Global Gaming Business Magazine, December 2015 by Global Gaming Business

p. 1 cover dec:_cover, inside, back.qx 11/12/15 5:00 PM Page 1

GGB Global Gaming Business Magazine

SMART CARDS MOHEGAN’S KEVIN BROWN EMERGING LEADERS GGB JOINS AGEM

December 2015 • Vol. 14 • No. 12 • $10

Dual Threat

Trending in 2016

Everi’s cash access business dovetails with its new role in slots

DFS Debacle How fantasy sports companies can survive and thrive

Indian Wars

Several states challenge tribes’ right to Class II Official Publication of the American Gaming Association

Association of Gaming Equipment Manufacturers

Project1:Layout 1 11/12/15 4:58 PM Page 1

p. 4 toc dec:_table & mast.qx 11/13/15 11:39 AM Page 4

CONTENTS

Vol. 14 • No. 12

december

Global Gaming Business Magazine

34 COVER STORY Everi One

COLUMNS

The combination of former companies Global Cash Access and Multimedia Games has created a unique casino supplier, combining payment, cash access and kiosk supply with a growing game design studio system centered in the technology and creative hub of Austin, Texas. The former GCA’s licenses are helping Everi’s game side flourish.

16 AGA Power to Gaming People Geoff Freeman

18 Fantini’s Finance Looking Ahead Frank Fantini

Cover photo courtesy of the NYSE

By Roger Gros and Frank Legato

22 10 For 16

42 Tribes vs. States

Our annual look at the industry’s top trends for the coming year looks at daily fantasy sports, eSports, skill games and more.

As several states attempt to pressure gaming tribes for new compacts and additional taxation, tribes increasingly turn to Class II gaming.

By Roger Gros, Frank Legato, Corey Nyman, Dave Palermo, Marjorie Preston, Steve Ruddock and Kit Szybala

The evolution of smart-card technology moves toward a single card for all payment requirements in a resort, whether playing or staying.

By Dave Palermo

46 Smart Payments

By Dave Bontempo

50 Fantasy Futures GGB iGames

Thomas Jingoli and Marcus Prater

53 Table Games Get Ready for Millennials Roger Snow

FEATURES

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

20 AGEM Manufacturing Milestones

The emerging daily fantasy sports industry can weather the most recent storm and emerge as a prosperous industry segment.

DEPARTMENTS 6 The Agenda 8 Dateline 14 Nutshell 54 Frankly Speaking 56 New Game Review 60 Emerging Leaders With Atlantis Casino’s David Farahi, Monte Carlo’s Jessica Cipolla-Tario, and Flamingo’s Andre Jackson

62 Goods & Services

By David D. Waddell and Dustin M. Ford

iGNA Outlook 58 Canadian Sports Betting Paul Girvan

59 iGames News Roundup

64 Cutting Edge 65 People 66 Casino Communications With Kevin Brown, Chairman, Mohegan Tribal Council

Global Gaming Business DECEMBER 2015

Is your advertising measuring up? Because we’ll take

agencies from anywhere. We view the crowded casino

the Pepsi challenge with other agencies. We will.

gaming category as an opportunity to demonstrate

Big agencies, little agencies, agencies with really long

how creativity can separate the winners from the

acronyms for names, agencies that claim to specialize

losers. So if you’ve thought about your advertising and

in gaming, agencies that claim they can help you

wondered if it’s measuring up, we’re your next agency.

more because they don’t specialize in gaming, agencies from up North, agencies from out West,

251.476.1283

RSG_37550_BrandingCampaign_PrintAd_GGB_December2015.indd 1

THE AD AGENCY FOR SMART CASINO BRANDS.

REDSQUAREGAMING.COM

11/10/15 10:39 AM

p. 6 agenda:_table & mast.qx 11/12/15 3:51 PM Page 6

THE AGENDA

The Power of Perception Roger Gros, Publisher

e proudly say that gaming is one of the most heavily regulated industries in the world. That’s a good thing, because gambling as an activity has often been on the shadowy fringes of society, conducted by criminals and lessthan-savory characters. By legalizing gaming and regulating it with transparency and diligence, gaming is today a respected business that pays massive taxes and employs millions around the world. So it’s important to maintain the reality, as well as the perception, that gaming is clean and can be trusted. There are a couple of instances in the past month that both threaten this and reinforce this perception. And in neither case am I even coming close to suggesting wrongdoing, however. In Nevada last month, Patricia Mulroy resigned from the state Gaming Control Board one day and accepted a seat on the board of directors of Wynn Resorts the next. Again, not suggesting any skullduggery here. But let’s review. Up until the time she resigned, Mulroy voted on issues brought before the board by Wynn Resorts. Should she have recused herself from these votes? Not according to the Nevada Commission on Ethics, which signed off on Mulroy’s resignation from the gaming board and her subsequent appointment by Wynn Resorts. The ethics commission waived the normal one-year waiting period that regulators have to sit out of the game in Nevada (and this is a recent development, by the way; regulators in Nevada used to have a revolving door to the casino companies). Just as an aside, I believe any government entity—not just in Nevada, but all governments—that oversees ethics is a bit like letting the fox watch the henhouse, but that’s just me. Again, I’m not alleging any wrongdoing. I’m sure Ms. Mulroy is a very reputable and competent executive. After all, she ran the water district in Southern Nevada for many years, and nothing is more important in Nevada than water. But how does this look to the outside world? Here’s a woman, politically connected to everyone in the state, who skips out on regulating the state’s major industry to immediately work for one of the most important companies in that same industry. Sorry, it looks bad. Perception may not be reality, but it certainly stains the credibility of our heavily

regulated industry. Why couldn’t she have resigned and waited the one year? In New Jersey, they have a four-year cooling-off period! And that is never waived like the one-year period was in Nevada. I know some very competent and excellent regulators in New Jersey who had to put on the shelf the very expertise they acquired by serving on a state regulatory body for four years. Just to be clear, this restriction only applies to companies that they regulated in New Jersey and not the entire gaming industry. So this ties into a recent decision by the New Jersey Division of Gaming Enforcement (DGE) to issue an iGaming license to Amaya Gaming, the parent company of PokerStars, the notorious company that illegally offered iGaming in all the United States following the passage of the Unlawful Internet Gaming Enforcement Act in 2006. Amaya had, of course, purchased the assets of PokerStars (and related Full Tilt Poker) after they were closed down following the Black Friday indictments in April 2011. The DGE was tasked with investigating the reformed PokerStars, which wanted to operate in the legal online gaming market in New Jersey. The Amaya deal was done in January 2014, and licensing—and not the final license, mind you, just that the company is found “suitable” to operate in the state—was completed in October 2015. The DGE was at least given the opportunity to vet PokerStars. In Nevada, the legislature placed PokerStars in a five-year “penalty box” because of its previous illegal activity via the bill legalizing iPoker in the state. New Jersey has long been seen as the toughest place to get licensed in gaming. Amaya is rightly proud of the approval by the DGE. I can’t imagine the lengths the DGE went in its pursuit of the truth. And Amaya will use this “golden ticket” when they approach other jurisdictions for licensing. But how valuable is that ticket if there’s a question about the propriety of an agency’s oversight? What if a gaming commissioner can quickly switch sides after a positive vote for a prospective employer? The industry needs to be totally transparent and free of any negative perceptions. Even with the assurances of ethical standards being upheld, being good is better than looking good.

Global Gaming Business DECEMBER 2015

Vol. 14 • No. 12 • December 2015 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com JohnBuyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Frank Fantini | Geoff Freeman | Paul Girvan Thomas Jingoli | Marcus Prater | Roger Snow Contributing Editors Stephanie Adkison | Dave Bontempo Dustin M. Ford | Corey Nyman | Dave Palermo Marjorie Preston | Robert Rossiello | Steve Ruddock Jacqueline M. Shahin | David D. Waddell

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Partner, Duane Morris, Baltimore

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

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

• Roy Student, President, Applied Management Strategies

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

Official Publication

Colossal Diamonds™ is a quiet classic. This larger-than-life, 3-reel, singlepayline game features simple, classic gameplay with big payouts. Colossal Diamonds has proven to be a massive hit for players and casinos wherever it has been placed. “Colossal Diamonds is the most popular and highest performing game on the floor at Coushatta Casino Resort. I recommend it to all casino operators, except, of course, my closest competitors.” - Warren Davidson, Director of Slots at Coushatta Casino Resort

GGB_Ad_ColossalDiamonds_201512.indd 1

Contact your AGS PlayAGS.com representative for details. 11/6/15 11:24 AM

p. 8 to 13 dl dec:Layout 1 11/12/15 3:53 PM Page 8

DATELINE USA december2015

New Jersey Governor Chris Christie

MGM’s Mandalay Bay will be part of the new REIT

HAil MAry

New Jersey sports betting lawsuit gets new life

MGM Goes REIT

Goals include reducing debt, raising value

espite losing every decision winding its way through the federal courts, the New Jersey lawsuit challenging the Professional and Amateur Sports Protection Act (PASPA) that bans sports betting in all but four states achieved a victory of sorts in October. When a three-judge panel of the Third Circuit Court of Appeals turned down the suit by a 2-1 margin in 2014 (following a similar ruling a year earlier), New Jersey attorneys filed a request to the court for an en banc or full court hearing, which was granted. These appeals are usually declined quickly without any response from the winning side—in this case the leagues—required. To be granted the en banc hearing, a majority of the judges have to agree there is a reason to hear more arguments, so the result is encouraging

to those who seek to legalize sports betting in the Garden State. In addition, two appeals court judges have recused themselves from the case, meaning that New Jersey only has to convince six out of 10 judges, instead of seven out of 12. New Jersey is attempting to circumvent a federal ban on sports betting by instituting a self-regulated industry that could operate at the state’s casinos and racetracks. The state is arguing that the current federal ban is on state-regulated sports betting only. The Appeals Court panel originally ruled that the state was still regulating sports betting by limiting it to casinos and racetracks, applying age restrictions and other rules. Legal experts characterized the decision as a victory for Christie. The Horseshoe Casino in Cleveland

CAESARS OUT OF OHIO Financial difficulties force the company to withdraw from partnership

he Horseshoe Casino Cincinnati and Horseshoe Casino Cleveland in Ohio will be getting a different name, and will be operated by Rock Gaming. Rock Gaming is owned by Cleveland Cavaliers owner Dan Gilbert, who is also chairman and founder of Quicken Loans and owns the Lake Erie Monsters of the American Hockey League. During the next six months, Caesars will strip its branding from the casinos as well as its ThistleDown Racino in North Randall. None of the casinos will close during the transition. Caesars is selling its 20 percent ownership in these properties. They will begin to switch over operations to the Detroit-based Rock Gaming. The changeover should be completed by mid-2016. It is unknown at this time what their new names will be. In the spring, the Ohio Casino Control Commission approved Rock Gaming LLC to be licensed as a new gaming management company. Much of this has been in the works for several months. In January, Caesars filed for Chapter 11

bankruptcy. The Ohio properties were excluded from this filing. In February, Caesars revealed that it would be selling the 20 percent interest it owns in all of its Ohio casinos, including Horseshoe Casino Cleveland, ThistleDown Racino, Horseshoe Casino Cincinnati, the Ritz-Carlton Cleveland, the Higbee Building, and a controlling interest in Turfway Park in Florence, Kentucky. Rock Gaming also owns the Greektown Casino in Detroit. Rock Ohio Caesars was a partnership formed in 2010 by Rock Gaming and Caesars to build and run casinos. Horseshoe Casino Cleveland opened in May 2012 and the Horseshoe Casino Cincinnati first opened its doors in March 2013. Rock Gaming and Caesars will remain partners in the Horseshoe Casino Baltimore, which opened last year.

Global Gaming Business DECEMBER 2015

fter much planning and discussion, MGM Resorts International last month said it would spin off the real estate of 10 of its properties into a real estate investment trust (REIT) and then lease back those properties to manage. A REIT has favorable tax advantages and allows MGM Resorts to reduce its debt and potentially raise its shareholder value. The proposal follows similar moves in the gaming industry by companies like Penn National Gaming, Pinnacle Entertainment and Caesars Entertainment, which wants to establish a REIT to help it emerge from bankruptcy. Into the new entity, MGM Growth Properties, MGM will contribute seven properties in Las Vegas— Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, Excalibur and The Park—plus MGM Grand in Detroit, Michigan and two Mississippi casinos, Gold Strike in Tunica and Beau Rivage in Biloxi. MGM Resorts will continue to own MGM Grand, the Bellagio and Circus Circus in Las Vegas, as well as its interest in CityCenter and Aria. Its other joint venture arrangements in Atlantic City’s Borgata, and in Macau, will remain unchanged as well. In addition, MGM Growth will have the right of first offer for MGM properties in Maryland and Massachusetts slated to open within two years. MGM Growth Properties will assume $4 billion in debt that the company expects to be refinanced with a combination of debt and equity offerings. MGM Resorts will own about 70 percent of MGM Growth Properties, so the deal isn’t actually a spinoff. While the deal will require FTC and regulatory approvals, it will not need IRS approval since MGM Resorts owns a majority stake. MGM Resorts will lease the properties under a long-term, triple-net master lease with an initial 10-year term and four five-year extensions possible.

p. 8 to 13 dl dec:Layout 1 11/12/15 3:54 PM Page 9

DATELINE ASIA december2015 Shinzo Abe, prime minister of Japan

Japan Looks to 2016 Country would draw mass-market Chinese J

apan will have to wait a little longer for legal casinos. Union Gaming Securities Asia Ltd. has announced that casino resorts in the country are almost certainly “off the table for 2015” after the Japanese legislature, or Diet, chose not to convene a special session this fall. It’s the first time in a decade that the country’s two-chamber parliament has declined to hold the annual fall session. “The legislative timeline now moves to 2016 for the first bill and 2017 for the second bill,” said analyst Grant Govertsen. He referred to two separate measures required to approve casinos in Japan—one to enact the legislation, and the second to deal with regulatory matters. Govertsen said a “large-scale IR” is not likely to open in Japan until at least 2020, the year of the Tokyo Olympics. Govertsen added, however, that the country should be a big winner when and if it goes for legal casinos. “High-value mass-market Chinese customers are

eschewing Macau and instead heading to new-to-them destinations—namely places like Japan and Korea,” he wrote. The volume of Chinese visitors to Japan has continued to skyrocket, with “year-to-date visitation up a staggering 117 percent to 3.3 million persons through August; this is on top of an 83 percent year-on-year comparison in 2014,” Union Gaming reported. Those figures should prove compelling to the Diet, which has been considering a casino bill for years. Opponents of the bill, including religious leaders, fear that casinos could lead to problem gambling and associated social ills. However, CLSA has estimated that casinos in Japan could generate annual revenues of $40 billion, creating a market that is on a par with only Macau and the U.S. Penghu’s Rainbow Bridge

Mohegan Eyes South Korea Gaming tribe partners with airport authority ohegan Tribal Gaming Authority has already expanded beyond the Connecticut base of its flagship Mohegan Sun resort with a Pennsylvania racino and the Resorts casino hotel in Atlantic City. The authority is now looking abroad—and more specifically, to Asia. MTGA has submitted a $5 billion bid to build and operate an integrated resort in South Korea, at the Yeongjong Island transportation hub west of Seoul. It would be a foreignersonly casino, under one of two available licenses planned to be granted this year in an effort to boost tourism to the country. MTGA President Bobby Soper Mohegan’s proposal, which is currently among 17 local and international bids for the two licenses, envisions a multiphase development beginning with a $1.6 billion integrated resort, including a casino and luxury hotel in a resort that would include entertainment attractions, shopping, dining, a theme park and convention facilities. Mohegan’s local partner is the Incheon International Airport Authority. The proposed IR is among six proposals near Incheon International Airport. Among Mohegan’s competitors in the district is Grand Leisure Korea, which is a subsidiary of the state-run Korean tourism agency. Other bids for resorts near the airport come from Chow Tai Fook Enterprises, a Hong Kong-based jewelry chain; China’s Macrolink Group; and Bloomberry Resorts of the Philippines. “While we have previously looked at various development opportunities outside of North America, this is the first opportunity we felt compelling enough to pursue,” Bobby Soper, president of Mohegan Tribal Gaming Authority, said. “It is not only convenient to what will arguably be the largest airport passenger terminal in the world; it is also expandable in several phases that will take full advantage” of Incheon’s beach attractions, boating activities and other amenities.

Taiwan County to Vote Again on Casinos? But casinos could incur wrath of China esidents of Penghu, an outlying Taiwanese island, may take to the polls to decide on legal casinos next year, according to multiple reports. The Macau Business Daily cited Taiwan’s Central News Agency in reporting that the local government has approved a referendum to be held between January and May 2016. The timeframe is pivotal: the presidential election takes place January 16, and the new president will be inaugurated May 20. The referendum must first be OK’d by Taiwan’s cabinet. If it’s approved, pro-casino groups would have to collect signatures amounting to 5 percent of more than 82,200 eligible voters in Penghu, or about 4,100 petitioners. At that point, the referendum could go forward. According to the Business Daily, gaming was once banned on Taiwan’s outlying islands, including Kinmen, Matsu and Penghu. That ban was lifted in January 2009. The people of Penghu first voted on casinos in September 2009, but shot down the measure with 56.4 percent of voters against the ballot question. Their neighbors on Matsu held a referendum in July 2012 and approved casinos as a way to boost tourism. But the Taiwan parliament has not yet drafted a regulatory structure for casinos, and the islanders continue to wait. Legislators have reason to hesitate, according to Taiwan Today. The publication reports that mainland China would be displeased if the islands approve casinos that attract Chinese gamblers. Visiting Kinmen Island in late May, Zhang Zhijun, director of China’s Taiwan Affairs Office, said as much, telling his hosts that China would sever transport and trade lines with Taiwan’s islands if casinos are legalized in the islands.

DECEMBER 2015 www.ggbmagazine.com

p. 8 to 13 dl dec:Layout 1 11/12/15 3:54 PM Page 10

DATELINE GLOBAL december2015

Hanging in Baha Mar’s Izmirlian struggles

Baha Mar Ltd. founder Sarkis Izmirlian

to keep dream alive

arkis Izmirlian, the billionaire who saw his dream of the largest casino resort in the Caribbean 90 percent complete before a dispute with his Chinese state-owned contractor led to a halt in construction and the start of liquidation procedures by the government of the Bahamas, has made a new proposal to save the largest construction project the islands have ever seen. Izmirlian has offered to put up more of his own money to save the $3.5 billion project from liquidation. His family already put up nearly $1 billion—$850 million from Izmirlian himself—for completion of the six-hotel gaming and leisure complex on Nassau’s legendary Cable Beach, with the remainder put up by the stateowned Export-Import Bank of China (Exim). Exim recently denied to loan Izmirlian’s company any more money to complete the project. As Baha Mar Ltd. laid off all of its 2,000 active and non-active employees in October, negotiations between Baha Mar, Exim and the contractor, China State

Construction Engineering Company subsidiary China Construction America, continued, mediated by court-appointed joint provisional liquidators and officials of the Bahamian government, in an effort to stave off liquidation procedures, which had been set to officially begin November 2 before the Bahamas Supreme Court extended the deadline for private resolution to November 25. Last month, Izmirlian offered to put up more of his own money through short-term investments, in exchange for collateral and a senior ranking among other creditors to protect his investment, according to a Bloomberg report that cited unnamed sources close to the negotiations. Meanwhile, the Supreme Court has placed Baha Mar into receivership at the request of Exim, a move the head of the Bahamas’ Progressive Liberal Party called “positive” in that it will ensure the parties cooperate to complete and open the resort. “The (receivership) decision will mean a new era of cooperation to get the project finished and people back on the job,” PLP Chairman Bradley Roberts said in a statement.

Sail away

Downsizing in Sydney

Bermuda hoping for casino by 2017

Crown cuts casino in half

rown Resorts has proposed downsizing its planned luxury casino at Crown’s Barangaroo in Sydney. Barangaroo Crown is now seeking ap- casino in Sydney proval for a 6,800-squaremeter (approximately 73,000-square-foot) VIP casino; the original footprint had a gaming floor that was more than twice that size. The license agreement gives Crown the right to unlimited table games within about 15,500 square meters of space, or 20 percent of the gross floor area, reported the website. Crown’s James Packer, speaking at the opening of his new $US3.2 billion Studio City casino resort in Macau, said Sydney Barangaroo is the most important project in his portfolio, which also includes a resort in Las Vegas. “In my business life, nothing is more important than Crown Sydney,” he said. “It will be the most expensive ever to build per square foot, and we want to make it very special.” The casino was originally slated to open in November 2019, but that date has been pushed back to 2020, according to the Australian. 10

Eilat’s airport

Fly Away Israel plans casino at former airport he city of Eilat, Israel, could be the site of the nation’s first casino, according to a report in T Ynetnews. The publication reported that an interdepartmental government committee convened in October to examine the possibility of establishing a Las Vegas-style casino resort in the nation’s southernmost city. The meeting was called by Tourism Minister Yariv Levin at the request of Prime Minister Benjamin Netanyahu. “We are examining this very seriously,” Levin said. “We think this can bring Eilat to a different place. It has amazing potential. The idea is to not only establish a casino, but a large entertainment complex that will launch Eilat upwards.” The plans also include a new convention center, shopping facilities and other non-gaming attractions. The likely spot for the development is thought to be Eilat Airport, which will be cleared for redevelopment after a new airport opens in Timna.

Global Gaming Business DECEMBER 2015

Bermuda official says the island nation is behind schedule on developing gaming regulations, but hopes to have a casino up and running in time for the 2017 America’s Cup yacht race. Bermuda Tourism MinBermuda Tourism ister Shawn Crockwell said the Bermuda government is Minister Shawn Crockwell behind schedule for what he says is an ambitious deadline to have a casino by 2017—thus far, it only has appointed a Gaming Casino Commission. “Obviously, we would like to have it for the America’s Cup, when there is going to be that volume of people in Bermuda,” Crockwell told the Royal Gazette. “The process has taken longer than I expected, but there are a lot of components to this. There has to be consultation with various bodies and there are so many things you have to do to make sure that, once we are up and running, we are not falling afoul of international standards.” The gaming regulations must go through the parliamentary process, which can take a great deal of time, Crockwell said, but they should be completed during Parliament’s next session. Veteran gaming regulator Richard Schuetz has been named the commission’s executive director.

YOU SEE AN OUTLET. CRIMINALS SEE A WAY IN.

Did you know something as simple as an

A BREACH CAN BE

unsecured power outlet could give criminals

DEADLY TO YOUR

access to your entire casino – front end, back

BUSINESS. DON’T RISK IT.

end, personnel records, customer data, your website, even cage information?

Contact GLI today, and let our Gaming Services

Fortunately there is GLI’s Gaming Services

Division experts find

Division. Staffed with leading security,

and fix any potential

compliance, audit and IT experts, GLI’s Gaming

ways in before the

Services Division has the global experience to

criminals do.

look for things you might not see. We provide the most comprehensive portfolio of services available to help you protect yourself and your casino including software audits, security audits, communication testing, kiosk testing, chip verification, progressive system testing, domain controller inspection, email systems integrity check and more. Start today at gaminglabs.com

p. 8 to 13 dl dec:Layout 1 11/12/15 7:34 PM Page 12

DATELINE TRIBAL december2015

Working TogeTher Five locations bid for Connecticut casino F

ive bids were received by the deadline in November to host the third Connecticut casino, which will be a partnership of the parties that own the first two. The Mohegan and Pequot tribes, with the blessing of the state legisRodney Butler, lature, have joined forces to chairman of the try to prevent gaming revMashantucket Pequot Tribal enue from falling further than Council it already has. Revenue from their two casinos has fallen from $3.2 billion in 2006 to $2 billion last year. They hope to get their satellite casino up and running before the projected fall 2018 opening of the MGM Springfield. The five locations are in the towns of East Hartford, East Windsor, Hartford and Windsor Locks. “The response we’ve received since releasing the RFP has been overwhelming,” said Rodney Butler, chairman of the Mashantucket Pequot Tribal Council. “Our mission hasn’t changed. We want this new facility to be located in a community that wants us there and values the jobs and revenue we’ll bring.” The next step, says Butler, is to evaluate the op-

tions and decide on a winner. MMCT Ventures, the partnership between the two tribes, hopes to make a decision by December 15. The Connecticut General Assembly needs to approve that selection. The next legislative session begins in February. East Hartford Mayor Marcia A. Leclerc was most aggressive in promoting the bid from her town. The former Showcase Cinemas site is perfect for the casino, she says. The 25-acre site is visible from Interstate 84, with more than 130,000 vehicles passing by daily, and “represents a fully compliant package of municipal support, quick time to market, extremely high visibility from the highway and easy access from the Greater Hartford region.” Hartford Mayor Pedro Segarra isn’t quite as enthusiastic, but wants to keep options open for the incoming mayor, Luke Bronin, who was elected last Tuesday. “It is our understanding that gaming is a probability for the Greater Hartford region and regardless of the location, the capital city will feel its impact,” Segarra told the AP. “For this reason, we have responded with our own proposal to keep that door open so that the next administration and the residents of Hartford will have the opportunity to weigh in on the process and make a final determination of what is in the best interest of our city.”

Back in Action

20-year Texas-tribe dispute resolved

he U.S. Department of the Interior and the National Indian Gaming Commission recently affirmed the Alabama-Coushatta Tribe’s right to operate gaming activities on its 10,200-acre reservation near Livingston, Texas. The tribe has pursued state and federal approval of gaming activities since its Speaking Rock Casino closed in 2002, when the The Alabama-Coushatta Tribe’s Speaking Texas attorney general sued the tribe over the type of Rock Casino near Livingston, Texas entertainment operations it could offer. At the time, Speaking Rock was a full-blown casino, but has offered only sweepstakes games and hosted concerts since then. The number of employees dropped from 1,200 to 500. Tigua Governor Carlos Hisa said the ruling will clear the way for Class II electronic bingo gaming at Speaking Rock, with the NIGC assuming regulatory duties over gaming operations; formerly the U.S. District Court in El Paso determined what could be offered.

