SLOT MANAGEMENT

Slot Management 101:

How 2 define your slots of problems!

You run around all day putting out fires while your customers become increasingly disappointed with the anemic guest experience that you created. Your boss demands results but time is against you. So, what do you do, run for the hills?

By Andy Cosgrove

Some people like to be busy but being busy doesn’t mean you’re being productive. I personally don’t know anybody, or any business, that doesn’t have problems but what separates the best operators from the amateurs is how they manage those problems. You may think that putting out fires is heroic but it’s not necessarily an efficient use of your time. Fixing slot machines might seem the right thing to do, but not if fixing one results in six others breaking down. Giving your staff a pay rise as a motivational exercise may seem like a good investment but not if you treat your employees so badly that they continue to leave because no amount of money compensates for having a bad boss. The point is that fixing a problem with a short term solution without first understanding what needs to be improved won’t provide you with the necessary stability to sustain your business in the long term. So if you want to be part of a successful team working for a highly efficient company now might be a good time to think long term, think sustainability, think consistency, think finding and understanding where sustainable improvements can be made to fix your operational challenges, think Lean Six Sigma, think the ‘define’ phase of the DMAIC methodology. Think big, think seeing the forest and not just a few trees.

So, what is the define phase of the Lean Six Sigma methodol-

ogy?–Before I go into the definition of the define phase, it’s important to revisit the meaning of all five letters in the Lean Six Sigma methodology because defining a problem / opportunity for improvement without first being armed with the tools and right approach to eliminate waste and improve your processes in the long term, will only take you back to putting out fires, and when you play with fire you increase the risk of being burned.

• Define – where is the business improvement opportunity

• Measure – how the process is currently being executed

• Analyze – where you define the root cause of your poor product or service

• Improve – you eliminate waste and variation from the process

• Control – is about sustaining the results of your process improvements

Welcome to the Define Phase – It’s a well known fact that 50% of the success of any project depends on how well the required effort to make a sustainable improvement is defined. I’ve witnessed many a promising project fail due to lack of vision, clarity, planning and the absence of the Lean Six Sigma methodology. In my previous article we covered a basic understanding of Lean Six Sigma. In this article we’ll concentrate on all aspects of the define phase including the fundamentals which include the following:

• The process and the process map – A process is a repetitive and systematic series of steps or activities where inputs are modified to achieve a value-added output. There are many processes in the casino industry such as how you pay a jackpot, how you access slot keys or how you count the chips on a roulette table. A process map is a technique that helps visualize process tasks, identify the complexity of a process and communicate the focus of problem solving. When studying a process, it’s important to know the difference between how the process is supposed to run, how it actually runs and what should be happening in order to make the process run more efficiently.

• Voice of the customer – There exists many short sighted casino managers who are self-proclaimed experts at knowing what customers really want but judging by what I’ve seen on offer (such as overpriced drinks, lack of real promotions, service without a smile) it would serve managers well to revisit this notion throughout the project lifecycle to ensure that they view the business from a customers perspective and make sure they provide the products, features, and services that the customers want, expect and need. It’s also important to act with integrity and create an atmosphere of trust and set the stage to deliver on our customers expectations in a timely manner (don’t keep them waiting an hour for a free glass of water!). Operators must deliver real value on a consistent basis because value is a fundamental aspect of delivering a successful Six Sigma project. Nothing will scare away your customers faster than ignoring their voice ,over promising on their experience and failing to deliver real value.

• Cost of Poor quality(COPQ) – this represents the financial opportunity of your improvement efforts. It is a symptom measured in profit or loss that results from errors and other process inefficiencies. COPQ helps quantify the benefits of your proposed improvement project and the four elements that make up COPQ are: External Costs, Internal Costs, Prevention Costs and Appraisal Costs.

• Process Metrics – In order to improve a process, the objective is to make the process better, faster and cheaper. All Six Sigma projects metrics fall into one of these three categories

Selecting projects, refining,defining, and financial

evaluation are also essential parts of the define phase and will help you ensure your projects delivers the expected results with over 99% certainty. When selecting projects, the structured approach is the preferred method of evaluation, and the minimum deliverables are as follows:

• Business Case – provides a high level view of the area of concern,the business motivation for considering a project, and what is the area of focus for the improvement effort?

• Project Charter – expands on the business case and clarifies the focus and baselines performance metrics against which the success of the project will be measured. Some of the core components are the problem statement are the scope, the primary metric, the secondary metric and charts. This document is important as it characterizes a primary understanding of the problem at hand.

