Global Gaming Business Magazine, May 2014 by Global Gaming Business

p. 1 cover 22:_cover, inside, back.qx 4/18/14 2:01 PM Page 1

GGB Global Gaming Business Magazine

CA iPoker ProGreSS PoiPet PLAnS BinGo BonAnzA onLine teCH PArtnerS

May 2014 • $10 • Vol. 13 • No. 5

The

Bally

Shuffle

SHFL deal complete, company becomes industry’s most diverse supplier Is the Sun Rising?

the status of gaming legalization in Japan and its potential

SIZE

Matters

Are integrated resorts the only answer in Asia?

Official Publication of the American Gaming Association

Return on Investment

Are tribes getting their money’s worth when hiring DC lobbyists?

The epic journey that audiences love worldwide continues onboard this magnificent slot machine. From first-class opulence to third thirdclass thrills, players can explore four mystery features, a U-S U-Spin™ Wheel Bonus, two Free Games bonuses and an interactive iDeck™ experience drawn straight from Jack’s sketchbook. Three progressive jackpots, including a giant top award, will attract players to a game as captivating as the “ship of dreams” that inspired the beloved 11-time Academy Award TM-winning film. Make history all over again with Titanic on your slot floor; contact your Bally Account Executive at 866.316.1777 or visit BallyTech.com.

p. 3 toc may:_table & mast.qx 4/17/14 5:12 PM Page 3

CONTENTS

Vol. 13 • No. 5

may

Global Gaming Business Magazine

COLUMNS

COVER STORY Page 26

16 AGA

Covering the Bases

A New State-Level Strategy Geoff Freeman

Bally Technologies incorporates the former SHFL entertainment to emerge as the most complete supplier of slot machines, table games and systems that the industry has ever known. By Frank Legato

18 Fantini’s Finance

Loren Nelson, Vice President of Game Development; Nathan Wadds, Vice President of Research and Development; Mike Mitchell, Vice President of Game Development; Jean Venneman, Vice President of Product Management and Licensing; Roger Snow, Senior Vice President of Table and Utility Products; Sethuram Shivashankar, Senior Vice President of Systems Research & Development and Information Technology.

82 Marketing

Global Reach Frank Fantini

78 Strategy Casino Brand Building 101 Julia Carcamo

Brand Awareness Aaron Righellis

DEPARTMENTS 4 The Agenda

FEATURES 20 Tokyo Rose As the Japanese Diet considers legislation to create casino resorts, the industry contemplates the coming of a giant new gaming market. By Steve Rittvo and David Rittvo

36 The IR Phenomenon The integrated resort has come of age over the past 10 years, but new markets may also benefit from a multi-property approach to development. By Dean M. Macomber

6 Dateline

68 Bingo Blooms The game of bingo retains its traditional appeal and gains new fans through the use of technology. By Dave Bontempo

74 Harrah’s California Harrah’s Resort Southern California transforms itself with a $160 million expansion. By David Ross

62 Tribal Fix Lobbyists for Indian Country are still chasing a legislative “fix” to offset Carcieri v. Salazar, the U.S. Supreme Court decision hampering the land-into-trust process. By Dave Palermo

76 Emerging Leaders With Boyd Gaming’s Michael Bond, GTECH’s Tifani Chung, and Williams Interactive’s Jordan Levin

80 Frankly Speaking 84 New Game Review 88 Cutting Edge 90 Goods & Services 97 People

58 Poipet Power With its prime location to serve tourists entering Cambodia, the city of Poipet is emerging as a lucrative regional market. By Steve Gallaway and Andrew Klebanow

13 Nutshell

98 Casino Communications

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

Features

42 Partnering Online Progress in the nascent U.S. online gaming industry is all about partnerships—and deal-making. By Marco Valerio

With Joel Leonoff, President and CEO, Optimal Payments, Inc.

48 The Bad Actor Question As legislators in states like California debate online poker, the discussion invariably turns to licensing so-called “bad actors.” By Patrick Roberts

52 iGames News Roundup MAY 2014 www.ggbmagazine.com

p. 4 agenda:_table & mast.qx 4/17/14 4:10 PM Page 4

THE AGENDA

Socially Unacceptable Roger Gros, Publisher

ne of the tenets of the American Gaming Association is that its members pledge to never market to children or people under the age of 21. It makes sense, because there is nothing to gain by marketing to this age group since they legally are, in most cases, not permitted inside a casino to gamble. But the recent spread of social gaming—you know, those games you play for “free” on your computer via Facebook or some other social media site—has blurred that line, and the industry needs to re-evaluate its participation in these areas. Since there is no prohibition or regulation that prevents children or teenagers from playing these games, it has become a thorny issue. After all, on the internet, a younger demographic works for some businesses. If you’re promoting products or services that children purchase—and, more importantly, their parents buy—it makes sense to build these social games with themes that children enjoy. But if you’re building a game, or a social gaming site, designed to attract adults, how do you create that balance of themes adults enjoy—and we’re not talking about hard core, of course— with the unlimited access that characterizes social game play? Very few social games ask for the age of a player. Only when it comes down to actually buying those worthless “chips,” “coins” or “tokens” do the sites capture any data assuring that the purchaser is the legal owner of the credit card used, and usually—but not always—of legal age. And since many sites and games are built to be portals to live gaming—whether online or land-based casinos—this could be a slippery slope that could come back to bite the social gaming sites and the companies that operate them. The problem, of course, is that today, many of the games you enjoy on social gaming sites wind up as slot machines on the casino floor. You enjoy playing them online and when you visit the casino, you can decide to play them for real money. Makes good business sense. But the characteristics of the social games and the setting in which they are being played is often quite different.

Global Gaming Business MAY 2014

Take a walk around the exhibit floor at any major trade show. There is a disturbing number of games based on cartoon characters. Yes, we all grew up with the cartoon characters and have fun seeing them deliver jackpots to us as adults, but what about children who enjoy those characters today? They can find these games online in a social gaming setting, but aren’t supposed to be intrigued if they see them as they walk by a casino floor or a slot arcade or VLT inside a restaurant? And other themes that aren’t even based on cartoons are sometimes quite juvenile. I’m sure the game designer aimed to rekindle a player’s simple memories of their childhood, but they appear to be marketing to minors. Does some of this stem from the fear that the casino customer is growing older and the operators and manufacturers are hoping to expand the demographics? I’m sure no one is hoping to develop a teenage following, but to an outsider, it could easily appear that way. Now, most of the major gaming manufacturers and designers claim that social gaming is different. There is no money changing hands (except for the need to buy points, chips or a more powerful playing piece), therefore, no need to exclude the younger players. But when casual observers can draw a direct line from these “social” games to real-money slot games, the industry will need to defend itself from charges it is trying to develop gamblers by designing games that appeal to younger people. I’ve purposely not offered any examples in this piece. I don’t mean to point fingers or even suggest that any company, game developer or operator is engaging in marketing to children or minors. But during this time when casinos are under attack from all sides, just the appearance of any impropriety can be harmful. It’s time for operators and manufacturers to think again about the themes of their games and what they might look like to someone outside the industry. It’s time to come together again with the pledge that there’s no room for marketing to minors or even the perception of marketing to minors in this industry.

Vol. 13 • No. 5 • May 2014 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Julia Carcamo | Frank Fantini Geoff Freeman | Aaron Righellis Contributing Editors Kimberly Arnold | Dave Bontempo | Steve Gallaway Alexis Garber | Andrew Klebanow | Dean M. Macomber Dave Palermo | David Rittvo | Steve Rittvo Patrick Roberts | David Ross | Marco Valerio

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

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

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

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

• Steven M. Rittvo, President, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 921 American Pacific Dr, Suite 304, Henderson, NV 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2014 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 921 American Pacific Dr, Suite 304, Henderson, NV 89014

Official Publication

More glitz. More glamour. More player engagement. Introducing Sex and the City Platinum™ Video Slots, a fabulous makeover of the strongest-performing original. The girls are back. And they’re better than ever—with the same math model and base game features of the strongestperforming Sex and the City™ Multiplay. And with Enhanced Game Content, you can refresh game play without changing machines. So players stay engaged longer. What can it do for your floor performance? Find out at igt.com/satcplatinum

C12282_SATC_GlobalGamingBusiness_FullPageAd.indd Saved at 3-13-2014 3:40 PM Job info

from

DSFmquach

Approvals IGT MJP C12282

Art Director

May

Client

IGT

Copywriter

Steve

Account Mgr Tom

Live

7.625” x 10.125”

Trim

8.375” x 10.875”

Studio Artist May

Bleed

8.625” x 11.125”

Production

N/A

Proofreader

Temp

Pubs Global Gaming Business

Notes

Printed At None

Fonts & Images

Job

Media Type Print

May Quach / Eric Liu

Fonts Frank (Regular, Thin, Light, Light Italic, Bold)

Inks Cyan, Black

Magenta,

Yellow,

Images A21290x01C_CMYK_smp.tif (CMYK; 602 ppi; 49.83%), A21161x03A_SATC_ simp_3u.psd (CMYK; 229 ppi; 130.5%), IGT_sig_white_print.eps (16.87%), HBO_ HOMEBOX (R)_White.eps (8.81%)

555 Market Street, 19th Floor San Francisco, CA 94105

p. 6, 7 dl asia.tribal:Layout 1 4/17/14 4:11 PM Page 6

DATELINE ASIA may2014

Japan SpeakS to MaJor CoMpanieS Melco Crown Entertainment, MGM reveal plans to develop casinos

Melco Crown Entertainment’s Crown Macau

wo major gaming companies are ready to get started in Japan. Melco Crown Entertainment says it is in talks with several Japanese companies about getting a US$5 billion joint-venture resort open in Tokyo in time for the 2020 Summer Olympics. “I do not envisage an integrated resort in either Tokyo or Osaka would be successful at anything under $5 billion,” said Australian billionaire James Packer, co-chairman of the Macau casino giant. “The cost for the successful applicant would probably be more than $5 billion.” Packer visited Tokyo last month as part of a delegation of Australian business leaders accompanying Prime Minister Tony Abbott on a swing through North Asia. The subject of a casino was part of those discussions, according to news reports. Melco Crown will be flexible about any partnership, and is talking to various companies, including real estate developers and infrastructure

Let Us In

South Korea’s provinces want casinos our provincial governments in South Korea say they’re planning or considering hosting resort casinos. In addition to Incheon and Jeju, which are slated for major gaming investments, English-language daily Korea The government of President Times reports that Busan, North Jeolla, Park Geun-ye is backing casinos. South Jeolla and Gyeonggi also want in on the action. “Our study shows that over 80 percent of multi-leisure complexes’ revenue comes from casinos,” said Byun Keun-se, a spokesman for North Jeolla, who told the Times three local sites around a development zone in the province known as Saemangeum would be appropriate for gaming under a law governing the area. A South Jeolla official responsible for promoting investment in the province said his region is ideally located to compete for Chinese gamblers as well as investors. “Our land is located by the West Sea, which visitors from the eastern part of China can easily access,” the official said. A tourism official with the municipal government of Busan said the port city is thinking about gaming for a landfill area known as Dongbusan, and a spokesman for Gyeonggi said his province also is considering a casino in hopes of reviving a plan for a Universal Studios resort in Hwaseong that has languished for want of interested developers. The Ministry of Culture, Sports and Tourism said it has no policies that limit the number of casinos in the country.

Global Gaming Business MAY 2014

companies, co-Chairman Lawrence Ho has said. Melco would also be interested in tie-ups with Japanese trading houses, he said. Pachinko giant Dynam Japan Holdings is one of the companies Melco has been talking to, according to Yoji Sato, Dynam’s chairman. Meanwhile, MGM Resorts International Chairman and CEO James Murren says he expects to open a destination-scale casino resort in Japan by the 2020 games. In an interview with Investor’s Business Daily, Murren acknowledged the “complicated process” that Japanese authorities have ahead of them, but said he’s confident. “We have knowledge and information on all of the issues that have to be addressed,” he said, adding that the Las Vegas-based casino giant, which also owns a lucrative casino in Macau and is building a second in the Chinese territory, is willing to work with Japanese partners.

Chiller in Manila Okada loses more partners in the Philippines

he Philippines’ Century Properties Group has asked a local court to prevent Kazuo Okada’s Universal Entertainment from terminating their agreement to jointly develop a US$2 billion casino complex in the Entertainment Japanese billionaire City resort district on Manila Bay. Kazuo Okada Century said it also sent a notice of dispute to Tokyobased Universal and its Philippine subsidiaries challenging the validity of the termination, which Universal ordered after a second local partner, First Paramount Holdings 888, withdrew from the venture. The partnerships were designed to resolve charges that Universal had sought to evade compliance with laws restricting foreign ownership of land to no more than 40 percent. In 2012, the Philippine Justice Department issued a legal opinion indicating the ownership structure of Eagle I Landholdings, Universal’s local affiliate, breached those laws because Aruze USA, Universal’s U.S.-based machine gaming supplier, effectively held 64 percent of Eagle I in the form of direct and indirect stakes. Century agreed to acquire 36 percent of Eagle I as part of a deal that calls for Century to develop five hectares of the Entertainment City site. First Paramount agreed to buy 24 percent of Eagle I. In contesting the termination, Century said First Paramount’s withdrawal does not nullify its deal because an alternative partnership with another qualified Filipino company could be negotiated. The company alleges that Universal wanted changes in the agreement that would have eliminated its exclusive rights to the luxury commercial and residential portions of the project. Construction, meanwhile, is reported to be proceeding swiftly at the site, known as Manila Bay Resorts, but the government says Okada and his companies need to resolve their various issues if they want to retain the license there.

p. 6, 7 dl asia.tribal:Layout 1 4/17/14 4:11 PM Page 7

DATELINE TRIBAL may2014

SeriouSly Seminole

Senator pulls plug on expanded Florida gambling

Florida State Senator Garrett Richter

n a surprise announcement in the middle of a Florida Senate budget hearing, state Senator Garrett Richter said due to ongoing negotiations between Governor Rick Scott and the Seminole Tribe of Florida, “there won’t be any comprehensive reform legislation this year. Sound policy must take into account the compact’s substantial revenue sharing and exclusivity provisions.” Richter had previously actively pushed for expanding gambling in the state. The overall compact between the state

and the Seminoles will end in 2030, but Scott and the tribe are negotiating provisions that will end next year. It gives the tribe exclusive rights to operate banked card games like blackjack at five of its seven facilities for five years. In exchange, the tribe agreed to pay the state a minimum of $1 billion. The Seminoles can halt those payments if slot machines are allowed anywhere outside of Broward and Miami-Dade counties, excluding those operated by other tribes. The tribe also can reduce the payments if South Florida parimutuels are allowed to have banked card games, or if slots are authorized at any facilities that were not already operating in Broward or Miami-Dade, except for Hialeah Race Track, when the deal was signed. Richter said, “If we put the gaming reform cart in front of the Seminole compact horse, we run the risk of getting policies at cross purposes.”

Buffalo Shell Game

Sioux City’s Warrior hotel

From $330 million destination to $130 million “shell” report by the Buffalo News suggests that the Seneca Nation’s Buffalo Creek Casino has not fully lived up to its promise of economic prosperity in the western New York city. The casino, which employs 459 workers, has not verified that it is spending $1.7 million per year to market outside the immediate area, which is part of its deal with the city, the News reported, and it seems to be drawing mostly local patrons and those from right across the Canadian border. The casino also has not fulfilled the requirement of an annual marketing presentation for the Common Council. “The city was made a lot of unrealistic promises. Not surprisingly, those have not been delivered,” said Sam Magavern, co-director of the anti-casino group Partnership for the Public Good. Mayor Byron W. Brown disagrees, and calls the city’s pact with the Senecas “a good deal for Buffalo.” The tribe initially planned to build a $330 million casino hotel in downtown Buffalo. That plan was derailed by the economic downturn, and the Senecas abandoned the original plan in favor of a smaller $130 million complex on the waterfront. “Smaller is better because it means less gambling is going on,” Magavern said. “But it did reveal that the tourist idea wasn’t a reality.”

The News reports that the Brown administration has not acted to enforce any provision in the agreement, and the casino has not upheld its pledge to retain one-third of its land for green space. Local Council Member David A. Franczyk, who supported the 2006 deal, said the Senecas need to be held accountable. “It’s certainly not Vegas. It’s a basic shell. It’s a middling casino,” he said. “But I wouldn’t come down like the wrath of Khan.” The tribe’s compact with the state provides for three casinos in western New York. The Senecas obviously want to change the terms of that deal; they recently acquired a tract of land in the town of Henrietta, south of Rochester, with hopes of building a casino there. That plan has met with opposition from the community. Five New York state senators and nine Assembly members have sent a letter to Governor Andrew Cuomo saying they oppose it too. “We believe that any expansion of gaming opportunities into Western New York will have a devastating impact on existing institutions that contribute millions of dollars to the local economy,” said the senators in their joint letter. The nine members of the state Assembly who signed the letter said they “vehemently” oppose the casino, which would compete with Batavia Downs and Finger Lakes Gaming, components of Western Regional Off-Track Betting.

HO-CHUNK

READY TO REVIVE PLAN Tribe wants to renovate Warrior hotel

arrior Entertainment LLC, the development group that includes Ho-Chunk, the Winnebago Tribe’s economic development division, along with the tribe and other investors, filed a petition March 13 in Polk County, Iowa District Court to enter Argosy’s lawsuit against the Iowa Racing and Gaming Commission. The lawsuit involves the IRGC’s award of a state gaming license to Sioux City Entertainment last April to build the $128.5 million Hard Rock Hotel and Casino, now under construction in downtown Sioux City. But in court documents, the IRGC, the Hard Rock Hotel & Casino Sioux City developer, SCE Partners and the city of Sioux City all objected to Warrior Entertainment LLC’s petition to intervene in the case. In its motion to resist, IRGC attorneys argued that the Warrior group, after missing the deadline to file its own judicial review suit, is now attempting to “impermissibly piggyback” onto the Argosy suit. The Warrior’s “speculative and indirect interest” does not warrant participation in the suit, the IRGC argued. In a statement, Ho-Chunk President and Chief Executive Officer Lance Morgan said he understands why there were objections. “We are like an uninvited guest at a party,” he said. “But we feel that we obviously have an interest in the proceeding and no one but us can adequately protect our interests.” MAY 2014 www.ggbmagazine.com

p. 8 Global:Layout 1 4/17/14 4:11 PM Page 8

DATELINE GLOBAL may2014

Saipan Success Governor signs casino bill

Gold Rush Queensland draws flurry of interest

Golf great Greg Norman is aligned with developer Tower Holdings.

rown Resorts and Chinese retail giant Tai Fook Enterprises are among a group of 12 entities lodging bids to develop resort casinos in the Australian state of Queensland. Queensland is currently home to four casinos, but the government is opening up three new ones with a view to leveraging the state’s sizeable natural attractions, including a massive coastline and draws like the Great Barrier Reef, to boost its tourism profile among big-spending Asians, particularly those from China, as an economic development tool. Six of the bids are for Brisbane, which the state has reserved for one of the licenses. Sydney’s Echo Entertainment operates the sole casino there currently, and is bidding for the new license. So are

Crown and Chow Tai Fook, a Chinese jewelry merchant, along with New Zealand casino operator SkyCity Entertainment, Australian developer Lend Lease and a unit of Shanghai-based property giant Greenland Holdings. Of the other expressions of interest, two relate to Gold Coast, where Echo also operates, and four to sites in the far north of the state near the Great Barrier Reef, currently home to the small Reef Casino Hotel in Cairns. Reef has been snapped up by Hong Kong financier Tony Fung, who is bidding for a license to develop a massive mixed-use resort with a casino on the northern coast near the Barrier Reef. Golf legend Greg Norman has joined forces with Tower Holdings, which is proposing to build a $2 billion resort project on Great Keppel Island. The development would include a casino, championship 18-hole golf course, 700 luxury villas, 350 apartments and a 350-room, five-star resort. “I want to make sure that the development we are involved in here can become one of the top resort developments in the world today,” Norman said. The state plans to have a short list of bidders finalized by the middle of the year and announce the three winners by mid-2015.

Ontario: $100 Million for Horse Tracks

Architectural Gem

Former premier ended subsidy in 2012

Renovations complete at InterContinental San Juan

he horse racing industry in Ontario, Canada, will get about $100 million each year from the government to help the struggling industry, reports CTV News. But the lastminute save may not work, says horse trainer Linda Yake. “Probably five years ago, we were racing seven horses and training nine or 10. Today, we have two in training,” Yake said. In 2012, the government pulled the Slots at Racetrack Program, which took $345 million from the tracks and put thousands of people out of work. “Now that the industry has been dismantled, it’s like burn- Ontario Premier Kathleen Wynne ing down a building and saying you’ll rebuild it. It takes much less time to burn down the building than it does to rebuild it,” Yake said. “It’s good to see that there’s some movement in that respect, because originally we were told we would get nothing and deserved nothing.” According to the Hamilton Spectator, Premier Kathleen Wynne is attempting to “undo the handiwork of her controversial predecessor, Dalton McGuinty,” who pulled the plug on the slots subsidy. Wynne actually increased support to the industry to $500 million over five years, up from the $400 million she promised last October. “For every dollar invested, we believe that will be returned to the treasury through the revenue that’s generated,” a senior government told the Spectator.

aipan Governor Eloy Inos has signed a bill legalizing a casino on the western Pacific island. His approval paved the way for casino operations on the three main islands constituting the U.S. Commonwealth of the Northern Marianas, and prompted the cashstrapped government to restore a 25 percent cut in Saipan Governor senior citizen pensions. Eloy Inos Up to now, casinos have been legal only on the neighboring islands of Tinian and Rota, and only one, Tinian Dynasty Hotel & Casino, is in operation. Repeated attempts to expand the industry to Saipan, the largest island of the group, have failed because of political and community opposition. But the recent legalization of electronic gaming combined with the government’s increasingly dire financial straits proved the difference, and the bill was fast-tracked though the House of Representatives and the Senate, bypassing the committee stage and without formal hearings. Officials now are looking for an investor willing to meet the law’s minimum capital requirement of US$2 billion and 2,000 hotel rooms.

Global Gaming Business MAY 2014

he 398-room InterContinental San Juan Resort & Casino, which was originally designed by noted architect Morris Lapidus, has completed a $22.5 million refurbishment. The refurbishment includes updated guest rooms, public spaces, meeting rooms and new signage that are intended to symbolize “sand and sea” and evoke the “emblematic colors and architectural characteristics of Old San Juan,” the company said. “Few properties in the region offer the combination of an oceanfront location coupled with the business amenities featured at the InterContinental San Juan,” said Alvaro Diago, COO, Latin America and Caribbean, IHG. “There is no doubt that this one-of-a-kind property will continue to define hospitality on the island of Puerto Rico and remain a key asset in the InterContinental Hotels & Resorts portfolio.”

ADVERTISING IS NOW A SKILL GAME. In today’s increasingly complex and competitive gaming landscape, your brand must operate with greater intelligence than ever. That’s where we come in. As a full-service agency that focuses solely on casino brands, our team combines strategic thinking, imagination, logistics and technology to help you outsmart the competition. It’s something that comes with the territory of doing what you love. After all, we’re gamers at heart. And we want to help you win a little game called advertising.

THE AD AGENCY FOR SMART CASINO BRANDS.