Global Gaming Business DECEMBER 2015

Chance for Chukchansi

Northern California casino has now been closed over a year

he Chukchansi Gold Resort & Casino near Coursegold in Northern California has been closed since October 9, 2014. It was closed by discord within the Picayune Rancheria of the Chukchansi Indians, and despite recent tribal elections, the discord remains the main factor in delaying the reopening of the casino. The closure resulted from an armed incursion by 15 men led by the head of one of the factions. About 500 employees and patrons had to be evacuated as a result. Because of fears for safety of casino customers, the state and federal governments ordered the casino closed. It has remained closed. Leading up to the closure of the casino, several factions claimed to be the legitimate tribal authority. One group of 46 members claims to be the only true descendants of the tribe that, according to the federal government, has 900 members on the rolls. Membership, and who is an actual member, has been one of the main points of contention among the tribal members. In October, the tribe held elections, but once again, all factions did not recognize the results due to the fact that members deemed nonmembers by some were allowed to vote. The election was upheld by Indian Dispute Resolution Services after it reviewed appeals filed by four candidates. One of the first goals for the council is to get the casino reopened. To do so, however, they must gain the approval of the National Indian Gaming Commission, which issued a statement. “Our priority is to ensure the facility reopens under circumstances that protect the safety of patrons, employees and tribal members, and so that the issues which led to the closure in the first place are not repeated,” said NIGC spokesman Mike Odle. “From our standpoint, there is no time frame as to when this will occur.”

p. 8 to 13 dl dec:Layout 1 11/12/15 3:54 PM Page 13

DATELINE EUROPE december2015

ResoRts WoRld BiRmingham deButs Expected to add to National Exhibition Centre draw

he new £150 million Resorts World Birmingham has opened at the National Exhibition Centre next to the Genting Arena in the English city, reports the BBC. The casino resort could turn Birmingham “into a global holiday destination,” the news outlet reports. RW Birmingham, which has created 1,200 new jobs, includes a 12-story, 538,000-square-foot resort in the shape of a cruise ship. It has 18 bars and restaurants and 50 outlet stores along with the casino, spa and hotel. It also features an 11-screen IMAX movie theater. RWB Operations Manager Barry Clemo said the resort is for people “too young to sit at home watching telly, and too old to push through the

crowds in the city center.” The NEC alone attracts 2 million people each year. James Berresford, CEO of the tourism organization VisitEngland, said the opening “marks a huge investment to the West Midlands and is sure to drive additional spend in the area, adding to the existing wide range of major visitor attractions such as Warwick Castle, Cadbury World and the Library of Birmingham that contribute to the 56 million visitors the West Midlands attracts every year.”

No More ‘Russian Vegas’

It is Genting’s first project in Europe. “No one has ever done anything like this before,” said Clemo. “There is no resort like this in the U.K. and no resort like this in Europe, so it is utterly unique.”

Hippodrome Casino

Casino patronage off the cliff he casino industry in Minsk, the Shangri La Casino capital of Belarus, is in the doldrums. The downturn is one consequence of the regional recession, which has been blamed on plunging oil prices, Western sanctions and a weaker currency. The ruble lost half its value at the end of 2014, reported the Guardian newspaper. “Lots of Muscovites used to come here, but now there’s a crisis and most of them disappeared,” said Moscow businessman and poker player Alexander Isayenko. “They’re either working or they’re face-down in the crisis.” Helen Keane, general manager of the Shangri La Casino, said up to 80 percent of her customers are Russians, but their numbers have dropped 10 percent to 20 percent since the crisis began. “We did lose quite a few visitors. A lot of our players had less money, but they would still visit,” she said. “We saw a downturn in revenues, but not to the extent that our business would close. We cut our costs. We weren’t hurting, some of the others are. Russia’s lived through several crises, but they survive, and there are always are some who will play. If you’re a billionaire and you lose a few million, you’re still a billionaire.” “Earlier, I could spend $10,000 in a night. Now I’ll play for $1,000,” said Andrei Sergeyev, a Moscow developer. More than a dozen major casinos were operating in Minsk before the crash, the Guardian reported. But this year, the Bakara, Millennium, Mirage, Victoria and Zolotoi Arbuz all shut down. Despite the downturn, Isayenko and Sergeyev said Minsk remains a viable destination. Meanwhile, Keane predicts the larger casinos in Minsk will remain, while many smaller casinos and slot parlors will likely close down.

London Growth

Hippodrome acquires Crystal Rooms

ippodrome Casino has acquired the Crystal Rooms Adult Gaming Centre, which is located next to its facility in Leicester Square in central London. “This is a significant new opportunity for the Hippodrome business,” Hippodrome Casino CEO Simon Thomas said. “It not only allows us to extend the current gaming offer, but delivers a significant platform at street level to showcase the magnificent range of entertainment facilities within the building.” Hippodrome Casino acquired Crystal Rooms following the recent adjustment of its Praesepe business development strategy. “We have enjoyed six years successful trading at what is an iconic gaming venue in the heart of central London,” Praesepe CEO Nick Harding said. “However, following a strategic review of the entire Praesepe business, which includes bingo clubs and a growing number of coastal businesses, we believe the energy and resources to remain at the top of the game in central London can be deployed more effectively.” The Crystal Rooms is among 71 Adult Gaming Centres operated under the Cashino brand in Greater London. The Hippodrome is the biggest and busiest casino in England and the most popular live entertainment venue in West London, Harding said. DECEMBER 2015 www.ggbmagazine.com

p. 14 nutshell:Layout 1 11/12/15 3:54 PM Page 14

NUTSHELL The New York State Gaming Facility Location Board OK’d plans to expand the Tioga Downs racino in Nichols into a full-scale casino operation. The three-member board gave the go-ahead on October 14, clearing one of the last hurdles remaining for Tioga Downs owner Jeff Gural, who still must pass a state background check before receiving one of four state casino gaming licenses. The recently formed anti-gambling group Voters in Charge wants Florida voters to determine if the state should have nontribal casinos. It began a petition drive to place a constitutional amendment on the 2018 ballot that would require a statewide vote to authorize blackjack, craps, roulette and other casino-style games, removing the legislature’s ability to approve non-tribal casinos in Florida. The group needs 68,314 signatures to launch a review by the state Supreme Court. Keep the Money in Nebraska has begun collecting signatures on petitions that would let voters determine if casino gambling should be allowed at the state’s five horse racetracks. The petition initiative is backed by the Horsemen’s Benevolent and Protective Association, which represents Nebraska horse owners and trainers and owns Lincoln Race Course and Horsemen’s Park; Omaha Exposition and Racing, which operates Omaha and Lincoln racetracks; and Ho-Chunk Inc., the economic development arm of the Winnebago Tribe of Nebraska. Ho-Chunk plans to reopen and operate a casino at Atokad Downs in South Sioux City, which closed in September 2012. Shakopee Mdewakanton Sioux Community Gaming Enterprise, owners and operators of Mystic Lake Casino and Hotel in Prior Lake, Minnesota, announced the property will add a new hotel tower and convention center. Construction will begin in April 2016 and be completed by the end of 2017, creating 400 construction jobs and 100 permanent jobs. Viejas Casino & Resort in Alpine, Southern California, owned and operated by the Viejas Band of the Kumeyaay Indians, opened a second hotel tower last month, two years after opening its first. The $50 million tower has 109 rooms, a fitness center, business center, bar and lounge and meeting spaces that can hold up to 1,200. The development project also included expanding the casino floor and adding 1,000 slot machines. GeoComply USA announced the launch of “Solus,” its new suite of services for the daily fantasy sports industry. Specially designed for the needs of the rapidly

evolving DFS sector, Solus provides geolocation and antifraud solutions tailored for the particular operational and market needs of daily fantasy sports. Basketball legend Michael Jordan, Washington Wizards owner Ted Leonsis and Dallas Mavericks owner Mark Cuban have all invested in sports betting data provider Sportradar AG, and will sit on the firm’s new U.S. board. The Swiss firm counts more than 450 bookmakers and 30 state lotteries among its clients, and has established itself as a world leader in the industry. A new investment round in Sportradar AG totals $44 million, led by Revolution Growth, a private equity firm founded by Leonsis, who also owns NHL’s Washington Capitals. The Bureau of Indian Affairs last month allowed three additional state tribal gaming compacts to go into effect in New Mexico. The total number is now 12 for 2015. Assistant Secretary Kevin Washburn allowed the compacts to take effect, although with concerns about revenue sharing. When the tribes assured him they were satisfied, he allowed them to go forward. The state now has more “deemed approval” compacts than any other state. This represents a majority of gaming tribes in Arizona. The next tribe likely to join this group is Nambe Pueblo, which just signed an updated compact. Penn National Gaming, owner of the M Resort and Tropicana in Las Vegas, and The D Las Vegas have joined the Nevada Resort Association, association officials announced October 15. Tropicana and M Resort President Bob Sheldon and D Las Vegas CEO Derek Stevens will become board members. The Mohegan Sun has been named “2015 Casino of the Year” at the International Entertainment Buyers Association Honors and Awards Ceremony in Nashville. Top entertainment executives, including ad agencies, theaters and clubs, choose the awards. The Mohegan Sun operates the Mohegan Sun Arena, which is typically ranked near the top entertainment values according to several publications, including Billboard Magazine. The Otoe-Missouria Tribal Council recently broke ground on its fifth casino, 7 Clans Perry Casino in Perry, Oklahoma. Scheduled to open in spring 2016, the casino will be built on a parcel of tribal-owned trust property in a residential neighborhood, on the site of an abandoned house. Parking lots will be put in on cityowned land next to the property. The tribe will pay a yearly fee to Perry in exchange for use of the land.

CALENDAR December 7-9: Global Symposium on Racing & Gaming, Loews Ventana Canyon Resort, Tucson, Arizona. Produced by the University of Arizona’s Race Track Industry Program (RTIP). For more information, visit ua-rtip.org/symposium. February 2-4: ICE Totally Gaming 2016, ExCel Centre, London. Produced by Clarion Gaming. For more information, visit ICETotallyGaming.com. February 4-8: London Affiliate Conference 2016, Olympia National, London. Produced by iGaming Business. For more information, visit londonaffiliateconference.com. February 9-11: Western Indian Gaming Conference 2016, Harrah’s Resort Southern California. Produced by the California Nations Indian Gaming Association. For more information, visit WIGC2016.com.

February 22-24: World Game Protection Conference, M Resort, Las Vegas. Produced by World Game Protection Inc. For more information, visit worldgameprotection.com. March 13-16: Indian Gaming 2016, Phoenix Convention Center, Phoenix, Arizona. Produced by the National Indian Gaming Association. For more information, visit IndianGaming.org.

“They

Said It”

“I feel like J. Robert Oppenheimer, having invented the atomic bomb. I meant it for peaceful purposes.” —Dan Okrent, credited for coming up with the idea for rotisserie baseball, which led to fantasy sports, to the Boston Globe

“When you’re viewed sort of as skeptically legitimate, there’s a divide. And it translated into very bad public programs, so there was not really a good investment in housing and all of the other lifestyle issues that make a community evolve.” —Wynn Resorts (and Mirage Resorts) co-founder Elaine Wynn, commenting that failures in the public sector contributed greatly to the decline of the Atlantic City gaming industry

“There are some big sharks in play, but there are still a lot of small fish to capture.” —Interblock Chairman Joc Pececnik, commenting to the Las Vegas Review-Journal that despite the size of merged behemoths like Scientific Games and IGT, there is still room for expansion and growth by smalland mid-sized suppliers

“We have a big investment in Pennsylvania and we want to continue to invest. We’re not going to be supporting any of this expansion. It doesn’t make sense to loot the model that has proven so successful for the state.” —Sands Casino Resort Bethlehem President Mark Juliano, on the various gaming expansion bills before Pennsylvania lawmakers, which include online gaming and slots at airports

“That’s like saying that a car is designed to run out of petrol, or a car is designed to exceed the speed limit. It’s just not true.” —Ross Ferrar, CEO, Gaming Technologies Australia, on claims that pokies are designed to deceive and addict hapless gamblers

“I’m not really sympathetic to somebody that says ‘I want everything free’ when we’re the ones spending the capital to build the amenities that are to the benefit of the tourists and the locals.” —MGM Resorts International CEO Jim Murren, commenting to VegasInc.com on the prospect of charging patrons to park near its new arena on the Las Vegas Strip

April 5-7: iGaming North America 2016, Planet Hollywood Resort & Casino, Las Vegas. Produced by the Innovation Group, BolaVerde Media, Lewis and Roca LLP and eGamingBrokerage.com. For more information, visit iGamingNorthAmerica.com.

“It’s good for our Navajo people to get a paycheck, go shopping and buy cars. It gives them a tremendous sense of pride that they can raise their families.”

April 27-29: GiGSE 2016, Hyatt Regency, San Francisco, California. Produced by Clarion Gaming. For more information, visit gigse.com.

—President Russell Begaye of the Navajo Nation, remarking on the economic changes wrought by the four casinos the nation has opened in the last five years

Global Gaming Business DECEMBER 2015

It’s pure mechanized electronic joy. Your players will be in classic company when they join Ralphie, the Old Man, Mother Parker, and all the other beloved movie characters for a present of epic proportions. They’ll play features, spin the mechanical wheel, and rack up wilds and symbols and more than a little good ol’ nostalgia-all on the wayto progressives galore and more fun than a pack of Bumpus Hounds.

Have a machine beyond your wildest dreams.

A CHRISTMAS STORY and all related characters and elements are trademarks of and © Turner Entertainment Co. (s15) 2015 Aristocrat Technologies Australia Pty Limited.

#aristocratslots

p. 16 aga december:Layout 1 11/12/15 3:54 PM Page 16

AMERICAN GAMING ASSOCIATION

Power to Gaming People Gaming Votes initiative builds support for industry among key policymakers By Geoff Freeman, President & CEO, American Gaming Association

n a packed room near the buffet at the Hollywood Casino Columbus, two members of Congress touted the impact of—and their support for—the Penn National Gaming property that had opened three years earlier. “I’m very hopeful and I’m very proud. I’m a big advocate and certainly was a proponent of bringing the casino to Columbus,” said Congresswoman Joyce Beatty, a Democrat and member of the Congressional Black Caucus. “The jobs matter,” said Congressman Steve Stivers, a Republican who has represented central Ohio since 2012, referencing a new report released by the American Gaming Association showing that his state’s 11 casinos and racinos support nearly 18,000 jobs. A similar scene played out at a Gaming Laboratories International testing facility just minutes from downtown Denver. GLI is hiring local engineers and mathematicians from Colorado’s finest colleges and universities, as it has grown its workforce to 125 employees over the last year, and the lab highlights the diverse range of jobs the gaming industry provides. Congressman Scott Tipton, a Republican who represents tribal casinos in southwestern Colorado, has seen the benefits of gaming firsthand, and voiced his support for our industry. “Some of the job opportunities that we see in various communities when we’re talking about the high-tech nature of this certainly create ample opportunity for people to be able to elevate themselves. As we move out of the metro area and into the more rural communities, where those opportunities are a little more limited, this is one access point that can help economically and help to be able to grow the economy.” U.S. Senator Cory Gardner was also

Global Gaming Business DECEMBER 2015

eager to tout the jobs gaming supports in his state. “If you look at the nearly 11,000 employees across Colorado involved in the industry, that’s everybody from maybe working in a kitchen to somebody who may be overseeing or dealing a game, or somebody who is working on the floor. So these are incredible amounts of jobs that run a variety of fields, from Ph.Ds and mathematicians to others who are providing support services at a hotel.” Building champions of gaming in Congress has never been more important than it is today, which is why AGA has been aggressive with the Gaming Votes initiative, which

ing Votes events serve as a reminder to federal officials of the strong local support we enjoy and the role we play as valued community partners. In 2016, we will have many more opportunities to highlight gaming. Expect to see AGA engaging local, state and federal officials in more battleground states, such as Pennsylvania, Florida and Michigan. With Nevada, Iowa, Ohio and other states hosting presidential debates, we will ensure that the jobs we support and the economic development we drive in those states are front and center for candidates and voters. Further, in the coming

“

Through Gaming Votes, we are educating candidates about the ins and outs of our dynamic industry and the significant positive impact it has on the economy in communities across the country. launched earlier this year, to hold on-theground events in key states. By tying these events in with the presidential election in the battleground and early voting states of Iowa, Ohio, Colorado, Nevada and others, we are creating prime opportunities for members of Congress to shine in their districts by touting jobs and economic development. The Gaming Votes initiative has demonstrated that support for our industry is bipartisan in nature. In a way that is new to gaming but not to other mainstream industries, we are showing elected officials the benefits of supporting our industry. At the local level, one would be hard-pressed to find a nonprofit leader, chamber of commerce president or mayor who does not embrace gaming, and the Gam-

”

weeks, AGA will finalize a voter guide that will help the nearly 1 million gaming employees across the country understand where presidential candidates stand on gaming and key issues that affect our success. We encourage gaming professionals to tell the story of our industry as they engage with candidates over the next year. Through Gaming Votes, we are educating candidates about the ins and outs of our dynamic industry and the significant positive impact it has on the economy in communities across the country. Most importantly, though, we are building supporters in Congress who recognize the value we bring to their district and state. We hope you will join us in this effort.

Bonus Attack™ brings thrills and excitement to the casino floor with dynamic game play and stunning artwork. Players win free spins in the Bonus Attack Bonus and can advance their winnings up to 10 levels by gathering as many symbols as they can find. Bonus Attack comes on Everi’s Core HDX™ cabinet, which delivers an immersive gaming experience on dual widescreen 23-inch high-definition monitors. Plus, the game is one of the first to feature Everi Bet™, a revolution in gaming that offers players a new, exciting way to configure their bets and gives operators a way to optimize the floor for maximum returns.

Powers the casino floor.™

everi.com

p. 18 fanitini:Layout 1 11/12/15 3:55 PM Page 18

FANTINI’S FINANCE

Looking Ahead Getting out the crystal ball to envision the next year in gaming

he third quarter earnings season is over, and attention will soon turn to what the new year has to offer. So, what did the third quarter tell us that might lend some insight into the future? For one, the U.S. casino market is back. Corollary to that, companies that had reduced their cost structures during the hard times are benefiting today, just as they said they would. For another, Macau is still a big question mark, with the big question now being whether the new mega-resorts will grow the market or cannibalize each other. Finally, opportunity for stock investors might be in emerging small regional casino companies. • Regional gaming. Several regional gaming companies have stories to tell beyond the general rebound in business. Penn National’s story is new properties such as the recently opened Plainridge, Massachusetts slot casino and the Jamul Indian casino opening next year near San Diego. Isle of Capri has strong revenue growth. Pinnacle continues to grow its Ameristar properties and will soon close on its REIT deal with Gaming & Leisure Properties. But the poster boy for the resurgence is Boyd Gaming. Boyd CEO Keith Smith had long talked about Boyd’s cost discipline and how, when growth returned, much of that revenue would flow through to the bottom line. It has. Boyd turned a pro forma 3.3 percent revenue increase into a 20.5 percent increase in EBITDA. And 50 percent-owned Borgata in Atlantic City turned 13 percent revenue growth into 33.5 percent more EBITDA. Boyd also is benefiting from a long-stagnant source, Downtown Las Vegas, which is experiencing a renaissance fueled by new bars and art galleries drawing in a young clientele. And, while Downtown probably always will be a small part of the mix, Boyd grew EBITDA there by 60 percent to $10.1 million. • Macau. The mass-market in Macau is stabilizing and might begin to grow again, both in actual 18

By Frank Fantini

revenues and in comparison to the previous year. The VIP business continues to decline, but is becoming less important with the ascendancy of higher-margin mass business. Nascent optimism was recently expressed by Melco Crown CEO Lawrence Ho, who said that recent positive policy moves by China’s government are sending the message that it’s OK to visit Macau, and that high-end mass-market customers are starting to return. Each casino operator also makes a plausiblesounding argument for why it will do well as Macau recovers. SJM, as the most VIP-dependent operator, sees the greatest chance for a rebound. Wynn and MGM Resorts also see their new mega-resorts as proportionally bigger expansions from their smaller footprints. But if Macau does transform into the entertainment capital of Asia, the biggest beneficiaries could be MPEL and Las Vegas Sands. Both will have the most non-gaming amenities and resorts that tourists can rate as must-see— Venetian and Parisian for LVS and Studio City for MPEL. In that way, they might have the most to gain in Macau’s transformation. Another hint: LVS has the least to lose, as VIP is a smaller proportion of its business than any other operator. • Emerging regional companies. Monarch Casino, Eldorado Resorts and Golden Entertainment are three small operators getting bigger fast. We’ve written about Monarch before, and are glad to see its stock has jumped 50 percent from when we first called it to attention. Monarch enjoyed a blowout third quarter, growing EBITDA 19 percent and earnings per share 54 percent. And, while the company doesn’t break out results between its Reno and Black Hawk, Colorado, casinos, one big difference is that renovation of the Black Hawk casino ended in late August. If Black Hawk was largely responsible for the big gains after just one month of renovations being complete, the impact in the future will be significant. But the larger stories for Monarch are the booming Reno economy and the coming transfor-

Global Gaming Business DECEMBER 2015

mation of Black Hawk into a destination-quality resort, including a luxury hotel. Reno is booming because of Tesla building a 6,500-employee plant nearby. But the town is also enjoying a boom in technology-oriented businesses generally. That should help Monarch and its flagship Atlantis casino. The only other destination resort in Black Hawk, Ameristar, generates $60 million a year in EBITDA. If Monarch can match that, it becomes transformational for Monarch. Eldorado and Golden Entertainment are new as public companies, each reaching that status by merging with an already public casino operator— MTR Gaming for Eldorado and Lakes Entertainment for Golden. Eldorado soon will completely own three large and adjacent downtown Reno casinos after it completes its purchase of MGM Resorts’ interests in two properties. That will give it scale and efficiency, thus making ERI another Reno play. At MTR properties, ERI is implementing the amenity-driven strategy that has worked for the company in Reno. As an operator of slot routes in Nevada, Golden is a play on population growth in Las Vegas and Reno. The company also has gotten a license in another big slot route state, Montana, and hints that it could move into new jurisdictions. Golden could be in a strong position if more states follow Illinois and allow slot machines in liquor-licensed establishments. Meanwhile, Golden is rolling up the tavern business in Nevada and is keeping its eyes open for the opportunity to add to the four casinos it now operates. With debt-to-EBITDA at just 2.5 times, Golden has the financial flexibility to grow through acquisition. And with CEO and principal shareholder Blake Sartini a veteran of Station Casinos, management knows how to run locals casinos. 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.

B:8.625” T:8.375”

Born from fun.®

B:11.375” T:11.125”

Multi-game. Multi-fun. All in one. When it comes to finding the most exciting slot machine to play on the floor, the best choice is not having to make one at all. The new KONAMI SeleXionTM multigame offers players instant access to a variety of their favorite games to keep them entertained and playing longer. Plus, casinos can maximize their titles with limited floor space.

gaming.konami.com

KO_Selexion_GGB_Ad_8375x11125_R2.indd Saved at

Fonts & Images

Job info Live Trim Bleed

Printed At

11-11-2015 1:57 PM

None 8.375” x 11.125” 8.625” x 11.375”

Fonts Helvetica Neue LT Std (77 Bold Condensed, 47 Light Condensed, 55 Roman) Images KONAGENL4128_SelexionAd_8x10.875.ai (107.81%), 4color_black. eps (50.56%), Latest Brand Logo_CMYK_8_16_13.ai (13.39%) Inks Cyan,

Magenta,

Yellow,

Black

None

p. 20 AGEM:Layout 1 11/12/15 3:55 PM Page 20

AGEM

Manufacturing Milestones AGEM celebrates GGB partnership, strong year overall

By Thomas Jingoli, President, and Marcus Prater, Executive Director, AGEM

e are honored to have the Association of Gaming Equipment Manufacturers (AGEM) debut our new presence in Global Gaming Business (GGB) with this December issue after a very busy calendar year for AGEM and our members. GGB is now the “Official North American Publication” of AGEM, a development that creates a true partnership for our nonprofit trade organization and the leading North American-based gaming publication. While we continue to mourn the passing of Casino Enterprise Management (CEM) magazine founder and publisher Peter Mead and the cessation of his publication, we look forward this burgeoning relationship with GGB Publisher Roger Gros, Editor Frank Legato, the entire GGB staff and their outstanding publication. For GGB readers not entirely familiar with AGEM and its mission, we represent manufacturers and suppliers of electronic gaming devices, systems, table games, online technology, key components and support products and services for the gaming industry. AGEM works to further the interests of the world’s gaming equipment suppliers through political action, regulatory influence, trade show partnerships, educational alliances, information dissemination and good corporate citizenship. With that in mind, 2015 was our most active year yet, starting in January with the election of new officers and then throughout the year in these main categories:

New AGEM Officers January brought a revamped officer team, including the addition of the new vice president of government relations title. The AGEM Board of Directors approved the slate presented of President Tom Jingoli, Konami; First Vice President Dan Savage, Scientific Games; Second Vice President David Lucchese, Everi; Vice President Of Government Relations Steve DiMasi, GTECH/IGT; Secretary Mark Dunn, Aristocrat; Treasurer Tom Nieman, JCM Global; Co-General Counsel Mike Dreitzer, Ainsworth; and Co-General Counsel Harper Ko, Scientific Games. Executive Director In February, the AGEM Board approved a threeyear contract extension for Executive Director 20

Marcus Prater, who has helped guide the organization to new heights since early 2008. Building Better Business AGEM initiated Senate Bill 9 in Nevada allowing for variable payback percentages on slot machines that will introduce true skill-based and arcade elements to casino floor for the first time. Following the unanimous passage of SB 9 and the signing of the bill by Nevada Governor Brian Sandoval, AGEM worked closely with the Nevada Gaming Control Board on the new regulations and technical standards that will govern this exciting new form of gaming. AGEM also released a detailed report by the respected firm of Applied Analysis on the effect of slot hold and other factors on overall slot revenues in the U.S., continuing an industry discussion designed to optimize slot floors for the benefit of all. Responsible Gaming The AGEM Board in February approved the contract renewal of AGEM Director of Responsible Gaming Connie Jones, and she had a very active year as AGEM continued to financially support a wide variety of organizations dedicated to responsible gaming initiatives, including the National Center for Responsible Gaming, the National Council on Problem Gambling, the Nevada Council on Problem Gambling, The Problem Gambling Center and GamCare in the United Kingdom. International Business With Director of Europe Tracy Cohen based in London and AGEM addressing issues in markets ranging from Austria to Chile to Macau, the organization continues to broaden its reach. Education AGEM has remained committed to the educational component in its mission statement, including funding separate AGEM scholarships at or contributions to the University of Nevada, Las Vegas Lee Business School, Nevada State College, Drexel University, the American Indian College Fund, the Global Gaming Women Charitable Education Fund, Atlantic Cape (N.J.) Community College, the International Center for Excellence in Gaming Regulation at UNLV, Las Vegas Discovery Children’s Museum and Spread the Word Nevada.