• Benefits Analysis–This financial evaluation establishes the value of the project. The components of the benefits analysis include the impact (Sustainable or one-off); allocations (cost codes / accounting systems); forecasts (cashflow and realization schedule)

Eliminating waste – One of the main goals of Lean Six Sigma is to identify and eliminate waste and part of this process happens in the define phase. Lean enterprise is based on the idea that where work is being done waste is being generated. Using Lean enterprise correctly means less waste, greater efficiency andimprovedcustomer service. One of the main advantages of combining Lean enterprise with the Six Sigma methodology is that by combining greater effectiveness with greater efficiency, you create the kind of experience that will transform your customers into loyal raving fans, so what are you waiting for?

The final part of the define phase

involves the ‘5S’ principal, which is designed to organize the workplace, keep it that way and instill the necessary discipline required to enable each personinvolved to achieve and maintain a world class work environment.The 5S principal is broken down as follows:

• Seiri – Sort and identify necessary items while eliminating unnecessary ones

• Seiton – Arrange items in a way they can easily be reached when required

• Seiso – visually sweep all areas, eliminate dirt, dust and scrap. Make your workspace shine

• Seketsu – Standardizing involves creating operational standards and maintaining them

• Shitsuke – Self discipline enables you to form a habit of following the first four S’s Conclusion: By the end of the define phase you should have a description of the process that’s creating waste for your business. It could be your slots promotions, your player’s club sign up process, your customer service training or even your egotistical marketing manager but, whatever it is, correctly defining the area for improvement using Lean Six Sigma will move you away from taking a gamble based on a gut instinct toward making a better informed and scientifically based decision that could, with over ninety nine percent certainty, turn your gamble into performance beyond your expectations.

Andrew Cosgrove is a seasoned slot operations veteran and certified project manager with over 24 years of hands on experience in Latin America and the Caribbean. Andrew has worked on both the operator and supplier side of casino slots and is available to help you succeed and exceed customer expectations via contracted consultancy services. Andrew can be reached at andy.cosgrove@ henimgwaycasinoconsulting.com or seehttps://hemingwaycasinoconsulting.com/

Flutter Considers Potential Floating Of FanDuel

Peter Jackson, CEO of Flutter Entertainment, one of the planet’s most recognizable operators, has intimated towards the possibility of listing of US-based sports subsidiary, FanDuel, on Wall Street. The announcement comes after concerning profit losses in 2021 of €345m ($382m), attributed to costs surrounding May 2020’s merger with Stars Group.

Although Jackson has stated ‘it’s not something that we need to do, it’s something that we continue to evaluate’ the news comes amidst a mixed bag of results in the last calendar year. Given Flutter’s swift expansion in recent years, it now pursues markets across the four corners of the globe. A range of enterprises are in operation across the America’s, Europe, Australia, and Asia, subjected to the significant pressure produced by a seemingly unrelenting global pandemic.

Given the variance in societal progress, the virus has impacted some gambling sectors more than others. In the U.S, where sports wagering is proliferating at an exponential rate, Flutter’s revenue impressively doubled to $1.8bn (£1.4bn). Furthermore, it’s Australian-based venture, Sportsbet, has presided over annual growth, delivering a staggering 43% uplift on the full-year 2020 figure.

However, substantial cost line losses and a protracted arbitration process have left analysts speculating about the scale of requirement for the proposed FanDuel action. In its international division, operating profits sunk to £240m ($319m), a colossal 54% downturn on the previous year. Marketing efforts were doubled in the U.S as it looked to tighten its hegemony over the sports betting market, however this incurred a huge loss of £289m, a 40% worsening against 2020.

Jackson maintains that the Dublinbased group are well positioned for 2022, and perhaps would point to overall yearly revenue growth of just shy of €7.2bn ($8bn) as a positive sign of future potential. However, in the interim, the haemorrhaging will need to stop. It seems Flutter will remain coy over the chances of FanDuel floatation, with Jackson suggesting that the gaming giant will await to see how this year’s market evolves.

New York State Eyes Up Potential Online Casino

Lawmakers in New York are currently reviewing a bill which looks to establish an online casino market in the Empire State. If suitably approved, Senate Bill 8412 will legalize online gaming platforms across the province. This represents another a major opportunity for localoperators, who received a considerable shot in the arm at the turn of the year.

Since early January, the state has presided over an unprecedented commercial return from its fledgling online sports betting sector. In an incredible period of trading, New York punters have wagered an eye-watering $2bn through online sportsbooks, partially facilitated by bumper takings around Superbowl weekend. This has also generated colossal revenue for the state, as a heavy, 51% taxation rate on online sports wagering directs substantial funds back towards local authorities.