251.476.1283

REDSQUAREGAMING.COM

p. 10 europe:Layout 1 4/17/14 4:14 PM Page 10

DATELINE EUROPE may2014

FOBT Failure U.K. bookies protest tax hike B

in 2013, an average of £776 impose limits on the machines with penalties for opritain’s betting shop operators are calling each. erators who fail to enforce them. for an urgent review of the government’s “It is these gaming maReports are that Cameron has personally ordered decision to raise the tax on electronic table chines which turn a betting officials and the U.K. Gambling Commission, the game revenue from 20 percent to 25 percent, a shop into a mini-casino on nation’s top regulator, to toughen up a new responsimove they say will cost the industry more than the high street,” complained ble gaming code instituted voluntarily by the indus£75 million a year when it comes into force in Counsellor Barry Henley. try in February. The code includes pop-up alerts, March 2015. It is a complaint echoed which flash on FOBT screens when a customer has The Association of British Bookmakers Chancellor George Osborne across municipalities nationspent £250 or played for 30 minutes. It’s expected said it will be “lobbying hard” to overturn the wide and is being heard now the code will be made mandatory with violators facincrease. “We are assessing the extent of the in the House of Commons, where the government ing possible closure. It’s possible bet sizes will be redamage the budget will cause the industry. What’s of Prime Minister David Cameron is preparing to duced as well. clear is that it has put thousands of jobs at risk almost immediately.” Ironically, critics of the controversial machines, known as fixed-odds betting terminals (FOBT), also take issue with the higher tax, arguing that it shows the government cares more about profiting from the machines than about protecting consumers. They say the machines, which allow players to The Spanish gaming and betting wager on a variety of automated casino-style games, operator could file for roulette being the most popular, are a leading cause bankruptcy protection. of problem gambling and have sparked an explosion in recent years in the number of high street betting panish gaming and betting giant Codere has shops, for which the machines, restricted to four per rejected a plan put forward by creditors to inject up to €400 million into the debt-laden company in location, are now the leading source of revenues. exchange for 96.8 percent of its equity. “Rather than deal with the FOBTs and proliferaInstead, the board of directors has proposed a five-and-a-half-year moratorium on bond interest paytion of betting shops (Chancellor George) Osborne ments, or alternatively, a 50 percent write-down of the debt and a conversion of up to €250 million into 8 says he wants to make more money from them,” said percent notes with no equity. Labor MP David Lammy, who represents a district Codere, struggling under €1.1 billion of total debt and faced with declining revenues across its farin London. flung business at home and abroad, started the year with a four-month window to achieve a restructuring The Labor Party is pushing Parliament to grant of its debt or file for protection under Spain’s bankruptcy laws. local governments greater zoning powers to control

Codere Fights To Keep Control

the licensing of new betting shops and wants the governing Conservatives to impose limits on bet sizes and other deterrents. Meanwhile, the city of Birmingham has been told that without new central government legislation they are powerless to stop more betting shops—and the casino-style electronic table games they contain—from opening in high-density shopping areas. City Council’s Planning Committee initially voted 6-5 against an application from bookmaker Coral for a venue in the Yardley district, but planning officers said if Coral sued, the city was likely to lose and would entail significant costs in doing so. Under current law, betting shops are classed as financial services, the same as banks, estate agents and insurance brokers, and therefore are under few restrictions barring them from high streets. Campaign for Fairer Gambling, a grassroots group dedicated to opposing the FOBTs, said Birmingham gamblers lost £53 million on the machines 10

Global Gaming Business MAY 2014

Russian Revolution

Casinos possible in Crimea

roposals for the formation of a casino zone in the recently seized Crimea are scheduled to be submitted to the Russian government by April 15. “This option is being looked at. If it works for the development of Crimea, it will be a zone in a non-populated area,” said Deputy Prime Minister Dmitri Kozak. Dmitri Kozak, Earlier, Minister of Economic Development Alexei Ulyukayev Deputy Prime Minister said that the special economic zone could be created to assist the Crimea in rebuilding a flagging economy. The zone is expected to include a package of tax and investment incentives similar to the casino zone designated five years ago for Russia’s westernmost Kaliningrad region. The government outlawed casinos in major metropolitan areas in 2009 and relegated them to four outlying districts, which in addition to Kaliningrad are located in the Don-Rostov region not far from the Crimea, and in Altai in Central Asia and around the Pacific coast city of Vladivostok.

p. 12 DL US:Layout 1 4/17/14 4:40 PM Page 12

DATELINE USA may2014

Whale Watch Federal crackdown alarms casinos t

he U.S. Treasury Department may soon require casinos to determine and report sources of high roller income, according to a report in the Las Vegas Review-Journal. The specter of government officials prying into these big spenders and their dealings went through the industry like “a magnitude 7.0 earthquake,” RJ writer Howard Stutz wrote last month. Title 31 of the Bank Secrecy Act is designed in part to thwart money laundering. At last year’s G2E Expo in Las Vegas, Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (FinCEN), said casinos could be subject to the same requirements as banks and other businesses dealing with

large sums of cash. “Every financial institution, casinos included, should be concerned about its reputation,” she said. “Integrity goes a long way.” The American Gaming Association has issued a statement saying it “is actively engaged with key federal agencies” in discussing the matter. Casino owners fear intense scrutiny could drive moneyed gamblers to more lenient markets, like Macau and Singapore. “This is a serious issue that could radically alter the way that casinos do business,” AGA President Geoff Freeman said in the statement.

Let There Be Light Pinnacle closes $260 million Lumiere purchase

n April 1, Tropicana Entertainment Inc. closed on its purchase of Lumière Place Casino & Hotels from Pinnacle Entertainment for $260 million. The all-cash transaction included the casino, HoteLumiere and the Four Seasons Hotel St. Louis. Tropicana officials said the property will remain under the Lumière brand. The Federal Trade Commission required the sale

Big Wheel Rolling High Roller opens in Las Vegas he High Roller observation wheel near the Las Vegas Strip is now open for business. The 550-foot High Roller has 28 cabins designed to hold up to 40 passengers. The ride takes 30 minutes, during which the wheel makes one full rotation and passengers can get a bird’s eye view of the city and the surrounding mountains. The High Roller is the tallest observation wheel in the world, exceeding the London Eye and Singapore Flyer. It is located between the Quad and Flamingo resorts at the new Linq entertainment corridor.

Global Gaming Business MAY 2014

last year for Pinnacle to complete its $2.8 billion buyout of Ameristar Casinos. The FTC also mandated the sale of Ameristar’s casino project in Lake Charles, Louisiana to the Golden Nugget; that transaction is expected to be completed later this year. Las Vegas-based Pinnacle still operates River City Casino & Hotel and Ameristar Casino St. Charles, both in the St. Louis market. Tropicana Entertainment owns Tropicana Atlantic City, Tropicana Laughlin, MontBleu in Lake Tahoe and properties in Indiana, Mississippi, Louisiana and Aruba.

“It’s really an art piece on the Las Vegas skyline, from the dynamic lighting sequences to the overall engineering and architecture that it adds to the skyline,” said Jon Gray, vice president and general manager of the Linq. “It’s a new icon that everyone, locals and tourists alike, have embraced. We’ve really enhanced the Las Vegas skyline.” The Linq, which will eventually have 30 venues, “required a big anchor,” said Greg Miller, executive vice president of domestic development for Caesars Entertainment. “We needed something big, something audacious almost, to compel people to come that far off the Strip.” Caesars expects between 4 million and 5 million riders in the wheel’s first year of operation. Ticket prices are $24.95 per person during the day and $34.95 after dark.

NeW York: the race Is oN

Local support is criterion for consideration

he game is officially on in New York state. After months of buzz about developers planning to apply for the state’s first four Class III casino licenses, gaming commissioners are about to hear from serious contenders. Lee Park, gaming commission spokesman, said the March 31 request for applications is “a milestone that formally begins the process that applicants have been waiting for.” In response to the 80-page RFA, each applicant must provide a resolution of support from its would-be host community, pay a $1 million application fee, and prove it is able to pay licensing fees that will run as high as $70 million. The siting board will judge the applicants based largely on the potential for economic activity and business development in their regions. Those factors will constitute 70 percent of the total “score.” “Economic growth, good jobs and enhancement to the region and community are paramount to this effort, and we look forward to seeing what bidders have to offer,” said siting board member William Thompson. Local support will account for 20 percent of the decision, according to the RFA, and applicants must demonstrate support from a variety of sources other than the local government. The final 10 percent of the decision will be based on workforce enhancement. The four casinos will be located in the Catskills, the Capital Region and Southern Tier/Finger Lakes regions, with one area getting two casinos.

p. 13 nutshell:Layout 1 4/17/14 4:40 PM Page 13

NUTSHELL

“They The government of Goa has introduced new annual license fees for casinos operating offshore and in the coastal Indian state. The fee for onshore casinos is between 2 crore and 4 crore (US$33,109-$66,219), based on gaming floor space, and between 6 crore and 8 crore ($99,329-$132,439) for cruise ship casinos, based on passenger capacity. Goa has six waterborne casinos operating on the Mandovi River around the capital of Panaji. The 12 land-based casinos operate in tourist hotels in and around the capital. Moon Nightclub at the Palms Casino Resort in Las Vegas has closed. The club opened in the property’s Fantasy Tower in October 2006. According to a statement from the Palms, the closure clears the way for “a new nightlife concept,” and until then Moon will occasionally open for private and special events. The SLS Las Vegas has begun accepting room reservations in advance of its Labor Day Weekend grand opening. The property, a project of Sam Nazarian’s SBE Entertainment of Los Angeles, is the former Sahara, a staple of the Rat Pack and other mid-20th century celebrities. The Sahara closed in May 2011. The Novomatic Group has acquired the Casino FlaminGO Hotel complex in the south of Macedonia directly on the Greek border. The complex includes a casino, a five-star hotel with 58 rooms and wellness offering, two restaurants, a selection of bars, a nightclub and an event stage. The gaming offering includes 440 slots, 10 American roulette tables and 16 card tables including blackjack, Caribbean Stud Poker and Ultimate Texas Hold’em Poker. Kentucky House Speaker Greg Stumbo said he will make a gambling expansion bill his top legislative priority in 2015 if, as expected, there is no movement in the state legislature on bills in the House and Senate to legalize casinos. Stumbo, the sponsor of one of two House bills to create a constitutional amendment to legalize casinos, has declared the issue dead for this year’s session after Senate and House leaders each refused to bring measures up for a vote unless the other chamber acted first. “We’ll put their feet to the fire come ’15 if we all get back here,” Stumbo said, referencing November’s elections. The Claridge Hotel in Atlantic City, New Jersey, recently acquired by an investment group called TJM Atlantic City, is officially accepting room reservations for Memorial

Day weekend. The 500-room Boardwalk hotel once included a casino and was sold by Caesars Entertainment for $12.5 million. New York’s Albany Law School has added a concentration in equine, racing and gaming law at the Saratoga Institute for Equine, Racing and Gaming Law. Classes start in September 2014 for the incoming class of 2017. Victor Drai’s nightclub After Hours, which moved from Bill’s Gamblin’ Hall to Bally’s Las Vegas when Bill’s closed for remodeling, will move back into its original basement location in May. Bill’s will reopen as the Cromwell. Betfair has partnered with Income Access—a technology provider and affiliate of iGaming management solutions—to launch the Betfair Casino affiliate program in New Jersey. The program will promote Betfair Casino’s online slots, poker and table game products that were launched in the state in November 2013. Betfair and Income Access will work together to help affiliates benefit from these products and supply them with experience on how to best promote and drive traffic in the regulated New Jersey online gaming market, the companies said in a press release. Zappos CEO Tony Hsieh, who made himself a force in the Downtown Las Vegas renaissance when he moved his company’s headquarters to the area last year, has acquired the shuttered Western Hotel for $14 million, reports Vegasinc.com. The resort was built in 1970 on Fremont Street in Downtown Vegas. It closed last January after 40 years in business. Former owner Tamares Real Estate sold it this month to a limited liability company controlled by developer Andrew Donner and affiliated with Hsieh’s Downtown Project. Nevada gaming regulators have OK’d Caesars Entertainment’s plan to sell four of its resorts to the company’s Caesars Growth Partners affiliate for $2.2 billion. The transfer was crafted to help the world’s largest casino operator expand its holdings while chipping away at $23 billion in long-term debt. Caesars Entertainment will manage the resorts, including Bally’s, the Quad and the Cromwell in Las Vegas, as well as Harrah’s New Orleans. Under the complex arrangement, Caesars Growth Partners will assume $185 million in debt associated with the Cromwell, once Bill’s Gamblin’ Hall, and spend $223 million to finish the Quad, formerly the Imperial Palace.

CALENDAR May 7-8: SAGSE Central America and Caribbean, El Panama Hotel, Panama City, Panama. For more information, visit SAGSEcc.com.

May 20-22: G2E Asia, Cotai Expo Center, the Venetian Macao. Produced by Reed Exhibitions and the American Gaming Association. For more information, visit G2EAsia.com.

May 12-14: Indian Gaming ’14, San Diego Convention Center. Produced by the National Indian Gaming Association. For more information, visit indiangaming.org.

June 23-25: Canadian Gaming Summit, Vancouver Convention Center, Vancouver, British Columbia. Organized by the Canadian Gaming Association. For more information, visit canadiangamingsummit.com.

May 14-16: Japan Gaming Congress, Tokyo. Produced by Clarion Gaming. For more information, visit japangamingcongress.com.

June 25-26: iGaming Super Show & Amsterdam Affiliate Conference, Amsterdam RAI. For more information, visit igamingsupershow.com.

Said It”

“Those new customers they get online might be in a younger demographic that doesn’t want to go into the casino and play slot machines. That’s the value in a land-based casino that goes online—it could eventually bring new people into the casino itself.” —Online gaming consultant Sue Schneider, on the benefits of online gaming to land-based operators in New Jersey

“We have to take care of their tribe membership and the benefits they are able to get, and they are not shrinking. If you just were to stay here, you would not have an increasing amount of revenue.” —Mitchell Etess, CEO of the Mohegan Tribal Gaming Authority, on the benefits of the tribe’s expansion to casinos in Pennsylvania, Atlantic City and Massachusetts despite flat revenues at its flagship Mohegan Sun in Connecticut

“The numbers are not that big a deal. No one’s making a killing yet.” —John Farahi, CEO, Monarch Gaming, on his decision not to go into online gaming

“This is a serious issue that could radically alter the way that casinos do business.” —American gaming Association President Geoff Freeman, commenting on a Reuters report that the U.S. Treasury Department may soon require casinos to report their high-rollers’ sources of funding

“Online gaming is growing our database, creating a long-term opportunity to market Borgata to an entirely new group of customers.” —Boyd Gaming President and CEO Keith Smith

“There was a time when tribes felt like we’re all in this together, everyone can get a piece of the pie. That unity has diminished over time, maybe regrettably.” —Philip N. Hogen, Oglala Sioux, a former chairman of the National Indian Gaming Commission, commenting on the lack of unity among tribes of rival casinos

“We’re gonna be enforcing the law. Stop, just stop.” —Nick Cox, Florida prosecutor, on new internet cafés cropping up in the state

“You can put lipstick on a pig and it’s still a pig. This is adding just a little more rouge or a different tuxedo.” —Steve Duprey, an opponent of expanded gaming in New Hampshire, commenting on a bill that recently passed the Senate

MAY 2014 www.ggbmagazine.com

MGAM_GGB_NTOCKick-off_MAY14.pdf 1 4/16/2014 4:10:18 PM

OUR PARTICIPATING CASINOS: 4 Bears Casino & Lodge • 7 Cedars Casino • 7th Street Casino • Agua Caliente Casino Resort Spa • Angel of the Winds Casino • Barona Resort & Casino • Bear River Casino • BJ's Bingo • Buffalo Thunder Resort & Casino • Cache Creek Casino Resort • Calder Casino & Race Course • Casino Pauma • Choctaw Casino Durant • Choctaw Casino Grant • Choctaw Casino Pocola • Clearwater River Casino & Hotel • Colusa Casino Resort • Coushatta Casino Resort • Creek Casino Montgomery • Desert Diamond Casino & Hotel • Eagle Mountain Casino • Elwha River Casino • Emerald Queen Casino & Hotel Fife • Emerald Queen Casino I-5 • French Lick Resort & Casino • Gold Dust West Casino Carson City • Gold Dust West Casino Elko • Gold Dust West Casino Reno • Golden Acorn Casino • Grand Casino Hinckley • Grand Casino Mille Lacs • Hard Rock Hotel & Casino Biloxi • Harrah's AK-Chin Casino • Ho-Chunk Gaming Black River Falls • Ho-Chunk Gaming Madison • Ho-Chunk Gaming Wisconsin Dells • Hollywood Casino Tunica • Hoosier Park Racing & Casino • Indiana Grand Casino • Jackson Rancheria Casino & Hotel • Jumer's Casino & Hotel • Kickapoo Casino Harrah • Kickapoo Lucky Eagle Casino • Little Six Casino • Lucky Eagle Casino • Majestic Star Casino • Meskwaki Bingo Casino Hotel • Mill Bay Casino • Muckleshoot Bingo • Muckleshoot Casino • Mystic Lake Casino Hotel • Newcastle Casino • Northern Quest Resort & Casino • Oaklawn Park Racing & Gaming • Okanogan Bingo Casino • Osage Casino Ponca City • Osage Casino Sand Springs • Osage Casino Tulsa • Paragon Casino Resort • Potawatomi Casino Carter • Prairie Band Casino & Resort • Prairie Meadows Racetrack & Resort • Red Earth Casino • Remington Park Racing & Casino • River Spirit Casino • Riverwind Casino • Rolling Hills Casino • Santa Ana Star Casino • Seneca Allegany Casino & Hotel • Seneca Niagara Casino & Hotel • Seven Clans Casino Warroad • Shooting Star Casino • Silver Reef Casino Hotel • Snoqualmie Casino • Southland Park Gaming & Racing • Spa Resort Casino • Suquamish Clearwater Casino Resort • Swinomish Casino & Lodge • Sycuan Casino • Table Mountain Casino • The Wynn Resort • Thunder Valley Casino Resort • Treasure Island Resort & Casino • Turtle Creek Casino & Hotel • Valley View Casino & Hotel • Wind Creek Casino & Hotel • Wind Creek Casino Wetumpka • WinStar World Casino • Yakama Legends Casino •

THANK YOU TO OUR SPONSORS:

MGAM_GGB_NTOCKick-off_MAY14.pdf 2 4/16/2014 4:10:21 PM

WHO’S READY FOR A ROAD TRIP? MULTIMEDIA GAMES KICKS OF ITS 2014 TOURNEVENT OF CHAMPIONS® TOUR You’ve waited patiently, and the time’s almost here for…

$500,000, Las Vegas & Ultimate Glory! Visit www.TOURNEVENT.com to see where our tour takes us!

p. 16 aga may:Layout 1 4/17/14 4:42 PM Page 16

AMERICAN GAMING ASSOCIATION

TAKE OUR IDEAS

OUT FOR A

A New StateLevel Strategy AGA has opportunity to affect policymaking By Geoff Freeman, President & CEO, American Gaming Association

T We Speak Casino. After 35-plus casinos and nearly 20 years, nobody has more gaming experience than RPM Advertising. From renowned Native American destinations to one of the largest casino brands in the world, we deliver results. RPM will produce the success and growth you want for your casino today. Call today for a free presentation 800.475.2000.

RPM ADV.COM Chicago Detroit Las Vegas Miami Milwaukee

Global Gaming Business MAY 2014

he American Gaming Association is launching a new effort to contribute to state-level gaming policy on a targeted basis. Until now, AGA has advocated for the gaming industry exclusively at the federal level. This approach was effective in preventing federal legislation that would hurt our industry. However, as gridlock continues to be the norm in Washington, public policy is increasingly shaped at the state level. The emerging Massachusetts gaming environment—where policymaking is in its infancy—provided us with an excellent opportunity to launch our new strategic effort. AGA recently submitted critical comments to the Massachusetts Gaming Commission (MGC) on its draft “Responsible Gaming Framework,” which seemed to favor personal opinion over proven science in establishing responsible gaming policies. AGA has pioneered its own code of conduct for the commercial casino industry and has published a Responsible Gaming Resource Guide. Both of these resources outline policies and best practices that are consistent with the scientific evidence on problem gambling. AGA will endeavor to distribute and share these resources with the industry. We want to ensure that helpful resources are always readily available. Our industry welcomes effective regulation. We also want to ensure that policies that regulate gaming are based in scientific evidence and do not harm the world-class gaming experience we provide to our customers.

PROMOTING GAMING’S VALUE IN STATES AGA’s recent comments to the MGC are only the beginning of our efforts to advocate for the gaming industry at the state level. We will be a champion for our industry and the many successes it has enjoyed in dozens of markets across the United States. We will share an accurate

portrayal of our industry, support policies that promote a better business environment and vehemently oppose policies that lead to inefficiency and harm our customer’s experience. I do not expect AGA to lobby in statehouses or to promote expansion. Our job is to share a story and effectively refute the critics. The value of gaming is a prominent topic for the media, policymakers and other stakeholders in many areas of the country. To aid the industry, AGA will proactively educate and aim to change perceptions of the misinformed by effectively communicating gaming’s many benefits. A major part of this effort will be an integrated public affairs campaign that highlights gaming as a growth industry, community benefit and economic asset. From Bethlehem, Pennsylvania, to Kansas City, Missouri, to the Gulf Coast to the Midwest, casinos are valued as community partners and thriving economic engines. Ensuring that communities across the country are aware of the various benefits gaming provides is essential as this industry continues to grow and expand. TRUTH TELLERS We have an extremely positive story to tell. The gaming industry provides jobs, economic development and critical tax revenues that fund education, public safety and other essential services. We revitalize communities—particularly the many American communities that are in critical need of economic growth. The single biggest change that you will see at the new AGA is a relentless focus on promoting the value of gaming. We will be unwavering in our championing of this great industry. We hope that you and others in the industry will join us. To stay up to date with and support our efforts, please contact our team at connect@americangaming.org. With the industry partnership and support of AGA’s new efforts, this new strategic approach will ensure the gaming industry’s continued growth. As always, your feedback and partnership is encouraged and appreciated.

p. 18 fanitini:Layout 1 4/17/14 4:42 PM Page 18

FANTINI’S FINANCE

Global Reach Online gaming brings entirely new elements to worldwide gaming business

lot has been made of the slow start of online gaming in the U.S. Less discussed, but perhaps a more important phenomenon, the launch of interactive gaming illustrates the globalization of the gaming industry as companies previously little known to investors, like 888 and bwin.party, are now integral. This is a sharp contrast from just a few years ago, when American investors focused almost exclusively on U.S. companies. The changes have been driven by three developments: • Businesses spreading across national boundaries, both online and among brick-and-mortar companies like Melco Crown and Genting. • European and Asian companies becoming more investor-friendly, including more detailed and frequent financial reporting, readily accessible investor relations departments, and investor conference calls. • The internet, which eliminates delays in getting actionable information. A few years ago, a column on international investing opportunities could focus on a relatively few companies, few of which had operations or customers in the U.S. Now, the number of international players is too long for a single column. And there are more of them every day. As recently as last fall, GameAccount was an obscure, privately held British online software company. Today, it’s publicly traded in London and has signed a major deal for a free-play casino with Foxwoods that mimics real-money casinos. A few years ago, only a few internet investors had ever heard of Playtech. Today, the London-listed online software and platform provider is becoming a household word. Betfair not only was unknown to Americans; they didn’t know about its core business—exchange wagering. Today, Betfair is an American presence with its account wagering arm, TVG, and ownership of Hollywood Park racetrack in California. The list of publicly traded international companies with American operations goes on—Aristocrat, Ainsworth, Konami, GTECH, Genting Malaysia, William Hill, Intralot and Amaya, among them. And, of course, there are American companies with increasing international presence such as IGT, Bally, Scientific Games, Wynn, Las Vegas Sands, 18

Global Gaming Business MAY 2014

By Frank Fantini

MGM Resorts and Caesars. Not long ago, a move by the British government to restrict slot-like machines in betting shops would have been of interest to hardly anyone outside the U.K. Today, it is important to investors in Scientific Games, which supplies many of the machines, and to bookmakers such as William Hill, Ladbrokes and Paddy Power, who get so much of their revenue from the games. Nor do the investment opportunities stop at foreign companies with U.S. operations or American companies gone international. There’s a whole world—literally and figuratively—of opportunity in businesses that do not touch America in any way. And, they are listed on stock exchanges with high regulatory standards, such as Sweden (Net Entertainment, Cherry), Australia (Crown Resorts, Echo Entertainment, TabCorp, Tatts), Hong Kong (Paradise Entertainment, Galaxy Entertainment, SJM, NagaCorp), Tokyo (Universal Entertainment, SegaSammy) and South Korea. Even countries like the Philippines are moving into the mainstream, thanks to the opening of megaresorts near Manila. So, where does all of this proliferation and convergence leave investors? With lots of choices, for one. But here are some quick thoughts on specific companies. • 888. With its alliance with Caesars, its own All American Poker Network and its relatively small base, London-listed 888 could be a mover. • bwin.party is big, but hasn’t been dynamic since the merger of bwin and PartyGaming. The arrival of Jason Ader as an activist investor might mean a big change. • William Hill is the most internationally ambitious and diversified of the British bookmakers that have been transformed into online moneymakers. • Betfair, like William Hill, is internationally very ambitious, and it has its own niche in exchange wagering. • Playtech provides the software and platforms that much of the world needs. • Net Entertainment. The Stockholm-listed company is expanding rapidly in the U.K.

• SportTech. Most Americans have never heard of the London-listed company, but that will change if Connecticut allows slots at OTBs, which SPO runs. • Melco Crown is the easiest international casino operator to follow, given that it trades on the New York Stock Exchange and meets U.S. accounting and reporting standards. MPEL is also the most ambitious of the non-U.S. casino operators. And for a pure play on the Philippines, MPEL has created Melco Crown Philippines, which trades in Manila. • Paradise Entertainment runs casinos in Macau, but its big potential is in electronic table games through its LT Games division. Paradise has gone from zero to thousands of placements in live table game-capped Macau, and recently opened a bank of machines at Las Vegas Sands’ Palazzo in Las Vegas. Macquarie analyst Jake Lynch thinks the Hong Kong-listed company can grow earnings more than 400 percent over the next two years. • NagaCorp has a government-granted, long-term casino monopoly in low-taxed Phnom Penh, Cambodia, where it operates NagaWorld casino resort, which is undergoing a major expansion. Hong Kong-listed NagaCorp also is expanding while staying debt-free, and paying a hefty dividend. And, for those who think the company sounds too remote, NagaCorp Chairman Timothy McNally is a retired FBI agent. • Genting is the biggest company few Americans heard of until several years ago. Its Genting Malaysia is Britain’s largest gaming company. Its Resorts World at Aqueduct raceway in New York is America’s biggest slots casino. And it is constructing a multibillion-dollar Resorts World in Las Vegas. Other Genting gaming companies are Genting Singapore and Genting Hong Kong, both with growth projects. Finally, there are the Hong Kong-listed American subsidiaries of Wynn, Las Vegas Sands and MGM Resorts as pure plays on Macau. So, there you go. A lot of names for starters. 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.

It’s only rock ’n’ roll. And they’ll like it. Hot Licks will spill from the Rolling Stones Slot Machine, putting players in the front row with the world’s greatest rock ’n’ roll band! The Rolling Stones slot game is a whirlwind of iconic rock, going on a roll with interactive features at high hit rates. The immersive iChair and 5.1 Surround Sound will put on a player-centric show, bringing them into the arena for Wild Licks, Rock ’n’ Roll Steel Wheel, World Tour Picks and Start Me Up! Free Games. Optimized for the Viridian Feature Top Box Cabinet,

The Rolling Stones will bring satisfaction to your floor. Contact your Aristocrat representative today. Contact your Aristocrat representative today.