Global Gaming Business DECEMBER 2015

Associate Member Committee For non-voting members to have a larger voice in the organization, AGEM created a formal Associate Member Committee comprised of Tracey Chernay, TransAct Technologies; Jim Roberts, James Industries; Rodney Hammond, JCS Technologies; Eric Olsen, Olsen Gaming/Spectronix; Skip Davis, Gary Platt Manufacturing; and Tabitha Jackson, YESCO. Industry Partnerships AGEM led an effort with the American Gaming Association (AGA) to highlight the growing problem of “eight-liner” machines in Texas that are often at the center of illegal gambling operations. AGEM also partnered on other issues and events with a wide variety of other industry associations, including the Gaming Standards Association (GSA). Trade Shows AGEM exhibited at G2E, G2E Asia, ICE and NIGA, and continues to work with trade show organizers around the world on the important topic of maximizing value for exhibitors and attendees. Mexico The AGEM Mexico Committee, active in Mexico City, grew in influence throughout the year and now is helping guide the overall gaming discussion as the industry continues to await the passage of a new federal gaming bill designed in part to provide a more stable business environment where operators and suppliers can prosper. Regulatory Reform AGEM has remained focused on improving the overall regulatory climate for its members, an effort that led to the organization helping shape the discussion this year in more than a dozen U.S. states and multiple foreign countries. Honoring Industry Leaders AGEM announced the creation of the Jens Halle Memorial Award Honoring Excellence in Commercial Gaming Professionalism and the Peter Mead Memorial Award Honoring Excellence in Gaming Media & Communications. Halle and Mead passed away within weeks of each other, much too young at ages of 57 and 54, respectively. Overall, 2015 will rank as AGEM’s most active and effective year to date, and we look forward to riding this momentum into 2016 and beyond.

High Card Flush is an exciting new game that is easy to learn and play for both experienced and new players. The concept is simple: players are dealt seven cards and compete against the dealer to create the longest flush possible. To add to the excitement, the game offers optional Flush Bonus and Straight Flush Bonus wagers. With simple gameplay and big payouts, High Card Flush is sure to be a hit on your casino floor!

GGB_HighCardFlush_Ad_201512.indd 1

11/6/15 11:23 AM

p. 22 10 trends:Layout 1 11/12/15 4:01 PM Page 22

10 Trends for2016 P

eering into our crystal ball this year isn’t so difficult as it is complicated. The issues facing the gaming industry are complex and diverse. There won’t be many surprises in the topics identified in GGB’s Ten Trends for 2016, but our expert writers and commentators try to illustrate what the industry faces next year. We hope you concur, and will give us your feedback on how you see the new year progressing on these and other topics. —GGB Editors

Content Is King Slot manufacturers are teaming with third-party content providers to grab and hold new patrons

t’s become a truism of the U.S. gaming industry that slots will be in trouble if millennials don’t get in the game—and fast. Certainly, younger players are not likely to sit on a row of clanging one-armed bandits like their parents and grandparents. But slots can be maximized with the right product and delivery. Hence, the rise of third-party content providers. Their specialty: games built for the mobile generation. “We’re talking about games that are more engaging straightaway, without the player having to play for two or three hours,” says Matt Davey, CEO of Las Vegas-based NYX Gaming Group, a global content provider with a library of more than 300 games. “Once you move out of the analog hardware side of the business into the digital software side, you have a lot more power to deploy games that are more appropriate” for up-and-coming players. In Europe, Davey says, millennials “are just as well represented as any other segment” when it comes to slot play. “We see massive growth of the mobile consumption, but as for the slot games themselves, they’re the same

Global Gaming Business DECEMBER 2015

games we have in the U.S. We’ve fine-tuned them, bringing out and emphasizing the entertainment side, making the small wins, medium wins and large wins a lot more attractive. We make the hit rates and the frequency of those wins a little higher, so the players can get a feel for and sense of the game more quickly than they can from a land-based game.” Otherwise, “it’s the same product.” For the millennial generation, it’s all about entertainment, connectivity and immediacy, says Kent Young, game designer and founder of Renobased Spin Games. “For pre-millennials, the social component wasn’t as important. But these kids are used to jumping on their phones and playing on Xbox; they don’t have the patience to put $10 worth of coins in a slot machine. Their experience needs to be seamless, quick and easy.” Independent content providers who cater to this population “are definitely on the rise,” says Young, especially in Europe, with its lower barriers to entry and fewer licensing requirements. “With the consolidation on the manufacturing side, a lot of people are going out and starting their own third-party studios. From a distribution perspective, as manufacturers try to

p. 22 10 trends:Layout 1 11/12/15 4:05 PM Page 23

Tangled Together DFS and eSports are two industries tangentially connected

aily fantasy sports has dominated the conversation in the gaming world over the past year, but with the industry facing its first real crisis, its continued growth is now less certain than it was just a couple of months ago. But another emerging market appears ready to swoop in and assume the mantle of the next big thing in gaming if DFS falters: eSports wagering. eSports have been around for a very long time, as the first recognized eSports contest, the 1990 Nintendo World Champions, predated all forms of online gambling by a good five years. But it was the emergence of multi-player, internet-based video games that caused the current surge in eSports’ popularity. Consider the following: Two hundred five million people either watched or played eSports in 2014. eSports competitions have mainstream sponsors like Red Bull and Coke. Championship events boast multimillion-dollar prize pools, and these events effortlessly sell out arenas with tens of thousands of seats. This growth is likely to continue in 2016, as both ESPN and Turner Sports have signed deals with eSports leagues and will be televising eSports tournaments. Is it any wonder Chris Grove titled his white paper on eSports wagering markets for Eilers Research, eSports Betting: It’s Real, and Bigger Than You Think? As with all high-level competitions, the ability to wager on eSports has flourished alongside eSports, and this is where the eSports industry and the daily fantasy sports have intersected. Because the two industries are blossoming at the same time, they have found a way to harmonize their products through daily fantasy eSports (DFeS) contests. DFeS contests first appeared in January 2015 with the creation of Vulcun and AlphaDraft, the latter of which was purchased by FanDuel in September, just weeks after rival DraftKings launched its own DFeS contests. DFeS will generate $20 million in wagers in its first year, according to Grove’s estimates, and with the two power players now involved, these numbers are expected to grow exponentially in the coming years, as the two industries seem to be tailormade for one another.

“From a distribution perspective, as manufacturers try to diversify their product portfolios, we’re seeing a lot of demand for outsourced content.” —Spin Games’ Kent Young

diversify their product portfolios, we’re seeing a lot of demand for outsourced content.” That demand will undoubtedly spike with the introduction of skillbased games in Nevada and New Jersey. With innovative presentation, easy access and a few other bells and whistles, slots might just be around for the long haul. “We’ve got to do a lot better job improving the entertainment value,” says

Thousands of spectators regularly attend League of Legends video game tournaments

But there are also storm clouds on the horizon. The decision by the Nevada Gaming Control Board to classify DFS contests as gambling and require operators to be licensed by the state could slow the DFS industry as well as the maturation of DFeS contests. However, even with the increased regulatory constraints and calls for further investigations into the industry, DFeS revenue will almost assuredly experience significant growth in 2016. Additionally, wagering on eSports isn’t limited to the nascent DFeS industry. Game-mediated betting (the wagering of virtual items with a realworld value found within games) is already a $2 billion-a-year industry, according to Grove’s analysis, with eSports book wagering accounting for an additional $300 million in handle every year. With or without DFeS, the U.S. eSports industry is going to soar in 2016, and eSports wagering options will likely soar along with it. —Steve Ruddock

Davey. “But once you’ve got players comfortable with it, it’s very sticky. The product itself delivers great value. Look at the big social casino operators: Caesars with Playtika, IGT with Double Down, Churchill Downs with Big Fish. They have very large, sustainable businesses where players have logged on and spent years being customers. You’ve got to focus on the entertainment side to get long-term customers.” And how about new technologies? Can players look forward to immersive Avatar? Virtual-reality Boomanji? Holographic Kitty Glitter? “We don’t know,” says Davey, “and people have lost a lot of money claiming they do know. They talked about 3D poker, for instance, but it never took hold. “That doesn’t mean 3D or virtual reality slots won’t work. You have to experiment and let the market give you the feedback. You have to build great product and understand the needs of the customers. They’re the final arbiters.” —Marjorie Preston

p. 22 10 trends:Layout 1 11/12/15 4:05 PM Page 24

Analyze This Big Data takes deep-dive analytics

rthur Conan Doyle’s fictional sleuth Sherlock Holmes once said, “The temptation to form premature theories upon insufficient data is the bane of our profession.” The man in the deerstalker hat was only half right. Today, there’s more than enough data—mountains and megabytes of data, packed with detail about customer likes, dislikes, behavior and buying patterns. But data on its own has little power to drive business. It takes data + analysis + strategic application (and maybe a little trial and error) to equal positive results. Even the multibillion-dollar casino industry doesn’t make the most of information-gathering technologies, says Angie Dobney of the Rainmaker Group, which helps resorts set prices for maximum profitability. “Let me put it this way—I still walk into casinos that do 30 percent to as much as 50 percent of their (marketing) by direct mail: they send a flier to your mailbox, and you call in to make a hotel reservation. There’s no way to go online, no portal to log in to to check your rewards. Technologywise,” she says, “we need to do some work.” It’s a big job not only to mine all that data, but interpret it and turn it into an actionable business strategy. But it’s vital for operators who want to reach their most valuable customers, discover their entertainment preferences, and win and retain their patronage. Rory Fagan, director of casino sales at San Francisco-based Duetto Research, says many casinos leave money on the table by “not looking beyond the gaming floor.” “For decades, casinos have incented the biggest gamblers with special deals and comps. But many consumers today are spending their time—and money—on food, fun and retail outlets, not the gaming floor. As gaming revenue has declined, and casinos become ‘integrated casino resorts,’ they realize these other amenities are critical to attracting today’s guests.” Despite that realization, Fagan adds, many marketing decisions and of-

Global Gaming Business DECEMBER 2015

fers are still based solely on gaming spend. “A customer spending $10,000 at a nightclub can be more valuable than many gamblers, and without the chance of the house losing money. Casino resorts must find ways to drill down into consumer spend across the entire resort and use this data to better segment and market to their most valuable guests.” The biggest data bucket—a casino’s loyalty program—can be supplemented by purchased data that identifies potentially valuable customers based on geographic location and other factors. But again, says Dobney, “Analytics make sure those customers are really profitable to the resort. It’s one of the industry’s biggest challenges: you have all this great data from multiple sources, but you have to understand it to identify that this is a new trend, and this is where we should mine for profit.” Loyalty programs can also be made to work harder. “Customers love deals and discounts,” says Fagan. “If clearly communicated to and properly incented, they will use a loyalty or player’s card throughout a resort,” especially if they get those extra perks. “By mixing great customer service with high-touch technology that can track consumer spend, casinos can use back-of-house systems to better reward their top customers and increase total revenue. It’s a mutually beneficial value proposition.” The challenge, he notes, is developing integrated technology systems that work together across departments, along with a “smart hub” to evaluate the data. “As resorts get better at this, and layer in customer spend beyond the gaming floor, marketers and managers will have a full 360-degree view of the customer,” Fagan says. Ideally, using this data, casino resorts can better serve their customers, win more of their wallet, earn their loyalty, and optimize revenues throughout the property. Elementary. —Marjorie Preston

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 25

1 9 0 0 A T T O R N E Y S | 3 8 L O C A T I O N S W O R L D W I D E˚

4. E

The Skill Debate The rush toward skill-based games is not quite a rush— yet

ver since regulators in New Jersey and Nevada called upon slot manufacturers to submit games using an element of skill—a move aimed at luring the millennial generation to the slot floor to make up for sagging revenues—industry pundits and the mainstream media have been addressing the issue with what has approached obsession. Millennials—those born since 1980—don’t generally flock to the slot machines. They do like table games, because they like to interact with one another, and tables provide a social experience. But as far as electronic gaming devices, the prevailing wisdom has been that gamblers among the 80 million millennials, to become slot players, will need slots that resemble the games they already play on their mobile devices. Manufacturers are brainstorming with officials to draft permanent regulations regarding skill games, but those who are sounding the alarm of the end of the slot floor as we know it may be a bit ahead of themselves. The first thing to be determined in creating a skill-based game will be what, precisely, can be monetized for casino play in a practical fashion. Young players like Candy Crush-style video games on which they can achieve high levels through skillful play. They like shooter games that pit them against each other in a competition. They like games that reward good hand-eye coordination and dexterity. They like eSports, in which they are actually a spectator in a fantasy video battle between two other players—a skill game and spectator sport in one.

Fresh perspectives. Martha Sabol and Laura McAllister Cox are honored to help guide IAGA as officers We are proud to share Martha and Laura, and their unique insight, with the International Association of Gaming Advisors (IAGA) and its members. Martha and Laura understand the gaming industry and work daily alongside many of the leading owners, operators, developers, suppliers, financiers and innovators. Martha A. Sabol IAGA President Martha, Co-Chair of Greenberg Traurig’s Global Gaming Practice, represents national and international casino owners, operators and suppliers in the areas of regulatory compliance, acquisition, licensure, internal investigations and corporate counseling. Laura McAllister Cox IAGA Secretary Laura, a Greenberg Traurig Shareholder, represents casino operators, gaming manufacturers and distributors, and casino employees in wide variety of corporate, regulatory, licensing and product compliance matters. We wish Martha, Laura and the entire IAGA Board success in the year ahead.

Global Gaming Practice Acquisitions | Financing | IP | Labor | Litigation | Operations | Real Estate | Regulatory Learn more at gtlaw.com/gaming GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2015 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 26533

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 26

And the millennials love to communicate with each other in real time on their smartphones, and would probably appreciate being able to do that during any skill-based contest. The industry is just now beginning to figure out how to incorporate all these unique preferences into casino games. Casinos like MGM Grand are already experimenting with millennial-friendly environments that could be the prototype for at least a section of a casino floor that will be designed for skill games. The InteractivePro tables at the MGM include slot games and internet access, and they are in a lounge that could be a model for spaces where young players could gather to play competitive skill games in the kind of social, club-like setting to which they already gravitate. As far as the nature of the skill games themselves, at one end are pioneering content suppliers such as Gamblit, with its Candy-Crush-like “Smoothie Blast.” At the other end are the traditional slot suppliers, which have already introduced skill-based gaming in the form of bonus games on traditionalstyle slots, from Scientific Games’ “Space Invaders” to IGT’s “Centipede,” which both offer player the chance to play the traditional skill-based arcade game or choose a pure chance bonus. Other manufacturers are easing into the new way of play with games that feature “perceived skill”—including games like Konami’s “Frogger,” which could some day be converted to pure skill. There is still time for this to develop. For one thing, the baby boomers who love traditional slots are still a dominant demographic in casinos—and they have much, much more disposable income with which to gamble on a 10 percent-house-edge game than millennials have to compete with each other on games that may or may not monetize well for the casinos. Also, the industry will need to ascertain just how much of its bottom line it will be willing to risk to skilled video gamers. If millennials feel they will be able to massacre skill-based video games to beat casinos, they have yet to learn that age-old adage of our industry: In the end, the house always has the edge. The exact nature of skill-based slots is yet to be determined. In the meantime, there are already thousands of skill games on casino floors. They are called video poker. —Frank Legato

Global Gaming Business DECEMBER 2015

The Right Choice Guests, not operators, driving food and beverage venues

s the world continues to go more and more casual, in many aspects of life, we are seeing this quite significantly impact upon food and beverage decisions and destinations, and now on the casino F&B environment. Your guests want what they want, when they want it, and in a setting they are comfortable in—basically the ultimate a la carte dining, drinking and enjoying venue. The idea of choice. Time is a tremendous factor in this as well; guests want to make sure they maximize their dollars and experiences, with food and drink included in that, most times with a mobile device in their hand. It is not enough to just have a food court or a collection of quick-service operations for guests to walk up to, as they are expecting more and a better selection based on quality, price, value and speed. The restaurant world outside of casinos provides that choice, so it is expected that you will too. Our guests have become extremely discerning, which is implicitly based upon their experiences and their ability to research food and locations via the internet (either through their computer or in-

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 27

THE

REAL DEAL

stantly via their hand-held devices), when they have not enjoyed something directly. We live in an instantaneous society, and guest demand for food and beverage is right in line with that. While we as operators are the ones running these restaurants and providing service, our guests are the ones who are making the decisions based upon dietary restrictions, food aversions, past experiences, time and location and perhaps, most importantly, what suits their individual tastes. Guests want to come as they are, not having to worry about “dressing up” or thinking too much about the dining experience. Moving forward, restaurants in casinos and casino operators need to better take into account what the guest is not only expecting, but demanding out of their food and beverage experiences. This should be taken into account for any and all F&B

venues, be they be in a grab-and-go setting, at a pool, music venue, casino floor or full-service restaurant. Speed of service and choice are the keys at this point, with guests sometimes desiring what they want 24 hours a day. The further rise of F&B delivery services will also continue, which has been embraced by many casino and free-standing restaurants. As the disposable income that guests have to spend dwindles or is divided, gaming, while important, is not the only reason we see our guests in casinos and on properties. They are going to continue spending, but will be more cognizant of the spend and where it is going, for their overall enjoyment and customization with a personal touch. —Corey Nyman, founder and managing partner, Grazing Pig Food Group in Las Vegas

In near nearly ly y 20 y years, ears, we’ve we’ve grown grrown to become the preeminent preeminentt casino marketing mar keting agency y and continue conttinue to build buil d some of the biggestt and a best industry.. See brands in the industry e for for yourself. matters. y ourself. lf Experience E i mattters. tte ters.

Call us Call us today today at at 800-475-2000 00

rpmadv.com rpmadv.com

DECEMBER 2015 www.ggbmagazine.com

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 28

Here and Now The trend that never was

here’s been a lot of panic over the past year about the aging of the casino population and who is going to replace them. In the past, that hasn’t been much of an issue, because once a person reached 40 or so, they slowly began to ramp up their casino play and eventually became robust casino gamblers, because they become empty-nesters and their disposable income increases. In addition, they’ve always enjoyed the entertainment and camaraderie they’d find at casinos. Over the last six months or so, there’s been a lot of chatter about attracting millennials to casinos/slots and the introduction of skill games to smooth that entry. Although by definition the oldest of the millennials right now is only 35, casino executives have convinced themselves that no millennial in his or her right mind would ever play the slot machines we are offering these days. This may be true, but since there are at least five years before we see the first millennial pass 40 and consider using a casino for what it’s intended, rather than just a grand hallway on the way to the nightclub, casino executives would be well advised to concentrate on what’s in front of them right now rather than the hazy future. “I feel like the decline of gambling is simply causing concern and an act of desperation to make it up somewhere, and the millennials are an easy target because they are the future,” says Paul McCune, the slot director at Riverside Casino & Golf Resort in Iowa. “But how far out is that future from where we are today?” Mark Birtha, vice president and general manager at the Hard Rock Northfield Rocksino in Ohio, says that the attention being paid to millennials if often at the expense of today’s players. “As a fairly new regional casino in a young casino jurisdiction,” he explains, “we have a core of customers who are familiar with gaming, but also another set of potential customers with little or no gaming experience. We use our non-gaming entertainment and food and beverage to get them in the door and introduce them to the product. It’s a true growth opportunity for us.” At the top of the list of issues that need to be confronted today is the declining numbers of today’s slot players who are finding other ways to entertain themselves that include gambling but do not include casinos. Take the social casinos, for example. The very companies that are supplying slot machines to casino executives are operating very lucrative social casinos that may not technically be gambling, but certainly are producing revenue. Casinos need to get into the game in a hurry, but finding a partner that isn’t competing with them could prove difficult. “We see that people are leaning toward entertainment in the way of shows and things like that more today than they are toward gaming, but why is that?” asks McCune. “Is it because they want to gamble but they figure they won’t win so they spend it somewhere else to get some anticipated satisfaction

for their money? Is there no desire to gamble at all by the millennials? Or is it that that they just don’t find the games appealing?” And then we come back to one of last year’s trends, the payback percentage argument. Manufacturers say that casinos are setting the slot hold so high that players aren’t getting to experience all the great entertainment features they build into their machines, because the players go broke more quickly. Operators say the manufacturers aren’t inventive enough to give players a true entertainment experience without hitting the bonus features. That discussion is ongoing, and was highlighted by an AGEM study released in August that correlated decreasing slot revenue with increased hold percentages. “This is a very complicated conversation,” says Birtha. “While manufacturers might have a point about higher hold percentages, for years they’ve been pushing lower denoms, licensed brands and participation games, so we naturally have to have a higher hold percentage to pay for those additional costs. So let’s not throw either side under the bus here. Hopefully, we can all get together and have a rational discussion about how to solve these problems.” Things out of our control also impact casino revenue. The local and regional economies can be a big boost or drag to the fortunes of any casino serving those markets. Innovative marketing and non-gaming offerings can outweigh those issues, but sometimes, there is simply nothing an operator can do. “I think the decline of gambling has a lot to do with the economy,” says McCune. There are a number of contributing factors that seem to be dismissed often: lack of jobs, inflation, issues with foreclosures and bankruptcies, health care costs, gas prices affecting costs of goods and people having to cut back on traveling, food costs due to droughts, weather disasters, threats of a market crash… I think available funds and disposable income becomes a real issue.” Birtha says a good operator must figure out how to make the most of any economic circumstance. “As an operator, we’re always cognizant of the economy,” Birtha says. “As such, we must offer a value proposition that includes great entertainment and reasonable prices, whether it’s the games or a restaurant. It’s all about the entertainment.” —Roger Gros

Manufacturers say that casinos are setting the slot hold so high that players aren’t getting to experience all the great entertainment features they build into their machines, because the players go broke more quickly. Operators say the manufacturers aren’t inventive enough to give players a true entertainment experience without hitting the bonus features. That discussion is ongoing, and was highlighted by an AGEM study released in August that correlated decreasing slot revenue with increased hold percentages. 28

Global Gaming Business DECEMBER 2015

GAMING EMPLOYEES: MAKE YOUR VOICES HEARD IN THE PRESIDENTIAL RACE Inform candidates that gaming is a valued community partner in 40 states delivering benefits that include:

1.7 MILLION JOBS

$240 BILLION IN ECONOMIC IMPACT

$38 BILLION IN TAX REVENUES

A PATH TO THE MIDDLE CLASS FOR WORKERS OF ALL BACKGROUNDS & EXPERIENCES

GET INVOLVED Join the American Gaming Association as we hold on-the-ground events in key states. Tell candidates to meet you and your co-workers and learn more about the industry. Visit gamingvotes.org and register to vote. Use #GamingVotes to get candidates’ attention on social media and let them know you’re paying attention to them.