Senate Bill 8412 isn’t quite as generous, with tax set at a more reasonable 25% of gaming revenue. However, state coffers will be further boosted by the decision to harness a ‘one-off fee’ on approved operators and gaming platform sub-contractors. If the bill is successful, firms that initiate an online casino tool will be expected to pay $2m for the privilege. Furthermore, any company who provides platform software or technical support, and advertises its brand through its client’s application, will be slapped with a $10m charge. It’s reported that this will earn the state around $150m in ‘one-off fees’ This, coupled with a healthy gaming tax levy generating around $475m per annum, sees the state take a substantial cut of earnings.

Given performance of neighbouring states, analysts are optimistic about the potential market. New Jersey, which has been colloquially re-branded as ‘Vegas East’, and Pennsylvania, both surpassed $1bn in online gaming casino revenue last year.

If online gaming reaches anywhere close to the heady heights of New York’s sportsbook performance, then New Jersey’s newly adopted title may need to re-locate to a state slightly further north…….

Aristocrat To Build Their Own Playtech

After the failed attempt by Australian based gaming company Aristocrat to acquire Playtech for some $4 billion their chief executive has said the company will now build their own real money gaming (RMG) company from scratch.

Aristocrat were so close to acquiring Playtech for so long but in the end a group of Asian investors purchased increasing amounts of Playtech shares at a higher price to block the Aristocrat deal and ultimately failed.

That has left the Australian based company with a dilemma do they look for another suitable acquisition or decide to go it alone and build their own.

Well originally Trevor Croker the Aristocrat chief said that building their own RMG would take five or six times longer than acquiring a suitable company and almost certainly 1.5 times more expensive, that is why they decided to go for Playtech.

However with the failure has come a new strategy that of build it yourself, according to Mr Croker Aristocrat will look to invest $1.3 billion in doing so, that money that was part of the Playtech deal they raised will now be used to develop their own RMG company.

Already installed as its new CEO is Mitchell Bowen who will lead the development and possible strategic acquisitions if needed to boost the companies growth further. Playtech Boss May Front Potential Bid

Playtech’s long-running takeover saga has taken yet another dramatic twist, with current CEO Mor Weizer emerging as a potential frontrunner for the firm’s acquisition. It’s rumoured that Weizer is preparing to launch a consortium bid with TT Bond Partners, former Playtech chief Tom Hall, and an unknown Asian suitor.

This latest episode plays out in the embers of Aristocrat’s recent failed bid for the software giant. Earlier this month, the Aussie-based gaming slots manufacturer tabled an eye-watering £2.7bn deal, only to see it struck down at a shareholder vote.

Most of the business’ senior leadership team were in support of the takeover attempt, but the process was believed to be derailed by a small Asian cartel of rouge shareholders. This sparked speculation about the long-term intentions of this pocket of investors. Last month, the same group served to undermine Eddie Jordan’s interest in acquiring the company.

However, fresh hope has once again materialised. Playtech have been transparent in their receptive stance towards offers, and a Weizerfronted bid may just be the antidote to quell this recent turbulent period. TT Bond Partners are yet to formally set their stall out, but have recently re-affirmed their interest in software technology enterprises. The investment firm assert their ‘significant experience’ in these sorts of services, and point to their global portfolio within this space.

US Gambling Hit $53 Billion In Revenues Last Year

The American Gaming Association said that 2021 set a new record as the highestgrossing year ever for the U.S. commercial gaming industry, reaching $53 billion in revenues, according to Commercial Gaming Revenue Tracker. The total breaks 2019’s previous industry record of $43.65 billion by more than 21%.

The industry closed the year on a high note, setting an all-time quarterly revenue record in Q4 2021 of $14.31 billion, surpassing the previous high-water mark of $13.93 billion set in Q3 2021.

“These results are nothing short of remarkable,” said AGA President and CEO Bill Miller. “The success of 2021 reflects our commitment to health and safety and how Americans have welcomed gaming’s expansion across the country. Today’s industry is effectively meeting customers how and where they want to engage—whether at a casino or through mobile gaming.”

Of the 34 operational commercial gaming jurisdictions in 2021—including four new markets—23 set individual records for full-year commercial gaming revenue. On a national level, every commercial gaming vertical set new annual revenue records.

Traditional brick-and-mortar gaming led the industry’s recovery, with 2021 combined slot and table gaming revenue totaling $44.94 billion, a 6.6 percent increase over 2019’s previous record.