#aristocratslots

p. 20 to 24 Japan:Layout 1 4/17/14 4:44 PM Page 20

NOW OR NEVER? Awaiting the launch of integrated resorts in Japan By Steve Rittvo and David Rittvo

s Japan throws itself into the process of legalizing and regulating large-scale casino developments across the country, it’s a good time to take stock of the process, provide some insight into the size and scope of the market and address the development opportunities and issues. The Japanese Diet is in the process of considering the initial draft bill for the legislation of integrated resort development. If the current schedule holds, the initial legislation should get passed in May or June, and the next more detailed legislation will be written and passed in 2015. Once the full legislation is passed, there will most likely be a four-to-six-year process to select the host communities and casino developers, and construct the integrated resorts. Before we consider the legislative logistics of this market, let’s take a step back and discuss the size and potential of the Japanese market. The Japanese have a penchant for gaming and gambling that is second only to the Chinese. Currently, the only legal forms of gambling in the country are on boat races, motorcycle races and bicycle racing. In 2011, there was approximately US$50 billion wagered (handle) at these events. This, coupled with estimates that the pachinko market could generate $40 billion (GGR), starts to give you an idea of the gambling potential within Japan. Analysts, including Asia-focused CLSA, have stated that even if developments were limited only to Tokyo and Osaka, the Japanese casino market could reach over $16 billion annually in its initial phase. This would make the Japanese market the second largest in the world, with only Macau generating more revenue. Should the legislation provide for two major casinos in these cities, as well as regional casinos in locations such as Hokkaido, Okinawa, Nagasaki, Akita and/or Aichi, the market totals could be close to $20 billion-$25 billion nationwide. The Innovation Group’s analysis shows that the market could reach $18 billion with just two integrated resort (IR) developments in Osaka and Tokyo, with Tokyo responsible for a majority of the revenue. If two smaller, regional IRs are allowed, we could see the market rising to $21.5 billion. Once fully ramped up and stabilized, the Japanese market could reach $33 billion-$34 billion annually. As you would expect, the significant potential of Japan is attracting significant interest from the world’s leading casino developers and operators. Among the large-cap public companies to openly announce their desire to

operate a casino in Japan are Boyd Gaming, Caesars Entertainment, Genting, Las Vegas Sands, MGM Resorts International, Melco Crown and Wynn. A number of other operators are expected to surface. It is fair to assume some Japanese pachinko and machine operators such as Sega Sammy and Konami will likely throw their hats into the ring and vie for a leading market role. In addition to the better-known operators and companies, significant but not publicly traded casino operators are entering the fray for Osaka and Tokyo. Rush Street Gaming, a casino operator with locations in Pittsburgh, Philadelphia and Chicago, is among the more successful U.S. operators exploring opportunities in Japan. “We are strong and well-recognized operators of urban casinos and an IR in Niagara Falls, and see the potential in the Japanese market,” says Greg Carlin, RSG’s president. “This market can provide a launching pad for our growth strategy into the international market.” Additionally, while some analysts believe this market is a race among the large-scale operators, the smaller operators have some very interesting potential in Japan. The secondary cities would be a trophy for almost any operator.

Legislative Background Three political parties and five independent congress members jointly submitted a bill for the draft IR Promotion Law to the House of Representatives on December 5. The three sponsoring political parties were the Liberal Democratic Party led by Prime Minister Shinzo Abe, the Japan Restoration Party, led by former Tokyo Governor Shintaro Ishihara, and the People’s Life Party led by Ichiro Ozawa. It is expected that the bill will be debated with a view to being passed into law at the ongoing ordinary session of the Diet, most likely next month. Should the bill not be passed by then, it will fall to the special session beginning in October. The IR Promotion Law Bill regulates the establishment and operation of casino facilities, and provides for such matters as the establishment of a cabinet external-affairs “Administrative Committee.” The IR Promotion Law will establish the legal framework for a new form of entertainment industry in Japan, initiating detailed discussions in what is expected to be a fairly straightforward process. Strong resolve on the part of the government should help turn this new framework and policy initiative into reality.

Analysts, including Asia-focused CLSA, have stated that even if developments were limited only to Tokyo and Osaka, the Japanese casino market could reach over $16 billion annually in its initial phase. This would make the Japanese market the second largest in the world, with only Macau generating more revenue. 20

Global Gaming Business MAY 2014

p. 20 to 24 Japan:Layout 1 4/17/14 4:45 PM Page 21

Prime Minister Shinzo Abe

Former Tokyo Governor Shintaro Ishihara

The passage of the legislation in the House of Representatives is likely to induce local government initiatives to attract IR investment. Subsequently, this will spur related activities and decisions including feasibility studies, opinion exchanges between affected local bodies, promotional activities and the formulation of requests to central government. Since local governments will be important stakeholders, they will play a key role in the submission of opinions to central authorities during the detailed planning process. Although the number of individuals and groups opposing the legislation is currently limited, there is nevertheless a strong possibility that a formal public protest movement might develop.

Ichiro Ozawa of the Peopleâ&#x20AC;&#x2122;s Life Party

the largest infrastructure developments. Based on a recent site visit to Yume Shima Island, extensive transportation infrastucture improvements will be required, with the most notable being upgrades to the connections to both the Osaka Subway and JR Train (National Railway) lines.

Japan Integrated Resorts

Until now, Singapore has stood alone when it came to the level of integrated resort product it provided to accommodate patronage of such significant revenues. Despite their magnitude and impressiveness, we believe they will be dwarfed by the properties about to be developed in Japan. Both Sheldon Adelson of Las Vegas Sands and Jim Murren of Hokkaido MGM have thrown down the $10 billion gauntlet, and have exDevelopment Locations pressed their willingness to spend that level of funds to bring As previously mentioned, the two large-scale developments are in their IR visions to Japan. Even if there is some potential hype in Tokyo and Osaka. Other jurisdictions, prefectures and cities have those numbers, Jay Defibaugh of CLSA recently referenced a cost of $8 expressed their interest to be one of the host communities for the billion for a prototypical facility, a number presumably not incorporating smaller, regional integrated resorts. all hard costs if the sites need to be fully assembled and acquired at market For the two large-scale developments, it appears Osaka is Akita rates. ahead of the development game. The city government has alWhat will these mega-IRs look like? To begin with, the gaming compoready identified a team to help steer the development process. nents are likely to be larger than anything experienced in a single complex Kazuhiro Nose, manager in charge of IR development for the to date. Based upon Innovation Groupâ&#x20AC;&#x2122;s review of the market potential, it Tourism Division of the Economic Strategy Department is anticipated the facilities in Tokyo and Osaka will require an approximate for Osaka, is leading the efforts. Nose is well reTokyo split of 1,000 tables, with the majority devoted to mass market and the balspected in his position, and has completed Chiba Kanagawa ance (some 250 to 300) designated for VIP play. multiple large-scale development projAichi Shizuoka Our modeling and the review of the pachinko market envisions a potenOsaka ects in his current capacity. tially stronger slot market than might be expected. We see some reasonable diThe proposed developWakayama Tokushima version from the upper level of the existing market as well as the creation of a ment sites for the area are foNagasaki real slot market in the IRs; we anticipate 4,000-plus electronic gaming decused around the Osaka Bay vices, including a significant component of stadium seating games within each area, six miles from downtown Miyazaki Okinawa of the large IRs. Osaka. The development plots A broad hotel mix will be needed within the IRs. We are anticipating the range between 49 and 185 initial development to come online with at least 2,500 hotel rooms in Tokyo acres, and are varying in their format and preparedness for full-scale developand Osaka and the anticipation is that each IR will have an iconic hotel strucment. The three development sites are Mai Shima, Yume Shima and Sake ture. Shima. Beyond the hotels, the other elements will need to follow the basic plans Nose has categorized the sites based on their scalability and need for largeof large-scale IRs. Given Japanâ&#x20AC;&#x2122;s strongly stated desire to grow its inbound forscale infrastructure improvements, with his clarification that Yume Shima Iseign tourist industry by over double (post-Olympics), the facilities will all land has the highest potential for scalability and sizing, although it will require MAY 2014 www.ggbmagazine.com

p. 20 to 24 Japan:Layout 1 4/18/14 1:25 PM Page 22

The government, at both the national and local levels, will need to develop a selection process and bid procedures. This represents both an opportunity and a potential pitfall. If these activities are not well-designed, it can set the entire development process back. Early rendering of an Osaka IR

need large and fully integrated convention and meeting facilities, both to support the tourism growth desired by the government and to maximize mid-week utilization. Japan represents a massive potential hub for MICE activities, and its present infrastructure is antiquated and under-sized. Japan is noted internationally for its respect of culinary greatness as exhibited by the concentration of Michelin-starred restaurants throughout the country. It is also a country where foreign chefs have established a notable and meaningful presence. To compete with other international IRs—but possibly even more important, to bring in the local patrons who are used to outstanding dining—a full cadre of upscale super-premium restaurants will be needed. A rough estimate envisions 40-plus food and beverage outlets in each IR. Retail is the third leg of the stool, and there is no question Japan is at the epicenter of global consumer consumption. We would anticipate a variety of shopping experiences integrated through the IRs that will offer a broad range of retail price points. These shopping experiences could provide an opportunity for partnering with Japanese companies and developers and help meet the expected need for integration of Japanese ownership as part of the IRs. Finally, we will see all stops removed in creating unmatched entertainment components integrated into these facilities. A sensitivity to Japanese culture and integrity will need to be melded with innovative shows and inimitable recreational opportunities. This is where we expect the bidders to unleash their creativity and come up with concepts that make the existing IRs in other global gaming destinations appear dull. The anticipated submissions in this area are well beyond our capability to envision, but we are looking forward to some awe-inspiring proposals. As we look at the regional IRs, we expect to see smaller facilities with similarly outstanding qualities. Candidly, we have not begun to size the regional IRs or to identify the range of the locales they can be developed in, but we are keenly aware that there will be significant variations in size and scope. Given the number of cities with populations of over 1 million and prefectures with populations of over 5 million, it is fair to assume that many of the regional IRs could generate more than $1 billion annually in gaming revenues. Assuming this significant baseline, the regional IRs should, at a minimum, also feature the components previously identified. That said, there could likely be trade-offs such as swapping convention and meeting facilities for more resort-type experiences and elements like marinas, golf courses and more expansive outdoor recreation.

Japan’s Recipe for Success Gaming operators are beating down doors in Japan, and they are prepared to do whatever it takes to ensure the success of IR programs there. But this is a partnership, and Japan needs to carry its share of the load to reach its maximum potential. First, the Diet needs to pass the legislation in the next few months and allow the government leadership to “put the meat on the bones” via a more formal structure that will allow the IR vision to play out in a cogent manner. The details must be adopted within one year after the initial bill is made into law. During the period, a tax structure must be developed that is at a level that is competitive or advantageous over other Asian gaming markets. A tax rate in the 22

Global Gaming Business MAY 2014

realm of 10-15 percent of GGR will allow for the capital expenditures needed for the IRs envisioned for Japan. How Japan addresses tax rates for junket players and how credit is addressed will also need to be resolved in a manner to allow for maximum benefit to accrue. There is no question Japan will require the highest standards from all bidders, but as can be seen in Massachusetts, creating an overly onerous and complex process can really reduce the number of bidders and seriously postpone the opening of facilities. If Japan wants to meet its proposed schedules and really have the maximum competition to develop the best facilities possible, there are outstanding examples of selection processes that were used in Singapore, Macau, Pennsylvania and Illinois that should serve as a starting point for the process. The suggestion that the national government should propose standards and conduct probity of bidders selected by the local jurisdiction seems like a very attractive option. This provides for the consideration of the individual local complex issues and the varying size and scope of the full range of IRs in Japan—all while affording the national government the ability to confirm the quality and integrity of the operations. Finally, at a minimum, the local jurisdiction (and perhaps the national government as well) will need to be sensitive to the need for infrastructure improvements. From road extensions and new roadways to sewer and water services, there is a variety of services that the IR developers will not be able to undertake on their own. There appears to be some thought going to these process and a vision that it can be both a need and an opportunity. Kazou Ueda, president of the Japan PFI/PPP Association, has taken the bull by the horns and now has had more than one casino operator express opinions on how these issues can be addressed by public/private partnerships. This early but high-level thinking will go far in helping Japan anticipate and resolve the set of concerns. Japan is without question the most exciting future jurisdiction for gaming companies; the winners will have captured the golden ring on the carousel. The competition to develop and operate one of these facilities is expected to be the fiercest ever witnessed on a global scale. The crucial legislation has yet to be enacted, and there is much to do before the first card is turned on a baccarat table. The next few years in Japan will be an indisputable focus of our industry. Stay tuned and enjoy the ride. Steve Rittvo is chairman, CEO and co-founder of the Innovation Group. Since founding the firm in 1993, Rittvo has participated in gaming studies for clients ranging from major gaming companies to riverboat and mid-cap companies, to Native American casinos of all sizes. He has provided gaming analysis to governments around the world.. David Rittvo is vice president of international development for the Innovation Group, leading the team to expand the company’s presence on an international level, focused on the Asian region.

Technology that inspires For nearly 60 years, JCM Global has been creating leading and award-winning transaction technologies that have evolved entire industries and inspired businesses to be better, smarter and faster. Now, there is a new generation of technology from JCM to inspire you, including even more advanced bill validation, advanced printing capabilities, real-time controls for the entire operation, and digital displays unlike anything youâ&#x20AC;&#x2122;ve seen before. A world of inspiring technologies, all from one company. w w w. j c m g l o b a l . c om

Evolve with JCM Global at Southern Gaming Summit Booth #825

p. 20 to 24 Japan:Layout 1 4/17/14 4:45 PM Page 24

Educational Action The 11th annual Japan Academy of Integrated & Gaming Studies was held earlier this year. By Mikio Tanji

ne indication of how long Japan has been considering gaming is demonstrated by an education effort that is now in its 11th year. The Japan Academy of Integrated & Gaming Studies (IRG) held its meeting at Dai-ichi Hotel Tokyo on February 25, for the first time since the IR Promotion Act was introduced to the Diet at the end of last year. Toru Mihara, IRG’s vice chairman, offered some optimism in his opening welcome. “Amid introduction of the act in last year which is expected to be enacted during the current Diet session, many new people are joining us at this meeting,” he said. “I would like to make this meeting fruitful by exchanging opinions on various future issues, which are of some help for the attendees.” Video messages from the heads of local governments interested in IR development among others, such as Ichiro Matsui, governor of Osaka Prefecture and Harumi Takahashi, governor of Hokkaido, were delivered to the meeting. After the act was presented to the Diet last December, the city and prefecture of Osaka jointly established the IR Site Preparation Council. Matsui said he was hoping for early enactment of IR-related acts, indicating he would like to accomplish the IR invitation in the Kansai area to prime the economy of Osaka, which is a metropolis comparable to Tokyo. Takahashi said the IR capitalizing superiority of a local area such as Hokkaido would contribute to Japan becoming a tourism-oriented country. She added that, while she was now conducting various studies with the cities of Otaru, Kushiro and Tomakomai, she would like the government to consider the institutional design for the IR delivering its spread effects to every corner of the country. The Kansai area, which includes Osaka and Hokkaido, is attracting everyone’s attention as strong candidates for IR sites. Another event held on February 5 was the first meeting of the Establishment Preparatory Committee of the IR Promotion Council, which would provide policy proposals on IR matters. Influential individuals and business groups across the country were listed as its founders, and 35 prefectures and 19 cities designated by ordinance among local governments participated as observers. It demonstrates that local governments other than Hokkaido and Osaka are also interested in the IR. Representatives of six casino operators—Melco Crown, MGM Resorts, Las Vegas Sands, Wynn Resorts, Caesars Entertainment and Genting—gave presentations.

Representatives of the companies explained their philosophy and plans, and how their plans would lead to an increase of tourism to Japan. Each suggested a taxation system, proposed non-gaming amenities and other matters important to the Japanese government, and demonstrated enthusiasm to develop an IR characterized by Japanese tradition and cultures. Transparency and establishment of relationships with regulatory agencies are also important in any IR plan. At the same meeting, a discussion with Diet members and others was held. The panel included several legislators and gaming experts, including Hiroyuki Hosoda, Sakihito Ozawa, Takeshi Iwaya and Toru Mihara. Hosoda, representing the Diet Members Alliance, explained a procedural rule by which each fraction of the ruling party and the opposition party would approve or deny a bill requiring a referendum, and emphasized the enactment of the IR Promotion Bill during the current Diet session. In addition, he guaranteed an open application process to foreign operators and a fair hearing. Iwaya, who serves a chief secretary of Diet Members Alliance, has worked on the IR issue more than 10 years. He talked about both local casinos and metropolitan casinos. “The Promotion Act has no definition of such casinos, but stipulates the independence of local governments,” Iwaya said. “The materials indicating a basic concept of the act define the local area casinos as the IR with a size appropriate for a concentrated area.” Mihara expanded the subject to online gaming, and commented that further discussion would be required, saying, “Discussion should be made in a step-by-step manner, since the discussion may go to unexpected areas under the current gambling ban situation.” He concluded that a giant step has been made by the cooperation of the economic community, national government, local governments, and academic associations. Mikio Tanji is supreme adviser at Gaming Capital Management Inc., advising institutions domestically and globally on gaming business. He formerly was CEO of Aruze Gaming, the U.S. subsidiary of Aruze Corp. (now Universal Entertainment).

Global Gaming Business MAY 2014

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 26

Perfect B

ready was the envy of the iny all accounts, it was dustry. a perfect marriage. “We’re only about four The industry’s or five months into the M&A-watchers had process,” comments Ramesh long thought that slot and Srinivasan, president and system supplier Bally TechCEO of Bally Technologies. nologies and table game and “Our first task is to make utility supplier SHFL entersure all the products in the tainment would mesh torange are marketed and sold gether seamlessly. Bally, the well to all the customers. oldest and second-largest slot Both SHFL and Bally had manufacturer in the business very good relationships in and long the leader in gaming various areas, with various systems, had been on a suscustomers, and our first step tained roll in the slot sector, is utilizing those relationships while SHFL—under the leadto sell all our products well.” ership of former Bally COO Bally Technologies product development leadership team (left to right): Loren Nelson, Vice The next step, Srinivasan President of Game Development; Nathan Wadds, Vice President of Research and Gavin Isaacs—had forged Development; Mike Mitchell, Vice President of Game Development; Jean Venneman, Vice says, is to find “integration new international markets for President of Product Management and Licensing; Roger Snow, Senior Vice President of points” among the mindits proprietary table games, as Table and Utility Products; Sethuram Shivashankar, Senior Vice President of Systems boggling array of products— well as moving them into new Research & Development and Information Technology. (Not pictured: Arthur Rotziokos, Bally slots, systems, bonusing channels (not to mention Vice President of R&D and Arun Rajaraman, Vice President of Interactive Development.) modules and iGaming Platowning the market for table form on one side, and on the game utilities like shufflers). other side, SHFL’s propriBut last year’s announceetary table games—both ment that the two companies electronic and live tables—as would merge, with Bally ultiwell as table systems, side-bet mately acquiring SHFL, was products and, of course, the still big news, particularly automated shufflers and coming, as it did, on the heels table utility products that of another mega-merger earwere the namesake of the lier in the year when the Scicompany originally known as entific Games/WMS deal was Shuffle Master. announced. “Our systems team can As far as the supply sector, bring a lot of strength to the Bally/SHFL made 2013 the electronic table systems busiyear of the merger. And if any By frank LegaTo ness, and there are a lot of merger made as much or things we can do together there, more sense to each individual which makes the electronic table systems a lot better,” Srinivasan says. “In terms company than Sci Games/WMS, it was Bally/SHFL. Quite simply, the deal of the creativity, we use a method called crowd sourcing, where we get ideas transformed Bally into the most complete supplier of casino games and related from all our employees. So, that gives you a broad base set of employees who equipment in the history of the industry. are providing a whole lot of creative ideas.” The impact of the combined company will only get stronger as Bally inte“There wasn’t a lot of overlap in our business units,” adds Derik Mooberry, grates the SHFL team, technology and content into a product lineup that al-

together

The addiTion of ShfL enTerTainmenT TranSformS BaLLy TechnoLogieS inTo The moST diverSe SuppLier in The induSTry

Global Gaming Business MAY 2014

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 27

“We’re really continuing the momentum of both companies.” —Derik Mooberry Senior VP, Games,Table Game Products and Interactive R&D

Bally’s senior vice president of games, table game products and interactive R&D. “Where Bally was strong, SHFL didn’t necessarily have products. Where SHFL was strong or had products, those were segments Bally wasn’t in, like table games. Australia and Asia were segments obviously that were very strong for SHFL, but not for Bally. So, integration-wise, things have gone very, very well.” “A lot of international customers had already started moving to our products,” says Srinivasan. “Especially in the systems technology area, we’ve been making great progress internationally. What the SHFL merger does is to improve us dramatically, very quickly, on the games front as well. When you look at Australia and Asia, some of the best-performing games there are SHFL games. And that’s about a $100 million business, between Australia and Asia, so this combination makes us strong internationally from the games front and from the table products front as well. “All in all, this has made us a much greater global company.”

Combined Strength In addition to the combined library of products, the Bally/SHFL deal represents a merger of two growth-oriented corporate cultures, each of which was at the top of its game at the time of the merger. “We’re really continuing the momentum of both companies,” says Mooberry. “We’ve worked hard to make sure that all of our integration efforts are taking a step forward and not a step backward. We’re trying to integrate the technologies as seamlessly as possible, so the consumer experience isn’t changed at all.” That means the table-game portion of Bally’s business will remain with those who have developed it at SHFL over the years. “The table game engineering department continues to function with its existing roadmap that was in place at the time of acquisition; it has just grown from there,” Mooberry says. “Both the companies’ DNA is to think about growth—how to grow rev-

enue, how to grow profitability,” adds Srinivasan. “Each of them was operating at record levels at the time of the merger, both were very innovative companies, and both were very profitable, highly customer-centric companies.” On the slot side, Mooberry says, the Bally development team and its successful Alpha platform are now complemented by what has been SHFL’s own slot success story, a library of games on the Equinox cabinet that has been extremely popular in Australia and Asia. “We’re starting to combine the (slot) teams,” says Mooberry. “We are supporting both the platforms that were in the marketplace. Obviously, Bally had its Pro Series line of products in different cabinets, but there are tens of thousands of Equinox cabinets in the field as well. We continue to sell and market both of those. “Customers like diversity. And when you look at casino floors today, there is a wider and larger assortment of hardware offerings probably than there ever has been in the past, so it’s a nice tool for our sales team to have a couple of different product lines to sell. The more you have in the catalog, certainly the better off you are.” He adds that longtime Bally engineers and those who worked for SHFL are being cross-trained on the platforms, so each team understands the different types of technologies involved. The mixture of hardware and technologies serves as the basis for what is now a remarkable collection of content for slots, table games and the hybrid e-tables such as SHFL’s popular Table Master and SHFL Fusion product groups. It’s a product mix that Bally has been devoted to delivering not just to MAY 2014 www.ggbmagazine.com

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 28

“We want to be the best provider of innovation, content and technology to the gaming industry. That is our mission.” —Ramesh Srinivasan President and CEO

brick-and-mortar casinos, but across multiple online, mobile and social channels as well. The Bally iGaming Platform is a cross-channel solution that is growing quickly in popularity with operators of land-based casinos in social free-game applications and real-money internet gaming sites internationally and, most recently, in the nascent U.S. iGaming space. “We continue, obviously, to bring content from both slot and table libraries into the online space,” Mooberry explains, “whether that be proprietary table game-style content or Bally slot content, and linking that to our iGaming Platform, which Bally has been marketing and selling throughout the world— with the goal of linking that iGaming Platform to our traditional core systems.”

For his part, Snow says he has benefited from the methodical approach to game development at Bally. “When you are around people who are very smart, whether it’s a college environment or a professional environment, you just learn things every day,” he says, adding that the enormous resources at Bally’s disposal have made him more effective at his job. “For example, within three months of the acquisition, they decided to establish a team in India of about 20 people dedicated solely to our e-table efforts,” he says. “It really opened our eyes to a lot of possibilities. Our products—our tables and shufflers, especially—have really been standalone products. But the way Bally approaches things philosophically, it’s all about connecting together. When you start to see the potential of stuff like that, you can’t help but get excited.” “Bally has always had enormous development talent,” says Srinivasan. “That becomes even more so with people like Roger Snow. And when you bring together people like Roger Snow with Bryan Kelly, who heads our Innovation Lab—where we have about 50 engineers just focused on looking outward (for new technologies)—the results are very exciting.” “The biggest surprise I’ve seen so far is the talent that we have seen from the SHFL folks,” adds Mitchell, Bally’s vice president of engineering. “These are incredibly smart, talented game designers and engineers and leadership, and it fits with us very nicely.” “Ultimately, the success of the business is all about people, and the products those people create,” says Srinivasan. “We have a tremendously strong team, and this is just the beginning. When you have this kind of talent, as CEO, I have this arduous task of just staying out of the way!”