WITH YOUR ENGAGEMENT, CANDIDATES WILL GET TO KNOW GAMING IN 2016. Learn more at www.gamingvotes.org and www.americangaming.org

facebook.com/americangaming @AmerGamingAssn

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 30

Stalled But Not Forgotten U.S. online gaming expansion still on track

tate legislatures were presented with a roadmap for legalizing and regulating online gaming following a September 2011 opinion rendered by the Department of Justice that limited the 1961 Wire Act to sports betting. In the two years following the ruling, several states were quick to take advantage of the opinion. Nevada preemptively legalized online poker in June of 2011, and with the DOJ’s removing federal uncertainty, launched the country’s first legal online poker site on April 30, 2013. New Jersey and Delaware legalized online poker and online casino games in June 2012 and February 2013 respectively, with both states launching their iGaming industries in the fall of 2013. Minnesota (2011), Illinois (2011) and Georgia (2012) all took their lotteries online. However, after this early rush, the spread of legalized online gaming has slowed to a trickle, as only a single state, Michigan, has legalized online lottery sales. It’s been even slower on the online casino and online poker front, where no state has joined Nevada, Delaware and New Jersey, and only a single state, Pennsylvania, appears poised to pass an online gaming bill in the foreseeable future. There are several reasons states have backed off online gaming expansion. There are the disappointing revenue numbers from the current legalized markets. There is also the Sword of Damocles known as the Restoration of America’s Wire Act that should the single horse’s hair fail, would wipe out state-sponsored online gaming in one fell swoop. The smaller-than-anticipated revenue coupled with the federal uncertainty brought about by RAWA has tamped down calls for online gaming expansion in state houses. That being said, this is a fluid situation capable of hitting a tipping point at a moment’s notice, and there are a number of states where online gambling expansion is not only possible, but expected in the coming years. This summer, Gambling Compliance targeted seven states as potential candidates for iPoker and/or iCasino expansion by 2020: Pennsylvania (2015-2016) California (2016-2017) New York (2016-2017) Connecticut (2018-2020) Rhode Island (2018-2020) Illinois (2018-2020) Ohio (2018-2020) Several other states including Massachusetts and Washington are also candidates, but with 2016 being a presidential election year, unless a state is on the cusp of passing an online gaming bill, a la Pennsylvania, iGaming expansion talks are unlikely to move past the exploratory phase. Which is why many are looking forward to 2017, with the hope that Pennsylvania serves as the linchpin. If online gaming expansion stalls in Pennsylvania, there will be less urgency in New York, Massachusetts and other state houses. If Pennsylvania can pass an online gaming bill in late 2015 or early 2016 and launch its iGaming industry by late 2016, it could open the proverbial floodgates, and light a fire in neighboring legislatures to get an online gaming bill passed. —Steve Ruddock

Global Gaming Business DECEMBER 2015

Riverboat casinos in Goa provide an underwhelming but nonetheless popular gaming experience for Indians

8. A

India: The Next Great Opportunity A more stable, capitalist nation could be gaming’s new frontier

s Macau can attest, relying on the Chinese gamer is both extremely rewarding and volatile. While operators in all Asian markets continue to enjoy the fruits of Chinese patronage and work to grow this segment, savvy operators are always looking for the next big casino development opportunity. The next new opportunity could in fact be a sleeping giant: India. India, China’s capitalistic and democratic neighbor, boasts the world’s second largest population (1.3 billion), a robust economy (with the IMF estimating the economy is worth $2.2 trillion) and a sizeable and growing middle-class population. According to India’s National Council of Applied Economic Research (NCAER), the middle-class population is expected to reach 267 million in five years. Indians have a proclivity to gamble. Although the only proximate gaming destinations are a flight or more away, Indian gamers frequent the available legal Indian casinos in the Indian states of Goa and Sikkim. Currently, Goa offers four offshore casinos that look and feel like Midwestern American riverboats, and 10 land-based casinos that are limited to electronic gaming by law, but often feature electronic table games with a live dealer. After flying into Siliguri, West Bengal and driving five hours to Gangtok, Sikkim, Indian gamers have access to two more land-based casinos which feature a full array of table games. Indian gamers also find their way to foreign casinos in Nepal, Sri Lanka, Macau and Las Vegas. With a few exceptions, many of the nearby facilities (in Goa and Sikkim) offer a largely underwhelming gaming experience. Despite this unappealing facility offering, Indian patronage of these facilities continues. Indian gamers overwhelmingly prefer table games, with a strong preference for familiar card games like roulette and baccarat and traditional Indian games like flush (Teen Patti) and mini-flush. Outside of legalized casino gaming, Indians find other ways to game. Cash card games are available at private clubs, illegal gambling halls on the outskirts of metro areas, and in many homes. During large holidays, like Diwali, Indians often gamble with family and friends, playing cash games, such as flush and rummy. Indians also wager frequently on sporting events, namely cricket. Even without proximate gaming options, Indian gamers are finding a way to enjoy gaming entertainment. With a proclivity to gamble and an appropriate offering of convenient, attractive gaming facilities, the Indian gaming market has serious potential. To illustrate the magnitude of its potential, consider the following example: If 10 percent of the projected middle-class population were to game five times a year and spend $50 a visit, the gaming market would be worth $6.7 billion. With this potential, it will be hard for the existing Indian operators to keep this market to themselves for very long. —Kit Szybala, director of analysis, Global Market Advisors (He can be reached at kszybala@globalmarketadvisors.com)

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 31

Bigger and Better Social gaming gets lost in the iGaming shuffle

aily fantasy sports and the legalization of online gambling are dominating iGaming industry news these days, yet there is another industry that produces 15-20-times as much revenue as DFS and New Jersey’s online gaming industry combined, that remarkably receives 15-20-times less exposure. That product is social gaming. In Q1 of 2015, Caesars Interactive generated $167.6 million in revenue from its social gaming products. Caesars (Playtika) is the market leader, accounting for 21 percent of the overall social gaming market share, which is expected to reach $3.3 billion in revenue in 2015, and as much as $4 billion in 2016, according to Eilers Research Senior Analyst Adam Krejcik. Comparatively, FanDuel’s Q1 revenue for 2015 (yet to be released) is projected to be around $14 million, and the New Jersey online gaming industry tallied $35.7 million in revenue during Q1 of 2015. Social gaming generated well over $800 million in revenue in Q1 of 2015.

What makes social gaming an extremely intriguing product is its malleability. Social games can be used to bolster existing brick-and-mortar or online products as a marketing tool, or can be launched as a stand-alone product capable of becoming its own viable and significant revenue stream. Social games can be completely free to play or they can be “freemium” games, where users can purchase in-game items, spins or add-ons. And since social games don’t fall under the umbrella of regulators, they can also be used to test new games before putting them on the casino floor or online. With all of these uses, brick-and-mortar casinos no longer view social gaming as a competitor, they see it as synergistic product that can enhance their current offerings. It’s no wonder that brick-and-mortar casinos from Foxwoods and Mohegan Sun to Maryland Live and Parx Casino, to San Manuel and Pala, are increasingly incorporating social games into their websites, a trend that will certainly continue in 2016.

p. 22 10 trends:Layout 1 11/12/15 4:06 PM Page 32

Social games can be completely free to play or they can be “freemium” games, where users can purchase in-game items, spins or add-ons. And since social games don’t fall under the umbrella of regulators, they can also be used to test new games before putting them on the casino floor or online.

10.

At Global Gaming Expo 2015, Brett Calapp of Pala Interactive detailed one of the benefits of social for brick-and-mortar casinos— filling out the player profile. “You know everything about them when they are in your casino,” Calapp says. “But when they walk out the casino door, you know nothing about them,” and social gaming can fill in those blanks. All that being said, social gaming is not without potential pitfalls. Beyond the “is it gambling?” question, social games could potentially fall under regulatory scrutiny in the future for several reasons. Presently, social gaming leaves age requirements up to operators, which on Facebook is all of 13. This may not seem important, since the games are free to play and players can’t win anything. However, they can spend a lot of money on “freemium” games. Couple this with the fact that these games don’t have to conform to fairness rules (social slots games can vary the payouts of their games to different players in different situations as they please) and you can start to see the potential for issues, and potential need for regulation of some kind. —Steve Ruddock 32

Global Gaming Business DECEMBER 2015

Technology and Regulations Tribes seeking to generate more from casino floor

ith American Indian gaming expanding at an annual post-recession growth rate of less than 3 percent, tribes in the coming years will be looking to improve slot machine technology and profitability in an effort to generate more government revenue from the casino floor. Much of the emphasis will be on continued advancement in Class II, bingo-style machines, which under the Indian Gaming Regulatory Act (IGRA) most tribes can operate free from state oversight and taxation. The Class II market has steadily increased, in part because of increasing state efforts to extract additional revenue from Class III, casino-style gambling, which under IGRA requires tribal-state regulatory agreements, or compacts. Tribes also will be monitoring the development of skilled and interactive games intended to appeal to millennial players who, according to studies, are not satisfied with traditional slots. Indian Country has historically been a proving ground for machine innovations such as cashless gambling and multi-denomination devices. “Indian Country is a great base for the testing of new products,” says Knute Knudson, vice president of global development for International Game Technology. “It has been. It will continue to be.” Increased profitability from the gambling floor is a priority for tribes seeking to ensure a sustainable source of government revenue. The win from 459 gambling establishments operated by 242 tribes in 28 states totaled $28.5 billion in 2014, a mere 1.5 percent jump over the previous year, according to the National Indian Gaming Commission (NIGC). There were only 10 more gambling facilities than the previous year, according to NIGC figures, evidence of a mature, if not saturated, gambling market. With compacts coming up for renewal in a number of states—California, Arizona, Oklahoma, Michigan and Arizona, to name a few—tribes are weighing the benefits of Class II machines versus

the taxes and regulatory issues tied to Class III gambling. “We’re seeing a couple of trends in Class II that are keeping it viable, alive and even growing,” says Gary Green, senior consultant to the president of Ortiz Gaming. “First of all is the tax situation. Then you have the compact renegotiations. “Then you have the tremendous improvement in the product. If you look at anybody’s Class II product today and compare them to the same titles from 10 years ago—five years ago—you’re going to see a different kind of performance in those games.” “With the flattening of gaming revenues and the saturation of the markets, operators have to be more creative,” says Richard Williamson, VGT senior vice president of compliance. “How do you lower costs? You change products. “Tribes have an option, where commercial casinos don’t. Tribes have an edge in that they are able to put in a Class II product, which is getting much better all the time.” Some estimates put Class II machines at 12 percent of the 350,000 slot machines in Indian Country. Of the 61,000 machines in Oklahoma, 42 percent are Class II devices, up from 34 percent in 2008. The NIGC has enacted regulations and technical specifications to enhance bingo machine innovations and ensure tribal primacy in regulating Class II devices. Tribes not able to secure Class III compacts in California, Alabama and elsewhere may find it beneficial from a regulatory and economic standpoint to stick with Class II machines. “Tribes may have to make a decision, depending on their markets, whether their ability to offer Class II gaming outweighs the benefits of having a compact with the state,” says Kevin Quigley, an attorney with Gray Plant Mooty of Minneapolis, Minnesota. “With the advancements in Class II, the economic matrix may have shifted. “Not having a compact with the state that waives your sovereign immunity might be the way to go.” —Dave Palermo

SAVE THE DATE. You’re changing the game at this year’s G2E. Take the next step and build on your success.

ATTEND G2E 2016.

SEPTEMBER 27-29, 2016 SANDS EXPO CENTER LAS VEGAS

EXHIBITS

SEMINARS

SEPTEMBER 27-29, 2016

SEPTEMBER 26-29, 2016

PRESENTED BY

INCLUDING

T H E WO R L D ’ S L A R G E S T G AT H E R I N G O F G A M I N G P R O F E S S I O N A L S – G LO B A LG A M I N G E X P O.CO M

p. 34 Everi:Layout 1 11/12/15 4:34 PM Page 34

EVERI THING TO EVERI BODY The merger of Multimedia Games and Global Cash Access has produced a robust, dynamic and progressive gaming company By Frank Legato and Roger Gros

Global Gaming Business DECEMBER 2015

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 35

EVERI I t seemed an odd combination when it was announced at the height of the consolidation merger in the slot industry in 2014. Global Cash Access (GCA), the gaming industry’s dominant company in payment processing, was acquiring Multimedia Games, a small but growing slot manufacturing company with a history in Class II gaming. But to Ram Chary, now the CEO of the newly named Everi, it made perfect sense. “In recent years, Multimedia had a great story,” he says. “They had almost closed their doors, but instead, wound up building a great business—a relatively small market share, but some very interesting games, some great technology, and most importantly, some very talented people. “We knew that they needed to grow to keep on that same trajectory and our payments business provided a great footprint. So, the idea is we’re going to help them grow, and grow more quickly, through the vast footprint we have on the payments side of our business.” Part of that growth, says Chary, is to utilize the company’s gaming talent developed in Multimedia’s former corporate headquarters in Austin, Texas, and expand beyond that. “We have been very transparent about our desire to expand the breadth of what we have in terms of our gaming portfolio,” he explains. “We’ve opened up new studios in Chicago and Reno. We think they’re both great cities in terms of acquiring talent, both from the industry and organically through hiring folks straight out of school. The access to a geographically diverse talent pool is something Multimedia didn’t have, so we’re broadening and diversifying our base significantly. “But you know, it starts and ends with what we have in Austin. The talent pool is very deep, both in the community and within our company, and the track record that the Austin team has in terms of coming up with ideas and innovations is really unparalleled.”

Cash Cow Everi’s success, says Chary, will always be tied to the payments business. It’s the lion’s share of the company’s revenue, and Everi owns the vast majority of market share in that side of the business. “We’re not a generic payments processor; we are specific to gaming,”

Chary says. “Over a period of many years, we’ve enjoyed significant scale. Now, with our gaming focus and scale, we can invest in our capabilities and create comprehensive solutions targeted toward our gaming clients. So, if you look at things that might have a competitive alternative, like our kiosk product or our cash access products, you will find that our technology, innovation and patent-protected cash access functionality separate our products from anybody in the space.” Chary says innovations like Everi’s “Cash Club” wallet, “Everi Ticket,” and “Everi Bet,” a games-based product that allows operators to change the cost to cover all lines, are all technological advances that set Everi apart from its competitors. “These are technology-based innovations that nobody else has, and they provide a tremendous value to our clients,” he says. Everi’s ATM services, however, are the core of its payments business. The number of transactions completed each year and the amount of cash dispensed is staggering. “Everi’s placement of ATMs and kiosks, which offer ATM and cash advance services, are still very central to our core payments strategy,” he says. “Each year, Everi completes roughly 70 million ATM transactions, dispensing about $15 billion in cash directly to gaming patrons. So, for many casino operators, that represents as much as 50 to 70 percent of their drop. That cash to the floor is the lifeblood of the casino, and our integrated solutions are critical to the way casinos operate today.” Casinos also depend upon Everi to verify the creditworthiness of their customers through Everi’s Central Credit service. “Central Credit allows casinos that issue markers to make informed decisions about a gaming patron’s creditworthiness and to share information with each other related to marker lines that are issued—things like the number of markers issued to a gaming patron and any currently outstanding markers,” Chary says. “Central Credit has been a tool that’s been around for many decades and is the only credit reporting agency focused on the gaming industry. It may be a behindthe-scenes product and something that is back office-focused, but it’s central to how a casino operates with a key gaming patron subset within the casino.” Because of the dependence on cash and cash-based transactions, the gaming industry has increasingly become viewed similar to that of other financial services, like banks. The ability of gaming operators to understand how cash transactions

“Each year, Everi completes roughly 70 million ATM transactions, dispensing about $15 billion in cash directly to gaming patrons. So, for many casino operators, that represents as much as 50 to 70 percent of their drop. That cash to the floor is the lifeblood of the casino, and our integrated solutions are critical to the way casinos operate today.” —Ram Chary, CEO, Everi

DECEMBER 2015 www.ggbmagazine.com

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 36

“I think the growth in the company will come primarily from games, but I want people to understand that our payments business will continue to provide steady results. We’re the only provider that provides both payments and games functionality, so we are intending to transform the casino floor, and ultimately that will lead us to additional growth in the payments business as well.” —Ram Chary, CEO, Everi are tracked, reported and justified is another crucial, but little known, area of casino operations. In 2014, Everi acquired NEWave and in the most recent quarter, has acquired the principal assets of Resort Advantage. These companies have developed a suite of compliance tools focused on addressing the needs of the gaming industry. Everi has since expanded and refined those products into a total package that is an important element in the compliance arsenal. “Everi Compliance offers a suite of solutions that nobody else in the industry has available,” says Chary. “We help with cage functionality, AML (antimoney laundering) and tax-filing requirements. We’ve picked up different capabilities through our acquisitions, and we have integrated and automated that functionality through software in a way nobody else has the capabilities to do. Here, we’ve only scratched the surface in terms of market penetration, and this remains a huge focus for us.” While Everi is eying international expansion, Chary says the available opportunity domestically, coupled with the complexity of banking and cash reporting laws around the world, ensures the company remains focused on the United States and North America at this time. However, international expansion is in the cards for Everi. “From a cash access perspective, we have a significant presence in the U.K.,” he says. “If there are markets like that, where we think we have a good handle on the regulatory requirements and our products and services can get traction in that market, then we’ll look to expand into those markets. At this time, we are not trying to be a generic global player.” Another area where Everi is treading very carefully is online gaming, and the difficult field of payment processing. Chary says the company is evaluating the risks versus the rewards. “We believe that widespread online, real-money gaming in the U.S. is many, many years away,” he says. “It’s going to take a regulatory push and endorsement, if you will, from the federal government, so we think it’s at least several 36

Global Gaming Business DECEMBER 2015

years away. There’s no question, because of our command of the regulatory requirements in the payments space, and our investments in technology, that we are uniquely positioned to enable those kinds of transactions in that segment of the business when it takes off… but we don’t think that’s going to happen any time soon.”

Building on Success While the cash transactions side of Everi will always be dominant, Chary says he’s spending more time on the games side. “I think the growth in the company will come primarily from games, but I want people to understand that our payments business will continue to provide steady results,” he explains. “We’re the only provider that provides both payments and games functionality, so we are intending to transform the casino floor, and ultimately that will lead us to additional growth in the payments business as well.” Before the Everi transaction, Multimedia Games was long an acquisition target of larger slot manufacturers—which raised questions about the wisdom of it becoming part of a company that had never developed gaming content. However, the decision was made early on that the new Everi would leave the Austin-based slot company’s operations untouched, and in fact, would work to expand the products and markets of the former MGAM. The first step in that process was to get a veteran at the helm of the games division—Chary promoted David Lucchese to executive vice president-games and relocated him to Austin. Lucchese was the former vice president of sales at Bally Technologies, and a longtime executive of Bally, Aristocrat and the groundbreaking supplier Casino Data Systems. When he arrived in Austin, he noted a marked contrast to the corporate style of traditional slot suppliers. “Having spent quite a few years with Bally and Aristocrat, and Casino Data Systems back in the day, I looked at our employee base here and realized

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 37

“MForce is a unifying platform that will drive all of our different products. Whether it’s a stepper, a core video or a specialty game like our MPX or High Rise or Skyline, they can all be driven by that MForce platform.” —David Lucchese, executive vice president-games, Everi

that I had never worked with a younger, more technically savvy, artistic group of people in my career,” Lucchese says. A lot of it has to do with Austin itself. Home to the University of Texas, along with a local community offering one of the most famous music and artistic scenes in the country, Austin offers benefits not to be found in Las Vegas. “We truly celebrate being an Austin-based development company,” Lucchese says. “We celebrate recruiting out of the University of Texas, as well as recruiting from the creative and technical set that’s attracted to Austin. We have a close relationship with the university here. “All of those things come together for a nice, relaxed environment that our employees enjoy. We embrace that culture, and I think it comes through in the content we develop.” The Class II, Class III and tournament products that have poured out of that environment were, in fact, what had made Multimedia one of the fastestgrowing—and most desirable from an M&A standpoint—of the industry’s smaller slot companies. Lucchese believes that content will be the centerpiece

for a large portion of the growth to come for the new Everi, which is already logging major contracts that combine payment products and services with meaningful orders of Everi’s slot games. Moving Everi games into new markets is made easier by the fact that the former GCA was licensed in many more jurisdictions than the former Multimedia Games. “GCA had a more mature penetration with both company licenses and product licenses, so that is getting us revved up to go into some new markets,” says Lucchese. He adds that combining the kiosk and payments businesses with slots has given a boost to market expansion. New combined payments and slots orders have come from Foxwoods, The Cosmopolitan of Las Vegas, Arizona’s Desert Diamond, Scarlet Pearl in Mississippi and the Alberta Gaming & Liquor Commission in Canada, to name a few. The Alberta contract represents a new jurisdiction for Everi games in a market where the former GCA had a long-established kiosk and payments business. DECEMBER 2015 www.ggbmagazine.com

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 38

More Games Whether or not contracts are combined with the Everi kiosk and payments businesses, the company’s strategy going forward is to greatly expand the markets in which it operates and increase research and development expenditures, which will enhance the company’s library of slot games. “First off, Ram Chary has allowed us to really keep intact the great things that Multimedia Games established here in Austin,” Lucchese says. “We continue to recruit and expand our operation here, as well as expanding our technical, artistic and game development staff.” That’s just the beginning. Lucchese has launched the first expansion of Everi’s R&D efforts beyond Texas, with new game studio operations ramping up in Chicago and Reno. “At G2E, we actually demonstrated our first example of content from the new studios, which had been quickly developed,” Lucchese says. “We iterated on our hallmark Carnival in Rio game, fine-tuning a version for high-limit rooms.” As of press time, Everi had around 20 employees in Chicago and another 12 in Reno, with those numbers expected to grow. “As we work collaboratively between Chicago, Reno and the headquarters for games in Austin,” Lucchese says, “we get to share ideas and cultivate them. We then go off and execute on those assignments. It’s been great watching the process evolve.” With the new R&D horsepower, Lucchese predicts fast expansion of existing game platforms and the development of new game styles. “We’re in development mode,” he says. “First off, we’re expanding our feature set. With the game design discipline in all three cities, the talent has expanded and so has the creativity. The teams are focused on that, and we really embrace that kind of creativity and diversity.” Next, he says, Everi is developing an extensive library for its core-games group, much of it based on the new Core HDX cabinet unveiled at G2E. Slated for general release this month, the Core HDX will be able to accommodate any of a total of 140 video titles at launch. The new design features dynamic lighting that synchronizes with game events, dual high-definition monitors and an ergonomic design. The next step after this month’s launch is to add to those 140 titles. “We’re designing games natively to leverage that cabinet, and the sound and lighting package we’ve engineered into that cabinet offering,” Lucchese says. Core HDX was designed to accommodate a year-old advanced gaming platform the company calls MForce. “MForce is a unifying platform that will drive all of our different products,” says Lucchese. “Whether it’s a stepper, a core video or a specialty game like our MPX or High Rise or Skyline, they can all be driven by that MForce platform.” Finally, says Lucchese, Everi is now taking the first big steps in augmenting what has been a very successful library of proprietary themes and titles. “The legacy Multimedia had dabbled in a couple of small brands in the past, but basically they were known for homegrown, creative content,” says Lucchese. “But now, we’re exploring licensed brands; we hope to have a couple of those secured and in our portfolio, to be unveiled at G2E 2016. All that’s coming together very nicely with the three development centers.” Chary says this is one of the changes that Everi brings to the table. “The former Multimedia team was philosophically opposed to brand licensing,” he says. “They didn’t really have the resources or scale to afford and 38

Global Gaming Business DECEMBER 2015

The Core HDX will be able to accommodate any of a total of 140 video titles at launch

execute in delivery of licensed content, or make that economically viable. In the slot supplier space, we intend to be a major player. You can tell that from our presence on the G2E show floor. To do that, we believe we need to play in the licensed product space. “We’ll be different, and will need to be very targeted and specific until we can adequately prove out the business model. We will focus on acquiring a singular flagship brand that we can focus on and build content around. So we will play in that space, unlike Multimedia, but not in an extremely large or uncontrolled way.” Lucchese agrees that licensed brands will be a small part of the company’s overall product portfolio at first—for one thing, the company already has a strong, steady and growing stream of recurring revenue from its longsuccessful Class II and video lottery markets. An important part of the company’s development expansion will be focused on the Class II market. “We’ll continue to nurture this important segment of our business,” says Lucchese. “Our customers have told us how important this is to their operating needs, and we want to ensure we continue to take care of our loyal, long-term customers and partners on the Class II side of the business.” With all that fresh engineering talent in Austin, and now elsewhere, the lion’s share of the business is likely to remain in proprietary themes. Lucchese says to expect new innovation in all game styles, including a growing emphasis on Everi’s stepper series in Class II and Class III.

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 39

EVERI One innovation launched at G2E is a game mechanic the company calls “Everi Bet.” This allows the operator to set the cost to cover all lines in a game to an appropriate amount for their individual casino. It also allows greater flexibility in the number of bet levels and maximum bets. It accomplishes this without changing the intended number of lines of a game or its volatility. “The operators were just astounded at what we pulled together,” Lucchese says, “and multiple operators came to us and said, ‘That is, by far, the best thing I’ve seen at G2E 2015.’ We view that as game-changing.”

Champion Tourney And then, of course, there is TournEvent. Wednesday of G2E week, Everi held the finals for its fourth TournEvent of Champions in Las Vegas. Most of those attending were among the 182 finalists of the months-long, national slot tournament centered around the company’s innovative TournEvent tournament system. Each finalist had won a satellite tournament at one of 100 participating casinos—98 in the U.S. and two in Peru—and with it, an all-expense-paid trip for two to Las Vegas for the finals at the XS Nightclub at Wynn Las Vegas. Each finalist also was guaranteed prize money from the tournament itself, with no finalist walking away with less than $500 in winnings. The tournament has grown exponentially since the idea was first floated to maximize the use of Everi’s TournEvent system, which holds contests on a dedicated bank of special games. The tournament bank sits under a giant overhead

monitor that also acts as a leaderboard, with a video screen beaming live-action footage of contestants while the tournament is going on thanks to the cameras affixed to each machine. The games themselves include special features like floating balloons that boost your score if you touch them, engaging players in a fashion that the dull, button-pushing kind of slot tournament never could. For added excitement, at any point, any contestant can be awarded a random “Jump to First.” If that happens, you can have the worst score in the room moments before the end of a tournament round and then win the tournament.

30 0 YEARS OF EXPE EXPERTISE. EXPER ERTISE.

NO OTHER SHOW EVEN E COMES COME ES CLOSE. E E. More Mor re than gaming, thiss is about WINNING. As the longest running gaming trade show w in history, history, the Indian Gaming T Tradeshow rad deshow & Convention delivers the insight nsight and strategies strateg gies you need to navigate the gaming gamin ng industry landscape to success. Meet M the industry leaders, access the th he cutting-edge trends and learn how to win in your y market. marke et.

INDIIAN GAMING INDIAN TRADESHOW TRA ADESHOW CONVENTION & CO ONVENTION

MARCH MARC CH 13-16, 2016 PHOENIXX CONVENTION CENTER | PHOENIX, OENIX, ARIZONA INDIANG GAMINGTRADESHOW.COM INDIANGAMINGTRADESHOW.COM

p. 34 Everi:Layout 1 11/12/15 4:35 PM Page 40

The tournament has grown every year, and this year, the grand prize was $1 million, won by Rita Kellerman, representing the Ho-Chunk Gaming-Wisconsin Dells casino.