Sports betting’s growth accelerated in 2021, generating $57.22 billion in handle and $4.29 billion in revenue—jumps of 165 percent and 177 percent over 2020 respectively. The sector’s all-time high was powered by strong demand in established markets like Nevada, New Jersey and Pennsylvania and further boosted by the launch of seven new commercial sports betting markets in Arizona, Connecticut, Louisiana, Maryland, South Dakota, Virginia and Wyoming.

Two new iGaming markets, Connecticut and Michigan, also opened in 2021, helping the sector to a record $3.71 billion in revenue. Combined sports betting and iGaming revenue for the year totaled $8.00 billion, up 158.0 percent from 2020 and accounting for a record 15.1 percent of annual industry gaming revenue.

“Despite our record-setting year, gaming’s total recovery is still reliant on the full return of travel and large events, which requires a safe health environment and open economy,” Miller continued. “I’m optimistic that we will see continued growth throughout 2022.”

MGM Announce Impressive Full Year Results

Las Vegas-based gaming giant, MGM Resorts, posted positive full year numbers on Wednesday afternoon, leading share prices to receive a tangible postclose bump. The firm emphasized that solid property performance in native Las Vegas, and in its venues further afield, had contributed to favourable full-year growth figures.

MGM’s stunning Q4 performance was the key protagonist behind their success. The final quarter of the year delivered a staggering swing in net adjusted earnings per share, with 2021’s number over a full dollar ahead of the 2020 like-for-like.

Net revenue saw an equally impressive annualized Q4 uplift, with a $3.1bn figure more than doubling the company’s efforts in 2020. MGM suggested the recent recovery of leisure and tourism industries had hugely bolstered the end of year run rate. However, one should not underplay the scale of this achievement. Although 2020 was plagued with temporary venue closures and decreasing consumer confidence, last year also faced into pretty some challenging headwinds. Continued caps on property capacities, the industrial introduction of mandatory face-mask wearing, and consolidated changes in player behaviour, have all sought to undermine the fortunes of many a sector stakeholder.

Furthermore, although the gaming firm were boosted by their Q4 performance, when COVID curbs started to ease, they certainly weren’t overly reliant on the closing three months of the year. Net adjusted earnings in a full year context were also highly impressive, with a colossal $4.27 bandwidth between 2020 and 2021 numbers.

CEO Bill Hornbuckle hailed the results yesterday, suggesting they demonstrated a ‘sharpened focus on operational resiliency’. And, although he earmarked the delay of early-year group bookings due to an Omicron infection hangover as an issue, he remained philosophical about the return of this footfall later on in the year.

Surely the firm, along with the other major marketplace players, have now navigated the worst. All will be setting their sights on an accelerated performance drive in 2022, as the industry continues to heal from the most economically damaging event in recent memory.

IGT Announces Sale Of Italian Payments Business

International Game Technology (“IGT”) has announced that its wholly owned subsidiary IGT Lottery S.p.A. has signed a definitive agreement to sell its Italian proximity payment business to PostePay S.p.A. – Patrimonio Destinato IMEL for €700 million.

Under the agreement, IGT will be selling LIS Holding S.p.A. and indirectly LISPAY S.p.A. These two wholly owned subsidiaries conduct IGT’s proximity payment business, which has been the leader in the Italian proximity payments market, offering services through a fully owned advanced payment technology platform and a network of 54,000 points of sale. Services offered range from payments services including bill payments and prepaid payment cards to commercial services providing telco and e-vouchers top up and technological solutions including merchant and enterprise services.

“This transaction provides us with an opportunity to monetize IGT’s market leadership in the Italian proximity payment business at an attractive value as we continue to execute our long-term strategy,” said Vince Sadusky, IGT CEO. “Streamlining our products and solutions portfolio enables us to focus our efforts and resources on our core and strategic assets, as we position IGT for industry leadership and increased shareholder value.”

The sale price represents an enterprise value of €630 million and approximately €70 million of net unrestricted cash. The business being sold generated about €228 million in gross revenues and approximately €40 million in EBITDA in 2021, reflecting a valuation multiple in line with the most recent Italian transactions in the proximity payments sector. IGT will use net proceeds from the transaction primarily to reduce debt.

The IGT Board of Directors has approved the transaction, which remains subject to customary closing conditions, including regulatory approvals. Closing of the transaction is expected to occur during the third quarter of 2022.

UBS AG is acting as lead financial advisor and fairness opinion provider to IGT, UniCredit S.p.A. is acting as financial advisor to IGT. AdvantNctm is acting as legal advisor to IGT and KPMG is acting as financial due diligence and tax advisor to IGT.