Pooling the Talent While much has been said about the complementary technologies brought to the table in the Bally/SHFL merger, even more can be said of the resulting pool of talent, injecting a team already swelling with talent—from Mike Gottleib, Jason Stage and other game maestros to game development veterans like Mike Mitchell, John Vallejo and Jean Venneman—with the industry’s best developers on the table side. One need look no further than Roger Snow, who in nearly 14 years at SHFL compiled more than 30 patents, including some of that company’s most popular titles. As senior vice president of table and utility products for Bally, Snow is in charge of all former SHFL product groups, but more importantly, he is charged with continuing to do what he does best: creating new games and bringing them to market. 28

Global Gaming Business MAY 2014

Roger Snow, Senior VP of Table and Utility Products

Product Strategy The augmented development team at Bally gives executives like Venneman, vice president of product management, a greatly expanded toolbox when developing the company’s product strategy going forward. Venneman has always worked closely with Mitchell and Vallejo, vice president of game development, in moving the company’s product strategy forward. The addition of SHFL adds yet another dimension to her job. “It’s been a really exciting time for us,” Venneman says, “because SHFL does allow a lot more content to come into our portfolio. SHFL had a great library of games, so it was very exciting to think of how we can utilize past, present and future in some of the different segments where maybe SHFL wasn’t so prominent before. The best example of that is in the U.S., where they were just really starting to enter the market when the acquisition occurred.”

e-FX Elite 2 Display

Attract more players to your tables with the new TCSJOHNHUXLEY e-FX Elite 2 Displays. 21” or 29” high-definition screens with full multimedia capabilities will excite and entertain your customers like never before. Present your marketing media alongside game specific animations to entice and retain players at your tables. Automated statistics, game instructions and winning numbers will engage your players with fully customisable animations and screen finishes. Each display has its own control panel so table limits and unit settings can be changed with just touch of a button. Key Features • Single-sided or double-sided screens • Automated winning number statistics • 21” or 29” LCD slim case design • Silver, gold or satin black standard finish • Camera fixing module (optional) • 10” topper screen module (optional) • Dual attendant/staff call lights (optional) • First phase of our complete media solution Complete your tables with e-FX Elite 2 Displays.

ga 2014

Gaming Awards Winner Technology/Provider Supplier

For more information on our range of displays visit: www.tcsjohnhuxley.com

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 30

“When all is said and done, a brand may bring a player to a game, but it’s really up to the play mechanics to keep the player there.” —Jean Venneman Vice President, Product Management

At the same time, she adds, the merger has given Bally a boost in markets like Australia and Asia, where SHFL’s Equinox game group already had a sizable market share. Equinox was just beginning to secure a foothold in U.S. Native American markets, so the strategy going forward will be to continue spreading titles from the former SHFL group in North America, utilizing the Bally Pro Series cabinet wherever necessary. The Bally Pro Series cabinet also will be utilized in other worldwide markets in which SHFL had yet to launch, but where Bally has established distribution networks, Venneman says. “We have the opportunity to put their content in Equinox and utilize our distribution channels, or take selected themes hand-picked for the jurisdictions and put them in the Pro cabinet and deploy them that way as well,” Venneman says. “We’ve got flexibility in how we offer their content, which is great.” That content, she says, adds up to the most complete library of games in the business. “One of the real key features of the acquisition is that (SHFL products) really round out our portfolio so well, so now we have different product lines Bally didn’t have before,” Venneman says. “We weren’t in the electronic table game space or felt table game space before, and now we are. So we are now seeing what we can do on the game side to support those channels, and vice versa.” “SHFL’s product lineup broadens our portfolio,” adds Mitchell. In fact, the product portfolios of the merger partners were already broad, and were growing fast. Bally’s latest hit has been the Pro Wave, a cabinet with a 30

Global Gaming Business MAY 2014

“The biggest surprise I’ve seen so far is the talent that we have seen from the SHFL folks. These are incredibly smart, talented game designers and engineers and leadership, and it fits with us very nicely.” —Mike Mitchell Vice President, Engineering

concave LCD monitor that curves toward the player, resulting in a format with all the real estate of an upright for game features, which can be played with as much comfort from a seated position as a slant-top. “What makes that design stand out in the casino is its initial appearance,” says Mitchell, “but once the players sit down at the gaming device, they are immersed in the best slot machine in the market, as far as the player experience. It’s comfortable; the sounds are unbelievable; the screen is accessible to the player. That’s caused our game designers to really take advantage of the full screen.” According to Vallejo, the initial games on the Pro Wave, including a new version of the “Quick Hit” progressive video slot, have been “outstanding” in their performance, adding that the format will accommodate hit games in any of Bally’s other cabinet styles, such as the red-hot V32 portrait-style format. “The Pro Wave drives all of those right out of the gate,” he says. “We can bring all of our high-performing legacy games over to the Wave.” The SHFL studios for Asia and Australia have joined a group of Bally game design studios that each compete for the next big hit—and each studio has its specialty. For instance, one of the newest hits for Bally, “ZZ Top Live from Texas,” comes from the Arizona studio headed by Jason Stage. Stage, a rock musician himself, poured his soul into the game, which wraps bonus events around high-definition video of a recent show by the Texas blues-rock legends in their home state. “It couldn’t have been a better fit for a studio and a game,” Vallejo says, “and we’re very proud of the effort and attention to detail that studio employed with this game.” Mitchell adds that the hardware—namely, a stateof-the-art sound system and the booming Bally Pro Sound Chair—provided the perfect format for this and other music-related themes. “We took great pains to develop what we believe is the best audio deliv-

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 32

“Ultimately, we want to develop a single view of the player in multiple channels, and we want to be able to interconnect all three, and then deliver that experience to the player." —Arun Rajaraman VP of Development, Systems

ery system in the market,” Mitchell says. “So, it was a natural to take these iconic music brands and bring them into the slot space.” Venneman adds that this audio system is one of the driving features not only of music-based themes like ZZ Top and the two Michael Jacksonthemed games, but for Hollywood themes like “Titanic,” another of this year’s blockbuster games. “Our technology really lends itself to music brands, with our Sound Chair, which we feel is a great way to give the player an immersive experience,” Venneman says. “But it’s not just about that. We’re pretty proud of the Titanic brand—an epic love story we think will resonate with players globally. It also has a very important music element, even though it’s not necessarily a music brand.” Going forward, Venneman says Bally will continue to choose its brands wisely. “Titanic is an example of where we feel there are a lot of different elements that will appeal to the player,” she says. “It’s not just the sounds, but the sights, the story, and of course, the game play experience. “Because when all is said and done, a brand may bring a player to a game, but it’s really up to the play mechanics to keep the player there.” Bally in-house studios are sometimes augmented by third-party content providers, the most recent being the wellrespected High 5 Games. Bally has signed a deal to transform many High 5 titles from social casinos into slots for the casino floor. “It’s been a nice addition, because they have a point of view and a style that’s very different from the traditional Bally style,” Venneman says. “So, it’s really great to be able to add those styles of games into the portfolio. High 5 also offers a different perspective, and has their own unique look and feel that has been proven to be very successful. We’re really happy to work with them.”

Table-Centric Along with the SHFL slot games, High 5 contributions and Bally’s own studios on the slot side, Snow’s table-game division continues to crank out innovations of its own. Snow says the resources of Bally have enabled him to accomplish projects that would have been difficult for SHFL alone—projects like a wide-area progressive 32

jackpot for blackjack. “We always did local-area progressives, in which the casino funds the jackpot and pays the winners,” Snow explains. “With a wide-area progressive, which is what slot companies do, the slot company itself controls the prize and pays the prize. So there’s no reason we can’t have a wide-area progressive for blackjack with a half-million or million-dollar prize. “When SHFL was on its own, the economics didn’t make sense, because we didn’t have the infrastructure in the casino— the jackpot team that monitors everything and races out to make a payment. There are only a handful of companies in the world that do this, and Bally is one of them.” Other new frontiers for Snow with Bally include the ability to connect SHFL’s popular e-tables like Table Master and Fusion to back-of-house slot management systems, and to add new types of bonuses to table games. “We are now working on a community bonus round feature for our electronic table games,” Snow says. “It came about because Bally has expertise for community bonus rounds and we have e-tables, so their slot guys and I, and my mathematicians, sat down and hammered out a way to bring that type of community bonus to e-tables, where something happens to trigger an event and everybody goes into a bonus round together.” Meanwhile, Snow continues to invent new games, and remains on the hunt for new table games and side bets. One that particularly excites him, he says, is “Free Bet Blackjack,” which Bally bought from inventor Geoff Hall last year. In this game, players can split cards or double down for free, and in exchange, if the dealer busts with a 22, all player bets push. “This is one of the few times in my career where I consider a Global Gaming Business MAY 2014

YOUR WORLD OF INNOVATIONS NOVOMATIC Global Attractions 2014

Booth #2319

ABSOLUTE PERFORMANCE • Game-dependent LED illumination • Touchdeck player interface or button panel layouts • 3 x 24” HD LCD screens and 18.5” TFT topper SLOT PRODUCTS NOVOSTAR® V.I.P.

PANTHER ROULETTE™

ELECTRONIC TABLE GAMES

MANAGEMENT SYSTEMS & JACKPOTS

NOVOMATIC BIOMETRIC SYSTEMS™

SIGNS & ACCESSORIES

NOVOMATIC AMERICAS SALES Jens Halle • +1 754 333 8000 • jhalle@novomatic.com • www.novomatic.com

AGI_2014_033_GGB/TribalGovGam_DomUSA.indd 1

18.03.14 14:41

p. 26 to 32 Bally:Layout 1 4/17/14 4:46 PM Page 34

game’s success a fait accompli,” Snow says. “This is going to be one of the biggest things of all time, and very few people know about it. We’ve got around 55 installs right now, but it’s just a matter of time before this thing explodes. A year from now, everyone’s going to know about this game. This is going to be a monster.”

Tying it Together Tying all of the diverse content from Bally together is what has always been one of the company’s greatest strengths, the Bally Systems division. Bally’s casino management systems have long led the industry, but more recently, the functionality of the basic systems has been enhanced with a wealth of networked bonusing features packaged in the Elite Bonusing Suite, and delivered to players in what are often enterprise-wide tournaments, bonus games and virtual races using the Bally iVIEW Display Manager system, occupying the same space as the base game display. Bally has sought to combine content coming from multiple studios for slots and e-tables, as well as progressives and bonusing for traditional felt tables, in a system that can deliver that content across all channels—social freeto-play games, for-money online casinos, and mobile applications for both, taking Bally content to players regardless of where they choose to play. It’s all tied together via the Bally iGaming Platform, an open platform that not only brings content to any distribution channel, but collects data from all those channels to provide a single view of the player for marketing and customer loyalty purposes. “Ultimately, we want to develop a single view of the player in multiple channels, and we want to be able to interconnect all three, and then deliver that experience to the player,” says Arun Rajaraman, vice president of development for systems at Bally. “Bally’s internet strategy is to connect the dots to create an ecosystem. We believe in an ecosystem of different components—a remote gaming server for content; the iGaming Platform to connect all the remote gaming servers together to create a unique player experience.” Rajaraman says marketing functions such as networked bonusing fit into the ecosystem along with business intelligence tools such as fraud prevention, compliance functions and integration with Google Analytics. Meanwhile, Bally’s systems team is constantly updating the ecosystem with new features for the Elite Bonusing Suite, and moving those features among the various distribution channels. “Certain land-based casinos may develop their brand name through free play, then entice players to come in and do either real-money wagering at the casinos or online,” says Rajaraman. “There are basic things you can do with free play—promotions players can earn while they are playing online, accommodating points that can be redeemed at the land-based casino.” According to Sethurum Shivishankar, senior vice president for systems R&D and information technology, updates are constantly being added not only on the player-facing side in the form of new bonuses, but on the operator side in a variety of features that improve efficiency. 34

Global Gaming Business MAY 2014

“We have integrated our iGaming Platform into our casino management system, so that the casinos can see one view of the player,” says Shivishankar, “but at the same time, they have a drill-down of where all they have spent, so casinos can target their marketing.” For the Elite Bonusing Suite, he says, “One of the key functions we added is a floor-wide progressive—nobody in the industry has it—which does not need any additional hardware. It is integrated in the system as part of our EBS module, which has flexible player-eligibility rules, and mystery progressives as well as pay-table progressives.” Another new EBS module is Tournament Express, a tournament product that can be implemented with systems other than Bally. (Eventually, says Shivishankar, the networked bonusing functions may be made available to nonBally system customers as well.) Srinivasan says the systems division is integrating the Bally player tracking platform with the iGaming Platform. “Our iGaming platform is an open platform,” he explains. “A customer can buy whatever front-end product they want—poker, bingo, casino gaming, table products. We give the ability to protect player data, so that they don’t need to share the player data with those front-end providers. “That iGaming Platform is integrated with the back-end core playertracking system—the same thing with our mobile platform—so the back-end player-tracking system portion of our systems, and business intelligence, and all the other tools we provide, come together to provide a single view of the player.” Bally’s mission in systems, slots, table games, utility products and the rest of the product library is the same as ever, says Srinivasan: “We want to be the best provider of innovation, content and technology to the gaming industry. That is our mission. And in terms of the methodology to get there, we want to be a customer-centric, engineering-driven company. “We are uniquely positioned to be the most broad-based supplier in the industry.”

p. 36 to 40 IR RV:Layout 1 4/18/14 1:26 PM Page 36

SIZE MATTERS...

OR DOES IT? As the Philippines, Japan, South Korea, Russia and other new large jurisdictions consider casino gaming, a second look at the integrated resort

The Las Vegas Sands Singapore property is a truly iconic building.

ver the last 10 years, seemingly each new large gaming opportunity has been accompanied by a hue-and-cry from politicians and developers alike for the huge potential demand to be served and the huge benefits that come along with it to be generated by one or two integrated resorts, or “IRs” as they are affectionately known. Unquestionably, this has resulted in some of the largest and most spectacular casino-centric properties—much less any leisure/entertainment complexes—in the world. These IRs contain every conceivable gaming and non-gaming desired activity with enough capacity for every conceivable patron under one roof within a single-owner, master-planned site. Yet, what started out as a new, vibrant and admittedly exciting alternative solution to the heretofore multiple property (MP) approach has seemingly pushed out any consideration of the latter, despite the fact that the sum of multiple properties can equal if not exceed an IR approach in terms of spectacular-ness, the quality of the customer experiences, and benefits to all of the stakeholders. This is not to say IRs should not be considered. It is to say IRs are not the only viable development approach in large potential situations and that the IR route involves tradeoffs that may or may not optimize the potential. Consequently, when new casino expansion opportunities arise, an MP and IR approach as well as the possible combination of the two should be considered dispassionately to determine what is best. Both work. Both work together.

Integrated Resort Etymology To discuss the pros and cons of the IR versus MP development approach we should start with the definition and origin of the phrase integrated resort and 36

Global Gaming Business MAY 2014

BY DEAN M. MACOMBER Genting’s Resorts World Sentosa brings a variety of family entertainment to a resort region of Singapore.

its acronym. It may be argued that IRs existed long before being coined as such. For example, the first MGM Grand in Las Vegas in 1973 was perhaps, in retrospect, one of the first IRs, if for no other reason than sheer size: over 2,800 oversized rooms, an array of restaurants, bars, and lounges plus not one but two theaters, a retail shopping district, and a jai alai fronton. Sol Kerzner’s Sun City in South Africa, opened in late 1979, certainly had the sprawling resort DNA of a casino-centric IR. Steve Wynn’s opening in 1989 of the Mirage in Las Vegas was not only labeled “the most expensive hotel in history;” it was also a genre-breaking property with “spectacular” as its theme—how can a hotel with its own volcano not be? Many other large developments followed, but perhaps the most noteworthy IR-ish example was the Atlantis in the Bahamas, which officially opened in 1998, again developed by Sol Kerzner. The Atlantis was quickly recognized

p. 36 to 40 IR RV:Layout 1 4/17/14 4:48 PM Page 37

Atlantis Paradise Island, Bahamas

as the most brash and awe-inspiring self-contained destination resort anywhere on the planet. The Atlantis had all the bigness and requisite hotel rooms, restaurants, bars, shows, recreation and relaxation activities of its forebears. But, it offered the traditional and some new activities with verve, panache and inspiration in a heavily themed aquatic environment that featured millions of gallons of aquarium-lakes, meandering rivers, scream-inducing water slides, and a mega-yacht center whose yachts were so big some had their own submarines. Atlantis evoked emotion like never before. Despite these predecessors, the event that brought the IR label and usage of the acronym into the modern casino lexicon was the introduction of casino gaming to Singapore. The term is specifically defined in the Singapore Casino Control Act to make sure there was no ambiguity among politicians, Singapore citizens, and/or bidders in terms of what Singapore sought to develop: … ‘integrated resort’ means a development comprising hotel, retail, dining, entertainment, recreation and other facilities, and of which a casino may be a part … What was the result not just from the IR definition, but also of the IR spirit embodied throughout the act? Well, if a picture is worth a thousand words, then the pictures in this feature of the two ultimate Singapore casino license winners— Resorts World Sentosa and Marina Bay Sands—must certainly be worth multiples of the combined US$10 billion-plus they cost. Most in the industry are familiar with these projects but, if you are not, suffice it to say they are each big, really big! Whereas Atlantis evoked controlled emotion, Resorts World Sentosa and Marina Bay Sands provoke deep visual and personal experiences that often cause an uncontrollable babbling of superlatives to whomever is listening (or not). These, indeed, are casino IRs, and the most-oft pointed to by governments and large gaming companies when the former are pitching the introduction of casino gaming to a skeptical citizenry or legislature and the

latter following closely behind promoting what they will do if they win the bid. But, here is what seems to have been forgotten: While no doubt the two Singapore IRs with over US$10 billion in combined investment have been a catalyst to increased levels of tourists, it is not unreasonable to suggest that five $2 billion, 10 $1 billion, 20 $500 million or some combination of these clustered in a zone or even spread within the small city-state may have generated the same or more benefits, all other things being equal.

The Non-IR Solution Works, Too Leaders and decision-makers responsible for formulating destiny should remember there are any number of non-gaming and gaming examples of MP resort, leisure and entertainment destinations both with and without casino gaming that generate revenue for the government, create jobs, incubate businesses, give rise to other tourism activities, and attract tourists. For example: • Fisherman’s Wharf (where the vast majority of 12 million visitors to San Francisco ultimately visit); • the 13-block-long Bourbon Street in the French Quarter of New Orleans (8 million visitors); • San Antonio’s River Walk (28 million visitors); • the Broadway and the Theater District in New York City that is estimated to have sold 11.6 million tickets in the 2012-2013 season; • the 100 restaurants and bars concentrated in Lan Kwai Fong in Hong Kong; • base areas found at winter ski areas such as Vail, Whistler, and Aspen; and, • destination resort clusters like Waikiki in Hawaii. These are examples of multiple leisure/entertainment clusters where the magnetism of the destination exceeds the sum of the parts—with not an IR to be seen. On the gaming side, the most obvious example of MP gaming-centric development is Las Vegas, which tellingly carries the moniker “Entertainment Capital of the World.”

Leaders and decision-makers responsible for formulating destiny should remember there are any number of non-gaming and gaming examples of MP resort, leisure and entertainment destinations both with and without casino gaming that generate revenue for the government, create jobs, incubate businesses, give rise to other tourism activities, and attract tourists.

MAY 2014 www.ggbmagazine.com

p. 36 to 40 IR RV:Layout 1 4/18/14 1:34 PM Page 38

DIFFERENT AGENDAS

According to the Nevada Gaming Abstract, 150 gaming locations were licensed in Clark County, where the total investment amounts to some US$40 billion in fixed assets that generate US$21 billion in total revenue from 6.6 million square feet of casino space and 120,000 hotel rooms, while employing 143,000 in the process. Granted, IR proponents may contend that Las Vegas is not so much an MP approach as a hatchery for the largest IR concentration in the world, to wit: Las Vegas by one accounting is home to six of the 10 largest hotels in the world and 25 of the largest 50. But, only 23 out of these 150 locations generate gaming revenues of $72 million or more per year, and probably half of the 23 would not qualify as IRs. The remaining properties include casinos of all sorts of shapes and sizes. Clearly, the success of the Las Vegas MP approach was not prevented by IRs, or vice versa. In fact, they appear highly complementary. It would also be hard to imagine Macau achieving its spectacular performance with just two IRs versus the six licensees who currently operate some 35 casinos offering 5,750 gaming tables and 13,100 slot machines. Throughout Macau, both gaming and non-gaming properties account for over 23,000 hotel rooms spread over 97 hotels with another 5,800 rooms in the pipeline. Net sum? Macau attracted 29 million visitors and generated US$45 billion in annual gaming revenue in 2013, over seven times the annual gaming revenue of Singapore in the same year. Another successful hybrid approach. Through the impetus of capitalism, multiple successful casino-centric development models can be found that conform to the exigencies of a particular market and/or venue: According to Casino City Press, there are over 6,000 casinos, horse tracks, dog tracks, racinos and cruise ships worldwide spread among 153 different countries. Cookie cutter? Hardly. One approach is best? Hardly.

Whither Comes This Love And Devotion For IRs? So why the dogma, devotion and emphasis of IRs to the exclusion of an MP approach? The reasons are embedded in market dynamics, economics, politics and human behavior. In reverse order, casino gaming quickly becomes an emotive subject whenever two or more people come together. Those in favor of gaming are generally not highly emotional about it whereas those against it generally are. This is problematic, because despite the fact that the development of casino gaming is typically a capitalistic effort, nevertheless the ability to own, develop and operate a casino is almost always a privilege, not a right granted or prevented by a constitution, legislation, regulation, policy and/or practice. This need for prior approval means there must be acceptance by the general public, politicians, and any number of others representing a variety of economic, infrastructural, environmental, religious, and a multitude of other special interest groups. Acquiring these approvals can be a dogfight. The result is that the path of least resistance often leads to one development approach versus another regardless of the raw economics and market potential 38

Global Gaming Business MAY 2014

INTEGRATED RESORT APPROACH

MULTIPLE PROPERTY APPROACH

GOVERNMENT

• Softens the potential political backlash to casino gaming by being able to state there will only be one or two casinos. • Promotes tourism and tourists from further distances under the contention that “bigger things” attract more tourists from further away than “multiple things.” • Reduces regulatory risk by being able to focus on one applicant/operator. • Maintains more and easier control over developers, development, and postopening operations/marketing. • The income to the government from one or several IRs will equal if not exceed that of multiple smaller gaming-centric properties.

OWNERS, DEVELOPERS, & OPERATORS • Eliminates or reduces the competition because most gaming companies —particularly those still recovering from the financial crisis—do not have the capital or access to capital to develop an IR. • Enables this group to extract givebacks, dilution, and/or forbearance of taxes, fees, other costs, and impositions. • Allows operators to secure greater control over our own destiny.

• Avoids the “Too Big To Fail” syndrome and associated issues (e.g., potential reduction of leverage over licensee). • Engenders greater involvement of more casino owners and local, regional and countrywide businesses and resources. • Provides greater flexibility to “put” casino gaming where locals want it and to spread the halo effect over a larger area. • Full build-out of multiple properties will produce benefits that potentially will exceed that of the IR approach.

OWNERS, DEVELOPERS, & OPERATORS • Allows developers to secure an otherwise difficult if not impossible gaming license because otherwise they may not qualify. • Reduces investment to an affordable, better risk-reward level. • Operators prefer the idea of competition because ultimately it produces better results for all owners. • Allows operators and developers to have more projects in more venues thereby improving brand, increases player development opportunities, allows crossmarketing, and reduces risk.

p. 36 to 40 IR RV:Layout 1 4/17/14 4:48 PM Page 39

Biggest, tallest, most expensive, fastest, and other attributes that end in “est” capture the hearts and minds of the body politic and the bully public. Enter IRs. Witness approvals. No wonder IRs are all the rage. that might lead otherwise. It is in this milieu that IRs have proven particularly useful. Why? Because along the path of least resistance one casino is better than two, and two casinos are better than several, and several casinos are better than many when overcoming opposition—even if that one or several are humungous. One or two IRs also tend to address the “not in my backyard” syndrome and avoids fears of future proliferation. The eye candy of these mega- and meta-plexes also serves to evoke visceral positive responses just as the Burj Khalifa in Dubai causes more chatter than half a dozen skyscrapers assembled close to each other. Biggest, tallest, most expensive, fastest, and other attributes that end in “est” capture the hearts and minds of the body politic and the bully public. Enter IRs. Witness approvals. No wonder IRs are all the rage. It should be recognized, however, that this rage is being fanned not only by politicians but also by the only half dozen or so casino companies that have the balance sheet to develop and operate an IR. For these large companies, IRs have the beneficial strategic side effect of raising the ante so high that the cost of entry

excludes other viable entrants that in combination could create the same impact. Their motivation is not altogether nefarious. There may not be enough expansion opportunities for multiple mid-size properties on the horizon, and big IRs are the only way to move their stock; hence, their preoccupation with IRs. Beneficially, the CEOs of these companies would also no doubt say, “This is what we do, there aren’t many that can, and we do it really well.” Hard, it would seem for a government official and public custodian, to turn away from a single multibillion-dollar offer to invest in their community that is already funded, and ostensibly guaranteeing thousands of jobs. Hard to ignore when the IR-centric companies arrive first, out-shout other options, and whose competition never seem to join together to put forth a viable MP master-planned alternative. It would take a calm, sober, unaffected mind to keep a clear head and consider other options when the solution is before you.