The tournament has grown every year, and this year, the grand prize was $1 million, won by Rita Kellerman, representing the Ho-Chunk Gaming-Wisconsin Dells casino. Chary says TournEvent has helped put Everi on the map. “TournEvent is still under-penetrated in the market, despite all the recent publicity and historic growth that it has enjoyed,” he says. “Many people don’t know or appreciate the distinction of having a social-type experience on a traditional slot floor. So we’re excited about what TournEvent can do for us going forward, and we’re excited about a next-generation TournEvent, which we expect will come at some point in the future.” TournEvent has drawn the attention of the industry, with other suppliers introducing their own instant-tournament systems that build on many of the innovations of TournEvent. Lucchese is not worried about the competition. “It doesn’t matter what segment of our product portfolio you consider, there’s always significant competition,” he says. “I think that continues to make all of us better in the product offerings that we develop for the casino operators. “We have a huge following for our TournEvent product. One of the things that makes us extremely unique, besides having a great core product for everyday use, is that we fundamentally changed how tournaments are run on casino floors. But the icing on the cake, or the crown jewel for our casino customers, is the commitment that Everi has made to their business through the investment we make in providing TournEvent of Champions.” He notes that the now-annual event motivates game developers at Everi to constantly improve the TournEvent system with new features—as well as creating profitable events for customers in the preliminary events, which are attended and hosted by Everi promotions staff, who ride one of two large TournEvent tour buses across the country for the satellite tournaments. “We send our promotions team on the road, two buses, traversing the entire country—as well as internationally now—through the ‘TournEvent Season,’ and that just adds to the excitement. The arrival of the bus is a big deal, and the casino operators get to advertise and promote this big event with their customers. That’s what it’s all about—helping the casino operators provide a more compelling gaming experience for their patrons, to drive more loyalty and more play to their casino operation.”

Skilled Millennials Chary believes that TournEvent is attracting younger players who like the social interaction in a casino in a way similar to how they enjoy social media. But as for developing specific games to attract younger players to slot machines, Chary has his doubts. “Slot play traditionally attracts an older demographic, and if you look at the profile across North America of that demographic, we don’t think it’s going anywhere anytime soon,” he explains. “I think attracting millennials and bringing them onto the casino floor, especially towards slot play, is really 40

Global Gaming Business DECEMBER 2015

an incremental opportunity, as it plays to a replacement opportunity. Now, that may change down the road, but right now, our mission is to create an innovative, distinctive opportunity for the traditional slot player to go onto a floor and enjoy that experience.” He also questions the current craze for skill-based games and how they might impact the popularity of slots with millennials. “We’re watching skill-based games very closely, like many folks in the industry,” he says. “There are aspects of some of our game development that are going to include perceived skill-based elements or dynamics that would lend themselves to skill as regulations are developed to allow for this functionality into the market. For me personally, I struggle with the operator’s ability to monetize some of those things. Of course, it’s not going to make sense for us to get into skill-based games if the operators can’t make money doing it.”

Meet Everi The TournEvent finals were just one part of what was a coming-out party for Everi at G2E. Its trade show booth was larger than past displays of either legacy company, and, thanks to the consolidation of the larger companies, was situated in one of the prominent top-five locations. Lucchese says the combined company’s first G2E provided a perfect forum for introduction of the new company to the industry. “The feedback we had at G2E was amazing,” he says. “There were customers that walked in the door and said, ‘Wow, with your product and showing, you guys have really stepped up your game. We can’t wait to get some of this new product on our floor.’ The content, the visual presentation, the graphics, the sound—it all came together.” For the future, Everi’s games division will continue to build on the foundation set by Multimedia Games. Lucchese predicts more investment in the stepper library—an area he says has been underserved in general in recent years—as well as continued investment in core video in all game styles. “Ram Chary has entrusted us to expand our product offerings in the games division of the company,” says Lucchese. “While continuing to invest on the payments side, he’s entrusted us to grow our ship share and our market share. If you look a couple of years down the road, I believe that you’ll see the investment beginning to pay off with our expanded library, our expanded content offering, our expansion of cabinet offerings and licensed content.” In the end, says Lucchese, “we believe that creativity, coupled with our strong and steady payments business, will pay off with an expanded presence on casino floors.”

subad2015:Layout 1 8/10/15 1:41 PM Page 1

DON’T MISS AN ISSUE OF GAMING’S MOST IMPORTANT TRADE PUBLICATIONS!

Subscribe to Global Gaming Business, the official magazine of G2E and the American Gaming Association. Visit www.ggbmagazine.com

p. 42 tribal Slots:Layout 1 11/12/15 4:40 PM Page 42

INDIAN WARS Gambling strains tribal-state relations in Oklahoma, elsewhere By Dave Palermo

elations between Oklahoma Governor Mary Fallin and the state’s American Indian tribes were already tense early last year when Fallin’s rock singer daughter Christina had the audacity to pose for an Instagram photo wearing a native headdress. “I am of the Muskoke/Creek Nation, and Christina Fallin should have known better,” penned writer Joy Harjo. “Don’t tread on my culture,” Choctaw Indian activist and songstress Samantha Crain wrote on a picket sign outside a concert by Fallin’s band, Pink Pony. Governor Fallin apologized, calling her daughter’s culturally inept behavior “inappropriate.” “I have great respect for Oklahoma’s tribal members. I celebrate their traditions and culture,” the governor said in a prepared statement. “Tribal governments are important partners to our state government, and I value the good relationships my administration has cultivated with them.” Many of Oklahoma’s 39 federally recognized tribes might disagree with Fallin’s characterization of tribal-state relations. They contend her administration is eroding tribal sovereignty and undoing decades of tribal-state cooperation on taxation, water rights, trust lands and other issues.

“Things have really developed into an acrimonious relationship,” tribal attorney Michael McBride says.

Fallin Failing

Tribes opposed Fallin’s decision to abolish the Oklahoma Indian Affairs Commission, replacing the office with a single tribal liaison. They didn’t appreciate the state’s recent hard line on tax and tobacco compacts. And they are extremely suspicious of Fallin’s publicly unexpressed desire to renegotiate tribal-state casino regulatory compacts due to expire in 2020, two years after the governor is termed out of office. Faced with declining state revenues tied to the slumping oil industry, Fallin is pressuring tribes to reopen talks on new compacts, hoping to get a bigger chunk of the gambling win. “Fallin’s administration is looking to bring more revenue to the state,” says Kiowa-Comanche John Tahsuda, principal of Navigator’s Global and a lobbyist for Oklahoma tribes. “Fallin doesn’t want to raise taxes, so she’s looking around. “One of the few economic bright spots in Oklahoma is the tribes,” Tahsuda says. “State officials see tribes doing reasonably well economically and they’re saying, ‘Hey, let’s go after the tribes for more money.’” “The state looks at us as if we have deep pockets,” Comanche Nation Chairman Wallace Coffey says. “But we give our resources back to our membership.” “We are under attack because we represent potential revenue,” Citizen Potawatomi Nation Chairman John “Rocky” Barrett says. “But it’s not just about money,” says Barrett, whose tribe has long fought state and local officials on sovereignty and taxation. “It’s about forcing Indian tribes to do things against their will. And it follows the history of how Oklahoma has handled tribal gaming from the very —Oklahoma Governor Mary Fallin beginning.”

“Tribal governments are important partners to our state government, and I value the good relationships my administration has cultivated with them.”

Global Gaming Business DECEMBER 2015

p. 42 tribal Slots:Layout 1 11/12/15 4:40 PM Page 43

“In the past, compacts were targeted to the scope of Class III gaming. Now, they attempt to narrow and undermine the tribes’ right to offer and regulate Class II gaming.” —Tribal attorney Kevin Quigley

Fallin doesn’t have much leverage in getting tribes to discuss new compacts. The agreements, which give the state 6 percent of adjusted gross revenues from slot machines and 10 percent of the table game win, have an automatic 15-year renewal clause, so the tribes aren’t anxious to talk. Tribes have generated nearly $1 billion for the state since a compact was agreed to in 2004. “I doubt that tribes are really looking to engage at this point,” McBride says. “There have been no discussions” with the governor’s office, Coffey says, informal or otherwise. To the contrary, tribes are increasing their inventory of Class II electronic bingo machines, which do not require approval or revenue-sharing payments to the state.

Class By Themselves Technological improvements have made Class II devices competitive with Class III machines, particularly in Oklahoma, where after years of non-compacted gambling players have grown accustomed to bingo-style, Class II gambling. “A lot of tribes are electing to go back to Class II machines in the casinos and not use Class III machines,” Coffey says. Forty-two percent of Oklahoma’s 68,000 slot machines in 2012 were Class II devices, up from 34 percent in 2008, according to the gaming compliance unit of the Office of Management and Enterprise Services (OMES). The percentage of Class II machines is believed to have risen even more since 2012. In what many perceive to be a desperate, ill-advised tactic to press tribes into negotiating new compacts, a state official suggested in a June 11 letter to Kevin Washburn, Interior Department assistant secretary for Indian affairs,

that many of the 41,000 compacted machines operated by 33 tribes at 115 casinos, auto plazas and other locations may be illegal. OMES Deputy Director Jeffrey Cartmell told Washburn the Cherokee Nation, state officials and an industry testing laboratory in 2006 agreed to a “substantive technical amendment” to the compact that was not approved by the state legislature and federal officials. As a result of the “technical amendments,” Cartmell said, “every machine that could be played in Las Vegas, Reno or Atlantic City was now an electronic instant bingo machine in Oklahoma.” Tribal and federal officials, including Washburn, rejected Cartmell’s assertion that agreed-to technical standards for compacted, Class III machines constituted an amendment to the tribal-state compact requiring state and federal approval. “We regret the discord in the relationship between the state government and the tribes,” said Washburn, noting in his August 14 reply to Cartmell that the compact included provisions for mediating disputes. “We understand the temptation to look to officials in Washington, D.C., to solve disputes in Oklahoma, but the most lasting resolutions are likely to occur when those disputes are resolved locally and without federal intervention.” Cartmell’s letter was symptomatic of several states—Alabama, California, Idaho, Michigan and Wisconsin, among others—that have targeted the legality of casino games in Indian Country in an effort to undermine the industry or press for new compacts. “State compact-based lawsuits are the new avenue states are using to narrow and undermine Indian gaming, particularly Class II-type Indian gaming,” says attorney Kevin Quigley of Gray, Plant Mooty, a Minneapolis, Minnesota, law firm launching a full-service tribal practice. “In the past, compacts were targeted to the scope of Class III gaming,” Quigley says. “Now they attempt to narrow and undermine the tribes’ right to offer and regulate Class II gaming.”

“It’s not just about money. It’s about forcing Indian tribes to do things against their will. And it follows the history of how Oklahoma has handled tribal gaming from the very beginning.” —Citizen Potawatomi Nation Chairman John “Rocky” Barrett

DECEMBER 2015 www.ggbmagazine.com

p. 42 tribal Slots:Layout 1 11/12/15 4:41 PM Page 44

An Anti-Tribal Gaming Trend The 9th Circuit Court of Appeals in July ruled that the Coeur d’Alene Tribe could not offer Texas hold ‘em poker because of a state law prohibiting the game. The tribe had argued Texas hold ‘em was a Class II game not subject to state jurisdiction. Meanwhile, the 7th Circuit Court of Appeals in April upheld the right of the Ho-Chunk Nation of Wisconsin to offer electronic poker, a game the state said was Class III and subject to a tribal-state compact. The 11th Circuit Court of Appeals in September upheld the right of the Poarch Band of Creek Indians to operate three non-compacted Class II casinos in Alabama. The ruling upended attempts by state Attorney General Luther Strange to have the machines declared illegal. A U.S. District Court judge in September ruled that the Sault Ste Marie Tribe of Chippewa Indians could file for a U.S. Interior ruling on a landtrust application near Lansing, Michigan, without entering into a revenue sharing agreement with the state. And federal and California officials are in District Court seeking to prevent the Ipay Nation of Santa Ysabel from offering proxy-service internet Class II bingo. Many of the legal assaults on tribal rights to operate Class II gambling without interference from the state—a provision of the Indian Gaming Regulatory Act of 1988—are efforts to leverage compact negotiations. “A national trend is that states are becoming more aggressive in preparing for compact negotiations,” McBride says. “They’re targeting Class II and trying to whittle down the definition.” “My experience tells me that when a state starts down the path of questioning Class II machines—whether it’s Alabama, California, Oklahoma or whomever—they’re planning, thinking ahead to either compact negotiations or some other action against tribes,” says Joe Valandra, a Sicangu Lakota and CEO of Great Luck Gaming, partner with the Santa Ysabel Tribe. “It may get wrapped up as a regulatory or policy issue,” Valandra says, “but it’s really a matter of getting more money to the state.”

An Ill-Advised Letter Former state Treasurer Scott Meacham, who negotiated the 2004 Oklahoma tribal-state regulatory compact under former Governor Brad Henry, says the goal was to provide, as compacted machines, a limited form of Class III gambling that fell short of traditional slots found in most gambling jurisdictions. “We didn’t want to do full Class III machines in Oklahoma,” Meacham says. “First of all, we didn’t think we needed to. Secondly, it would be much more difficult to get the state legislature to approve Class III machines.” The compact called for a form of electronic instant bingo that conformed to the Oklahoma State-Tribal Gaming Act. From there, things apparently got complicated. Jamie Hummingbird, director of the Cherokee Nation Gaming Commission, told a panel at the recent Global Gaming Expo that the first machines off the assembly line “did not meet the expectations of the compact.” “The compacted games weren’t performing, economically, the way the tribes had expected,” says Valandra, who at the time served as chief of staff of the National Indian Gaming Commission. “The tribes began to push the manufacturers to make adjustments. That’s how these so-called amendments 44

Global Gaming Business DECEMBER 2015

“My experience tells me that when a state starts down the path of questioning Class II machines—whether it’s Alabama, California, Oklahoma or whomever—they’re planning, thinking ahead to either compact negotiations or some other action against tribes.” —Joe Valandra, CEO of Great Luck Gaming, and former NIGC general counsel

took place, in that context.” Tribal regulators and state officials, assisted by manufacturers and machine testing laboratories—notably Gaming Laboratories International (GLI)—in 2006 agreed to a set of technical standards and specifications for compacted, Class III machines. GLI recommended for approval a device that lacked a video screen and incorporated a random number generator to calculate winning outcomes. The tribal-state consultations and GLI recommendation, according to tribal and state officials, constituted an interpretation of compact provisions and not an amendment requiring state and federal approvals. Meacham, who participated in the 2006 tribal-state discussions, says there was no mention of amending the compact. “It’s a statutory compact,” he says, approved by voters and the state legislature. “We wanted to give the tribes and racetracks the ability to offer new and attractive, competitive games. We wanted to create a machine that had the heart of bingo … and allow growth and development, because we understood you had to constantly be creating new experiences to keep the gaming public engaged. “I don’t know what the state’s motivation could be,” Meacham says of the letters to Washburn. “It feels to me like a bureaucratic overreaction.” GLI President James Maida declined to discuss the matter. “I am sorry, but as the independent non-partisan lab I am forbidden to speak about this issue,” Maida said in an email. “The letters speak for themselves.” GLI’s 2006 opinion was submitted to tribes and the state, and received no objections. However, earlier this year, nearly 10 years after the GLI opinion, state auditors visited six tribal casinos and issued notices of violation (NOVs) contending some machines violated compact provisions. The notices were later

p. 42 tribal Slots:Layout 1 11/12/15 4:41 PM Page 45

“The state is on some very shaky legal footing to attack the legality of the games at this late date after having acquiesced to what has been occurring for almost a decade.” —Former Oklahoma Governor Brad Henry, who negotiated the original compact with the tribes

rescinded when OMES acknowledged it lacked authority to issue NOVs. “They agreed to retract the letters,” Hummingbird says. “But they continued to maintain the machines were illegal.”

It is not clear if the state will pursue efforts to dispute the legality of tribal slot machines.

Standard Variations

Barrett speaks of the decades the Citizen Potawatomi has fought with state and local officials over taxation issues, a battle that continues despite a 1991 U.S. Supreme Court decision favorable to the tribe. Barrett blames term limits and the lack of knowledge about state, federal and tribal relations. “There is a lack of institutional memory,” he says. “There is not a single Oklahoma legislator who was in office when the last gaming compact was signed. Less than half the Oklahoma legislature had graduated from high school when the 1991 Oklahoma Tax Commission v. Citizen Potawatomi Nation case was heard.” Barrett also believes an anti-Indian sentiment is sweeping the nation. “It’s not really about state’s rights,” he says. “It’s got an uglier underbelly. It’s about racism.” Attorney Burrage says tribal-state relations have historically been good. Earlier this year he negotiated a water rights settlement between Oklahoma and the Chickasaw and Choctaw Nations. “Every issue that’s come up has been worked out in a compact or settlement of some kind,” Burrage says. “The tribes are significant economic engines in this state, and people are starting to see that. The tribes are also sophisticated business people.” “I thought we put together a pretty good deal,” former Governor Henry says of the 2004 compact. “It’s been great for the tribes. It’s been great for the state,” he says, generating nearly $120 million a year. Henry, an attorney, ponders the logic of questioning the legality of Oklahoma gambling devices in an effort to force tribes to the negotiating table. “The state is on some very shaky legal footing to attack the legality of the games at this late date after having acquiesced to what has been occurring for almost a decade,” he says. “In a court of equity, the state would be deemed to have unclean hands, as the law sometimes says.” Henry also regrets the hardening of relations between tribes and the state. “I had a great relationship with the tribes, and I’m proud of that,” he says. “Tribes contribute a great deal to our economy and our state, our culture and heritage. There’s just no reason we shouldn’t celebrate the tribes and all they’ve done for our state. “I just hope there’s not any real discord here, and we can all get along.”

State officials met with a handful of tribal regulators and suggested they “come up with a set of standards by which all games would be evaluated and approved,” Hummingbird says. “The technical standards—all the different things the games are supposed to do—are already spelled out in the compacts,” Hummingbird recalls telling state attorneys. “So why are we here?” “It appears the terms of the compact and the technical requirements of electronic instant bingo were amended, either by agreement or by … lab certification procedures,” Cartmell said in his letter to Washburn, a process he suggested could have required approval by Interior, if not the state legislature. Tribal officials expressed outrage at Cartmell’s assertions. “The allegations that we are operating illegal games are insulting,” Hummingbird says. “Cartmell has taken the unusual step of alleging to you that the parties may have been acting unlawfully since nearly the inception of their compact relationship,” Choctaw Nation tribal policy director Brian McClain said in a June letter to Washburn. “In short, his allegations have no basis in law or fact, contradict a longstanding mutual understanding of the compact standard and have been raised in a manner that is, frankly, strange.” “The first thing state officials were trying to do is show there was an amendment to the compact,” Chickasaw Nation attorney Michael Burrage says. “There never was an amendment to that compact. “My reaction also was they wanted to negotiate some of the compact provisions. This was a method to do that,” he says of allegations raised in Cartmell’s letter. Coffey was more succinct. “It was very evident they were trying to pick a fight,” he says. Cartmell and Fallin’s office did not return calls and emails seeking comment. Fallin’s tribal liaison, Secretary of State Chris Benge, and his deputy assistant for Native American affairs, Brian Hendrix, also failed to return calls and emails for comment. An OMES spokesman issued an email statement that said, “Upon being unable to locate records related to potential compact amendments and interpretations, the state followed proper protocol by requesting clarification from the federal Interior Department as prescribed by federal law.”

Eroding Relations

DECEMBER 2015 www.ggbmagazine.com

p. 46 SmartCards:Layout 1 11/12/15 4:41 PM Page 46

Getting

smart

Smart-card technology matures as the U.S. market grows for new types of gambling tailor-made for the payment method by Dave Bontempo

nnovative genius launched and still drives the gaming world. But being “smart” has never been more important. The lucrative American gaming market samples a smash overseas hit. Smart cards, already used extensively in financial and health industries throughout Europe, flow more freely through the American casino world. Expanded card use elicits euphoria between the gaming and non-gaming entities linked by them. Optimism also remains for the reverse of iGaming’s slow growth, which would prompt a smart-card proliferation. There are detours, however. Data-breach reports pack sobering reminders of hacking threats. So does cautious government policy, like the industryfriendly Nevada Gaming Control Board warily approaching online legalization because of security fears. The latest example was its October ruling that daily fantasy sports is a form of gambling requiring a state license to operate. Underscoring the judgment were four player lawsuits claiming the equivalent of insider trading against the DraftKings and FanDuel websites. The Nevada board moves deliberately, and if its influential stature affects other states, smart cards will lose one of their rising markets in fantasy sports. While these scenarios play out, much adieu surrounds the card, which resembles a credit card in size and shape, but is different. The inside of the smart card usually contains an embedded microprocessor, replacing the standard magnetic stripe on a credit or debit card. These financial instruments are more popular in Europe than in the United States. Yet, when the American market starts embracing something, industries rush toward them. In this case, the industries are gaming and credit-card companies. Welcome to the stampede.

Sightline: A Good Vision Omer Sattar has long championed card use by casino properties. The cofounder and executive vice president of strategic initiatives for Las-Vegas-based Sightline Payments literally had company eyes on the prize. 46

Global Gaming Business DECEMBER 2015

His group brought a significant component to the gaming-world table a couple years ago via Loyalty Card Plus, a unique reloadable prepaid card program designed for casino operators. Vantiv, Bally Technologies and Discover partnered with Sightline back then, and properties continue to sign up. “A casino issues you a card and you can take that card and use it at any retail location,” Sattar says. “The same card is tied into all of the casino’s systems—slot systems, TITO, machines and table game management systems. I can ultimately sit at a slot machine and put in a player loyalty card, and it asks how much money I’d like to use. “From that same card, I can buy in without putting cash into the machine. Instead of hitting cash-out or using TITO, that money gets put back on the card. This is the first time something like this is being done, where a casinogranted card lets you play in a casino and spend money anywhere you want. It does so in a secure fashion. Cards are FDIC-insured, and carry lost/stolen protection (with Reg E). From a customer standpoint, the convenience factor is huge.” From the casino perspective, this system removes cash, Sattar says. It eliminates the issue of money being expensive to manage, procure and deposit at a bank. “One of the applications we offer is designed for when customers hit jackpots at a casino,” Sattar indicates. “There is a major security concern around jackpots being paid in cash because you can be followed out of a casino and then be assaulted. Now, money is going on a piece of plastic. If it is stolen, it is basically useless to them.” Customer preferences can also be targeted, and marketed to. Frequent flier points? Sort of. “We have created an ecosystem that replicates how airline rewards work,” Sattar explains. “When I take a casino card and pay for a steak at a steakhouse—any steakhouse, not just one that is on the casino property—I can now get casino points. Customers who are loyal to various brands are now earning points for their next casino visit. This program is zero dollars out of the pockets

p. 46 SmartCards:Layout 1 11/12/15 4:41 PM Page 47

“When you give a customer something they can hold in their hand that has their name on it, it fosters great loyalty. From what we have seen with the cards, there is heavy usage, and cards staying active for a long amount of time.” —Omer Sattar, co-founder and executive VP, Sightline Payments

of casinos; it is a free marketing tool that incentivizes customers. “Not only does a casino now know that I like steak, but where I like to go and when I like to have it. Rather than a blanket offer next time, as a casino, we now give you a targeted offer built around eating steak.” The Sightline footprint has been pronounced, Sattar contends. It spreads across several entities. “We work with brick-and-mortar, iGaming, parimutuel, ADW, and race and sports,” he says. “We’ve been live for over two years and have seen some really interesting data points from the casino standpoint. In iGaming, operators found that those who have signed up for the card, when compared to customers who bring in money from other mechanisms, are much more loyal. “When you give a customer something they can hold in their hand that has their name on it, it fosters great loyalty. From what we have seen with the cards, there is heavy usage, and cards staying active for a long amount of time. If you also give customers the convenience of using gaming technology on mobile or at home, with their name on it… and they can buy groceries using the same technology, it’s pretty obvious that they will use it.” The process incorporates both convenience and loyalty, Sattar asserts. The more it unfolds, the better chance it will become second nature. “Separately, this ties in to existing loyalty systems,” he says. “We don’t want them to be changed out, as they have been built over a long period of time. When someone wants the prepaid card, we simply attach it to the existing casino loyalty program. We can feed all that data back in to existing loyalty systems. We don’t want casinos to have heavy infrastructure costs in replacing what they have. Our goal is to have a major casino company on board with as little cost as possible. Loyalty cards will and should maintain a presence in this industry, even with the convergence of mobile and other payment solutions. Payments should tie to loyalty and drive loyalty, not replace loyalty.”

Vantiv: Natural Tie to Sightline The success of Sightline played into the Vantiv lineup. Cincinnati-based Vantiv brought a high-profile reputation into the gaming world a few years ago. It handles more than $23 billion of annual transactions and services retail giants Wal Mart and CVS, among others. Vantiv provides the connectivity for anyone using a card to fund gaming purchases. Two years ago, it created Vantiv Gaming Solutions, now Vantiv Entertainment Solutions, reflecting the company’s intent to help casinos, iGaming, lottery and social gaming operators build strategic pay programs. Vantiv has obtained an ownership interest and partnership with Sightline. “When we studied the gaming industry and looked at what our ultimate goal was—the convergence of gaming and payments—the innovative technology that Sightline was building and the bidirectional network as it relates to cashless gaming worked for us,” says Joe Pappano, senior vice president and managing director of Vantiv Entertainment Solutions. “We wanted to invest in that technology. At Vantiv, we have 40 years in the payments industry. We knew that because of our credibility, industry expertise and assets, we could help take the Sightline offering and enhance and build out technologies that existed. “More importantly, our partnership became a critical piece in driving a unified customer experience. Collectively, we knew we could help drive significant change and revenue growth. (Sightline) needed a strong partner that was committed to the gaming industry, and that’s what we are. We are positioned well to provide a one-stop shop for an operator and any other entities in the gaming ecosystem.” Pappano says the card’s original business model was predicated on removing cash from of the casino floor, knowing it is the largest operating expense for casinos. An added benefit is that it is being tied to rewards programs and different wallets. The utility of the card is expanding dramatically because of

“In order to truly entice the gaming consumer, you want to be able to tap into what and how they spend every day. You have to provide more pinpointed value than a standard free night stay. You need more diversity since demographics have changed. There is a variation among millennials versus Gen X versus baby boomers. They all want to be approached differently.” —Joe Pappano, senior VP and managing director, Vantiv Entertainment Solutions 47

p. 46 SmartCards:Layout 1 11/12/15 4:41 PM Page 48

CardLogix tries to ease security concerns with MFA, which contains safety measures ranging from facial recognition to fingerprinting. A Las Vegas television station personality tried to crack the system and could not.

innovation, and this utility is future-proof, he says. That’s why security must be foolproof. Given significant industry growth and data breaches involving businesses, security concerns remain paramount. It is one of the biggest obstacles vendors face in all industries. “The card itself is issued by a financial institution, and adheres to regulatory oversight,” Pappano says. “It is FDIC-insured, and it does come with Reg E protection. What that means is that the consumer is not liable for lost or stolen cards, just like their traditional debit and credit cards. In addition, the funds are held by a bank. We’re not reinventing consumer protection with this, and it fits within the governance that’s inherent in the financial industry. Two highly regulated industries are coming together here, and the program is built on protecting consumers.” Casinos and traditional non-gaming entities are becoming one. Many properties, especially tribal casinos, use shopping venues like Tanger to improve their business presentation. Outlets lure a separate brand of shopper, and player. “What you’ll see is a blurring of channels that start to extend to various brands, and the utility of incentivizing their customer base,” Pappano predicts. “Additionally, there will be a shift more toward real-time offers and expansion beyond the four walls of a casino. You’ll see traditional retailers leveraged to provide additional offers back to everyday consumers who participate in gaming. In order to truly entice the gaming consumer, you want to be able to tap into what and how they spend every day. You have to provide more pinpointed value than a standard free night stay. You need more diversity since demographics have changed. “There is a variation among millennials versus Gen X versus baby boomers. They all want to be approached differently.”

CardLogix:Verified ID While Vantiv and Sightline help gamblers shop, CardLogix targets online “drop.” Its smart card not only governs purchasing power, but enables play, particularly online. That’s the perception gleaned from the Multi-Factor Authentication (MFA) solution from the Irvine, California-based company, which supplies cards and software to casino operators worldwide. MFA is a finished software solution that involves a card. In a brick-and-mortar setting, the card can be placed right inside a slot machine. For online gaming, 48

Global Gaming Business DECEMBER 2015

it not only enables the action but secures a person’s identity, according to the company. Gaming regulators are prudent, therefore deliberate, in protecting the public and delaying the expansion of online gaming. That’s understandable, according to Bruce Ross, the CEO of CardLogix. “Credit cards without chips rely on a simple magnetic stripe on the back, and, as we are all painfully aware, are subject to fraud,” Ross indicates. “Credit card issuers are just now converting to EMV chip cards to greatly mitigate this problem. “However, the CardLogix MFA is not a financial card, and likely a credit card would continue to be used to play. The main safeguards on the card are the smart chip and the stored biometrics, which make it virtually impossible for someone other than the authorized cardholder to gamble or do anything else with the card.” CardLogix tries to ease security concerns with MFA, which contains safety measures ranging from facial recognition to fingerprinting. A Las Vegas television station personality tried to crack the system and could not. “Now that EMV chip cards are introduced into the U.S., smart cards will be infinitely more familiar to them and people who gamble,” Ross says. The combination of smart card and biometric technology is already widespread in many other industries and governments, and the worldwide gaming industry is next. Biometric ID credentials are becoming more commonplace. A smart card is an ideal solution for storing and protecting biometric data, which takes up a lot of room. In the compliance-driven gaming industry, this solu-

p. 46 SmartCards:Layout 1 11/12/15 4:42 PM Page 49

tion offers non-refutable verification of a transaction. The card can carry an electronic signature, further binding player identity to the transaction. The card issuer can also incorporate a user PIN for added security. “We feel it’s only a matter of time until our field-tested solutions will be the gold standard for identity in the worldwide casino industry,” says Ross. The MFA is targeted to casino operators and hardware/software gaming platform providers, like Scientific Games. It is not yet installed in any jurisdictions. While U.S. online gaming proceeds slowly, the real prospect for the MFA is the rest of the world, Ross contends, because many countries opt for government-run, nationwide gaming, like national lotteries. There will be a succession of countries that legalize online play and will need the security of this type of solution, he predicts. The MFA solution addresses basic regulatory concerns like age and location, along with problem gaming. It has versatility across online and physical gaming. The same card used for online play can open room doors, do player tracking, store value, power loyalty programs, and, ultimately, replace paper and TITO, Ross says. The CardLogix MOST Card is a smart card central to the success of the solution. The basic components of a complete system start with enrollment. Biometrics are captured at this point and stored on the card, which has the computing power, capacity and security to store it. Then comes card configuration. The MOST is a microprocessor-based card, and works just like a computer with its own operating system. The card is developed using software that allows a person to set the card up, specifically with keys and data structures. For online identity verification, a PC is equipped with MFA software via a simple download, a camera and a small fingerprint reader. To log on, one inserts the MOST Card received at enrollment, and, when prompted, verifies that his real-time identity (face via camera or fingerprint via reader) is the same as what’s in the card. As a person plays, he is periodically asked to re-verify. According to Ross, this solution authenticates one’s identity for gaming transactions, discouraging the practice of a minor jumping into an online game already set up by an adult, or a child pilfering the credit card of a parent to play. The solution has gone deeper than most, if not all, of its predecessors. Yet even in this case, the company knows that success comes slowly. That’s the only “smart” way to look at it.

Keep Your Casino

TITLE 31 COMPLIANT with FABITrack®

504.837.2626 www.fabicash.com "5.T t $BTI "EWBODF t 5JDLFU 3FEFNQUJPO '"#*5SBDL 5JUMF t *OUFHSBUFE $IFDL $BTIJOH '"#*$BTI .PCJMF t $VTUPNFS 4FSWJDF First American Bankcard, Inc. is a Registered Agent of Citizens Bank, N.A., Providence RI

DECEMBER 2015 www.ggbmagazine.com

p. 50 dfs:Layout 1 11/12/15 4:43 PM Page 50

The Path Forward for

DFS A

How fantasy sports sites can survive the storm and emerge healthy and prosperous By David D. Waddell and Dustin M. Ford

lot has been written about the fantasy sports industry (and particularly daily fantasy sports) in the last few months. Is it gambling? Is it legal? What did Congress intend by creating a carve-out in the Unlawful Internet Gaming Enforcement Act

(UIGEA)? Should it be outlawed? Should it be regulated? Should it be taxed? Is it too big to fail? Have there been advantages to industry employees with inside information? There are advocates on both sides of almost every issue that has been discussed, and persuasive arguments can be made no matter which side of these issues you seek to address. At this point, the fantasy sports operators likely regret the aggressive advertising campaign that they engaged in this year. Having invited increased attention, they have found themselves scrutinized beyond their wildest dreams. Understandably, these operators are spending much of their time reacting and defending themselves on multiple fronts. Lost in this onslaught has been any meaningful discussion of some key issues that matter. First, looking forward, how can consumers and society be best protected? What issues need to be addressed to assure this protection? Based on its widespread popularity, it is clear that fantasy sports (whether legal or illegal, regulated or not regulated) are here to stay. Any attempt to completely outlaw this popular activity will lead to the same debacle that has occurred with illegal sports wagering in this country, where over $140 billion is estimated to be wagered this year through illegal bookies, according to the American Gaming Association. This type of widespread illegal enterprise creates huge societal problems allowing for the growth of organized crime, terrorism funding and money laundering activities, as well as a lack of consumer protections, such as responsible gaming, accessibility to minors, technological safeguards and fair play. To avoid this, some sort of oversight system The newly formed FSCA will be headed by former U.S. needs to be developed, whether it be a governSecretary of Labor and mental regulatory system (or multiple systems prominent legal scholar in different jurisdictions) or a form of industry Seth D. Harris 50

Global Gaming Business DECEMBER 2015

self-regulation, similar to what the financial industry in the U.S. has established by creating the Financial Industry Regulatory Authority (FINRA), which regulates brokers and exchange markets. On Tuesday, October 27, the Fantasy Sports Trade Association announced that it will be forming the Fantasy Sports Control Agency (FSCA), an independent body to regulate the developing industry. The FSCA will be headed by former U.S. Secretary of Labor and prominent legal scholar Seth D. Harris. In addition to serving in the Obama administration, Harris was the director of New York Law School’s Labor and Employment Law programs and visiting professor at Seton Hall Law School, where he focused his research on issues involving federal labor, disabilities and employment discrimination policy. Harris’ accomplishments in both the legal and public sectors should provide the FSCA with strong guidance as it develops industry standards, internal controls, auditing and enforcement mechanisms. Although some in the fantasy sports industry are pursuing an independent non-governmental regulatory body, many jurisdictions continue to explore the possibility of developing a regulatory structure. On November 11, Massachusetts Attorney General Maura Healey announced that she intends to have proposed regulations for the industry developed by the end of the year. On the same day, American Gaming Association President and CEO Geoff Freeman stated: “The gaming industry wishes to see this product succeed and to partner where appropriate. State-by-state legal clarity and consumer protections are necessary prerequisites for daily fantasy’s success and future collaborations between our industries. “As we move forward, the AGA will work with law enforcement, sports leagues and other interested parties to consider effective approaches that protect consumers and the integrity of sports.” State attorney general offices have begun to officially weigh in on these decisions in Nevada and New York, and other public bodies are conducting independent reviews. Illinois and New Jersey lawmakers have stated that they have

p. 50 dfs:Layout 1 11/12/15 4:43 PM Page 51

sive background checks on all the parties involved. Independent oversight into the background and experience of key operational professionals has allowed the traditional gaming industry to assure those with the potential to use gambling for illegal purposes are kept out of the industry. Minimum personal character, professional experience and financial benchmarks are common standards throughout the industry, and have resulted in businesses operated by upstanding, talented individuals.

Legal and Societal Standards

or will introduce legislation seeking to regulate the activity. The broad attention to regulatory oversight will result in a wide variety of approaches, although all will likely include some general standards of gaming regulatory policy.

Sound Oversight Structure Whether the industry oversees itself or if at some point the government gets involved, any sound system that provides the necessary protections to consumers and to society will structurally have five key components: 1. Due Diligence/Licensing Standards; 2. Game Integrity and Consumer Protection Standards; 3. Internal Control Systems; 4. Audit and Enforcement Systems; and, 5. Due Process Protections. All of these components commonly exist in the myriad state jurisdictions in which the casino gaming industry, the horse racing industry and the lottery industry have operated, and provide a good model for the fantasy sports industry. Some jurisdictions have begun establishing policy for fantasy sports and other similar contests, though there are not yet any extensive fantasy sports regulatory structures in place. New Jersey has authorized fantasy sports tournaments for promotional purposes, but the jurisdiction has not yet put forth any detailed rules on the operation of such activity. Nevada recently passed Senate Bill 9, which authorizes the gaming regulators to permit skill-based games on the casino floor, and the state is currently drafting regulations to govern such activity. Both of these regulatory systems have focused on systems to be used if the casinos are involved in the activity, rather than looking at it on a stand-alone basis.

Due Diligence and Licensing Standards To protect society and consumers, some mechanism needs to be developed to assure that criminal elements and unscrupulous individuals who have engaged in illegal activities do not get involved in the industry. Most jurisdictions have done this by developing licensing standards to keep these people out of the industry. The due diligence process involves exten-

To qualify for the carve-out under UIGEA, fantasy sports games need to meet certain specific criteria. These include notifying players of the specific prizes in advance of the competition, that the fantasy teams are not made up of only players from a single real-life team, and that the contest is determined not by any single team or athlete’s performance in a single real-life contest. For the fantasy sports industry, it will be key for any oversight system to make sure that the games involved meet these standards. To ensure integrity, the traditional gaming industry has turned to public and private gaming labs to test each gambling game and game component prior to its introduction for play. Gaming Laboratories International, which provides independent testing services to governments and to game suppliers in the casino industry, released a white paper in July 2015 outlining the benefits of testing and lab certification standards for fantasy sports operators that would help assure proper protections. In addition to meeting the UIGEA standards, it will be important for there to be oversight to assure that all gambling activity is conducted in a safe, fair and predictable manner. The integrity of each fantasy game is crucial to both regulatory and industry success by assuring consumers that those games are not unfairly adjusted in favor of a single party. Some fantasy sports operators which maintain gambling operation licenses in Great Britain, such as DraftKings, have been exposed to regulatory efforts to ensure game integrity. Great Britain’s Gambling Commission published its “Sport and Sports Betting Integrity Action Plan” in September 2015, which outlines a broad strategy to promote integrity in sports betting activity. The plan includes goals and suggestions for participants across the industry for cooperative monitoring and reporting of potential sports integrity issues. Although a comprehensive list of issues to be addressed to assure game integrity and consumer protection is beyond the scope of this article, the broad categories of issues that need to be addressed include the following: Age and Identity Verification. As the fantasy sports market is currently based online, age and identity protections are a necessary step to ensure that a player’s identity can be confirmed, and that underage individuals are not engaged in the activity. Transparency of Rules. While the basic game play in fantasy sports is widely known—drafting multiple players whose individual performances will be aggregated into a total team score—the specific scoring calculations, team composition requirements and other factors have dramatically evolved since the introduction of the activity years ago. Certain fantasy leagues or contests may have rule nuances that are not readily explained to a new player, and that can result in a consumer not fully understanding the nature of the contest. It is important that full disclosure of these nuances is made as a basic means of consumer protection. Insider Knowledge. Access by a select few to insider knowledge of betting trends, odds and game conditions can greatly affect the public’s confidence in fantasy sports activity. In September and October, the New York Times ran a series of articles outDECEMBER 2015 www.ggbmagazine.com

p. 50 dfs:Layout 1 11/12/15 4:43 PM Page 52

How fantasy sports sites can survive the storm and emerge healthy and prosperous lining instances of employees of fantasy sports operators using their considerable inside knowledge of betting patterns to win contests on competitor websites. This resulted in a decline in revenues for the industry, as some participants lost confidence. At the very least, access to such knowledge creates the appearance of impropriety and diminishes consumer confidence in the conduct of games. Some major fantasy sports operators have since instituted corporate policies attempting to curtail and eliminate the activity, including expanding participation bans to employee family members in line with traditional gaming practices. These are commendable steps, but further attention can cut off additional insider opportunities beyond merely employees and their families. Integrity Issues with Sporting Events. A key issue that needs to be considered and addressed is what should happen in the event the integrity of a certain sports outcome comes into question. If I select a player as my fantasy quarterback, and later a question arises as to the integrity surrounding that player’s performance, clear standards need to exist with regard to how the issue will be dealt with in a way that is both transparent and fair to the consumers involved. Responsible Gaming. The potential for problem gambling issues in fantasy sports activity was recently recognized by the National Council on Problem Gambling. On October 8, the council adopted a resolution which stated that it “believes fantasy sports contest participants are at a high risk to, and do, develop gambling problems (and) calls on companies offering fantasy sports contests to develop gambling-related consumer protections using the NCPG GRADE guidelines as a foundation.” To be responsible to society and to protect the consumer and public, it is vitally important for the fantasy sports industry to make a big commitment to assure responsible gaming standards are met. Know Your Customer and Anti-Money Laundering Protections. Given the countless number of transactions, wagers and accounts maintained by fantasy sports operators, it is vitally important for them to follow the “know your customer” and anti-money laundering requirements that other financial institutions must meet. This involves extensive employee training, and steps being taken to assure that neither organized crime nor terrorist groups end up using the fantasy sports sites as a way of laundering money. Given that financial institutions offering credit cards are permitted (under UIGEA) to process fantasy sports transactions, many of these compliance steps with the anti-money laundering regulations are likely occurring at the financial institution level. It is important for the fantasy sports operators to take steps to assure that they have internal standards in place to assure such compliance no matter how the financial transaction gets processed. Internal Control Standards. The gaming industry has, through strong regulatory oversight, made strong internal control procedures a standard practice for businesses operating in the space. By adopting model procedures, approving individualized business practices or creating required practices, regulators have created an atmosphere that allows gaming operators to self-police and report compliance violations in addition to their traditional, larger oversight role. This ensures that operators can closely monitor day-to-day compliance goals while regulators devote greater resources to macro-level investigations and reviews. Patrons are also provided with a measure of confidence that operations meet minimum industry standards that protect game play. Audit and Enforcement Systems. Once all the licensing and due diligence, game integrity, consumer protection and societal protection standards are fully developed, and internal control systems are put in place to assure self52

Global Gaming Business DECEMBER 2015

regulation by operators, some form of independent review or “audit” function is necessary to provide the public with the assurance of compliance with these standards. If problems are discovered, some form of method of addressing the shortcomings is necessary, i.e. an enforcement system. To sustain itself, the fantasy sports industry needs to do more than simply hire an advocate (law firm) or advocacy group (trade association) to reassure the public on these points. Some form of independent review by a party that is not under control of the operator is necessary for the industry to have credibility with the public, and to assure that society is adequately protected. This does not necessarily mean that there needs to be governmental involvement. A properly empowered entity with appropriate independence can address this need, much like FINRA has for the financial services industry, or the gaming laboratories have done for slot machine testing industry. Due Process. Due process is the cornerstone of our legal and regulatory systems, and is designed to ensure that all individuals enjoy the ability to have concerns addressed in a uniform manner by impartial parties. The terms of use for at least one of the major fantasy operators seek to accomplish this through standard arbitration clauses—a good start, though there are opportunities for improvement. Another major operator allows for all dispute resolution to be made by the operator at its sole discretion. Clearly, if the dispute is with the operator, this would not seem to be an adequate form of due process. Independent evaluation and adjudication is key to providing the due process protections for consumers in this new industry. Hearings by unbiased third parties, with appeal procedures, ensure that consumers’ voices are heard in a fair and objective manner. This type of due process should be available not only for patrons, but also for those denied participation in the industry for failing to meet set standards.

Benefits of Protections To be successful in the long term, the fantasy sports industry will need to proactively take steps to dispel developing myths and to assure accountability to the consumer and to the public at large. This can best be done by developing systems to address the five prongs of proper oversight outlined in this article. These concepts are proven through the casino gaming industry’s dramatic growth and acceptance since its first development in 1930s Nevada and its continued expansion throughout the world. Proper oversight, whether through an independent body or government agency, has boosted public confidence in institutions such as the financial markets and the traditional casino industry, and ultimately contributed to their development. Fantasy sports operators now have the opportunity to shape the industry by adopting similar oversight practices. The recent announcement that an independent regulatory body, the FSCA, will be established is a big step in the right direction, and should be applauded. David Waddell is an attorney and president of RMC Legal. Waddell’s areas of practice include gaming law, business, tax and municipal law. You can reach him at 517-507-3859, waddell@rmclegal.com, or online at rmclegal.com. Dustin Ford is an attorney with RMC Legal, and assists casino clients with compliance, regulatory and legal needs affecting the industry at large. He can be reached at 517- 999-5414, dford@rmclegal.com, or online at rmclegal.com.

p. 53 tableGames:Layout 1 11/12/15 4:43 PM Page 53

TABLE GAMES

Get Ready for Millennials We’ve only just begun

ne of my colleagues, just for shiggles, played a little game with himself at this year’s Global Gaming Expo. Whenever he heard the word “millennials,” he drank a shot. The convention doors swung opened Tuesday at 10 a.m., and yada-yada-yada, by lunchtime his blood-alcohol level was higher than Doogie Howser’s grade-point average. The M-word was indeed on everyone’s breath that week, from the owner of a small-time startup to the CEO of a big-time casino operator. Anybody and everybody you talked to was talking about, or talking about somebody else talking about, this newly coined and newly coveted demographic of 21- to-34-year-olds. With all due respect to Puff Daddy (or Weird Al), it’s clearly not all about the Benjamins (or the Pentiums) any more. It’s all about the millennials, baby. Uh-huh, yeah, this group of adults that has less money than any other, that has a third of its population living at home with mom and dad, that has reached the requisite age to vote for president but not to run for it, had become the singular focus of our attention and resources. OMG. No wonder these kids today have such stratospheric self-esteem. Oh, and by the way, if you’re sick of the word “millennials,” do yourself a favor and move to a cave in Uzbekistan. One without Wi-Fi. Why? Because this buzzword hasn’t reached its half-life let. Business jargon has come and gone the past 10 years, from “mind share” to “touch point” to “core competency,” and believe you me: This one has more sustainability than, well, “sustainability.” “It’s tough to make predictions,” the previous-millennium Yogi Berra said, “especially about the future.” Well, undaunted and undeterred, and hopefully unremembered if they all crap out, here are a few casino gambling prognostications about the millennial crowd: #SameOldSame Sorry, all you iconoclasts and daydreamers out there, but millennials will not trigger a radical

By Roger Snow

change to the content or context of casino gambling. At least not anytime soon. Now, you may think that forecasting young people will play traditional games seems wishful thinking. And you’d be right. Most definitely. Our company is the world’s largest supplier of card shufflers and proprietary table games, and one of the largest suppliers of slot machines and electronic tables. There’s no doubt we want this particular prophecy to prove prophetic. But even if we were selling ink daubers to bingo parlors or oxygen tanks to keno lounges, we’d still be going all Nostradamus on this. Consider human nature. There’s just something selfcontradictory hard-wired into the human psyche that makes us, as TV writer David Milch puts it, “spin against the way we drive.” People are always rebelling or repelling against themselves. To wit: millennials spend most of their waking hours wired into their, ironically enough, wireless devices. You think they want to experience that experience everywhere? Then explain European backpacking, the Electric Daisy Carnival, and Tinder. Millennials want to keep it real as much as the next generation. Besides, if you think about it, Facebook, Instagram, Twitter, et. al are social and interactive. Do you know what else is social and interactive? Table games. You’ve got other players. You’ve got the dealer. You’ve got the background music. You’ve got cards and chips and dice. Oh my, you’ve got the ambient noise in the casino, and at least for a few more years in a few more places, you’ve got the waft of cigar and cigarette smoke. Every sense is touched. You got an app for that? Ha, didn’t think so. #ByeBadBets Millennials are without question the most knowledgeable generation when it comes to gambling. That’s what happens when you’ve had all the world’s information in your pocket for as long as you’ve had pockets. They know the good (highdenomination slots) from the bad (double-zero roulette) and the ugly (big six wheel). But this

bodes well for games of all types that give players a fair shot at winning. OK, a fairer shot. Pretty much everything you find in a casino, save for blackjack and certain video poker machines, tilts toward the house. That’s expected. But gouging isn’t. The Las Vegas ReviewJournal posited in a recent article that high hold percentages are driving down slot play. Maybe yes, maybe no. That’s an opinion, but so is this: millennials are going to find a good gamble or they’re going to find something else to do. #ChChChChanges The millennial generation, like any other, is a work in progress. Think back, baby boomers, Gen Xers and Gen Yers, to when you were their age. Think about what you did, what you thought, what you prioritized, and what you didn’t. When you stop laughing, think about how little you think like that now. Millennials too will evolve in all aspects of their lives, from the music they listen to, to the food they eat, the movies they watch, and yes, the games they play. So be careful when taking aim at this target market, because the target is moving. Casino suppliers and operators should study what happens over time with these folks. Experiment. Trial and error may not be sexy, but it works. If it’s good enough for evolutionary biology, it should be good enough for games of chance. Don’t assume and don’t take anything for granted. Remember, trends are always obvious when you connect the dots after the fact; it’s much tougher to draw inferences in their infancy. And finally, when it comes to millennials— or Millennium Falcons for that matter—my new hope is the same as my old hope: May the force be with you. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed are those of the author and do not necessarily reflect the views and opinions of Scientific Games or its affiliates.

DECEMBER 2015 www.ggbmagazine.com

p. 54 frank:Layout 1 11/12/15 4:44 PM Page 54

FRANKLY SPEAKING by Frank Legato

Fantasy Casinos

Global Gaming Business DECEMBER 2015

Moving on, there is still a lot of question in the U.S. whether eSports and daily fantasy sports will have to be legalized and regulated. I’m guessing this is going to put a major drag on the time it will take this new gambling business to materialize and mature. But even if DFS and eSports tank in the U.S., there are plenty of skill-game ideas being knocked around, like those mobile-phone games where you crush candy, or break bubbles, or whatever they do with those games. As I’ve said before, I have a problem envisioning crowds of young people going all the way to a casino so they can play games on their phones. They can do that without even getting on the expressway. I’m not sure if it’s just that I’m old-fashioned, or simply old, but I still like gambling in casinos that have slot machines with reels, and lots of video poker, and real, live table games, where you can look the dealer in the eye as he stuffs your samolians into never-never land with that plunger they use. Is that what they’re called? Plungers? If not, they should be. In any event, with old-fashioned casino gaming, I get to toss the bones like a crusty World War II veteran, shout out cool-sounding gambling stuff, or, alternatively, sit for hours cursing at an inanimate object. What, I ask you, could be better in the way of gaming entertainment? Perhaps it’s just that I doubt my own ability to exhibit skill in knowing what teams, or what video gamers, or which Royal Family on which I should wager. Hey, what the heck do I know? I had the Cubs. VICT OR R INALD O

hen I started writing about gaming—I think Coolidge was president—things were pretty simple. You had your slot machines, your spinning reels, and your quarters and dollar tokens, and lots of dings and buzzes. And you had your table games. The table games are pretty much the same now as they were then. Slot machines, though, are getting crazier all the time. And things are bound to get a lot crazier as we try to figure out the vast variety of stuff on which people in this world are willing to place a wager. Some measure of wagering wackiness can be found in the U.K., where they’ve been known to bet on everything from when babies will be born in the Royal Family to how many scones the prime minister consumes in a day. (OK, I made that up, but I’ll bet it’s three.) Several weeks ago, there was a big event at London’s Wembley Stadium that drew about 24,000 young people over four days, at £30 a pop. The draw at Wembley was not some football match or world-class tennis tournament or concert. It was a show that many think is coming to a casino near you in the U.S., on land or online, very soon—eSports. Now, I’m just a clueless American old guy, so I’m still trying to wrap my brain around eSports. From what I can gather, there’s a big screen, and two expert video gamers compete against each other in a giant 3D video game, with shooting and swordplay and chopping off limbs and other neat stuff. And people pay to watch. Evidently, it’s a millennial thing. For casino operators and regulators in the U.S. looking for new skill-based games that can please millennials, it’s not a very big stretch to imagine leagues with teams of famous video game experts pitted against each other, and crazy twentysomethings who love this kind of thing flocking to wager on their favorite teams. Some say eSports will go hand-in-hand with daily fantasy sports in the casino of the future. I just have a few problems with it. First, are there really millennials with, you know, disposable income for gambling? Because I don’t know any. But in this case, it doesn’t matter, because eSports are skill, not gambling, right? Just like daily fantasy sports anywhere except Nevada. Right? Hey, fantasy sports aren’t gambling. I know, because Roger Goodell said so. And every time I watch an NFL game, I see commercials for DraftKings and FanDuel, and as far as I know, those broadcasts can’t take place without the knowledge and consent of the National Football League, which steadfastly and sanctimoniously opposes any kind of sports betting. I even heard a comment from an NFL player on another team’s star running back, in which he said, “Wow, my wife will be happy with that performance. He’s on her fantasy team.” But it’s not sports betting, because that would ruin the integrity of the game.