What Size IR? That is the Question The two tables in this article attempt to summarize the agendas, issues, points and counterpoints of taking either an IR or MP approach toward development. It

p. 36 to 40 IR RV:Layout 1 4/18/14 1:39 PM Page 40

is up to governments, citizens, businesses and other stakeholders to develop a comprehensive goal set representing all stakeholders and then fully understand how to achieve those goals within the dynamics of a casino bid and casino development process. Those involved need to pay attention to venue-specific situations and conditions, and be cognizant of short versus mid-to-long-term objectives while being aware of hidden agendas. But perhaps the most important advice, at least at the start, is to approach the introduction, development, operation, marketing and oversight of casino gaming without preconceived ideas in order to optimize the potential. In this regard, the admonition stated at the beginning of this article is worth repeating: When new casino expansion opportunities arise, both the MP and IR approaches should be considered independently as well as in various

combinations dispassionately, to determine what is best for the venue in question. Both work. Both work together. Dean Macomber is president of Macomber International, Inc. With 35 years of diversified experience in the gaming industry ranging from dealer to president, development to operations involving mega-destination resorts to locals-oriented casinos in numerous domestic and international venues, Macomber provides high-value, executive-level consulting in the areas of strategic and business planning, feasibility and all other project development phases, and pre- and post-opening management and profit improvement engagements. He can be reached at macomberinc@gmail.com.

STRONGEST SELLING POINTS INTEGRATED RESORT APPROACH

MULTIPLE PROPERTY APPROACH

GOVERNMENT

• Being “spectacular” extracts the greatest potential from the marketplace and extends the reach of that marketplace the furthest distance. • A mega, single IR project attracts the best design and other development resources because the profit opportunity is greater and, by inference, the owner can hire the best and most expensive resources. • IR opportunities appeal to the largest gaming companies that are willing and able to commit $3 billion to $10 billion to a project. • These same companies have gotten so big that only IRs generate sufficient profits to get them interested; IRs are the only way we can attract them. • Provides leverage to extract higher than usual capital investment, tax rates, fees, other payments, and other accommodations from the owner. • IRs can also justify lower than usual tax rates and other terms and conditions, thereby engendering greater interest and justifying higher capital investment.

OWNERS, DEVELOPERS, & OPERATORS “This is what we do and what we do best.” • Provides leverage to demand benefits and accommodations from the government. • Singular ownership allows the owner to execute every facet of the project. • IRs interconnect physically and experientially the various activities with the shortest distance. • IRs provide great marketing mass and resources that the owner can use to more effectively market the property. • The construction is easier, less disruptive, opens “all at once,” and is more predictable. • IRs raise the bar to a new standard, create more “buzz,” and become popular quickly. • The advantages do (or can) overcome the disadvantages. 40

Global Gaming Business MAY 2014

• Diversity of experiences is as strong a marketing pull for tourists as “spectacular.” • And regardless, multiple properties can be woven into spectacular individual and combined experiences, too. • Multiple properties provide more development flexibility for governments and owners alike by using clusters, zones, and/or dispersed locations. • Provides the potential for a greater total sum of development and benefits, particularly at full build-out (since others after the IRs are built may be scared off). • Competition brings out the greatest price-value for the consumer and the best performance for the owners and government. • Multiple properties are more “moral” since the opportunity is more broadly spread among all of the stakeholders. • Results in less concentration of all different types of risk.

OWNERS, DEVELOPERS, & OPERATORS • A greater number and diversity of owners can bid and win a gaming license. • Also provides the opportunity for non-gaming activities to fit in between the gaming facilities integrating into a whole. • Each owner brings its own brand, positioning, and expertise potentially resulting in “the best” of each. Diversity resulting in cumulative mass equals if not exceeds concentration of mass. • Small, medium and large projects are easier to capitalize. • Owners can work together to form consortiums and venue-driven marketing programs to reach tourists and markets further afield. • Vision and execution, not approach, is the key. • The advantages do (or can) overcome the disadvantages.

Born from fun.®

STEP RIGHT UP TO MORE LOYAL & PROFITABLE GUESTS WITH TRUE-TIME TOURNAMENTS!

WIT H T HE AWARD-WINNING

Capture the attention of your guests by introducing a unique spin on system-delivered community gaming with player-on-demand tournaments. Automatically delivered via SYNKROS™ to any True-Time Windowing™ enabled machine on your floor, True-Time Tournaments™ offer a revolutionary format that allows your guests to play without taking machines out of service, without lines and without additional labor costs to set-up and run the event. For more information on how to get your players in the action, visit gaming.konami.com/SYNKROS

KonaSynk4005_TTT_8.375x10.875_R2.indd 1

2/12/14 5:58 PM

p. 42 to 46 online:Layout 1 4/17/14 4:49 PM Page 42

Adventures in Deal-Making: iGaming Partnerships in the U.S. How a new industry began and how it will progress by Marco Valerio

n iGaming partnerships, trust is the most important element in any relationship, but finding the right partner was a chore in the beginning, says Matthew Katz, founder and CEO of CAMS LLC, a provider of thirdparty services including I.D. verification and payment processing solutions to the iGaming industry. “When we started CAMS, prior to state-regulated online gaming going live in the U.S., it was a massive uphill battle to find a partner,” Katz says. “It was known who the operators and the lottery providers were, yet finding the right person to talk to in these organizations was tough. “Even when you found the right person, deals would take us a very long time to complete.” The game has changed. Internet gambling is now live in the U.S., and the year or two that contained its launch was a veritable deal-making boom. Almost every land-based casino in New Jersey entered into a partnership with an iGaming platform provider. There’s a great demand for services like CAMS, meaning partnerships need not be necessarily limited to land-based casinos and online gaming platforms. Recently, iGaming deal-making has even gone outside of the regular gam-

ing arena. Shortly after PartyPoker announced a milestone marketing partnership with the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils, WSOP.com was named the “exclusive online gaming partner” of the NHL’s New York Rangers. Yes, such a partner can exist now in the U.S., signaling unprecedented deal-making opportunities in a country historically suspicious of online gambling. All this disruption that the U.S. iGaming industry both caused and sustained was the result of just three states—and not even very big states at that—going live with state-regulated internet gaming. With another 47 states to go—plus some U.S. territories and the remote dream of accepting international players—many eyes and hearts are set on what might come to be a second boom of U.S. iGaming deal-making—with any luck, a third and fourth as well. In short, the quest for lucrative and well-timed partnerships is moving furiously. Katz, who has become a fixture at iGaming shows worldwide, no longer has as much trouble landing meetings as he did before. “We see such incredible interest in this space, and we see more start-ups popping up than I

R G

Rym lead play deli them loya you

“Our success is not defined by how much money we make from our partnerships in the first year. Our truest definition of success is how many years we work together. By not gouging our customers for significant up-front fees or significant usage-based fees, it helps them understand that we are a partner instead of just a vendor. We are investing in their business and we are investing in our long-term partnership.” —Matthew Katz, founder and CEO of CAMS LLC 42

Global Gaming Business MAY 2014

ASS ME

WWW

“Tropicana did not rush to a decision, and vetted potential partners very carefully. We spoke to many suppliers before choosing to move forward with GameSys.” —Steve Callender, GM, Tropicana Casino and Resort, Atlantic City

can recall in any other industry,” he says. The iGaming start-up boom, Katz says, isn’t limited to just online gambling; social gaming and fantasy sports may be peripheral to the U.S. iGaming world at present, but their might and momentum are doing their part to keep CAMS in activity. “Once you have made sure the prospective partner is operating lawfully,” says Katz, “you want to support working with everybody.”

Coming to the Table With so much novelty and eccentricity characterizing the ascent of the regulated U.S. online gambling industry, it can be easy to forget that “this business works much like any other,” says Steve Callender, general manager of the Tropicana Casino and Resort in Atlantic City. “When a new market is opening up,” says Callender, “both operators and suppliers alike go looking for favorable partnerships, often aided by specialized consultants with specific experience in negotiating online gaming partnerships and service provider deals to expand into new markets.” The Tropicana is no stranger to the iGaming partner-seeking process. In mid-2013, the Boardwalk-based property officially revealed its partnership with

U.K.-based software provider GameSys. Callender offers an inside view of how an iGaming deal generally transpires, at least from the land-based perspective. “There is typically a process of ‘activation’ in which early conversations with potential suppliers help shape the direction of the search,” he explains. “Then, alternative providers are investigated for the purposes of comparison and due diligence. In addition to the front-end features that operators may tend to focus on first, there are important factors to consider around back-end features and infrastructure, cultural fit, technical capacity and compatible strategic goals.”

The ‘Typical’ Deal (Hint: There is None) Marcus Yoder, formerly the head of IGT’s Interactive Division, is today the lead consultant for his own company, Accelarus. Yoder, who was both witness and party to much of the formation of the New Jersey online gaming market, says that, while the motions of deal-making may occasionally be uniform, the resulting agreement follows no particular recipe. “There was not necessarily an ‘average’ deal in New Jersey,” he says. “You

p. 42 to 46 online:Layout 1 4/17/14 4:49 PM Page 44

bwin.party in 2011, and Caesars Interactive Entertainment, which signed a platform partnership with 888 Holdings all the way back in “Boyd Gaming focused on 2009. Neither company selected its online three parameters: gaming partner in haste. integrity, operator Robert Boughner, Boyd’s executive vice experience and product president and chief business development offiquality. It was important cer, says his company “conducted an extremely that we find a partner who thorough review of more than 20 potential shared our commitment to providers before selecting bwin.party.” This integrity and responsible could startle the outside reader, who is accusgaming. Bwin.party has tomed to hearing about a deal only when the consistently respected final agreement is reported in the gaming press. U.S. laws with respect to But Seth Palansky, vice president of corporate online gaming, has a communications for Caesars Interactive, relates successful track record, a very similar experience. Deal-Making With a Deadline and offers a first-in-class “The truth is, we likely have kicked the tires New Jersey Governor Chris Christie did not sign the product.” on every piece of poker software in the marketstate’s online gambling bill into law until the beginplace over the past five years,” Palansky says. ning of 2013. By the middle of the same year, it was —Robert Boughner, Executive VP “But when you include all factors, the available publicly known which land-based casinos were going and Chief Business Development options for a U.S.-facing operator were quite to be working with which supplier. Surely enough, Officer, Boyd Gaming limited in our view. some of these agreements had at least entered the ne“Of course, quality of the software platform gotiation stage well before the official passage of the was important, but so was the experience and iGaming bill, but once the document was signed, expertise of the people behind the company, as well as an often overlooked there was still a sense of rush and urgency for qualifiable operators to get their factor—the suitability of the company we chose.” act together on time. “Suitability” (i.e., will you get licensed or not?) can be an awkward Either get a partner or do it on your own—just be prepared to launch by topic in the U.S. iGaming industry, because several of the platform November of this year, the government basically said. providers operating today who are headquartered outside of the U.S. had In spite of all the pressure, platform-seekers still needed to be cautious. been active in some shape or another in this country in the decade of the “Tropicana did not rush to a decision, and vetted potential partners very care2000s, when the online gaming market in the U.S. was at its grayest. fully,” says Callender. “We spoke to many suppliers before choosing to move Boyd’s software partner PartyPoker independently served U.S. players forward with GameSys.” until it withdrew from the market completely following the passage of the The same discriminating approach can be said to have been taken by Unlawful Internet Gaming Enforcement Act in 2006. Boyd Gaming, which entered into a joint venture with MGM Resorts and have some operators who simply licensed all of their platform, game content and services from a provider. For those deals, there would normally be some form of nominal up-front payment, then a revenue share to the platform provider.” Callender says that to strike the optimal deal, a participant needs to be more focused on its own individual needs rather than on keeping with convention. “It’s difficult to generalize about operator and vendor goals,” he says. “Each property in Atlantic City is unique. We each seek to occupy specific market niches, and we look to maximize shareholder value and the business as a whole long-term with different strategic approaches.”

“The truth is, we likely have kicked the tires on every piece of poker software in the marketplace over the past five years. But when you include all factors, the available options for a U.S.-facing operator were quite limited in our view.” —Seth Palansky, VP of Corporate Communications, Caesars Interactive

Global Gaming Business MAY 2014

YOURCASI NO BRAND

80Mi nut esPerDay Thet i mepl ay er ss pendengagedwi t hPl ay 4FunNet wor k™ , ourwhi t el abel s oc i al c as i no. Pl ay er sar el oggi ng4+s es s i onsperdayat20+mi nut espers es s i on. *Whatc oul dy oudowi t h 80ex t r ami nut esof y ourpl ay er s ' t i meeac hday ?Dr i v eaddi t i onal t r i pst oy ourc as i noﬂ oorby engagi ngy ourpl ay er sonl i neandont hei rmobi l edev i c eswi t hPl ay 4FunNet wor k.

PLAY

FUN

N ETW O R K

Lear nmor eat wi l l i amsi nt er act i ve. com/ p4f

p. 42 to 46 online:Layout 1 4/17/14 4:49 PM Page 46

“No doubt the majority of operators needed partners with experience to get them going, but slowly, over time the land-based operators should be focused on building up their own skill sets—or buying their online partners outright.” —Marcus Yoder, Accelarus

In the interval between this pullout and the U.S. iGaming renaissance of last year, bwin.party was often cited as the entity best positioned to take advantage of the U.S. market once it became transparently legal to operate there. This prophecy has seemingly held up, since Borgata has been shown to be the clear iGaming revenue leader in New Jersey following the commencement of its online offering a few months ago. “When selecting an iGaming partner,” Boughner says, “Boyd Gaming focused on three parameters: integrity, operator experience and product quality. It was important that we find a partner who shared our commitment to integrity and responsible gaming. Bwin.party has consistently respected U.S. laws with respect to online gaming, has a successful track record, and offers a first-in-class product. “We did our homework, and our success in New Jersey has shown that we made the right choice with bwin.party.”

Culture Shock Accustomed to the overseas market as they are, not every foreign iGaming company has found U.S. cooperation with land-based gaming establishments to be a walk in the park. Palansky sheds more light on this reality: “I’m sure if you asked our partners, they would complain about the checks and balances we have in place and how it can slow down the creative process,” he says. “It is true. We are guided by compliance, ethics and a regulatory process that must stand up to any scrutiny. As such, innovation can take longer to bear fruit than those without these guiding principles. “The scrutiny and diligence one must face during the licensing process is difficult and challenging. Foreign operators who may have longstanding businesses in other jurisdictions can be shocked at the level of detail—and personal detail, too—that accompanies being a participant in this business.” Unappealing and discomforting as it may be, this probing degree of regulation is just the cost of doing business in the American gaming market, a very coveted one by international iGaming companies. Boughner has worked for Boyd Gaming for almost four decades, and he takes the following view: “There is definitely pressure on operators to conduct thorough background checks—and there should be. We have established rigorous and robust compliance standards, which apply not only to online partners, but vendors, suppliers and other companies we do business with.” 46

Global Gaming Business MAY 2014

Deal-Making of the Future How well U.S. iGaming is doing barely a few months into official operation is already debated frequently. In New Jersey, iGaming revenue has been decent, but far off of most of the projected expectations that preceded the launch. Still, most of the companies involved are in it for the long haul. Katz argues that, for those invested into this space, and bound to some sort of collaborative partnership (thus practically everyone), the spirit of long-term goodwill will be vital. “Our success is not defined by how much money we make from our partnerships in the first year,” Katz says. “Our truest definition of success is how many years we work together. By not gouging our customers for significant up-front fees or significant usage-based fees, it helps them understand that we are a partner instead of just a vendor. We are investing in their business and we are investing in our long-term partnership.” Speaking of the future, Yoder suggests that, forgivable as many of today’s partnerships may be given the U.S. land-based industry’s inexperience with anything involving iGaming, there may come a time to take the training wheels off. “I think there are those U.S. operators who will simply rent out their licenses to whoever can provide the biggest rent check,” he says. “That can be short-sighted, because then you lose the opportunity for cross-marketing between online and land-based. No doubt the majority of operators needed partners with experience to get them going, but slowly, over time the landbased operators should be focused on building up their own skill sets—or buying their online partners outright.” Yoder says that if the next few years continue to bring breakthroughs in the way of U.S. intrastate online gaming legalization, it may considerably influence the deal-making landscape that exists today. “I think the pace of partnering is commensurate with the pace of legislation,” he says. “Many of the deals that would affect, say, New York or California have already been agreed upon well over two years ago. The interesting thing will be if more than one additional state legalizes in the next six to eight months. “Then, the U.S. land-based companies need to consider the ability of their potential partners to have the bandwidth and scale to handle multiple jurisdictions at once. Only a handful have that capacity.”

Introducing the

Contact your Ainsworth Account Executive about this exciting new product today!

www.ainsworth.com.au

Subject to regulatory approval

Bad Actors,

Bad News? the attempt by pokerStars to enter legal or soon-to-be legal u.S. online gaming markets could backfire by patrick roberts

evin Costner. Mylie Cyrus. Stephen Seagal. Arnold Schwarzenegger. Nicholas Cage. Angelina Jolie… These are “bad actors” who make almost every critic’s “worst of” list. But when it comes to bad actors in the online gaming space, PokerStars is clearly the winner, hands down. Sometimes the term “bad actor” is defined differently, but for our purposes, we’ll stick with the “online casinos that accepted bets from U.S. players after the passage of the 2006 Unlawful Internet Gambling Enforcement Act.” So when it comes to “bad,” there are many other sites that have worse reputations than PokerStars. Bovada probably tops the “black” list of online casinos that U.S. officials want to close down. Bovada is the successor to Bodog, which was so bad that it had to change its name after federal officials seized the Bodog site and indicted founder Calvin Ayre on money laundering charges in 2012. Ayre claims to no longer have any ownership interest in Bovada, but that casino uses the same aggressive marketing campaigns toward U.S. players as did Bodog. Canadian Ayre remains a fugitive to the U.S. charges. So why is PokerStars the poster child for “bad actors?” After all, PokerStars is licensed in many jurisdictions and receives grudging admiration from some quarters in the way it responded to money laundering and racketeering indictments from the Department of Justice on “Black Friday”—April 15, 2011. Soon after the indictments, however, PokerStars worked its way out of the charges by making a $731 million payment to the DOJ, which included the purchase of the assets of a similar bad actor, Full Tilt Poker. The company never admitted any wrongdoing, nor did the settlement allege that it had been conducting illegal gaming in the U.S. PokerStars former Chairman Isai Scheinberg remains a fugitive, but his son Mark Scheinberg has taken over his father’s old position. Today, PokerStars no longer takes bets from U.S. customers on its offshore websites and it remains the global leader in online poker. Clearly, PokerStars expected to be invited back to the U.S. by states that wanted the world leader involved.

Global Gaming Business MAY 2014

Calvin Ayre, Bodog founder and U.S. fugitive

California Senator Lou Correa, sponsor of a bill that omits “bad actor” provisions

First States Strategy Because it was cleared by the DOJ, PokerStars made plans to enter the legal U.S. online gaming market. That wasn’t to be, however. The first state to legalize iPoker, Nevada, built in a “bad actor” clause that will prevent PokerStars from participating in Nevada iPoker for at least five years. While bwin.party entertainment (as PartyPoker, one of the most popular poker websites in the world in 2006) pulled out of the U.S. following the passage of UIGEA, and the company has partnership agreements with MGM Resorts and Boyd Gaming, PartyPoker has yet to be licensed in Nevada, but is currently pursuing approval. Delaware and New Jersey, the next two states in the march toward legalization, left the determination up to the regulators, but clearly stated that the system would take into account previous actions of any applicants. When PokerStars made an offer to buy the now-defunct Atlantic Club, the New Jersey Division of Gaming Enforcement said it would evaluate the application, but promised no license. When the Atlantic Club deal imploded, PokerStars later found a partner in Resorts Atlantic City, where it would build a $10 million poker room if found acceptable. But the DGE suspended PokerStars’ license application and said it would review the suspension: “The Division of Gaming Enforcement has determined that the application of Rational Services Limited (PokerStars) casino service industry licensure (CSIE) will be held in a suspended status for a period of two years,” the division declared. “The division, within that period, may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated, at which time the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability. “The division’s determination is based primarily on the unresolved federal indictment against Isai Scheinberg for the alleged violation of federal gambling statutes, namely, the Illegal Gambling Business Act and the Unlawful Internet Gambling Enforcement Act (UIGEA), and the involvement of certain PokerStars executives with internet gaming operations in the United States following the enactment of UIGEA.”

Some experts agree that the removal of Mark Scheinberg as chairman, as well as a few other senior executives, and the elimination of influence from Scheinberg senior (as well as the resolution of federal charges) may be enough to guarantee a license, but that solution has not been forthcoming.

California Dreamin’ Most experts believe that California is the Promised Land for iPoker. With 37 million people (vs. only 9 million in New Jersey), California is a little more than half the size of the United Kingdom, where online poker thrives. And California’s demographics are even more favorable to iPoker participation. So it wasn’t surprising when PokerStars became an issue in the passage of iPoker legislation in the Golden State. One of the two bills that would legalize iPoker in the state lacks a “bad actor” clause, which has further divided the tribal community, which would be the heart and soul of a California iPoker industry. For the third year, the California legislature will debate whether to legalize online poker in the state as two groups have introduced bills on internet gaming. Senator Lou Correa is the author of one of the new bills, which is backed by a coalition including the San Manuel Band of Serrano Mission Indians, the United Auburn Community and the Rincon Band of Luiseño Indians. Another bill has been introduced by Assemblyman Reggie Jones-Sawyer and has the support of the Pechanga Band of Luiseño Indians, the Agua Caliente Band of Cahuila Indians and the Yocha Dehe Wintun Nation. Both bills legalize online poker only and would require that all players be physically located within the state’s boundaries. The two bills do have several differences over licensing procedures and the naming of bad actors, but reports say legislators may have a better chance of reaching compromises this time out. One bill specifically bans them, while MAY 2014 www.ggbmagazine.com

p. 48, 49, 50 BadActors:Layout 1 4/18/14 1:57 PM Page 50

—pokerstars.com

the other leaves the matter to the discretion of the tribal and state regulators. That became important last month when published reports said that PokerStars is in partnership negotiations with the Morongo Band of Mission Indians and three large Southern California Card Clubs to offer online poker in California, including the Commerce Club and the Bicycle Club. However, the California Tribal Business Alliance has pledged to block any legislation that doesn’t have a bad actor clause, which would essentially shut PokerStars out of the market thanks to its sketchy history stemming from its shutdown in April 2011. “We will strongly oppose any legislation which allows PokerStars to participate,” Leslie Lohse, alliance chairwoman, said in a statement. PokerStars responded with a statement of its own. The company said that it “shares the belief that a future licensing framework for online poker in California should be based upon the highest standards of suitability that maximize consumer protection and consumer choice. We have consistently met those standards in jurisdictions around the world, where we hold 11 licenses—more than any other company, including licenses in leading European jurisdictions such as Italy, France and Spain.” The statement continued that the company “has not, will not and need not request any changes to the California gaming regulations.” The statement says, “Many other jurisdictions that have online gaming—such as New Jersey— have moved forward on online gambling without a bad-actor clause, leaving such determinations to its regulators. The California —Leslie Lohse, Gambling Control Commission Chairwoman, has a 15-year history of successful California Tribal consumer protection and is more Business Alliance

Global Gaming Business MAY 2014

than qualified to continue to determine suitability.” In fact, said the statement, the opponents of the bill are only interested in keeping superior competition out of the state. “The only parties seeking to change this are certain groups who want to use the legislature to gain a competitive market advantage and to limit competition,” the statement said. “Their efforts are not in the best interest of consumer choice or consumer protection.”

Back in Action So, why is PokerStars considered the baddest of the bad actors? The CTBA says any bill should preclude “bad actors whose past behavior and tainted brands and assets would erode the integrity of intrastate internet poker.” But PokerStars’ strong response to the CBTA’s statement indicates it is ready to fight back aggressively against anyone or any organization that attempts to mischaracterize anything the company has done recently. Anyone who does so, the company says in its statement, is “misrepresenting the Unlawful Internet Gambling Enforcement Act and PokerStars’ past U.S. operations.” The company cites legal opinions to back it up. “The fact is that UIGEA did not make illegal any gaming that was not already illegal before its passage,” the statement said. “This has been confirmed by the U.S. Third Circuit Court of Appeals and by the U.S. Department of Justice. PokerStars operated under legal opinion that its offering of online poker did not violate U.S. law before 2006 and maintained that opinion following the passage of UIGEA.” In the Third Circuit opinion, PokerStars cited a letter from Brian Benczowski, principal deputy assistant attorney general (Justice Department) to Rep. John Conyers, chairman of the House Committee on the Judiciary on July 23, 2007: “The UIGEA itself does not make any type of gambling legal or illegal; rather, the statute is focused on regulating the methods of payment for already-illegal gambling.” An unrelated report stated that the United States Court of Appeals for the Third Circuit held that the UIGEA “does not itself outlaw any gambling activity, but rather incorporates other federal or state law related to gambling.” Therefore, the company requests that it be given the opportunity to apply “just like any other company seeking to operate in California and investing in a fair and well-regulated market.”

Gaming Solutions

Sure, the house always wins here.

and d he here re

and d he h re an he and ere

But what about here? and d he here re

an he and here re e

and he a here r re and he here re

and d he h re

and nd he h re

and he here re even eve n here

Boost revenue all over the house – even online – with Vantiv Gaming Solutions. Emerging technologies and changing

Payments Processing

Prepaid Loyalty & Rewards

ACH & Alternative Payments

Customer Intelligence

regulations offer smart gaming operators new ways to maximize revenues. Vantiv’s innovative payment solutions are designed to enhance your customers’ overall experience. Whether it’s online, in your restaurant, at the theater or at the gaming tables, we can help you capitalize on the future of payments in gaming.