TGGfullpage2016_Layout 1 11/6/15 9:46 PM Page 1

PUBLICATION

AN ANNUAL INDUSTRY REPORT

DONâ&#x20AC;&#x2122;T MISS YOUR OPPORTUNITY TO ADVERTISE IN THE 13th ANNUAL EDITION

GGB magazine is proud to announce the 13th annual edition of TRIBAL Government Gaming: An Annual Industry Report, the most comprehensive annual publication available today covering all Class II & Class III gaming operations in all jurisdictions offering tribal gaming. More than just a directory or resource guide, TRIBAL Government Gaming features editorial coverage of cutting-edge issues such as tribal sovereignty, Indian gaming regulation, economic diversification, nationbuilding, compacts and more.

TRIBAL Government Gaming is a highly visible publication with a circulation of more than 16,000, including bonus distribution at NIGA in March 2016, OIGA in July 2016, G2E in September 2016 and other appropriate trade shows and conferences.

TRIBAL Government Gaming reaches key decisionmakers in the Indian gaming and traditional casino industries, including operators, regulators, manufacturers and vendors.

As an annual publication, TRIBAL Government Gaming will offer a one-year shelf life providing increased frequency and recall for advertisers. Sponsorship opportunities are available for increased marketing awareness.

Ad Space Deadline: FEBRUARY 9, 2016 I Publication Date: MARCH, 2015 For more information on advertising, please contact

John Buyachek, Director of Sales & Marketing

phone: 702-248-1565 x227 I email: jbchek@ggbmagazine.com

p. 56 ngr dec:Layout 1 11/12/15 4:45 PM Page 56

NEW GAME REVIEW by Frank Legato

Batman Rogues Gallery Aristocrat Technologies

ristocrat follows up on its extremely successful Batman Classic TV Series multi-bonus wheel slot by returning to the campy 1966 Batman super-hero series with Batman Rogues Gallery. The new game focuses on the famous villains of the series, which were portrayed by some of the biggest stars of the day—Cesar Romero’s Joker, Frank Gorshin’s Riddler, Burgess Meredith’s Penguin, Otto Preminger’s Mr. Freeze, Victor Buono’s King Tut and Julie Newmar’s Catwoman. The new game, a four-by-five “Reel Power” scatter-pay game, resides on Aristocrat’s award-winning Vervehd cabinet or on the Behemoth, the company’s new giant format. In this case, the Reel Power format—the much-copied setup with no paylines and wins for adjacent symbols—is on a four-by-five reel grid, for a total of 1,024 possible ways to win on each spin. There is a two-level, single-site progressive jackpot, along with several bonus features.

Gears of Gold Scientific Games

his new Bally title uses the Bally Pro Wheel cabinet to create a neat Industrial Revolutionstyle mechanical machinery theme. A large bonus wheel dominates the tall top box over a base five-reel, 40-line video slot in a striking visual display. The game also is a wide-area progressive on the Bally Cash Connection link, with a top award resetting at $400,000. There are several special features in both the primary and bonus games. Before each base-game spin, each reel has mystery symbol positions that are randomly replaced with the same symbol, creating greater chances for five-of-a-kind wins. On any base game spin, “Directional Wild” symbols may appear. These are wilds marked by arrows which point in any of eight directions. Any symbols in the path pointed out by the arrow become wild. This is a very frequent feature, occurring every four spins on average. Also, when a Directional Wild symbol appears, it is randomly accompanied by a multiplier feature in which spaces on the main wheel transform to multipli56

Global Gaming Business DECEMBER 2015

One of those special features is called “Reel Growth.” A bonus wheel either awards credits or, when the wheel lands on a special slice, from one to all five of the reels grow—expanding vertically by two rows, for a sixby-five grid. The extra rows include from one to five extra high-paying Batman symbols. There also is a free-spin feature, in which two, three, four or five scattered bonus symbols trigger five, eight, 15 or 20 free games, respectively. The free games can be retriggered when the scattered bonus symbols land on a free spin. Batman Rogues Gallery is configured for choice of denomination from a penny to $20, with a 50-75-credit minimum bet. Manufacturer: Aristocrat Technologies Platform: Vervehd, Behemoth Format: Five-reel, ways-to-win video slot Denomination: .01-20.00 Max Bet: 500 Top Award: Progressive; $1,000 reset Hit Frequency: Approximately 70% Theoretical Hold: 4%-14%

ers ranging from 2X to 10X. The player is granted one spin on the big wheel applied to any wins resulting from the Directional Wild. Bonus events center around the Gears of Gold Wheel Bonus. Three scattered Gear Bonus symbols on the middle reels award one spin of the main wheel, this time including slices marked with credit awards from 1,000 to 3,000 credits, two Free Games slices and one Jackpot slice. If the wheel stops on Jackpot with the maximum 300 credits wagered, it triggers the wide-area progressive jackpot. If it stops on one of the Free Games slices, the player is awarded twice the bet, and a potentially unlimited freegame round begins. A “Multiplier Gauge” at the start of each free game randomly selects a multiplier from 1X to 5X that applies to that free spin. The free spins continue as long as a multiplier gauge appears at the start. The free-spin feature occurs every 273 spins on average, for an average payout of 44 times the total bet. Manufacturer: Scientific Games Platform: Alpha 2 Format: Five-reel, 40-line video slot Denomination: .01 Max Bet: 300 Top Award: Progressive; $400,000 reset Hit Frequency: 32.07% Theoretical Hold: 11.54%-14.96%

p. 56 ngr dec:Layout 1 11/12/15 4:45 PM Page 57

Radiant Queen Konami Gaming

his is one of the first games to be released on Konami’s new Concerto upright cabinet. The cabinet features signature holographic side lighting and the proprietary DynamicDash button panel, billed as the industry’s first LCD video button interface with responsive tactile buttons that react to the touch. The cabinet includes dual 27-inch high-definition touch-screen monitors and a 19.5-inch video topper. Radiant Queen is among Concerto’s debut game themes in the new KP3+ platform. It is a “Roku Reels” six-reel video slot, available in 10-line, 15-line, 20-line or 40-line configuration. The base game features “Action Stacked Symbols”—clusters of like symbols that result in big wins—and nudging full-reel wilds during the free games, which expand into giant wild symbols covering a block of reel spots. The first reel contains a number of adjacent

symbols that are randomly replaced before the reel spin is initiated. All replacement positions are filled with the same symbol. There also are “Inner Reel Multipliers.” When a symbol appears with a 2X, it is equivalent to two of that symbol in that position, and symbols marked with a 3X equal three of that symbol in that position. There also is a free-spin bonus event. Three, four, five or six gem symbols trigger eight, 12, 15 or 18 free games, respectively. During the free spins, two, three, four, five or six gems trigger an additional four, eight, 12, 15 or 18 free games respectively. Manufacturer: Konami Gaming Platform: KP3+ Format: Six-reel, 10-, 15-, 20- or 40-line video slot Denomination: .01-5.00 Max Bet: 50 Top Award: 400 times line bet Hit Frequency: 38 percent Theoretical Hold: 4%-18%

Wheel of Fortune Power Wedges International Game Technology

his is one of the first IGT wide-area progressive slots to be featured on the new CrystalWheel cabinet, which is an adaptation of the popular CrystalDual cabinet topped with the iconic spinning Wheel of Fortune bonus wheel. IGT Wheel of Fortune Power Wedges carries the normal wide-area progressive, on either the Money Madness or the TV Hits jackpot link. At press time, the Native American Money Madness linked jackpot stood at just over $500,000; the Nevada Money Madness at $2.2 million. The TV Hits links also vary by jurisdiction—at press time, it ranged from just over $200,000 (Mississippi) to $2.7 million (Michigan). Alternatively, the game is available as a stand-alone video slot, with a static top jackpot of 1 million credits. The base game is available in two formats—either a 40-line video slot or a four-by-five, 1,024-ways-to-pay video slot, in which there are no paylines and wins register with adjacent symbols. Two or more bonus symbols trigger a free-spin bonus. If the player bets 100 credits or more and lands three scattered wheel bonus symbols, the familiar game-show-style wheel bonus is triggered. The wheel spin bonus can award credits, the Pointer Frenzy feature or the Jackpot

Wedges bonus. Players can win one of four multi-level progressives in the Jackpot Wedges Bonus, and a chance to win the wide-area progressive jackpot if they bet 300 credits or more. Manufacturer: International Game Technology Platform: AVP, CrystalWheel Format: Five-reel, 40-line or ways-to-win video slot Denomination: .01 Max Bet: 500 Top Award: Progressive—Reset varies by jurisdiction Stand-alone—1 million credits Hit Frequency: Approximately 50%-70% Theoretical Hold: Progressive—11%-13% Stand-alone—4%-14.1%

DECEMBER 2015 www.ggbmagazine.com

p. 58 igna:Layout 1 11/12/15 4:45 PM Page 58

iGAMING NORTH AMERICA

Canadian Sports Betting Is 2016 the Year?

anadians can legally bet on sporting events. They just can’t do it on the outcome of one game; they must make “parlay” bets (bets on the outcome of two or more games) with the provincial lotteries. Parlay bets are not particularly attractive propositions to players, and hence, Canadians spend significant amounts either placing wagers with illegal sports books or wagering over the internet. It is estimated that over $4 billion is wagered on the internet by Canadians on singleevent sports, all of it illegal, and none of it regulated or taxed. A couple of years ago, a Private Member’s Bill (C-290) was submitted by Joe Comartin, a leader in the NDP party. The bill passed the House of Commons on a voice vote (an indication of solid support) but then languished in the Senate for three and a half years. Hearings were held, but the bill was never brought up for a vote. However, with the election of a Liberal government, there are some who now see the potential for a government bill being brought forth to replace C-290 in 2016. The opposition to the proposed bill tends to follow two lines: • That legalizing sports betting of this nature increases access to gambling and creates additional social problems. • That legalizing sports betting will increase the problem of match-fixing (i.e., it is harder to fix two or more games in a parlay bet than it is to fix a single sports event). Notably, these two concerns ignore the fact that Canadians are already gambling on singleevent sports online, on offshore websites. No one has been charged with illegal gambling online and no offshore company has been brought to task for accepting such bets. To bring such prosecutions requires the application of fraud provisions, and as of yet, no prosecutor has ventured into this arena. This lack of enforcement reflects the difficulty of prosecuting across jurisdictional boundaries. In addition, it is widely held that laws against match-fixing in Canada are weak and anti-

By Paul Girvan

quated. These laws were developed in an era before the internet, and are not effective in today’s environment. Canadians already have access to illegal websites that take wagers on Canadian football, NHL games and Canadian soccer. So, these events are already subject to large betting volumes, albeit on offshore websites. Therefore, the incentive for match-fixing already exists. Today, the only significant form of protection, for players and the sports, is the vigilance of the offshore operators eager to make sure games they are taking wagers on are indeed not subject to match-fixing. From the perspective of the federal and provincial governments, the benefits of C-290 are obvious:

‘‘

(Sports betting) is not going to go away, and better that the government regulate it to protect consumers and reap the benefits from the incremental tax revenues it would generate.

”

• Increased revenue for provincial gaming operators that can now compete both online and in land-based casinos for single-event sports wagers, and tax them appropriately. Border casinos such as Casino Windsor, Fallsview and Casino Niagara in Ontario, for example, would suddenly have a significant competitive edge over their nearby U.S. competitors. • Increased protections for consumers by bringing this activity into the “light” by ensuring fairness and the application of problem gambling protection protocols implemented by provincial governments in their online and land-based offerings.

Global Gaming Business DECEMBER 2015

• Increased protections against fraud, money laundering and match fixing. • Legal clarity in this “gray” area. Proponents have tied the passage of singleevent sports wagering to a call for more robust laws against match-fixing, with the major goal of protecting the integrity of sports. Indeed, only by bringing single-event sports wagering into the legal gaming arena can this be achieved. As Paul Burns, vice president of the Canadian Gaming Association—a leading proponent for changing the Criminal Code—noted, “There is a strong appetite among Canadians for singleevent sports wagering across Canada.” This is not going to go away, and better that the government regulate it to protect consumers and reap the benefits from the incremental tax revenues it would generate. It is thought that the sports authorities are also generally in favor of this bill, but with the caveat that there also must be a significant effort to protect the integrity of sports codified within the bill or in accompanying legislation. If the bill should be brought forth in 2016, it appears that there is significant support for it, certainly among the players, but also from law enforcement, provincial gaming operators and Canadian sports associations. Ontario is one province that has come out in support of singleevent sports wagering, and if the Criminal Code is amended, they plan to offer such wagers. There is no guarantee that such a bill will be forthcoming. However, the drumbeat of support is growing, and may be hard for the newly elected federal government to ignore for long. This raises the question of what long-term effect this development could have on the debate in the U.S. Paul Girvan is a partner and managing director of the Innovation Group, in charge of its New Orleans office. Girvan has been providing feasibility analyses to the gaming industry since the early 1990s, and in the past five years has increasingly focused on iGaming. The Innovation Group is co-producer of the iGaming North America Conference held in Las Vegas in March.

p. 59 igames:Layout 1 11/12/15 4:46 PM Page 59

Switzerland to Legalize Online Gambling

ccording to reports, lawmakers in Switzerland’s Federal Council are lifting a ban on online gambling and planning the creation of a new gambling regulatory authority. According to Poker Industry Pro, the authority would consist of representatives from the existing regional gambling regulators. The authority would be responsible for creating a licensing regime for both local and international gaming companies. It calls for the country’s 21 brick-and-mortar casinos to be allowed to offer online games by permitting operators to obtain online gaming licenses. The publication Ubersetzer reports that new regulations will include roulette, blackjack and other gambling via the internet, along with small poker tournaments outside of casinos. The country’s ban on online gaming has been repealed, allowing the country’s residents to legally wager online in advance of the new law being enforced on January 1, 2019, according to reports. The law would not tax online gaming income, including from online poker. Income tax will continue to be levied on both lotteries and sports wagering. Taxes from online gaming will be designated for “charitable purposes, in particular in the fields of culture, social projects and sport.” The Federal Council announced that regulation will better protect consumers and enable existing licensed casinos to apply to offer real-money internet gambling services. Consumer protection will be increased with Swiss cantons obliged to take measures against problem gambling and provide treatment for people with gambling issues.

Russia Blocks Online Gambling Domains

ussia continues to crack down on illegal online gaming, and has seized control of more than a dozen online gambling sites. The domains—located both in Russia and overseas—are being seized by officials of Roskomnadzor, Roskomnadzor is the the federal agency that federal agency that oversees the media. The oversees the media in Russia sites were found to be in

violation of Russia’s gambling policy. The newer sites to be blocked that are not based in Russia include 888Poker, bwin.party, Ladbrokes, Titan Poker, Unibet and Betway. Russian bookmakers blacked out included 1xbet, TrioBet, Favbet and Fonbet. Online domains of casino affiliates have also been blocked, according to the official register of banned sites. The sites were then added to the country’s blacklist of domains forbidden to be accessed by Russian citizens. Online gambling is illegal in Russia, and the country recently introduced a bill that would ban banks from processing online gaming transactions.

Eilers: Social Casino Games Will Earn $4.4 Billion

new report from analyst Adam Krejcik at Eilers Research predicts the market for social casino gaming will grow from its current $3.4 billion level to $4.4 billion by 2017, accounting for 4 percent of all gaming industry revenues. The forecast was among 13 predictions involving social casino games from Krejcik. Among the others: Skill play will be integrated into social casino games. “This trend follows the rise of eSports, daily fantasy sports betting, and the millennial generation’s focus on skill gaming,” Krejcik wrote. Krejcik also predicts that live-dealer social games will become popular, “much like in realworld casinos;” big-screen smartphones and Apple TV will replace iPad usage; social games will monetize on the Oculus Rift virtual-reality headset, which debuts next year; cost-per-install advertising rates will moderate; Wall Street will recognize the value of social games; Scientific Games will bring social table games to the market; the top slot manufacturers will release social-specific games; Amaya will grow in social gaming; Asian social casino markets will grow; third-party branded content will become popular; and social games “will actually become social.” For that last prediction, Krejcik cites as an example Big Fish Games’ Big Fish Casino, which maintains an active player network allowing players to socialize with each other.

AGS Interactive to Launch Twinkie Game

GS Interactive (AGSi), the iGaming division of Las Vegas-based slot manufacturer AGS, has signed an agreement with Hostess Brands, LLC to create an online slot game centered around the legendary Hostess Twinkie snack cake. AGS will launch “Twinkie 7s” on its successful Lucky Play Casino social casino app for iOS. “The launch of Twinkie 7s is an exciting milestone for AGSi, and significantly bolsters our growing library of social casino titles,” said Mani Honigstein, general manager of AGSi. “Equally exciting is our new partnership with the iconic and beloved Hostess brand, which creates potential for more opportunities in the future. We are confident that Twinkie 7s will not only resonate well with the millennial demographic on social casino channels, but also with long-time fans of the classic treats.” The game features some of Hostess’ most popular treats—Ho Hos and Sno Balls in addition to the iconic Twinkie—as bonus symbols. Earning a certain amount of these bonus symbols triggers a Triple Wheel Bonus round, leading to larger wins. This launch comes on the heels of AGS’ recent acquisition of RocketPlay, a renowned developer of social casino titles for mobile devices based in San Francisco with a development studio in Tel Aviv, Israel. Since acquiring RocketPlay, which AGS rebranded as AGSi, several of the company’s popular land-based slot titles have been integrated into AGSi’s flagship app, Lucky Play Casino, and its recently launched iOS app, Vegas Fever. Lucky Play Casino is also currently available for Android devices, and AGSi has plans to integrate land-based titles onto that platform in the near future. Additionally, the company is working to release an Android version of Vegas Fever.

DECEMBER 2015 www.ggbmagazine.com

p. 60, 61 emerging:Layout 1 11/12/15 4:47 PM Page 60

EMERGING LEADERS

Getting Muddy Jessica Cipolla-Tario Vice President of Marketing, Monte Carlo Resort

Booming in Reno

essica Cipolla-Tario loves a good challenge. Her latest was completing the Tough Mudder run in October at Lake Las Vegas, a 12-mile obstacle course designed to test physical strength and mental grit. It is no wonder that Cipolla-Tario chose to participate in a race that places camaraderie before course time and obstacles over distance. The greater part of her career has been focused on the development and advancement of her associates to help them in reaching their professional goals.

David Farahi Chief Operating Officer, Atlantis Casino Resort Spa avid Farahi truly understands what it means to work hard to achieve success. When he returned to Monarch in 2007 to begin his professional gaming career, the company was at its peak. Shortly after, the gaming industry took a huge hit, reflecting the pains of the economic recession. Farahi’s tenacity was truly put to the test at this point, as the company was struggling to keep gaming revenues from falling. As Farahi recalls, “Essentially, we had to run really fast to stay in the same place… ‘Flat’ was the new ‘up.’” Farahi notes this time period as the most difficult challenge he has experienced in his career thus far. After several years of giving his all, Farahi was chosen in April 2012 to lead the integration of the company’s first acquisition, Riviera Casino in Black Hawk, Colorado. Under his guidance, an existing group that lacked true company culture was transformed into a team that now exhibits strong culture and an unbreakable bond. With his team by his side, Farahi was able to grow the property’s EBITDA by 55 percent in the first 14 months of operation. Although he has many moments to be proud of in his eight years as a gaming professional, Farahi specifically thinks of this time as being the most memorable. “Looking back on it, I am most proud of helping build and being part of the team that achieved such success.” Prior to his professional career in the gaming industry, Farahi attended the Moshe Dyan Center for Strategic Studies at the University of Tel Aviv. He then earned a bachelor’s degree in economics and political science from Northwestern University and achieved a master’s degree in business administration from Columbia Business School. Farahi has also won several accolades, such as the Reno Gazette’s 20 Under 40 Award and JEWISHcolorado’s Young Leadership Award. Now, as chief operating officer of the Atlantis Casino Resort Spa, Farahi is looking toward the next 12 to 18 months. Farahi is most excited to see the transformation of his hometown, Reno. The term “Renossance” has been coined to describe the rebirth of the city, which has recently been recog-

“Looking back on it, I am most proud of helping build and being part of the team that achieved such success.” nized in a Wall Street Journal article as a booming site for manufacturing. Due to this shift toward manufacturing, which began following the economic recession, the unemployment rate in Reno fell from a high of 14.7 percent in 2011 to a post-recession low of 6.1 percent in August 2015. With thousands of jobs anticipated to come from the introduction of several manufacturing firms, Farahi and his team at the Atlantis Casino Resort Spa are “ready to take on the growth while still being the locals’ favorite.” While he is excited to experience these changes from a business perspective, he is also looking forward to seeing how his hometown will be transformed from when he was a child. —Stephanie Adkison, The Innovation Group

Global Gaming Business DECEMBER 2015

Her mantra to “push the envelope, take chances and trust the gut feeling” has undoubtedly paid off for her throughout her career. Cipolla-Tario has spent her entire career in Las Vegas, so it’s only natural that her path eventually led into gaming. After finishing her degree at the University of Nevada, Las Vegas in communications and advertising, she was recruited out of an advertising agency to work at MGM Resorts International’s corporate office. Looking back, Cipolla-Tario thinks this move had the largest impact on her career and set her on an upward path towards becoming an executive. At MGM, she quickly advanced to executive director of brand management before leaving the corporate office at age 34 to become

p. 60, 61 emerging:Layout 1 11/12/15 4:47 PM Page 61

Learning by Doing Andre Jackson vice president of marketing at the Monte Carlo Resort. One of the biggest challenges she found during the early part of her career was developing an executive presence and feeling the need to curb the fun, quirky side of her personality. Though Cipolla-Tario admits that women, herself included, tend to be harder on themselves than their male counterparts, her powerful message to other women executives is to stop pressuring themselves to be overly polished, and just show confidence. Cipolla-Tario credits part of her early career success to a fruitful mentorship under Anton D. Nikodemus, then president and chief operating officer at Monte Carlo. She believes that a huge part of a leader’s role is to encourage young professionals, in the same way that Nikodemus did for her. Following his example, Cipolla-Tario challenges her mentees to develop creative solutions that enhance their position within the company as well as provide meaningful industry exposure. Her mantra to “push the envelope, take chances and trust the gut feeling” has undoubtedly paid off for her throughout her career. A few years back while working at Monte Carlo, she took a chance on a social media campaign that she strongly believed in, but initially was not well received by her colleagues. The strategy was to have all executive members of the property manage their own professional Twitter accounts in order to humanize the brand. The campaign was a huge success that literally changed the industry’s approach to incorporating social media at the corporate level. As the gaming industry evolves, CipollaTario sees a demand for millennials to engage in new marketing strategies, creating opportunities to become emerging leaders. She looks forward to changes in the industry that will reflect the generational behavior and interaction with gaming operations. Cipolla-Tario says she is honored to be part of GGB’s 40 Under 40 group of award recipients, and hopes to see the group go beyond recognition and form a networking group that could share and learn from each other’s experiences in the gaming industry. —Jacqueline M. Shahin, The Innovation Group

Assistant Director of Hotel Operations, Flamingo Las Vegas ndre Jackson is proof that to be successful in the gaming industry, one must truly embrace the meaning of the word “hospitality.” To him, hospitality means “creating experiences and treating hotel guests the same way you would like to be treated while on vacation.” As the assistant director of hotel operations at Flamingo Las Vegas, he excels at ensuring superior guest service while optimizing the property’s financial performance. Jackson has been successful in the hospitality industry for over 15 years, since earning his bachelor’s degree in restaurant and hotel management from the University of Houston. Intrigued by casinos after taking several related classes in college, he joined the gaming industry in 2005 as a front office supervisor at Grand Casino Tunica and eventually worked his way to Las Vegas. While employed at the Imperial Palace Hotel and Casino in 2010, he encountered the decision that has had the largest impact on his career to date: switching from operations to Continuous Improvement. New to Caesars at the time, Continuous Improvement consists of a team that delves into different departments in order to identify and resolve any departmental inefficiencies. It was this yearlong experience that taught Jackson many skills that he continues to use in his current position. “I learned so much that when I came back to operations a year later, I was a stronger leader,” he says. Using his passion for providing excellent guest service, Jackson has won several awards, including the most prestigious award at Caesars Entertainment, the Chairman’s Award. This particular award is one that Jackson is especially proud of winning not once, but twice during his time at Caesars Entertainment. In 2010, he was selected from a pool of 30,000 employees for the Chairman’s Award for the Western Region. In addition to these awards, he has also been featured in Who’s Who Las Vegas magazine and has actively served on committees for the Nevada Hotel and Lodging Association. While Jackson’s success has undoubtedly been a result of his self-motivation and passion for the industry, he has credited several colleagues that helped him along the way. “Karie Hall (the general manager of Cromwell) inspired and forced me to do things

“Don’t burn any bridges, because everyone knows everyone else.” that took me out of my comfort zone, and Mary Ann Dennis (the senior vice president of teleservices in Caesars Entertainment) has always given me good career advice,” he says. He also recognizes the role that his current boss has played in shaping his present and future professional career. “Norris Hamilton (director of hotel at Flamingo Las Vegas) has helped me to manage managers and to be an impactful leader of people.” Jackson passed along some advice that he has learned in the gaming industry over the last decade. “Find a mentor in the industry that can give you advice on your career path, and be very humble,” he says. This piece of advice can be useful in many different industries, as any young professional can benefit from having a mentor to guide them through career challenges. Jackson also offers a message that is especially true in the hospitality industry: “Don’t burn any bridges, because everyone knows everyone else,” he says. Although the industry may be challenging at times, it is important to remain professional and remember what is important: staying true to your passion. Jackson is an inspirational example of a gaming professional who not only loves his job, but also has true passion for the gaming and hospitality industries. —Stephanie Adkison, The Innovation Group

DECEMBER 2015 www.ggbmagazine.com

p. 62 goods:Layout 1 11/12/15 4:47 PM Page 62

GOODS&SERVICES TOWN AND COUNTY LEISURE TO DISTRIBUTE JCM

ayment solution supplier JCM Global announced that Town and County Leisure, the national gaming and amusement supplier based in Birmingham, England, has secured distribution rights for the Ticket2Go system produced by JCM subsidiary FutureLogic. Ticket2Go is designed to offer small and medium-sized venues a ticket-in/ticket-out solution for gaming machines. It fully supports U.K. standards for TITO systems, and has been qualified for both digital and analog machines operating in the U.K. “Town and County is part of the fabric of U.K. gaming, and has built a reputation for professionalism, in-depth market knowledge and integrity,” said Jim Foster, sales manager for JCM Global. “(Town and County Managing Director) Paul Langham and his team have an intimate hands-on knowledge of the Ticket2Go system, and the decision to appoint them was a nobrainer. Their knowledge of Ticket2Go in effect makes them an extension of JCM, as opposed to an arms-length distributor or broker of product. I look forward to a long and mutually rewarding business relationship with Paul and his team.”

WEST VALLEY PICKS EVERI veri Holdings Inc. announced that Desert DiaEcomplete mond Casinos & Entertainment will place a range of Everi slot machines and payment solutions at Desert Diamond’s new West Valley Resort and Casino in Glendale, Arizona, expected to open this month. The West Valley Resort will be the newest casino owned and operated by Desert Diamond, part of the Tohono O’odham Gaming Enterprise, an enterprise of the Tohono O’odham Nation. The new agreement builds on Everi’s existing relationship with Tohono O’odham, which currently includes placements of games at the enterprise’s Tucson and Sahuarita properties. West Valley Resort

IGT LAUNCHES LOTTERY SOLUTION Upon opening, West Valley Resort will feature multiple Everi gaming device banks, including the company’s popular TournEvent slot tournament system as well as a variety of video and mechanical reel gaming device titles, including Black Diamond, Double Jackpot Gems and Wild Wild Gems. The new casino will also deploy a suite of Everi’s payments solutions, including ATM/cash access and check guarantee services, full-service kiosks, jackpot payment kiosks, Everi Compliance for anti-money laundering and tax reporting, and the company’s QuikMarketing services. “We are delighted to extend our partnership with Everi and bring a broad range of their gaming and payments solutions to our new West Valley Resort,” said West Valley General Manager Henry Childs. “Everi’s unique combination of products and solutions will allow us to demonstrate to our local players our commitment to providing the best in casino gaming entertainment and the most secure transactions.”

SCIENTIFIC GAMES CENTRALIZES EMEA DIVISION iversified gaming supD plier Scientific Games Corporation announced that it has centralized its European division in Barcelona, Spain, and will discontinue redundant functions at its office in Amsterdam, the Netherlands, by December 31. Marco Herrera, The Barcelona facility managing director of will now be the central hub gaming, EMEA for for Europe, Middle East Scientific Games and Africa (EMEA) sales, service, support and manufacturing for the company’s Bally, Shuffle Master and WMS product brands. “Our business in the EMEA region is strong and growing,” said Marco Herrera, managing director of gaming, EMEA for Scientific Games. “We are excited to have our EMEA operations centralized in Barcelona, where we have the proper infrastructure to support our customers, along with a world-class showroom to highlight our trailblazing product innovations.” The company will maintain localized sales, field support, product support and product development personnel across the EMEA region, including Austria, France, Germany, the Netherlands, Slovenia, South Africa and the United Kingdom.

Global Gaming Business DECEMBER 2015

aming and lottery supplier International Game G Technology unveiled Aurora, its new high-performance, high-reliability lottery solution, at last month’s trade show of the National Association of State and Provincial Lotteries (NASPL) in Dallas, Texas. “It’s the dawn of a new era,” said Marco Tasso, senior VP of global product marketing, lottery, for IGT. Aurora builds on the success of IGT’s Enterprise Series system—the most prevalent central system and back-office application solution for lotteries in the world, the company says—to respond to rapidly changing market conditions and lotteries’ needs for more agility, greater interoperability and a truly omnichannel experience. The Aurora suite of open solutions was designed to define the environment for current and future lottery growth in terms of a technological platform. From the ground up, Aurora’s architecture is loosely coupled, providing an entirely new level of system integration and flexibility to seamlessly integrate to third-party applications or games. This service-oriented architecture will separate Aurora’s game engines from the business logic, so making changes to a game will not affect the business end, allowing lotteries to get solutions into production faster. Aurora also offers lotteries more agility when executing on key business decisions, and sound, actionable analytics to help them make those decisions. Aurora’s advanced business intelligence portfolio allows data to be integrated, mined and visualized, ultimately helping to drive results for the lottery.

GLI RELOCATING SYDNEY LAB n order to be closer to manufacturers who have reIdistrict, located west of Sydney, Australia’s central business Gaming Laboratories International announced it will move its Sydney laboratory from Rosebery to Seven Hills within the next few months. The new address will offer most New South Wales manufacturers and other clients better access to GLI’s laboratory, services and personnel. Also, the new space will provide 25 percent more lab space and allow a 30 percent increase in engineering staff. Operating in Australia for more than 20 years, GLI has become the region’s largest provider of its kind through three labs serving regulatory clients and customers throughout Australia, New Zealand and the Western Pacific. GLI Australia’s Chief Operating Officer APAC Espee de Robillard said, “This is a very exciting time for GLI, and especially for GLI in Australia and the

p. 62 goods:Layout 1 11/12/15 4:47 PM Page 63

Asia Pacific region. Expanding our offices, employing more staff and investing in the gaming industry means we can accept a greater workload from across the region, truly support our regional offices in Macau and the Philippines and maintain the expectations and trust of our customers. In today’s world of technology and future vision, we see our customers challenging the realms of the possible, and this is an area where GLI, as a global professional services delivery organization, is building its knowledge base and expertise/specialist services. This requires increased infrastructure.”

BOYD GAMING TAPS NRT oyd Gaming inked a deal with NRT Technology Bdemption to provide ATM, cash advance and ticket-remachines at all 22 Boyd Gaming casinos located across the United States. NRT Technology becomes Boyd Gaming’s exclusive provider of automated cash services, and will roll out its new encryption and tokenization system as part of the agreement. NRT Technology signed an exclusive multi-year agreement with Boyd Gaming to provide its 22 casino properties with NRT’s QuickJack ticket redemption kiosks and SmartAcquirer ATM and cash advance machines. NRT and Boyd Gaming also are launching NRT’s SecureSmart encryption and tokenization security system. “This strategic partnership is one of the most exciting and technologically advanced in NRT’s history,” NRT President and CEO John Dominelli said. The deal makes NRT the exclusive provider of ticket-redemption kiosks and bill-breaking and cash-access services at Boyd Gaming’s 22 casinos across the United States, which will be in place by the end of October.

ACEP AND GAN FORM PARTNERSHIP in the fourth quarter, American Casino Bonline&eginning Entertainment Properties LLC, through its division ACEP Interactive, will expand its online virtual gaming website by partnering with GameAccount Network Plc. The collaboration will enhance ACEP’s online presence by providing a larger game library, strengthening the mobile app and utilizing virtual currency. ACEP will be the fifth land-based casino operator and the first in Las Vegas to adopt GAN’s technology. Once launched, the website and mobile app will offer an expanded profile of simulated slots and table games plus new games including bingo. Alec Driscoll, director of gaming development at ACEP, said, “GAN has proven themselves as the go-to platform to meet the needs of the casino operator. We’re excited about the partnership because it

not only allows ACEP to offer an enhanced entertainment experience to existing patrons, but also to gamers everywhere.” Dermot Smurfit, chief executive officer at GameAccount Network, said, “We’re delighted to partner with ACEP to bring their iconic casino brands to the forefront of the digital casino experience. We believe simulated gaming is the right opportunity for major land-based Nevada casino operators seeking to extend their business and patron relationship online and take market share in the highly competitive Las Vegas gaming market.” ACEP owns and operates Stratosphere Casino, Hotel & Tower, Arizona Charlie’s Decatur, Arizona Charlie’s Boulder and Aquarius Casino Resort in Nevada.

SHAQ, DGS LAUNCH HYBRID BLACKJACK ormer NBA star Shaquille O’Neal joined with FingAtlantic City-area e-table supplier Dynamic GamSystems last month to launch “ShaqJack,” which the company says is the first live-dealer hybrid electronic table game to be introduced in the U.S.

BMM ANNOUNCES PARAGUAY CERTIFICATION aming testing company BMM Testlabs anG nounced that it has certified the Quinela system of TDP SA Paraguay. The company performed the tests in compliance with the technical specifications cited by CONAJZAR in the Bidding Terms and Conditions, licensed to TDP SA Numbers Game Operation within Paraguay. “BMM is very pleased to have been included in the first project that relied on a global independent test lab for the Paraguay market,” said Drew Pawlak, senior vice president of business development, Americas for BMM, “specifically that regulators are beginning to rely on ITLs to ensure integrity in gaming across the region. The Quiniela system supports the most important game in Paraguay with over 5,300 active sellers, 33 Official Betting Agencies in the Central Department, 31 Departmental Betting Agencies and over 300 Sub-Agencies in the rest of the country. Over 280,000 play slips are processed on a daily basis with the average daily sales being GR 1.7 billion.”

PANAMA LICENSES NOVOMATIC SUBSIDIARY he Panama Gaming Board, or Junta de Trecently Control de Juegos, has officially licensed the created Novomatic subsidiary Novo

The game, which beams live video of a dealer to electronic play stations located anywhere in a casino, was launched at the Parx Casino in Bensalem, Pennsylvania, in October. An elevated dealer platform is surrounded by 24 “ShaqJack Stations,” with voice-over by Shaq advising players to make their wagers and telling them when bets close. Players wager via ticket-in/ticket-out on individual terminals on the live game. ShaqJack was developed over a four-year period by Dynamic Gaming Systems and O’Neal. “I wanted to find a way to make a casino game fun for everyone and find a way to bring Shaq’s unique brand of humor to the gaming floor,” said Dynamic Gaming CEO Charlie Barksdale when the game was launched. “We clicked right away when we started talking about creating this game. We wanted a game that was familiar to everyone, even those with a modest appetite for gaming, but one that would still provide us with opportunities to bring new elements of excitement and rewards to the experience.” O’Neill launched the game in an appearance at the casino October 4.

Panamá as a provider of slot machines and systems to the Panamanian market. Novo Panamá Managing Director José Teng said, “Our entire team is determined and eager to grow and to become the best gaming supplier in the country. And we have had an excellent start. It has been only four months since the opening of our offices and we have already sold a significant number of slots to leading casinos in Panama. This goes to prove that the market appreciates the Novo Panamá offering.” Teng added the company’s objective is to improve the offering to the local gaming industry through professional local representation, timely technical assistance and expert after-sales services. According to JCJ figures, the Panamanian gaming market currently includes around 15,000 slot machines and 200 live gaming tables, with anticipated growth potential. In 2014, total gaming revenue was $515.24 million and gaming tax revenue was $96.1 million. The Panamanian government legalized private casinos in 1997. With a strong economy and investments in infrastructure, the nation’s gaming industry has continued to grow and today encompasses casinos, bingo halls, slot parlors, sports betting, horse racetracks and lotteries.

DECEMBER 2015 www.ggbmagazine.com

p. 64 cutedge dec:Layout 1 11/12/15 4:48 PM Page 64

CUTTING EDGE by Frank Legato

Lasting Connections Product: InfoGenesis and rGuest Manufacturer: Agilysys, Inc.

ven when you’re serving hundreds or thousands of guests at a time, you succeed in gaming hospitality because you know the value of a single connection. You’re more than a gaming operation. You’re a restaurant, an entertainment venue, a hotel, and perhaps a full-service family vacation destination. For you, success isn’t about playing the odds. It’s about making the most of every revenue source. Agilysys addresses this need with next-generation PMS and POS technology solutions that help deliver unsurpassed guest service, regardless of the venue, to drive lasting connections and financial success. Begin the guest connection with rGuest Seat, a guest-centric table, reservation and wait list management solution that helps restaurants increase revenue by retaining repeat customers and providing a superior guest experience. Operators can get more guests in the door with online reservations, manage customer expectations about wait times, and run table management from anywhere in the venue using mobile tablets. The system eliminates the distance between servers and guests with InfoGenesis Flex, an intuitive, full-featured mobile POS that looks and functions like a terminal, delivered through tablet devices. Operators can keep revenue flowing and create more meaningful guest experiences even in the most remote or expansive areas of a property. Using InfoGenesis Flex, servers send orders to the bar or kitchen more quickly, so they can spend

more time with guests building connections. Operators can leverage the guest information and operating data acquired across these interactions to gain critical business insight. To build a stronger business, you need better information. rGuest Analyze keeps you on top of the business, so the operator can stay ahead of problems and make more informed decisions. rGuest Analyze is a reporting and analytics solution that leverages the data within Agilysys products to help gain critical operational insights. Using information about guests, item sales, tenders, check sales and discounts, it delivers at-a-glance charts and graphs, as well as detailed reports, in customized management dashboards. Insight Mobile Manager provides property managers with the freedom to move around while keeping tabs on key information from a tablet or mobile device. Agilysys InfoGenesis and rGuest solutions for gaming enable the powerful property and guest data needed to build lasting connections that drive loyalty, increase wallet share and ensure repeat visits. For more information, visit agilysys.com.

Mobile Payments Product: VirtualATM Manufacturer: Iverson Gaming Systems

all it player tracking, for a mobile world. Iverson Gaming Systems, a Philadelphia-based manufacturer of slot and player tracking systems, is turning heads with its recently introduced VirtualATM mobile application. The app allows players to use their own smartphones to transfer funds securely and easily to and from any connected slot machine, while also providing a “second screen” for real-time rewards and player tracking information. To get credits onto the machine, guests use a PIN debit transaction that electronically routes funds to a slot machine from the guest’s personal checking account, savings account or prepaid debit account. The underlying pathway and authorization process of this transaction is identical to that of a standard ATM withdrawal, except the player does not have to get out of his seat to walk to the ATM: a smartphone handles the entire process. The player’s bank account is debited in real time, and the amount of the withdrawal is instantly reflected in the player’s bank account balance. While VirtualATM puts funds transfer literally in the palm of the player’s hand, Iverson adds player tracking—the smartphone mirrors the slot machine’s player tracking display. Rewards points, tier status, promotions and help-desk functionality are available on the smartphone in real time.

Global Gaming Business DECEMBER 2015

Iverson designed the VirtualATM Account Based Gaming functionality to support jurisdictional requirements and to stand side-byside with existing systems, giving operators a quantum leap in functionality by leveraging technology and protocols that are already in use today. Players get a more convenient experience with improved guest satisfaction; marketing gets to send customized messages to the right player, at the right time—whether they’re at the slot, at the gift shop or at home. For more information, visit iversongaming.com.

p. 65 people:Layout 1 11/12/15 4:48 PM Page 65

PEOPLE SIMERMEYER NAMED NEWEST NIGC COMMISSIONER

.S. Secretary of the Interior Sally Jewell appointed E. Sequoyah Simermeyer, a member of the Coharie tribe, as associate commissioner of the National Indian Gaming Commission (NIGC). Simermeyer will E. Sequoyah join Chairman Jonodev O. Simermeyer Chaudhuri (Muscogee Creek) in carrying out the federal Indian gaming regulatory responsibilities of the commission. He will serve a three-year term. “Sequoyah joins a team of talented and hardworking public servants who are committed to creating greater economic opportunities and upholding the highest ethical standards when it comes to Indian gaming,” Jewell said. “His wide range of experience and expertise in Indian affairs makes him a very well qualified person to help the commission oversee these important responsibilities in Indian Country.” Prior to joining the NIGC, Simermeyer was the deputy chief of staff to the assistant secretary for Indian affairs. In this position, he focused on a wide range of national policy issues, including land into trust, tribal governance and economic development. Simermeyer recently completed a one-year assignment with the Majority Staff of the U.S. Senate Committee on Indian Affairs, where he authored legislative proposals, wrote committee reports and conducted extensive briefings on legal and policy matters related to Indian Country. Simermeyer also served as counselor to the assistant secretary for Indian affairs at the Department of the Interior, first appointed during the Bush administration in 2007.

GRIFFIN RETIRES AS TRUMP ENTERTAINMENT RESORTS CEO

ob Griffin has retired as CEO of Trump Entertainments Resorts, saying Bob Griffin the move comes more than a year after he originally planned. Griffin told the Associated Press he is retiring to Colorado, where his family moved six months ago. Griffin stayed to oversee the company’s fourth bankruptcy and the acquisition of its lone casino, the Trump Taj Mahal, by billionaire Carl Icahn.

That transfer has been delayed while waiting for a court ruling on whether the company will have to restore health benefits to union workers at Taj Mahal. A bankruptcy court ruled the company could cut the benefits, but Atlantic City’s main casino union has appealed that ruling. That has set off a bitter fight between the union, Icahn and Trump Entertainment. Griffin was hired in September 2010 to succeed Mark Juliano as CEO of the company. Griffin oversaw the shutdown of Atlantic City’s Trump Plaza in 2014 and then the bankruptcy proceeding.

MINNESOTA TRIBAL CHAIRMAN TO WORK FOR PRESIDENT

aren Driver, chairman of the Fond du Lac Band of Lake Superior Chippewa in northeast Minnesota, will leave that job later this month to work in the White House as special assistant to President Barack Obama on Karen Driver Native American affairs. Driver has been tribal chairman since 2007, and before that was director of special projects. She considers among her finest accomplishments overseeing the construction of the Black Bear Casino “on time and under budget.” In her resignation letter, she wrote, “I am excited by the opportunity to have a wider impact in Indian Country under President Obama’s administration, which has shown unprecedented support for Indian Country.”

DAHL JOINS FOUNDATION GAMING GROUP

oundation Gaming Group, which recently completed the purchase of DiamondJacks Casino & Hotel in Vicksburg, Mississippi, announced it has hired Jeff Dahl as principal and co-chief executive officer of its affiliate, Foundation Gaming & Entertainment LLC. The company is based in Gulfport, Mississippi. Previously, Dahl served as principal at Accela Gaming Advisors LLC, and on the board at Revel AC. He also was president and chief executive officer of MTR Gaming Group. Foundation Gaming Group Principal and Chairman Allan Solomon said, “We are very pleased to have completed the transaction, and to welcome Jeff to the company. Our group has a long history with this property, and with many of the team members at the property.”

Principal and Chief Executive Officer Greg Guida added, “Completing this transaction, along with Jeff joining the company, are big milestones in the growth of Foundation Gaming. We are really lookJeff Dahl ing forward to working with the property team to transform the property into one of the most successful properties in the market.” DiamondJacks Vicksburg features 30,000 square feet of gaming area with more than 650 slots and 13 table games. It also has a 122-room hotel and three dining options. Foundation Gaming & Entertainment also operates DiamondJacks in Bossier City, Louisiana.

MACAU REGULATOR EXITS

acau’s top gaming regulator, Manuel Joaquim das Neves, stepped down at the end of November. Neves has been head of the Gaming Inspection and Coordination Bureau since 1997, and has been in government since 1984. “After 31 years as a civil servant, 18 as Gaming Inspection Bureau director, I believe it’s time to take a break and spend more time with my family,” Neves told TDM. Neves presided over the explosion of the gambling industry in the territory and saw the first foreign-owned casinos come to Macau. He is leaving under difficult circumstances, as Macau grapples with a 16-month plummet in gaming revenues. The replacement for das Neves will be Assistant Prosecutor-General Paulo Martins Chan.

GGB

December 2015 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7, 21 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .49 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 GGB Subscriptions . . . . . . . . . . . . . . . . . . . . .41 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11, 31 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . .25 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Konami Gaming . . . . . . . . . . . . .19, Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 NetEnt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Red Square Gaming . . . . . . . . . . . . . . . . . . . . .5 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .27 Tribal Government Gaming . . . . . . . . . . . . . . .55

DECEMBER 2015 www.ggbmagazine.com

p. 66 casino comm:Layout 1 11/12/15 3:50 PM Page 66

CASINO COMMUNICATIONS

Kevin Brown Chairman, Mohegan Tribal Council

evin Brown was elected as chairman of the Mohegan Tribal Council in his first attempt in 2013. “Red Eagle” spent 25 years in the U.S. Army, with deployment experience and management expertise at stateside bases. He has several degrees, and served as an analyst at the Pentagon. With extensive leadership and organizational management experience, Brown was the perfect choice to lead the Mohegan tribe at this time, as it is facing competition from Massachusetts, diversifying its economy and building yet another expansion to its flagship property, Mohegan Sun. He spoke with GGB Publisher Roger Gros at Mohegan Sun in October. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: You spent a lot of years in the Army. But I’m guessing being chairman of the tribe, you get reactions that are very unmilitary. Kevin Brown: That’s funny. A lot of folks have sort of a misconception about the very hierarchical structure of the military, and following orders. But the last 10 to 14 years of combat, and the deployments that come with it, put soldiers in a very uncertain and violent environment, where they have to be very agile and adaptive. I’ve got those experiences under my belt, as well as dealing with tribal sheiks in different countries, let alone my own tribal politics here in the U.S. Your tribe is unique in Indian Country, in that you’ve really got your members involved in the management of the company, from Bobby Soper on down.

We’re very proud of that. It was a long-term goal and part of the vision of this entire development. And we have reached probably the ultimate here, by having Bobby now seated as of October 1, as the heir to Mitchell Etess as the CEO and president of Mohegan Tribal Gaming Authority. And as you said, it trickles right down to Ray Pineault, who’s the president and 66

Global Gaming Business DECEMBER 2015

general manager of this property and Kara Fox-LaRose in Pocono Downs in Pennsylvania. She’s assistant general manager of that property. There are many others, as well. However, we also recognized early on that if we weren’t careful, we’d make the mistake of accelerating down that path too quickly, and it would be to our own detriment. We were very fortunate and very well advised in the early years to recognize that we needed to have industry experts to cultivate, mentor and bring these folks along to the point that we’re at now. Your preparation for the challenge of the casinos in Massachusetts is impressive. How is that strategy working out right now?

It’s twofold. It’s moving down two parallel paths at the same time, and it seems that everyone I talk to has allowed themselves to get pigeonholed into thinking we’re only doing one or the other. We are both improving and developing this property to make it that much more of a destination tourist location, an integrated resort location, and looking for other ways to directly compete with Massachusetts by developing other gaming locations. And in the news quite a bit lately is our joint venture with the Mashantucket Pequot Tribe, who own and operate Foxwoods. We could consume this entire interview just talking about the history of that relationship. We competed against each other fiercely in this corner of New England and now we come together to fight against Massachusetts. And I think that you can see that this joint venture has been taken seriously. The press is reporting that MGM is reassessing the scope of their project in Springfield. We are not—as we were once alleged to be doing—going to build a “slots in the box” kind of environment. In fact, we’re going to build a first-class casino like the one we operate here in Uncasville, and we’re going to directly compete with whatever

MGM puts up north. And their box is getting smaller, isn’t it? You just got back from Korea. It sounds like a tremendous opportunity there. We all know that gaming in Asia is booming, even with the slump in Macau. What do you see in Korea?

We’re talking about a potential property, positioned strategically, right on the Incheon International Airport grounds. You will fly into that airport, and you will see the Mohegan Sun-inspired project on the north side of the runway. And within five to seven minutes, you can be in the front door. In the broadest sense, we’re talking about the ninth-largest airport in the world that has 42 million visitors through it every year. They’re building a second terminal that will bump that to 60 million visitors a year. They have plans for a third terminal and two more runways to make that 90 million visitors a year. All of that driven by the Korean government’s desire to increase tourism to the country. We want to be a player in that. And it’s looking very good. What was the thought initially, to become involved in Asia?

Well, two things, I would say. But first and foremost, I don’t know if there’s such a thing as a pyrrhic loss, but the Massachusetts pursuit, the Massachusetts competition, was sort of a pyrrhic loss for us. Because the silver lining was that the world, those that are seeking to have operators come in, began to recognize that Mohegan is in that upper crust of operators. And this initial connection to Korea came as a result of not landing the Boston casino, but someone seeing that we could compete toe to toe with a guy like Steve Wynn, and do very well. And the second thing is that there is an affinity for Native American culture in Korea. So that became sort of a hook for us as well.

Born from fun.