ATM & Cash Advance

Treasury Management

Internet & Mobile Gaming

Retail & Restaurants

Card Data Reporting & Analytics

Hospitality & Leisure

CASINOS

iGAMING

SOCIAL GAMING

vantiv.com/ggb

A D VA N C E D E P O S I T W A G E R I N G

LOT TERY

F A N TA S Y S P O R T S

74905_Gaming_single_GlobalGamingBusiness.indd 1

9/10/13 2:16 PM

p. 52 to 56 igames:Layout 1 4/18/14 3:52 PM Page 52

Ader Criticizes Bwin Board, Nominates New Members

Ban the Ban Organizations, senators oppose national online gambling ban

Investor has also called for a new management team Activist investor Jason Ader

Landscape is changing, says commission member

ason Ader, the corporate investor who made IGT squirm last year, made some headlines this year when he acquired 6.1 percent of bwin.party through his Spring Owl firm. He immediately launched public criticisms of the company. Ader charges the company has not been returning shareholder value. “Be it through personnel decisions which do not appear to take into account the needs of the business or compensation decisions which we don’t believe have been aligned with the success or lack thereof of the shareholders, it is unfortunate that this board has overseen a path which has seen the shareholders bearing the economic burdens of their mistakes,” Spring Owl said in a press release, Bwin.party responded with its own release. “We have had several conversations with Jason, welcome his investment and look forward to holding more in-depth dialogue,” the release said. “We continue to urge him to use his right to nominate his representative to the board as soon as possible so that we can take him through the full details of our plans.” Ader has suggested possibly breaking up bwin.party and has also questioned the recent appointment of the new chairman, Phillip Yea. He has called on bwin.party CEO Norbert Teufelberger to replace the current senior management team with what he calls “a more competent team of managers.” In addition, Ader has nominated four people to be named to the bwin.party board, including Michael Fertik, the CEO of Reputation.com, financial attorney Francis Grady, venture capitalist Kalendu Patel and Innovation Group founder Steven Rittvo. Spring Owl has the right to name one member of the board, according to bwin.party.

Global Gaming Business MAY 2014

Massachusetts: Not This Year

Massachusetts Gaming Commission member James McHugh

assachusetts is unlikely to legalize online gaming this year, despite earlier comments from the Massachusetts Gaming Commission member James McHugh that it would probably do so. Since McHugh made those comments a month ago at the Internet Gaming Forum in Boston, the legislative landscape has changed considerably. Last month, Beacon Hill sources reported that bills that had been discussed are unlikely to be voted on in 2014. At this point McHugh is of the opinion that no bill will advance this year. He expressed that opinion last month at a gambling forum at the Borgata Atlantic City. Several bills that would legalize online gaming are currently active, but opposition to them is increasing at the same time that opposition to the 2011 gaming expansion act is focusing on getting a referendum on the November ballot that would give voters a chance to decide the fate of gaming in the Bay State. One bill would authorize online gaming, and a second bill would allow the state lottery to operate online. Such bills have the support of Treasurer Steve Grossman and state Senator Bruce Tarr. However, Senator Jennifer Flanagan, while not actually opposing such bills, prefers to go slow and not get too far ahead of other states that are looking at legalization, as well as monitoring what Congress may do. However, the main factor in delaying the bills may be the current focus on choosing and then licensing the three casino resorts that the 2011 legislation authorized. Gaming Commission Chairman Stephen Crosby in January said that nothing should be done on online gaming until the sites for the casino resorts had been selected.

roponents of online gambling got some big endorsements last month when a laundry list of powerful national organizations rejected an online gaming ban on Capitol Hill. The North American Association of State & Provincial Lotteries (NASPL), the National Conference of State Legislatures (NCSL) and the National Fraternal Order of Police all came out against the bill, the Restoration of America’s Wire Act, pushed by Las Vegas Sands and its chairman, Sheldon Adelson, that would shut down all online gambling in the U.S. An editorial by Chuck Canterbury, president of the National Fraternal Order of Police, opposes a federal ban on internet New Jersey U.S. Senator gambling. Cory Booker has come Bills introduced in out in opposition to any Congress, backed by changes in the Wire Act. Adelson, who opposes online gambling, would make online gaming illegal in the U.S. and would not grandfather existing online gaming. A number of politicians have penned editorials both for and against online gaming, as opponents and proponents wage a public opinion battle, but Canterbury’s editorial comes from a law enforcement source. “The solution is clear,” wrote Canterbury. “We should maintain states’ rights to regulate online gaming within their borders and reinvest that revenue to make sure the systems are safe for all consumers. This will also allow law enforcement the tools necessary to monitor and shut down illegal activity and give consumers who may have been victimized a means of redress.” Both the NASPL and the NCSL wrote letters to the bill’s Senate sponsor, South Carolina Senator Lindsay Graham. NASPL is fearful that the bill will not only eliminate online sales of lottery tickets, but also threatens multi-state lotteries like Powerball and Mega Millions.

p. 52 to 56 igames:Layout 1 4/17/14 4:52 PM Page 53

In Congress, Graham’s bill to toughen the federal Wire Act and ban online gambling in the U.S. can expect two “no” votes from New Jersey’s U.S. senators. Democrats Robert Menendez and Cory Booker said they would fight passage of the measure, saying a ban would simply prop up illegal gambling sites. “Blanket prohibition of internet gaming will empower black-market operators at the expense of responsible states like New Jersey, which have invested in creating a secure internet gaming structure,” Menendez said in a news release. Silvia Alvarez, a spokeswoman for Booker, told the Newark Star-Ledger that New Jersey “acted responsibly and invested in creating a structured, secure and regulated environment for online gaming.” “Senator Booker opposes this legislation, because it would drive internet gambling underground, where there are no protections for consumers and no measures to prevent minors from taking part,” she said. “The bill would have the perverse effect of putting millions of American

poker players at risk while doing nothing to prevent minors from playing online, combat fraud or crack down on other illegal activities.” New Jersey state Senator Raymond Lesniak— a principal architect of the state’s online gambling legislation—called for the state’s congressional delegation to oppose the bill. “I would presume that our congressional delegation would stop that or, at the very least, grandfather in New Jersey,” Lesniak told the StarLedger. “Even that—a ban in other states— would restrict our ability to sign agreements with them to get additional revenues for New Jersey and Atlantic City casinos.”

Three States Consider iGaming New York, Mississippi and Pennsylvania are all doing studies

ew York could legalize online poker under a bill introduced to the state legislature. The bill would allow New York to license and

New York U.S. Senator John Bonacic

tax internet poker games from up to 10 different providers under a proposal from Republican state Senator John Bonacic. But Bonacic, who chairs the Senate Committee on Racing, Wagering and Gaming, said he doesn’t expect

the bill to pass this year. Bonacic said he wants to see the impact of four privately owned casinos authorized by voters on the state before moving to legalize online gambling. Still, New York needs to begin considering how to effectively regulate online gambling, he said. “I don’t intend to push (the bill) this year,” Bonacic told the Associated Press. “But we need to start a discussion.” Bonacic said the legislation is needed to protect New York consumers from unlicensed offshore online gambling sites as well as to prevent

Looking to Advance your bottom line? You designed the answer. MEI has made it possible with

MEI has redefined expectations of note acceptors yet again with SC Advance. Enhancements were driven by customer requests to improve upon core measures of performance— acceptance, speed and security— and do so in a manner that is backwards compatible with the existing installed base. By maximizing the number of street-grade notes accepted, while simultaneously increasing the security against counterfeit notes, the MEI SC Advance is a step forward on the most important measure…operator profitability. Learn how to specify cashboxes in your property that fill up faster than ever before. Stop by booth #1111 during NIGA or call 610-918-8018 to schedule a SC Advance demonstration.

meigroup.com

MAY 2014 www.ggbmagazine.com

p. 52 to 56 igames:Layout 1 4/17/14 4:52 PM Page 54

underage gambling and combat problem gambling. Operators would pay $10 million licensing fees and taxes equal to 15 percent of their gross revenues under the bill. The proposal only allows online poker and not other forms of online gambling such as casino games and slots. A task force to study the possibility of internet gaming has been designated by the Mississippi House Gaming Committee. Chairman Richard Bennett said he would like a neutral study for sports betting and online gaming. Mississippi has traditionally shied away from internet gaming in the past. Legislation has been introduced two separate times. The first was from Rep. Bobby Moak in 2012. The bill died. Moak attempted another bill this year, which also died. Heading up the task force is Mississippi Gaming Commission Executive Director Allen Godfrey. He said the group will study the three states which allow online gaming—New Jersey, Delaware and Nevada. The task force will also look at problem and underage gaming. Godfrey said it is not the group’s responsibility to make recommendations for new legislation regarding online gaming. The group is simply gathering data for the gaming commission. In Pennsylvania, proponents of legalizing online gambling got some bad news recently as several key GOP state leaders—including Governor Tom Corbett—said there isn’t much interest in Harrisburg to move on the idea. Pennsylvania House spokesman Stephen Miskin said, “I’m not sure there’s a whole lot of support in our caucus right now for it.” Republican Governor Tom Corbett is pushing for an expansion of gambling in the state, but that move is focused on introducing small games of chance at taverns and bars. Still, the state did authorize a study to determine the potential impact of online gambling and online poker would have on the state. But Jay Pagni, a spokesman for the governor, told reporters that Corbett isn’t likely to push for online gambling. The findings of the Pennsylvania study are due to be introduced next month.

AGA Backs Away Murren tells group to dial back iGaming rhetoric

GM Resorts International Chairman Jim Murren, who currently serves as chairman of

Global Gaming Business MAY 2014

Baddest of the Bad MGM Resorts Chairman Jim Murren

Unauthorized offshore gambling sites trying to poach New Jersey online gamblers

the American Gaming Association, wants the AGA to lessen its lobbying efforts in support of a federal bill to legalize and regulate internet poker, because the position puts the organization at odds with many of its own members. In an interview with the Las Vegas ReviewJournal, Murren said major operators who are AGA members—including Caesars Entertainment, Boyd Gaming and Station Casinos—and supplier members including IGT and Bally are already involved in the legal iGaming businesses in Nevada and New Jersey, where intrastate iGaming was legalized. AGA support of bills to federalize internet poker, some of which also seek to ban other internet gaming, threatens to fracture the AGA membership. Murren wants the AGA to concentrate on other issues. “I don’t want the AGA to find itself mired in a tremendous amount of controversy and infighting,” he told the newspaper. “I feel like the internet has become too divisive a topic when there are so many other topics we want to put forward where we can all agree.” MGM has yet to enter the legal iGaming business in the U.S.; nor has Wynn Resorts. Las Vegas Sands Chairman Sheldon Adelson is currently involved in a crusade to have all internet gaming banned. LVS President Michael Leven is a member of the AGA board. MGM has, however, joined Caesars and other operators in launching the Coalition for Consumer and Online Protection, formed as a counter to Adelson’s Coalition to Stop Internet Gambling. The pro-iGaming coalition advocates regulation of legalized online gaming to protect gamblers. “I’ve also talked with (Caesars Chairman) Gary Loveman and others,” Murren said. “We all agree that an over-arching effort should be deployed to prevent illegal gaming sites and protect the consumer against illegal internet gaming.”

hen New Jersey opened up online gambling in the state in November, many of the world’s top online gambling sites applied for gambling licenses. But according to the chief executive of one of those companies—bwin.party—a lot of other international companies didn’t bother, and are now trying to lure in New Jersey players. “There’s increased activity by offshore operators again into New Jersey, driving heavy promotions,” Norbert Teufelberger, chief executive of bwin.party digital entertainment, said in a March conference call with investors. “There’s new companies coming now who are actually trying to capitalize on that opportunity. It’s quite amazing how high the criminal energy can be, but we are quite confident that the New Jersey Division of Gaming Enforcement will shut that down quite efficiently, and soon.”

Kerry Langan, a spokeswoman for the state Division of Gaming Enforcement, told the website Philly.com that the DGE is “aware of this issue and is taking steps to coordinate an appropriate response to this illegal activity.” Though the federal Unlawful Internet Gambling Enforcement Act of 2006 made it illegal for unlicensed international companies to offer online gambling in the U.S., it did not stop the activity. Bwin.party, however, voluntarily stopped serving U.S. customers in 2006. The company is now partnered with the Borgata Hotel Casino & Spa to offer online gambling in New Jersey through its Party Poker brand. Bwin.party officials said they are worried that New Jersey gamblers may not be aware of which sites are licensed and which are not, and may be tricked into playing on unlicensed sites.

p. 52 to 56 igames:Layout 1 4/17/14 4:53 PM Page 56

Ladbrokes acquires Betstar Australian company goes for €15 million

.K. bookmaker Ladbrokes has acquired Australian private bookmaking business Betstar in a deal worth €15 million. Ladbrokes officials say the deal will allow them to add a new client base and speed up the growth of its Australian business. Betstar has about 40,000 registered customers. The brand name will continue under the deal. “Australia represents one of the most vibrant regulated sports betting markets in the world, and today’s announcement will see us add new customers to our growing presence,” said Damian Cope, managing director of Ladbrokes International. “It offers us a chance to improve our market share and bring the innovative product development and marketing skills displayed by Ladbrokes.com.au to a wider audience.”

Poker Pittance Online poker brings in $8.5 million in Nevada

evada’s internet poker sites have brought in only $8.5 million in revenue in their first 10 months of operation, according to the first revenue results released by state regulators. The figures were cumulative and not divided among the three operating sites, each of which had

different launch dates. Ultimate Gaming was the first site to go live in Nevada in April 2013, followed by Caesars Interactive’s World Series of Poker brand and more recently Real Gaming. WSOP.com is considered to be the leading site in Nevada, according to various online poker news websites that track player numbers. The Nevada Gaming Control Board has begun releasing revenue figures now that Real Gaming— 56

Global Gaming Business MAY 2014

which went live in February—is operating. Regulators were not required to release revenue figures until three sites were operating in the state. For February, with three sites operating, online poker generated only $824,000 among them during the month. The state’s overall gambling performance at brick-and-mortar casinos was also down 13.7 percent for February, generating $926.1 million in revenue. Despite the low numbers, Nevada regulators have approved applications from six companies to extend internet poker licenses that were set to expire, as they have not launched online sites. Published reports suggest that most of these companies are taking a cautious approach and weighing the state’s online market before moving.

Poker Partners Delaware/Nevada online gambling pact shoots for summer start

evada and Delaware officials say they expect the two states to begin sharing their online poker-player pools by this summer under the online gambling agreement between the two states. That moves up the start estimate, which was originally set for the end of the year. The two states signed the first interstate online gambling agreement last month to pool the player bases of their online gambling Nevada Governor sites. Only three Brian Sandoval states—New Jersey is the third—have approved online gambling. Online gambling is only available to players within each state’s borders. Since both Nevada and Delaware have relatively small populations, agreements to share players between states have been seen as crucial to online gambling’s success. Towards that end, Nevada Governor Brian Sandoval is inviting other states including New Jersey—which has a significantly larger population— to join in the pact. As many as 10 other states are said to be considering online gambling legislation. “I think it’s important for them to know that we’re capable of doing this,” Sandoval said. “I trust the regulatory process we have. We vetted this with

Delaware for several months and we’re currently building the platform.” Sandoval says joining in the pact could help states just starting out with online gaming. “If there are states that don’t have as sophisticated a regulatory structure as we have, that’s something we can offer,” Sandoval told the Las Vegas Review-Journal. “If your state doesn’t have the infrastructure, use our capabilities.” As for New Jersey, Sandoval said he has spoken with Governor Chris Christie about an interstate compact, but no deal has yet been offered.

Universal Agreement GSA crafting online standard

he Gaming Standards Association announced it is making rapid progress through its Online Gaming Committee to establish a universal online gaming standard for the industry. The committee will held meetings in London April 9-10, hosted by GSA Platinum member company Playtech. “A successful online gaming operation requires multiple integrations with third parties,” said Valery Gelfman, Playtech technical consultant and chairwoman of the Online Gaming Committee, “including external content Gaming Standards providers, monitoring auAssociation President thorities and, in many Peter DeRaedt cases, brick-and-mortar operation. Playtech is pleased to work with GSA and help drive the effort towards establishing integration standards based on best practices. Such standards, without a doubt, will benefit all constituencies in the industry and help create value.” “The new standard will provide support for third-party gaming interfaces, external interfaces, including geolocation and payment processors, and central monitoring for regulators,” said Ethan Tower, GSA’s protocol director. “GSA is moving forward quickly with the creation of standards to support the online gaming industry,” said GSA President Peter DeRaedt. “This is not the time for suppliers or operators to sit on the sidelines. We encourage all interested parties to jump in with both feet to ensure that their voices and opinions are heard as these important standards are being created and finalized.”

Y SAR

IVER

ANN

p. 58, 59, 60 Poipet Cambodia:Layout 1 4/18/14 1:58 PM Page 58

HAve You Been to

So,

PoiPet? The Cambodian city close to greater Bangkok presents a unique opportunity

hen examining the major casino markets of Asia, Macau and Singapore most often come to mind. Most gaming executives are familiar with these markets, and their prodigious gaming revenue performance continues to attract the interest of the media and financial analysts. The extraordinary performance of these markets has caused casino developers to look more closely at other regional Asia markets such as South Korea, Vietnam and Japan as they look for that next great opportunity. What are often overlooked are other regional Asian markets that are already established yet are somewhat removed from major Asian cities. These gaming markets generate prodigious amounts of gaming revenue and serve as convenience-based gaming destinations to regional populations. One such market is Poipet, Cambodia, which serves residents living in greater Bangkok, a metropolitan area with over 10 million people. With legal casinos prohibited in Thailand, Poipet is the nearest gaming option for those residents. 58

Global Gaming Business MAY 2014

By Steve Gallaway and Andrew Klebanow Poipet sits across from Aranya Prathet, a border town in northeastern Thailand that serves as the primary overland crossing between those two countries. The casino district is comprised of seven properties, ranging in quality from two-and-a-half stars to three-and-a-half stars. Each casino has 65-100 table games, 125-300 slots and 140-550 hotel rooms. Poipet casinosâ&#x20AC;&#x2122; location relative to each countryâ&#x20AC;&#x2122;s immigration checkpoints is unique. One leaves Thailand and enters the Poipet casino district without actually going through Cambodian Immigration. This allows Thai residents to easily cross the border and enjoy a day of gaming entertainment without enduring the ordeal of passing into and out of Cambodian Immigration. A Thai citizen returning home need only present a border identification card to re-enter Thailand, speeding the border crossing process to just a few minutes. (Westerners, who likely have a minimal impact on the townâ&#x20AC;&#x2122;s gaming revenue, must at some point obtain a Cambodia visa stamp to reenter Thailand.) The casino district flanks either side of the road that connects the Thai

p. 58, 59, 60 Poipet Cambodia:Layout 1 4/17/14 4:54 PM Page 59

Poipet sits across from Aranya Prathet, a border town in northeastern Thailand that serves as the primary overland crossing between those two countries. The casino district is comprised of seven properties, ranging in quality from two-anda-half stars to three-and-a-half stars. Each casino has 65-100 table games, 125-300 slots and 140-550 hotel rooms.

Border Control to Cambodian Immigration. Nothing can quite prepare a firsttime visitor for the street scene outside of the casinos. A cacophony of tourists, backpackers, trucks, touts and pushcarts line the street, creating a border-town atmosphere reminiscent of Tijuana in an earlier time.

TourisT MAgnET Poipet is also a primary entry point into Cambodia for tourists visiting Siem Reap and Angor Wat, both popular tourist destinations that generate a considerable amount of pedestrian traffic through the border district. The casino-hotels serve as a jumping-off point for these and other tourist destinations in Cambodia. Poipet is a three-and-a-half-hour drive by car from central Bangkok. A fourlane divided highway is now replacing a two-lane, two-way road, ostensibly to accommodate the burgeoning commercial traffic traveling to the border. In addition, regularly scheduled bus service from Bangkok, mini buses and taxis combine to provide a reasonable mix of transportation alternatives. An old rail system that runs from Bangkok is slated to be replaced with a high-speed line that will ultimately link Bangkok with Cambodia and China. Once past Thai Border Control, gamers can easily walk to any of the casinos. All of the casinos offer relatively attractive gaming environments, a complete mix of dining options that one would expect to find in a casino resort, and appropriate quality lodging. Service standards are good and many staff members speak English, making it fairly easy for a Westerner to navigate the properties. As in other Asian markets, baccarat is the most popular table game. Electronic gaming machines, while growing in popularity, remain a secondary feature. What is unique to the Poipet market is its embrace of a hybrid form of

internet gaming. In each casino, an area is reserved for internet table games. These tables sit under klieg lights and high-resolution cameras. As dealers play the game, gamers in Bangkok and other cities place wagers online and observe the outcome of those games on their computer monitors. It allows them to play against a person—not a computer—and witness in real time the outcome of each game. This type of internet wagering allows gamers to overcome the trepidation and mistrust often associated with playing online; it allows remote wagering with the assurance that the game is legitimate. So why have so few Western casino executives visited Poipet? For one, it is in a somewhat remote location that requires a bit of planning to get there. Another reason is that for years the only way to get to Poipet was on a dangerous two-lane highway. Another is the city’s image. It is a border town in Cambodia, and with that comes a tawdry image, one that is fully justified. And finally, many people are simply unaware of the city’s existence. What most people do not appreciate is that it is the sole casino district within a three-hour drive from a city with 10 million people. With incremental improvements to these properties and more aggressive mass marketing, Poipet has the potential to grow gaming revenues substantially. As the transportation infrastructure improves, the city has the potential to emerge as a regional gaming destination whose gaming revenues are expected to exceed those found in most U.S. regional markets. Steve Gallaway and Andrew Klebanow are principals at Gaming Market Advisors. They can be reached at info@gamingmarketadvisors.com. MAY 2014 www.ggbmagazine.com

p. 58, 59, 60 Poipet Cambodia:Layout 1 4/17/14 4:54 PM Page 60

gOLdEN CROwN CASINO The Golden Crown Casino features 42,000 square feet of gaming space, 150 gaming machines and 79 table games. The property has one restaurant and a hotel with 156 rooms. Baccarat is the dominant game on the floor, but the casino does offer other table games such as blackjack, roulette and Pai Gow Poker. It is arguably the nicest property in the market, albeit below what one would find in most Western jurisdictions. gRANd dIAmONd CITy Grand Diamond City Casino features a 62,000-square-foot gaming floor with 220 gaming machines along with 93 table games. Like the other casinos, the gaming floor is dominated by baccarat tables. It features a number of restaurants along with a 300-room hotel including 146 deluxe rooms, 127 suites, 18 junior suites and nine executive suites. hOLIdAy PALACE hOTEL & RESORT Holiday Palace Hotel & Resort features a 65,000-square-foot gaming floor with 300 gaming machines and 70 table games. Baccarat is the featured game on the floor, but blackjack, roulette, pai gow and 3 Card Poker are also offered. There is a 141-room hotel connected to the casino and multiple dining options. Holiday Palace also offers a full-service spa with a complete menu of services and amenities. The casino also features an 18-hole golf course next to the resort.

hOLIdAy POIPET Holiday Poipet features a full-service casino with 104 gaming machines. The casino also offers 71 table games including baccarat, blackjack, Pai Gow Poker and roulette. The property also has a 260-room hotel.

Global Gaming Business MAY 2014

PRINCESS hOTEL & CASINO The Princess Hotel & Casino offers 63,000 square feet of gaming space with 166 gaming machines and 97 table games, with 87 devoted to baccarat. Two blackjack and three roulette tables also are offered, along with pai gow, tai sai and fan tan. The casino has a 240-room hotel and multiple restaurants. STAR VEgAS INTERNATIONAL Star Vegas International (below) features a 31,000-square-foot gaming floor with 130 gaming machines and 88 table games including 70 baccarat, seven blackjack, seven roulette and four tai sai tables. The resort has a 550room hotel that offers customers standard rooms or suites. The resort has a number of restaurants and an 18-hole golf course, along with a hair salon, karaoke piano lounge, spa and retail shops.

TROPICANA RESORT The Tropicana Resort (left) features a casino with 66 table games and 135 electronic gaming devices. It also has a buffet, a retail outlet and a hotel with 230 rooms. While it shares a name with several U.S. properties, it is not related to those companies.

Your Runway.

Your Team.

Raise the Stakes with Style from the Cintas Gaming Design Studio. Vegas is the crown of high-rolling style. Cintas has been bringing that image to gaming all around the world. Designers and Image Experts from our Las Vegas gaming center work with you to create the right guest experience. Together weâ&#x20AC;&#x2122;ll design and implement a custom program unique to your brand. See for yourself at cintas.com/gaming or call 702.435.1262 for more information.

CIN13056_Gaming_Ad_R4_FA.indd 1

3/11/14 5:36 PM

p. 62 to 66 tribal feature:Layout 1 4/17/14 4:55 PM Page 62

FIXING A HOLE Tribes, lobby face toughest challenge in Carcieri decision By Dave Palermo

merican Indians, when unified, have proven their political strength on Capitol Hill. Lacking numbers but united in purpose and fortified with billions of dollars from casino gambling, tribes during the Obama Administration have won several major legislative battles. Indigenous communities in 2010 succeeded in getting Congress to permanently authorize the Indian Health Care Improvement Act (IHCIA), a crucial effort in modernizing a crumbling and ineffective system. Tribes were united last year in getting congressional authorization of the Violence Against Women Act (VAWA), a significant step in protecting Indian women on U.S. reservations from an epidemic of murder, rape and domestic abuse. And Indian leaders have successfully staved off Treasury Department intrusion into the tax-exempt status of tribal government programs. Federal lobbying by tribal governments has increased dramatically since 1998, climbing from $5 million in 1998 to more than $22 million in 2013, generating a great deal of political clout to go along with a unified message from Indian Country.

“Political power is determined by organized votes, organized money or organized ideas,” says Tom Rodgers, president and CEO of Carlyle Consulting of Alexandria, Virginia, and a member of the Blackfeet Tribe of Montana. “We’ve never had the organized vote. We’ve never had the numbers. But Native Americans, when organized and with their resources brought to bear, can favorably affect an outcome.” “We’re used to being united,” says tribal lobbyist Mike Anderson, a citizen of the Muscogee Creek Nation. “And when that happens we’re a powerful force.” Perhaps. But Indian Country’s newfound political power is being seriously challenged by federal court rulings and congressional attempts to thwart what is most crucial to tribal sovereignty and self-determination: the ability of tribes to reclaim and place in federal trust their ancestral lands. It’s a political and legal battle Indian advocates believe is too important to lose. Unfortunately, the odds for success are long.

“The message I give to my brothers and sisters is in this political environment, whatever group is going to succeed—whether it’s the majority of Indian Country that wants a clean fix, or whether it’s the minority— they have to do it transparently.” —Tom Rodgers, President and CEO, Carlyle Consulting, member of the Blackfeet Tribe of Montana

Global Gaming Business MAY 2014

p. 62 to 66 tribal feature:Layout 1 4/17/14 4:55 PM Page 63

LEADING AMERICAN INDIAN LOBBYISTS AND PROMINENT CLIENTS 2013* Defeating Decision Indigenous governments have struggled for nearly five years to remedy Carcieri v. Salazar, a 2009 U.S. Supreme Court decision that limits the Interior Department’s ability to place land in trust for tribes not “under federal jurisdiction” when the Indian Reorganization Act (IRA) was passed in 1934. The high court ruling stems from former Rhode Island Governor Donald Carcieri’s fear that 31 acres the Narragansett Tribe said it wanted in trust for elderly housing would instead be used for a casino. Carcieri and related federal court rulings in Patchak v. Salazar and Big Lagoon Rancheria v. California have ripped away the fabric of established Indian law and jeopardized the ability of tribes to strengthen their governments and provide for their citizens housing, health care and other services non-Indian communities take for granted. Tragically, in this most crucial of battles, tribes are no longer united—at least not to the degree necessary to overcome a contentious Congress angry with what a handful of senators perceive to be an unnecessary proliferation of Indian casinos. Native America’s $24 million in federal political contributions in the 2012 and 2014 election cycles—nearly 20 times the $1.6 million contributed in 1998—has done little to sway Congress on a legislative “fix” to Carcieri. And the tribes’ $22 million lobby—praised for its role in securing passage of VAWA and IHCIA—has been powerless. Some tribal Capitol Hill firms have been chastised for their lack of transparency, others for their inability to work in unison on Carcieri-related fee-to-trust issues. While a remedy to the high court decision may get through the House this session, the latest in a series of Senate Carcieri bills introduced in April by Jon Tester (D-Montana), chairman of the Senate Committee on Indian Affairs (SCIA), is believed doomed on arrival. “I know that there are a number of my colleagues who have an interest in this legislation and would like to see changes to this bill,” Tester warned in introducing his legislation on the Senate floor. “Even Indian Country is divided on the issue.” Tribes are philosophically united on the need for a legislative “fix” to the high court ruling. But there is strong division over whether the remedy should be linked to Indian Gaming Regulatory Act (IGRA) provisions dealing with casinos on newly acquired lands. The debate is in large part fueled by a handful of controversial casino projects: gambling halls proposed by the restored North Fork and Enterprise Indians in California and newly recognized Cowlitz Indian Tribe of Washington state; Tohono O’odham’s effort to build a Phoenix area casino on property acquired through a federal land claim; and the Menominee Tribe of Wisconsin’s proposal to develop an off-reservation casino near the Illinois border. The Aboriginal Lands Coalition—a loosely organized group of tribes that include the San Manuel and Pechanga Indian bands in California, For-

ribal governments spent $22.1 million lobbying the federal government in 2013, a dramatic increase over the $5 million spent in 1998. Much of the increase is attributed to tribal government casinos and passage in 1988 of the Indian Gambling Regulatory Act. But while most of the lobbyists file disclosure statements under the category “casinos/gambling,” their work on behalf of indigenous communities extends to governmental issues beyond casinos. Here is a list of some of the larger lobby firms doing business in Indian Country and their more prominent clients. AKIN GUMP $3,890,000 Gila River Indian Community ($2.8 million)/ Oneida Indian Nation of Wisconsin ($170,000)/ Pechanga Band of Luiseno Mission Indians ($500,000)/ St. Regis Mohawk ($90,000) IETAN $2,158,500 San Manuel Band of Serrano Mission Indians ($500,000)/ Pechanga Band of Luiseno Mission Indians ($240,000)/ Seminole Tribe of Florida ($270,000)/ Saginaw Chippewa ($198,000)/ Eastern Band of Cherokee ($180,000)/ Mashantucket Pequots ($168,000)/ Yocha Dehe Wintun Nation ($150,000)

DENTONS US $1,590,000 Tohono O’odham Nation ($1,320,000) HOLLAND & KNIGHT $1,320,000 Choctaw Nation of Oklahoma ($480,000)/ Mille Lacs Band of Ojibwe ($360,000)/ Jicarilla Apache Nation ($280,000) MAPETSI POLICY GROUP $1,245,000 Poarch Band of Creek Indians ($240,000)/ San Carlos Apache ($160,000)/ Miccosukee Tribe of Florida ($160,000)/ Mescalero Apache Tribe ($160,000) DINKER, BIDDLE & REATH $1,130,000 Confederated Tribes of Colville ($350,000)/ Quapaw Tribe ($190,000)/ Ho-Chunk Nation ($190,000)/ Southern Ute Indian Tribe ($150,000) PACE LLP $1,050,000 Morongo Band of Mission Indians ($280,000)/ Salt River Pima-Maricopa Indians ($240,000)/ Santa Ynez Band of Chumash Indians ($200,000) *Source OpenSecrets.org

MAY 2014 www.ggbmagazine.com

p. 62 to 66 tribal feature:Layout 1 4/17/14 4:55 PM Page 64

Montana Democratic Senator Jon Tester has proposed the most recent bill to fix Carcieri, but its prospects are not very bright.

est County Potawatomi in Wisconsin, and Gila and Salt River Pima-Maricopa Indians of Arizona, among others—claims IGRA rules and Interior regulations are being used and abused by indigenous communities and big-moneyed developers who, in some cases, are encroaching on the ancestral lands of other tribes. But coalition moves to reform the land/trust process are viewed by many tribes as obstructing efforts to get a Carcieri remedy that does not involve amending IGRA or limiting the ability of tribes to acquire trust land for casinos and other purposes.

Off-Reservation Gambling Fuels Lobby War Akin Gump and IETAN, powerful lobbyists for San Manuel, Pechanga, Gila River and other tribes embroiled in the controversy, have been criticized by tribes seeking a “clean” fix to the Carcieri ruling. The firms, which share office space in Washington, D.C., have been accused of working behind the scenes to get a legislative remedy that would limit the land/trust process for new recognized and restored tribes, among others. “There can be no second-class citizenry of federally recognized tribes,” says Brian Patterson, a New York Oneida and president of the United South and Eastern Tribes (USET), which has been leading the lobby effort to remedy Carcieri. “There can only be one status for federally recognized tribes. That’s our pursuit.” IETAN partners Wilson Pipestem and Larry Rosenthal say the criticism is unfair. They contend opposition to a Carcieri fix from Senators Dianne Feinstein (D-California), Jack Reed and Sheldon Whitehouse (D-Rhode Island), Charles Schumer (D-New York), Richard Durbin (D-Illinois) and others make it difficult if not impossible to get a Carcieri remedy out of Congress without compromising on off-reservation casinos. “All of my clients support a clean Carcieri fix,” Rosenthal says. “The problem is after four years there hasn’t been a road map on how to get there. Do the math. There simply are not enough votes.”

Akin Gump lobbyist Alison Binney did not return telephone calls for comment. But she has also previously said there were too few votes in the Senate to get an IRA amendment without concessions on off-reservation casinos. But lobbyists for other tribes working the issue in Washington do not buy that explanation. “Akin Gump and IETAN and others may say publicly they favor a clean fix,” Anderson says. “But if a vehicle comes out of Congress that includes a clean fix, they’re all going to jump in with amendments. “There are a number of lobbyists who are never going to be for a clean fix because they always have been pushing a compromise, which is to serve their clients, which is to link IGRA changes to Carcieri.” USET tribes and others bristled three years ago when it was learned IETAN clients and others were working with Feinstein on limiting off-reservation gambling. The issue grew even more heated when the National Congress of American Indians (NCAI) disclosed in 2011 that Feinstein was drafting off-reservation legislation with the aid of Interior Deputy Secretary David Hayes, a move that muddied Carcieri efforts. “This was done unbeknownst to the tribal governments, at least those that were seeking a clean fix,” says a prominent Capitol Hill political adviser. “There was no consultation. “That caused a lot of hard feelings in the Indian lobby community. That’s where the lobby groups started to work against each other.” “The vast majority of Indian Country—NCAI, NIGA and regional associations—support a clean Carcieri fix,” Rodgers says. “But there is a minority of Indian Country which believes very differently about strategy and tactics. “The message I give to my brothers and sisters is in this political environment, whatever group is going to succeed—whether it’s the majority of Indian Country that wants a clean fix, or whether it’s the minority—they have to do it transparently.” IETAN and other firms also were accused of blocking an attempt in December 2012 to get a clean Carcieri fix to a Senate vote. Loretta Tuell, then counsel for the Senate Committee on Indian Affairs, promised NCAI delegates the tribes had the 60 votes needed to get the measure to the floor, a pledge panned by several tribal political operatives who doubted her claim.

“There are a number of lobbyists who are never going to be for a clean fix because they always have been pushing a compromise, which is to serve their clients, which is to link IGRA changes to Carcieri.” —Michael Anderson, Principal, Anderson Indian Law, tribal lobbyist and a member of the Muscogee Creek Nation

Global Gaming Business MAY 2014

A winning solution for your cash access needs. With over 25 years of ATM experience in the gaming industry, U.S. Bank Gaming Services offers custom solutions, which incorporate industry-leading products and state-of-the-art equipment. As the largest bank provider of integrated cash access services to the gaming industry, our cash access solutions ensure continuous cash flow for quick and easy guest access. “Cash in” with the reliability and stability of U.S. Bank Gaming Services. Call us today at 1.800.784.5414.

USBGS_AD_rev.indd 1

10/11/11 3:32 PM

p. 62 to 66 tribal feature:Layout 1 4/17/14 4:55 PM Page 66

“San Manuel continues to support a clean Carcieri fix. But we understand, also, the political realities of the issue are such there are a lot of factors to reaching an appropriate or workable solution to the problem.” —Jacob Coin, Executive Director of Public Affairs, San Manuel Band of Mission Indians, member of the Hopi Tribe of Arizona.

USET and NCAI at the 11th hour advised tribes to back away from the effort, fearing it would fail for lack of support, despite promises by SCIA Chairman Senator Daniel Akaka (D-Hawaii) that he had the needed votes and a pledge from Majority Leader Harry Reid (D-Nevada) to move the measure. “That was the closest we came to getting a clean fix,” Anderson says. “In the beginning of the day we had 60 votes, including Republicans. By the end of the day that all evaporated. “Indian Country blinked.” “That’s just wrong,” Rosenthal counters. “They never came close to getting the votes.”

Carcieri And The Need To Protect Ancestral Lands Some believe criticism directed at IETAN and Akin Gump is unfair. IETAN, particularly, had been working on behalf of San Manuel’s Serrano Indians on ancestral land issues long before the Carcieri ruling. San Manuel has for more than a decade fought efforts by Los Coyotes Indians near San Diego to build a casino 100 miles away in the desert community of Bartow, which is within Serrano territory, though far from its San Bernardino County casino. “San Manuel had been looking for a way to limit situations like Barstow for a long time,” says a Capitol Hill attorney who requested anonymity. “It was a pre-existing situation. Carcieri got plopped down in the middle of it.” Protection of ancestral lands is a concept supported by virtually all tribes, but it is not guaranteed under IGRA provisions for gambling on newly acquired lands. “We need to get some certainty built into the regulations or the law,” Jacob Coin, San Manuel’s executive director of public affairs, told Gambling Compliance.com. “San Manuel continues to support a clean Carcieri fix,” said Coin, a citizen of the Hopi Tribe of Arizona. “But we understand, also, the political realities of the issue are such there are a lot of factors to reaching an appropriate or workable solution to the problem. “Congressmen are empowered with the role of creating this fix to Carcieri. If they’re of the mind other factors are at play then they have to find ways to work through those issues.” While lobbyists are the face of most legislative wars, they act at the behest

Global Gaming Business MAY 2014

of their clients. “At the end of the day the decision-making is with the tribal leaders, not the lobbyists,” says Kiowa-Comanche John Tahsuda, principal in Navigators Global. “Politics involving tribes working against each other certainly figures into this,” one tribal attorney says. “Lobbyists didn’t create that.”

Long Odds In Congress Tester’s bill follows by a few months legislation introduced by Senator Maria Cantwell (D-Washington), who was criticized for her attempts to mediate a compromise with Feinstein and other anti-gambling senators. Unlike Cantwell, the Montana senator has a long and strong relationship with tribes. “I think Senator Tester will pass a clean Carcieri bill out of committee,” Rosenthal says. “Then he’ll take some time to see if he can work some magic. He’s well aware of all the issues. He’s an intense negotiator. If anyone can get this done, it’s Jon Tester.” A solution is crucial to Indian Country and the 366 federally recognized tribes in the lower 48 states, particularly the more than 50 tribal communities recognized after 1934. Any attempt to place land in trust for casinos or other purposes faces a potential challenge on Carcieri grounds. “I can’t speak to the strategy,” Heather Sibbison, an attorney for the tribal division of Denton U.S., says of Tester’s legislation. “But I can speak to how courageous his action is, and how important it is.” It is a stark irony that a handful of tribes and senators are holding up a legislative fix to Carcieri because of their opposition to what they perceive to be an unregulated, unchecked spread of Indian casinos, since the tribal gambling industry has been stagnant for several years. The National Indian Gambling Commission in 2012 audited 425 casinos, only 20 more than in 2008. Nonetheless, it appears there will be no congressional remedy to Carcieri without a united Indian Country, and a congressionally mandated limit to an industry that is not growing. Tester is a realist. “While I believe a clean fix is a solution, many of my colleagues in the Senate don’t agree,” he told delegates to a winter NCAI meeting. “It must come with the support and pledge of Indian Country to come together on this issue and engage in meaningful dialogue.”

p. 68 to 72 Bingo:Layout 1 4/17/14 4:57 PM Page 68

Bingo Tech B

The age-old game of bingo gains strength from new technology By Dave Bontempo

ingo sports tradition and vision in the technology age. The centuries-old game renews the fervor of the fabled numbers-on-cards competition with each new generation. Fast-paced technology escorts the ultimate social game from kitchens to church halls and major casino properties. Witness the touch-screen electronic daubing, multiple-card lineup, the feel of slots and the hint of high-roller exclusivity. The

Global Gaming Business MAY 2014

computer technology in bingo, blurring the lines between traditional slots and bingo machines, enhances this trend. Faster-paced games, wild cards, rising jackpots and the appeal to younger crowds remain core strengths for the game. Casinos in Europe and Mexico have long showcased bingo. Indian Country, the state of Nevada, charitable gaming halls and the start of online gaming highlight its emerging American market.

p. 68 to 72 Bingo:Layout 1 4/17/14 4:57 PM Page 69

Bingo may not be viewed as lucrative in many properties, but it has a loyal following. Foxwoods, the world’s largest casino, actually began as a bingo hall. It has a 3,600-seat hall and holds two daily sessions. Many games routinely pay $1,500. Neighboring Mohegan Sun offers periodic Bingo After Dark competition in an ultra-hip-hop game set against a neon backdrop. DJs spin tunes between rounds. Potawatomi Bingo Casino offers four daily sessions with up to 180 electronic cards allowed. It has a 45,000-square-foot bingo hall able to accommodate 2,500 players. The Native American-run property in Milwaukee, Wisconsin has jackpots of $20,000, and even placed bingo into the name of the establishment. In Nevada, Station Casinos links high-stakes bingo games over several properties. Its Jumbo Bingo game is a progressive jackpot that starts at $125,000. How’s this for a progressive idea? The $100,000 Big Money Matinee occurs at Boulder Station, Palace Station and Red Rock casinos May 17-18. Special room rates are available for event players, meaning that bingo fanatics are being recruited to the gaming stage. They are no longer dabbling. They’re “daub”eling. Casinos have used bingo to service locals, but technology and the thrill of the games have widened its scope. The enticement of bigger jackpots raises the modest entry fees in some cases. Bingo remains a fun game for players and a low-exposure, easy financial venture for casino operators. They can use it both to develop loyal players and lure more foot traffic into their building.

Zitro: Bingo at the Track Is it a slot machine? Or is it bingo in floor mode? That’s the double question, and perhaps the key ingredient, sparking the rise of Zitro’s gaming

“What I think makes slot products great is that when you hit a certain trigger on a game, it provides bonus features. We have the same thing. If a player competes a square within the card, for example, and the middle is empty, he gets an entertaining feature. He or she can pick prizes hidden underneath certain things. It gives them an additional award for hitting that feature (and presumably, an incentive for buying additional balls).

Live Multi Game Providing the Most Mo ost Inn novative Invigorating and Innovative Gaming Products Produc cts

Visit us at Booth 6647 TThe he Venetian Venetian Macao Macao May M ay 220-22, 0-22, 22014 014

—Sam Basile, CEO of Zitro USA Inc. push in the United States. The Madrid-based company, already an international powerhouse with credentials like 13,000-15,000 units in Mexico, created an American division last year. Combining sleek slot cabinets, faster game play and attractive variations of bingo, it has begun to bear fruit on a corporate vision. The company unfurled its designs at G2E last year and debuted six of the Blackwave cabinets at Gulfstream Park in Florida in January. The Las Vegas-based arm of the company aims its next push at the California market. Zitro can bring eight games immediately to play via its new Blackwave cabinet, according to Sam Basile, CEO of Zitro USA Inc. Blackwave’s key attributes include the enabling of games to be developed on the server and updated in real time.

Tel: (853) 28787656 http : //www.ltgame.com Email : sales@hk1180.com

MAY 2014 www.ggbmagazine.com

p. 68 to 72 Bingo:Layout 1 4/17/14 4:57 PM Page 70

The integration of infinite jackpot and mystery systems also plays a key role in the product. Then there are aesthetics. “The dual screen and the cabinet provide an amazing and compelling comfort to the player,” Basile says. “The screens with the graphics and impressive surround-sounds are designed to allow the player to have an enjoyable experience, give them a greater reason to participate.” It’s a bingo game with a slot feel. Bingo patrons enjoy the speed of a casino setting while slot enthusiasts find another gaming source. “The beauty of our machine is that it appeals to both groups,” Basile says. “It attracts a bingo player who wants a better experience and it also appeals to a slot player who may be just hitting a button and not knowing why he is winning. With us, you are not merely being entertained by the machine, but you are interacting with the machine.” Basile says the majority of the company’s machines contain four 15-number games, for a total of 60 balls in the pool. The initial draw is 30 balls, but players are allowed to randomly purchase up to 10 additional balls. It is a risk-reward scenario, in which the player pays a premium for the right to improve his odds. The games have flash, speed and mystery. The addition of sounds, graphics and one’s decision-making ability enrich the experience. “What I think makes slot products great is that when you hit a certain trigger on a game, it provides bonus features,” Basile asserts. “We have the same thing. If a player competes a square within the card, for example, and the middle is empty, he gets an entertaining feature. He or she can pick prizes hidden underneath certain things. It gives them an additional award for hitting that feature (and presumably, an incentive for buying additional balls). The players are truly entertained, immersed in the game. The time on device is much greater than just sitting down and playing. “The player with the extra ball is like the craps player with the dice or the blackjack player seeing their hands and calculating the rest of the odds. When you purchase this extra ball, you make a true gambling decision.” Basile says most new clients will initially lease the equipment and may buy it later. Players can be involved for pennies or up to $80 on a particular spin, he says. Cultivation, and education, round out the product offering. “We don’t just put our machines on the floor,” Basile says. “We have promoters there. Just as we grew the market in Mexico, we will do so in the United States. At Gulfstream, we have two very nice ladies at the machines. They introduce players to the machine and show them how to choose the denomination of play to get started. We show them the extra-ball feature and provide T-shirts and other things as a thank-you for them playing. We intend to develop what I would call a bingo community. We become friends with them. That is how the players become loyal to you. You have to build a relationship with them.”

Ortiz: Bingo-Slot Hybrid Ortiz Gaming, based in Boca Raton, Florida, already enjoyed a strong presence in Latin America and Europe when it entered the U.S. market in 2012. The company is a multi-national developer of eectronic slot, bingo and amusement-with-prizes (AWP) gaming machines. It it did not have to reinvent the gaming wheel in the U.S. But it merged the best of bingo and slots. “We aren’t repackaging bingo; we are revolutionizing slot machines by adding bingo them— taking the best of the bingo world and the best of the reels world to create the fierce loyalty of bingo players with the high drop of reel players,” says Maurilio Silva, president of Ortiz Gam70

Global Gaming Business MAY 2014

By only having one ball drop, the speed of the game and the speed of the ball drop can increase without causing confusion or frustration to the player. Players can pick their ball drop speed and the number of cards to play for their own enjoyability, but we find that because of its simplicity, excitement and the great bonusing available, our players crave the fast pace of our bingo games. —Maurilio Silva, President of Ortiz Gaming

ing. “Rather than being a Class II interpretation of a slot machine, our games are a genuine fusion and rethinking of an electronic game.” Silva says the company’s theme games flourish because the game remains easy to play even when the speed of the game increases. Whether playing one or multiple cards, players can easily focus on only one ball drop, unlike similar reel games with multiple screens and multiple reels. “By only having one ball drop, the speed of the game and the speed of the ball drop can increase without causing confusion or frustration to the player,” Silva says. “Players can pick their ball drop speed and the number of cards to play for their own enjoyability, but we find that because of its simplicity, excitement and the great bonusing available, our players crave the fast pace of our bingo games. “We took that simplicity and added enhancements,” he adds. “For example, the original stepper-reel slot machines play about seven games a minute or theoretically 10,080 games in a 24-hour period, and a max play of three credits per game. The next evolution of slot games was 25-line video slot machines, which slowed the game to about six games per minute, because of the new bonusing features. The 25-line video is good for a maximum theoretical 8,640

Project2:Layout 1 4/17/14 3:25 PM Page 1

p. 68 to 72 Bingo:Layout 1 4/17/14 4:57 PM Page 72

games per day. “We expanded on this technology so that our bingo-themed games have a maximum theoretical 43,200 games per day,” says Silva. “Plus, we added to the already-impressive math, the most exciting bonusing and community gaming that the industry has available. That technology alone is just an example which increases potential casino revenue five times.” Ortiz Gaming has loaded up its new product line for NIGA. One of them is Six Bingo, available for Class II and Class III. This classic game has been redesigned. The five-by-five bingo game has bonus features. One of these is the extra ball draws, and, similar to classic bingo, a free space in the center spot. Six Bingo is comprised of four cards with 24 numbers each (and a free space), where 44 balls are drawn and up to seven extra balls are offered. Ten prizes are offered, in addition to the jackpot. Another new entry is Goal Mania. It explores the soccer-theme take on bingo, with the main character as a goalkeeper. It is a Latin bingo game consisting of a three-by-five bingo cards, four cards with 15 numbers each. Thirty balls are randomly drawn and up to 10 extra balls are offered for purchase. It has 17 prizes plus the jackpot. The bonus is offered when the player wins the double-O prize. The option to double the prize is also offered, where the player guesses on which side the soccer player will kick the ball. If the goalkeeper defends it, the player loses the sum bet. If the goalkeeper doesn’t defend it, the player wins half or the entire sum bet. Some new offerings continue to flourish. Triple Bonus, unveiled at G2E in 2012, is a Latin bingo game consisting of a three-by-five bingo card instead of the typical five-by-five card. Triple Bonus is comprised of four bingo cards with 15 numbers each. Players may choose to play one card, or all four. The game starts with 30 balls drawn from a virtual globe. After the 30 bingo balls have been drawn, players will have the chance at an extra bonus draw of up to 10 additional balls. Each time an extra bonus ball is drawn, the number will be marked on the activated cards and will offer the chance to win additional prizes. An additional bonus game is triggered by making a square pattern on any of the activated cards. In the bonus game, players spin the wheels to earn additional credits. In total, Triple Bonus has 11 prizes to win, plus the jackpot.

Video King: Youth Movement Bingo has a sleek look and feel, according to Tim Stuart, president and CEO of Omaha, Nebraska-based Video King. With his company renting equipment both to charitable organizations and casinos, he has noticed a younger market base. “Like with anything, those who have become creative with it have done very well,” Stuart says. “You may think that bowling can be boring, for example, but now you have cosmic bowling, with the black lights and the funky music and the midnight games, and all the kids are coming in. The same thing is happening with bingo. You have cosmic bingo and fluorescent lights, all kinds of fun things to attract a younger crowd. Little by little, the people who run bingo are making it more creative.” The creative touch might be music, or perhaps “bingo” to the ears of an executive whose company thrives upon the game. Video King is among the world’s largest providers of electronic gaming systems, game designs and bingo hall equipment. Its entertainment systems can be found aboard luxury cruise liners, throughout Indian Country and in thousands 72

Global Gaming Business MAY 2014

Cascading coins, dancing elements such as clovers, elves, top hats and a flighty fairy; sparkling rainbows and flying diamonds are part of Bing O’Lucky’s lineup. of charitable, commercial and military establishments around the world. Video King rents approximately 60,000 units to various jurisdictions. The equipment can run the gamut from state-of-the-art bingo consoles, integrated management systems, mulch-channel video flashboards and high-tech electronic handsets to tablets and other portable gaming devices, as well as an array of innovative computer games. Stuart says the game remains the same at its core. It is sociable, unfolding in a relaxed atmosphere. This is well-suited both for community fundraising and for recreational gambling at a casino. Operators view bingo as a means to cultivate customers either for more expensive games or simply for restaurants, shopping and shows. Technology’s impact occurs on the tablets. “Every jurisdiction is different, and we service so many of them,” Stuart indicates, “but if we had to pretend every bingo hall had 100 seats, I would say eight out of every 10 players would use a tablet now, along with the cards. A few years ago I would have said it was two out of 10, and the rest would have been using the cards.” The games Video King supplies its vendors take bingo to a new realm. One of them is Bing O’Lucky. Each winning card now has its own animated sequence, and each game has 15 of these animated scenes. Cascading coins, dancing elements such as clovers, elves, top hats and a flighty fairy; sparkling rainbows and flying diamonds are part of Bing O’Lucky’s lineup. Players begin by touching the main screen to select the number of cards and at which price one wishes to play, which is changeable every game. The cards are actively daubed as the called balls are displayed, simulating the feel of live play. To switch it up, players can click the help and options button to view the pay table and change the pace of play. An array of horse-racing games also exists. In Horse Race, 15 jockeys vie for top prizes. One can play any one of three different pull-tab payouts in conjunction with Video King’s software. Long Shot is a unique progressive pull-tab concept that generates large jackpots. It can become even more enjoyable when coupled with the Long Shot animation program, now available as part of Video King’s suite of race games. Go-Go-Ball is the newest race ticket on the market. It teams with Video King’s cast of characters—from Sir Dab-A-Lot to Free Space to the rocket-fueled Astronaut—with race animation awarding prizes for win, place and show. Over the last several months, Video King has ushered in the next generation of flash board play. It has taken the game into the realm of big-screen television. By splitting the electronic flash board image into three high-definition channels, information can be displayed in a big way across three TV screens, which can be 40, 50 or even 60 inches. Aligned in the shape of a traditional flash board, two of the monitors will show the 75-number bingo board, and the third will display the other game information, including game name, pattern, ball called, ball count, or even the ball image. As an added bonus, the TVs can be used for digital signage. In all, it’s not your father’s bingo.

“THE BEST POKER PLAYER TRACKING SYSTEM EVER.”

IF YOU THINK WE’RE BLUFFING... ...CALL US.

25003 Pitkin Rd., #C100, Spring, TX 77386 281.367.5233 | genesisgaming.com

p. 74 harrahs:Layout 1 4/17/14 5:07 PM Page 74

Harrah’s Resort Southern California celebrates $160 million expansion By David Ross

California

Dreamin’

ifteen years ago, the spot where Harrah’s Resort Southern California now sits, including a casino and two 21-story hotel towers, was a slow and sleepy community—a 6,000-acre reservation where the traffic would often come to halt because a cow had decided to stand in the middle of the road. Just as often, two cars would stop while the drivers chatted. The casino and the 500-member tribe that owns it have come a long way since then. The casino came first by way of a Sprung structure (kind of a tent) that was filled with slot machines, and was only several years later followed by the casino and the first 21-story tower. The resort (until recently known as Harrah’s Rincon Resort & Casino) April 4 celebrated the grand opening of $160 million worth of improvements and a new marketing campaign—“The First Resort for Fun!”—designed to emphasize the non-gaming aspects of the resort as much as the slot machines and table games. Visitors can paddle up to Southern California’s only swim-up bar, order a drink, and drift through the 400 feet of the Lazy River, which is part of a pool area called “Dive.” At another part of the resort, expert masseuses can pound them into very contented jelly. Or they can just sink their teeth into a worldclass hot dog. It’s a resort that aims at world-class status in an out-of-the-way part of Southern California. The improvements include a new 21-story hotel tower with 403 rooms that doubles the number of rooms available. They also include a 23,000square-foot event center that seats 2,400; a total of nine dining options; six

Global Gaming Business MAY 2014

bars, including the Corked beer and wine bar; and Spikes, a craft cocktail bar. The opening of the new enhancements includes the return of Pink’s Hot Dogs and the introduction of a new restaurant called The Earl of Sandwich, a new chain of baked sandwich restaurants owned by the noble British family, including the 14th Earl, John Montague, whose ancestor is credited with having invented the most famous of finger foods. This will be its second store in Southern California. That eatery’s claim to uniqueness is that every one of its sandwiches is baked fresh to order. At the grand opening, Richard Pink, whose family started the original Pink’s Hot Dogs in Hollywood 75 years ago, declared enthusiastically, “Pink’s has finally reopened,” after many months of being closed. He repeated the family slogan, “When you bite into it, it snaps and the juices flow!” Pink’s has a reputation among the glitterati. Orson Welles is said to have established a personal best at the original Pink’s by downing 18 hot dogs in a sitting, while today luminaries such as Steve Martin and Katy Perry regularly drop by for a nosh. The name change at Harrah’s accompanies the expansion, and emphasizes the fact that the resort is being sold more as a world-class casino resort than as a regional Indian casino based in Valley Center. So, somewhat rare for an Indian casino, the name of the Rincon Band of Luiseño Indians is no longer a part of the brand now. Interviewed last month by the San Diego Union Tribune, Tribal Chairman Bo Mazzetti explained, “This was a business decision made by the full council. If we’re going to do what we set out to do, which is to be a world-

M ga

p. 74 harrahs:Layout 1 4/17/14 5:08 PM Page 75

The various improvements make Harrahâ&#x20AC;&#x2122;s the fourth largest hotel property in San Diego County, and a property that Harrahâ&#x20AC;&#x2122;s is referring to in television ads as â&#x20AC;&#x153;Palm Vegas.â&#x20AC;?

class facility and attract people from Russia, China and the United States, you have to have something attractive, something that people will understand. How many people are familiar with Valley Center or Rincon?â&#x20AC;? The $160 million price tag, the largest expenditure since the casino opened 14 years ago, is actually Phase VII of a development plan that was approved years ago. The construction began in October 2011 and continued while the casino remained open. Joe Martinez, the project manager for Sierra Building Solutions, discusses some of the challenges of tying the various elements of the property together in a way that looked organic. â&#x20AC;&#x153;A lot of us have been around from day one,â&#x20AC;? he says. â&#x20AC;&#x153;Rincon has been part of me for 15 years.â&#x20AC;? He recalled the cattle crossing the road in front of them during construction. â&#x20AC;&#x153;When you have to tie two towers together, thatâ&#x20AC;&#x2122;s not an easy thing.â&#x20AC;? Also with the project from its inception was John Finn, the recently elected California president of W.E. Oâ&#x20AC;&#x2122;Neil Construction, the original contractor. During his remarks at the ribbon-cutting, Mazzetti noted that the tribe was able to finance the $160 million expansion â&#x20AC;&#x153;on our own credit-worthiness, which is a big deal for the tribe.â&#x20AC;? The various improvements make Harrahâ&#x20AC;&#x2122;s the fourth largest hotel property in San Diego County, and a property that Harrahâ&#x20AC;&#x2122;s is referring to in television ads as â&#x20AC;&#x153;Palm Vegas.â&#x20AC;?

The celebration April 4 included a ribbon-cutting, with the resortâ&#x20AC;&#x2122;s General Manager Janet Beronio introducing other speakers, who included Rincon tribal chairman Mazzetti, Assemblywoman Marie Waldron of the 75th Assembly District, and Brad Friedmutter, CEO of the Friedmutter Group, which has overseen the casino resortâ&#x20AC;&#x2122;s design from its inception. He looked out into the vast space of the 2,400-seat event center and said, â&#x20AC;&#x153;This is a huge room that gives this property a huge edge in entertainment. This is a resort where all of the pieces come together. The new hotel is planned around the old hotel and blends into the new faĂ§ade.â&#x20AC;? Guests included members of the Rincon tribal council. It took place in the huge events center, a structure large enough to contain the concerts that used to be held outdoors. Tom Jenkins, the regional vice president for Caesars, declared, â&#x20AC;&#x153;This has evolved into a world-class resort. We are thrilled to have been part of it.â&#x20AC;? The new marketing campaign for Harrahâ&#x20AC;&#x2122;s Southern California Resort is two-pronged: 1. See it Up Close; and, 2. The First Resort for Fun. The goal, says Jenkins, is to shift the perception from gaming to a resort, where you can do a lot more than just gamble. â&#x20AC;&#x153;We are not just a resort. We are not just a casino. We fall somewhere in the middle.â&#x20AC;?

Medieval Goldâ&#x201E;˘ LV WKH KRWWHVW QHZ VORW H[SHULHQFH DYDLODEOH IURP ,QFUHGLEOH 7HFKQRORJLHV IHDWXULQJ OLQHV RI PDJQLÂżFHQW gaming fun and features a-plenty including: Random Rewards, an Interactive Pick â&#x20AC;&#x2DC;Em, Free Spins and a 3-Level Progressive.

incredible

TECHNOLOGIES ÂŽ

WWW.ITSGAMES.COM

MAY 2014 www.ggbmagazine.com

p. 76, 77 emerging:Layout 1 4/17/14 5:08 PM Page 76

EMERGING LEADERS Trending Now Michael Bond Vice President, Corporate Finance, Boyd Gaming hile being included in the inaugural edition of Emerging Leaders may have been a surprise, Michael Bond, vice president of corporate finance at Boyd Gaming, is deserving of the honor. Bond has a laid-back attitude—“I am just a guy who loves his job,” he says—but credits a lot of his success to thinking creatively about problemsolving. Bond has a natural ability to focus on doing every step in a process well, no matter how important or mundane. This attention to detail has allowed Bond to rise through ranks at Boyd Gaming. He started as an internal audit intern in 2002 and today leads a group of motivated employees in his current role, which was made official in 2013. In addition to working with the right com“Although I work for an pany at the right time, Bond credits his success to working hard and focusing on doing each job well. operator, there is a real “Throughout my career, I have focused less on need for a renaissance in ‘climbing the ladder’ and more on doing the task game design over the at hand as well as possible,” he explains. next decade. I think a That thought process combined with working alongside strong mentors within Boyd Gaming— few young and talented including CFO Josh Hirsberg, Vice President of creatives will revolutionize Internal Audit Paula Eylar and CEO Keith the casino experience by Smith—has allowed Bond to grow and prosper in taking game design to his career. Along with his own career path, Bond has paid attention to up-and-comers in his comthe next level.” pany and the industry. As a VP over the past six years, Bond is playing a leading role in making sure that young professionals have the advice, support and space to grow in the industry and become very successful. “Seeing young, hard-working kids quickly grow into talented and respected professionals is the most rewarding thing I have done in my career,” he says. In addition to being a strong mentor, Bond also pays attention to trends and areas of growth in the industry for both established leaders like himself and emerging leaders. In addition to the obvious growth areas of international expansion and online gaming, Bond has identified another key area of growth: game design. “Although I work for an operator, there is a real need for a renaissance in game design over the next decade. I think a few young and talented creatives will revolutionize the casino experience by taking game design to the next level,” Bond says. “New game designs will appeal to younger customers and demographics, which is a necessity for the gaming industry to thrive over the next 10 to 20 years.” Over the next 12 to 18 months, Bond says he is excited to take the lessons he has learned throughout his career and begin to make a positive and lasting impact on the financial operations of Boyd Gaming. —David Rittvo, The Innovation Group

Global Gaming Business MAY 2014

Content Is Queen Tifani Chung Senior Content Manager, GTECH ifani Chung, senior content manager for GTECH, has worked in the gaming industry for more than 10 years. GTECH is a leading commercial operator and provider of technology in regulated gaming markets worldwide. Chung’s responsibilities include the content strategy of the North American video lottery and route operations while overseeing the research and development division for video lottery markets within GTECH. Chung believes education is the driver in enhancing one’s career. She attended the University of New Brunswick and graduated in 2003. She left the university with a computer science background in hopes of following her passion to work in the gaming industry. Chung took on extra work and furthered her education to progress her success and leadership qualities. She notes that through her experience, she has learned how crucial teamwork is, and that working collectively cannot only benefit a com-

p. 76, 77 emerging:Layout 1 4/17/14 5:09 PM Page 77

“I’m always looking for

“It is not only about how smart and prepared you are, but also about showing respect, patience, and demonstrating the ability to build a supporting coalition.”

my next challenge. This desire for constant change is a large part of what I attribute my rise in the company to.”

Culture Convergence

pany, but also the individuals within the team. Although she does not have direct reports as a mentor, the collective culture within GTECH offers employees the opportunity to all work together and learn from one another. Shortly after attaining a job with GTECH, Chung began her career as a software tester. Excited to have her foot in the door, she knew this was the opportunity she needed to one day achieve a senior position within the company. In the early years, as a software tester she made sure to gain as much exposure and experience in the industry as possible. The toughest choice Chung says she made in her career was moving from a project management role to a strategy position. In this new role, she takes on the responsibility of working on the front end of projects. Her new tasks include making decisions at the beginning of projects such as figuring out the scope, choosing the games to introduce, and where to launch them. “The new role would be a change, but I was ready for it,” she says. Chung takes pride in her strong leadership skills, which allow her to inspire her team to produce topperforming games while meeting aggressive business goals. She says the recent success of new multi-games released in Canada is one of her proudest moments with GTECH. Chung’s advice to other aspiring and emerging leaders is to take and appreciate every opportunity, even if entry level or unexpected. Secondly, education is key, and is an important tool to better oneself and push forward in the professional world. She believes each career choice is not just a stepping-stone, but is a learning tool for credibility and experience. “I’m always looking for my next challenge,” Chung says. “This desire for constant change is a large part of what I attribute my rise in the company to.” Open to change, she looks forward to new gaming channels and challenges within the industry. —Alexis Garber, The Innovation Group

ollowing the Scientific Games acquisition of WMS Industries, the organization wisely maintained the leadership of one of its most prominent executives, Jordan Levin. In his new role as managing director of Williams Interactive, Levin is helping to shape the future of one of the world’s largest providers of lottery, gaming and interactive products and services through his oversight of the company’s interactive group. Continuing under the Williams Interactive brand, Levin’s role includes overall strategic direction, business development, sales and marketing, and operational activities. Williams Interactive was formalized in 2012 with the mission to leverage content and operations expertise in the various online, social, mobile and other interactive sectors. Levin is confident that both within his company and on a broader industry scale, this segment is the perfect fit for young leaders like him. “The interactive industry is full of professionals from the X and Y generations in positions of management and influence,” Levin says. “With respect to high technology and creative industries, this is logical. The learning curve is faster and faster, and young professionals (especially in technology) have a great opportunity in any type of interactive industry, including gaming. The sector is unquestionably opening doors for emerging leaders and young professionals looking to establish themselves.” While Levin believes that the opportunities are significant across the spectrum of the gaming industry, he is also confident there is something unique about the culture at Williams Interactive that allows for emerging leaders to thrive and advance. “By and large, we have a culture that encourages hard work as well as fun,” he says. “We very much are and very much continue to strive to retain a true internet culture.” Levin also credits the structure of his organization for its ability to identify and promote

Jordan Levin Managing Director, Williams Interactive

young leaders. “Our culture is largely non-hierarchical,” Levin explains. “I personally place little premium on someone’s title, and I ensure my management team understands and lives that as well. Ideas and decisions come from all areas of Williams Interactive, and I myself have a complete and total opendoor policy.” Perhaps one of Levin’s greatest assets is his ability to mentor emerging colleagues and to share the invaluable management experience he has gained at such a young age. “I encourage my youngest, highest-potential employees to learn the ‘softer skills’ required in management,” Levin explains. “It is not only about how smart and prepared you are, but also about showing respect, patience, and demonstrating the ability to build a supporting coalition.” Levin admits he was flattered to be included among the inaugural class of Emerging Leaders, but as with many great leaders, is also quick to give credit and thanks to his organization and team members for their support and contributions. “The success of Williams Interactive would not be possible without the outstanding management teams and employee base we have working in all of our locations around the world,” he says. When it comes to shaping the future of one of the world’s largest gaming and lottery entities, Levin knows this has everything to do with developing its people. “I will continue to encourage my team to place a premium on hard work and preparation,” he says. “There are no short-cuts in life. I teach my youngest, high-potential colleagues to chase their ambitions within our organization. We have several examples of young professionals already operating in positions of heavy responsibility and influence, and those folks are models for everyone. I am proud to have this be one of the hallmarks of my leadership at Williams.” —Kimberly Arnold, The Innovation Group MAY 2014 www.ggbmagazine.com

p. 78 ggw:Layout 1 4/17/14 5:09 PM Page 78

STRATEGY

ANALYTICS THAT SHAPE ROI STRATEGY SMP is a full service agenc aagencyy specializing in gaming ffor or 20 yyears. ears. As the pioneer in C Casino asino Program LLoyalty oyalty Pr ogram and Direct Direct Mark Marketing eting analy analytics tics w we e ha have ve proven track a pr oven tr ack rrecord ecord with o over ver 40 casinos. Our str strategic rategic approach creates significant appr oach cr eates sign nificant gains iincremental incr emental t l rrevenue evenue ga ains i att ffavorable avorable ROI. ROI. Giv e us an hour ffor or a w eb Give web show how meeting to sho w yyou ou u ho w we make difference w e can mak e a dif feren nce ffor or yyour our casino!

smpcom.com smpcom. com

1.1.888.796.3342 888.796.3342

THE PLAYER PORTAL Communicate dir Communicate directly ectly with w yyour our players pla yers thr through ough thei theirr o own wn personalized personaliz ed w web eb por portal. tal. Pr Present esent players pla yers with their rreal eal tim time me point balances, club le level vel sta status atus and of offers fers while rreceiving eceiving in individual ndividual player pla yer ffeedback eedback and pers personalized sonalized surv ey inf ormation- all in easy to survey informationanalyz analyze e rreports. eports. Y our casino gains rreal eal pla yer e insight Your player to mak make e mor more e inf informed ormed mark m marketing eting and adv advertising ertising decisions b based on pla player yer inter interests ests and mediaa choices. C Contact ontact us to schedule a personal demonstr ation. demonstration.

ffocusonyourplayers.com ocusonyourplayers.com c

1.1.888.796.3342 888.796.3342 2 78

Global Gaming Business MAY 2014

Casino Brand Building 101 Creating an effective brand boils down to five crucial steps.

or years, I’ve been polishing old brands and creating some new brands. I have found that, no matter what the project, market or budget, the steps are the same. They are what one of my former agencies likes to call “The Jules Rules.” I like to refer to them as the five pillars of brand marketing.

Know Your Target/Market Formal research unearths a great deal of insight. I always recommend it, but I also highly recommend spending time on the floor. When was the last time you worked your player’s club—answering questions about the latest promotion, redeeming offers, issuing comps based on the actual play in your CMS? If you can’t recall, it’s time to hit the floor. Not only do you get to meet and learn more about your guests, you get to understand what your front-line employees have to face when trying to deliver on your brand promise. I’d also invite my advertising agency folks to meet some guests face to face. It’s amazing what everyone will learn and how that will affect the next steps. Brands are Built from the Bottom Up I have used the old iceberg image as a longstanding example of what makes a good brand because it’s the best way to show your operations team how what they do is the most important part of the brand. All the things that happen below the surface are what makes your brand true (or not) to your guests and to your employees. The next time you embark on a brand project, look at all of those elements first before giving your agency or graphic artist directions on a name or logo. Operationalize Your Brand When you can’t see a difference between what you say you do (marketing) and what you actually do (operations), that’s when you know you have a truly great brand. First, you have to build the internal culture. Then, you have to make sure the tools you provide your employees to deliver on the brand are consistent with your vision. If you’re going to be the value leader in slots, you have to be the value leader throughout your property.

By Julia Carcamo

That doesn’t mean cheap. Value isn’t a price point (but that’s a discussion for another column). You can still offer a fine-dining experience. Just make sure that experience is better than anything your guests could have imagined. If you’re going to be the leader in service, guests can’t be waiting for what seems a lifetime for their cars to return from valet or to get to a guest services rep or cage cashier. True Brand Programs Share DNA Employees and customers reward brands that are true and consistent. It’s easy to be tempted by the trend, but if it doesn’t fit your brand, the guest experience will feel disjointed and your employees will not have the ability to deliver on the brand promise. The offerings you feature have to feel like they are coming from the same source. You’re not a shopping center offering every option. You have to be selective and only offer the things that make sense to your brand. To paraphrase Steve Jobs, sometimes what you say “no” to is as important as what you say “yes” to. Make Your Brand Iconic You would think that after working at one of the premier destinations in Las Vegas, my work for a smaller regional gaming company would have been less than thrilling. I’m here to tell you that is not true. The day the Isle of Capri Casinos management took the Lady Luck trademark out of the legal file cabinet and into the light was one of the most exciting days in my career. The Isle management team realized we couldn’t just ignore one of the most iconic brands in casino history. “The Lady” excited us and, more importantly, our customers. Those are my five pillars, but to be truly successful, you also need to get help. Brand development is not a DIY project. It takes resources—brainstorming, creative, execution, and sometimes legal. This can be as cost-effective or expensive as you let it become. Don’t skimp because of costs, but do find the collaborators that absolutely love your business to help you. Nothing else should do. Julia Carcamo is the chief brand strategist at J Carcamo & Associates consultancy. She has held leadership positions at the property and corporate levels at medium to large casino companies. You can contact her at Julia@jcarcamoassociates.com.

Project1:Layout 1 4/17/14 3:19 PM Page 1

p. 80 frank:Layout 1 4/17/14 5:31 PM Page 80

FRANKLY SPEAKING by Frank Legato

Fun in Cyberspace

Global Gaming Business MAY 2014

V IC TOR

RINAL DO

ou know, I remember when the biggest issue in the casino industry was whether or not players would touch slot machines that didn’t take coins. As I recall, my expert analysis at the time was that coins were part of the slot experience, and that they would stay part of the experience one way or another. It was right after I invested in beta VCRs and Blackberry smart phones. These days, it’s all about iGaming. I must admit, I was against internet gaming at first. OK, I wasn’t “doing a Sheldon” on the subject. I didn’t send bales of money to lawmakers to support bills to ban internet gaming. (I couldn’t anyway; all my money was invested in slot-machine coin hoppers.) But I was always of the opinion that as far as gambling went, I wanted to look into the eyes of the person who was taking my money. I wanted to watch those hard-earned dollars disappear as the dealer rammed them into the nether regions of the table with that bill-ramming thingamabob they use. Yes, bill-ramming thingamabob. I do believe that’s what the technical term for it is. You could look it up. Alternatively, if I’m playing slots or video poker, I like to wave bye-bye to my $20 bills as they go into the slot. It’s a sentimental thing. Gambling on the internet is so… virtual. You can’t watch your dollars as they fly away from you through cyberspace. However, my own personal gambling preference doesn’t mean that internet gaming is bad. Besides, I’m sure I will become accustomed to cyber-gaming just as I have become accustomed to playing slot machines without pumping quarters into a slot and pulling a handle. Yes, kids, I used to do that. Go ahead and say it—I’m old. When I started playing, slot machines were powered by steam. Hey, when I started playing, rainbows were black and white. The Dead Sea was only sick. My Social Security number is 1. I have an autographed Bible. OK, I’ll stop. My point, as if I ever had one, is that internet gaming is simply another distribution channel for the same gambling we’ve been doing all along. Heck, I’ve warmed up to it to the point where, as editor of this magazine, I even embrace the term “iGaming,” even though, as a professional writer, I have always considered placing a capital letter inside a word to be a capital offense. No pun inTended. I have also come to realize that the arguments against internet gaming are pretty much hooey. It will hurt brick-and-mortar casinos? Not likely. When you can play online and earn points, free rooms, free meals and other stuff you can only redeem at an actual casino, are you going to tell me people aren’t flocking to the physical property to redeem them? We don’t turn down free stuff. It’s what separates us from the animals. Internet gaming causes problem gambling? No. First, people with gambling problems are going to find a way to gamble, and if they want to do it online, there are plenty of offshore sites that will be glad to accommodate them, whether it’s legal or not. Second, safeguards against problem gambling can be implemented more easily online than in a land-based casino. Finally, there’s empirical evidence now that iGaming doesn’t cause problems. Gambling Research Australia just issued a report on the online gaming habits of Aussies, which found no evidence that online gambling is connected with problem gambling. Yes, that’s in gambling-happy Australia, where guys place bets on whether or not their toast will be burnt. They probably placed bets on the outcome of the gambling study. If online gaming doesn’t cause problems for Aussies, that’s good enough for me. I’m sure that some day, resistance to online gaming will be viewed in the same way as we now look back at the resistance to coin-free slot machines. As for me, I’ll tinker with it when I’m in Delaware, New Jersey or Nevada, and I’ll just learn to imagine my dollars being rammed into the table with a cyberthingamabob.

And I’ll still go to land-based casinos. (Seabased casinos too, for that matter.) Hey, how else am I going to get the free stuff I earned playing on my computer? (It’s an Apple I, of course.) Now, if you’ll excuse me, I’ve got to go put a tape into my beta VCR. I think I’ll watch Grumpy Old Men.

WHERE THE INDUSTRY COMES TOGETHER TO CONDUCT REAL BUSINESS May 20-22, 2014 The Venetian Macao

A G2E Event

Organized by