Canadian Gaming Business May 2009

Canada's Premier Gaming Industry Magazine

Vol. 4 No. 3

May 2009

The State of Gaming in Canada

Inside: Players Clubs Revealed

PM 40063056

Charitable Gaming Trends 2009 Gaming Summit Show Issue

Gaming Industry Award Winners

Special Supplement: Canadian Gaming Lawyer

March 2009

Volume 4 Number 3

Publisher

Chuck Nervick

chuckn@mediaedge.ca 416-512-8186 ext. 227

Editor

Lucie Grys

lucieg@mediaedge.ca

Advertising Sales

Philip Soltys

philips@mediaedge.ca

Senior Designer

Annette Carlucci

annettec@mediaedge.ca

Designer

Ian Clarke

ianc@mediaedge.ca

contents

rachels@mediaedge.ca

Circulation Manager

Cindy Youman

circulation@mediaedge.ca

EDITOR’S NOTE

6

MESSAGE FROM CGA

8

Gaming News Roundup

12

Gaming in Canada:

16

Q & A:

Marketing to Your Players

18

Operator Profile:

Gateway Casinos & Entertainment

20

Facility Profile:

22

Executive Profile:

Rick Josephson

Production Coordinator Rachel Selbie

5

Proudly owned and published by:

How We Got There from Here

Edgewater Casino, Vancouver, BC

President Kevin Brown

President & CEO Bill Rutsey

kevinb@mediaedge.ca

wrutsey@canadiangaming.ca

24

Finance & Investment:

Vice President, Strategic Development Chuck Nervick

Vice President, Public Affairs Paul Burns

26

Gaming Trends:

Charitable and Not-for-Profit Gaming

chuckn@mediaedge.ca

pburns@canadiangaming.ca

30

Operator Profile:

32

I Gaming:

Canadian Gaming Business is published five times a year as a joint venture between MediaEdge Communications and The Canadian Gaming Association

Tax Harmonization Could Be Expensive

Penn National Gaming

Poker Initiatives in the US and Canada

For advertising information, Contact Chuck Nervick 416-512-8186 ext. 227 chuckn@mediaedge.ca

For editorial information, Contact Lucie Grys 416-512-8186 ext.301 lucieg@mediaedge.ca

Copyright 2009 Canada Post Canadian Publications Mail Publications Mail Agreement No. 40063056 ISSN 1911-2378 Guest editorials or columns do not necessarily reflect the opinion of Canadian Gaming Business magazine's advisory board or staff. No part of this issue may be reproduced by any mechanical, photographic or electronic process without written permission by the publisher. Subscription rates: Canada $46.30 per year, $82.60 two years. All rates are payable in Canadian Funds only.

Postmaster send address changes to: Canadian Gaming Business Magazine 5255 Yonge Street Suite 1000, Toronto, Ontario M2N 6P4

34

The Canadian Gaming Industry Award Winners

36

Marketing:

Three Ways to Get More E Power

38

My Life and Gaming:

A Dream Comes True

Canada's Premier Gaming Industry Magazine

Vol. 4 No. 3

May 2009

The State of Gaming in Canada

Volume 4 No. 3 on the cover Bill Rutsey, President and CEO of the Canadian Gaming Association address the state of gaming in Canada today in this issue’s cover story.

Inside: Players Clubs Revealed

PM 40063056

Charitable Gaming Trends 2009 Gaming Summit Show Issue

Gaming Industry Award Winners

Special Supplement: Canadian Gaming Lawyer

Official Publication of the Canadian Gaming Summit

Canadian Gaming Business | 3

editor'snote

Editorial Advisory Board Howard Blank, Vice President Media & Entertainment / Marketing & Promotions Great Canadian Gaming Corporation Lynn Cassidy, Executive Director Ontario Charitable Gaming Association

Putting faces to names

Robin Drummond, Vice President Spielo Paula Dyke, Director, Public Affairs and Corporate Communications Atlantic Lottery Corporation Nick Eaves, President and Chief Operating Officer Woodbine Entertainment Group Art Frank, President Niagara Casinos Brian Fraser, Marketing Manager IGT Canada Jordan Gnat, President & Chief Executive Officer Boardwalk Gaming Muriel Grimble, Executive Director Gaming Products & Services Alberta Gaming & Liquor Commission Lyle Hall, Managing Director HLT Advisory Inc. Zane Hansen, President & Chief Executive Officer Saskatchewan Indian Gaming Authority Ron Kelly, Executive Vice President Arrow Games Michael Lipton, Q.C., Past President, International Masters of Gaming Law and Partner, Dickinson Wright LLP Eric Luke Eric R. Luke and Associates Alan Lyman, Senior Regional Director Scientific Games Margaret McGee, Vice-President of Business Innovation Nova Scotia Gaming Corporation Richard Paris, Security Director, Niagara Casinos

After nearly a year as the editor of Canadian Gaming Business, I have connected with a number of people in the gaming industry over the phone, via email and have regularly received updates and press releases letting me know what’s going on in the industry.

Casino openings, job promotions, new product launches and updates about quarterly earnings keep me up to speed on the constant changes in the gaming world.

As editor, it is my job to work with the publisher, Chuck Nervick of MediaEdge and Paul Burns and Bill Rutsey from the Canadian Gaming Association to bring the readers what they want and deliver time sensitive news from coast to coast. As readers, I look to you for your feedback and to let us know if we are hitting the mark.

The 2009 Summit is now upon us and I am looking forward to meeting face to face with those who I have only spoken with or corresponded via email over the past year. It will also be an excellent chance for you to pitch a story or to express an interest in writing for the magazine.

In this issue, Bill Rutsey writes about the state of the Canadian gaming industry and shares some insights and solid statistics. Lisa

Kopochinksi takes a cue from an upcoming Summit session and delves into the topic of marketing to your Player ’s Clubs. Andrew Coppolino interviews experts in the charitable gaming sector and talks about how it continues to evolve.

With the announcement of the Canadian Gaming Industry Award winners, we celebrate and honor this year’s recipients: Paul Newton, Dave Gadhia, Art Frank, Manitoba Lotteries Corporation and Woodbine Entertainment Group. Also profiled in our regular features are Gateway Casinos & Entertainment, Penn National Gaming, Rick Josephson and Edgewater Casino.

Launching in this issue is a new column written by Dr. Aubrey Zinderberg.

Reflecting on his career in the gaming world and sharing many of his stories and experiences, the regular feature will offer insights into this extraordinary industry.

Marketing strategies, I Gaming updates, changes to taxation and the 32-page semi-annual supplement, Canadian Gaming Lawyer, make this packed issue a must read.

I’m looking forward to hearing about what you have to say – in person.

All the best, Lucie Grys

E-mails to the Editor Policy Canadian Gaming Business welcomes e-mails to the editor. E-mails should include the name of the sender, business or professional affiliation, and city and province of the sender’s office or home. A phone number should be included for contact purposes; the phone number will not be published. We reserve the right to edit e-mails for purposes of brevity and clarity. Please email lucieg@mediaedge.ca

Canadian Gaming Business | 5

messagefromCGA

Four years and counting

By Bill Rutsey, President and CEO of the Canadian Gaming Association

Four years ago gaming was under constant attack in the media and in public; with no coherent strategy for response, no information or research to respond with and no spokesperson or champion. It was in this environment that the idea of creating a national organization, the Canadian Gaming Association (“CGA”), with the mandate to create a better understanding of the gaming industry by bringing facts to the general public, elected officials, key decision makers and the media through education and advocacy, was born.

And this has been no easy task – creating an organization that is now recognized as being a credible source of responsible and reliable information with the necessary access to media to respond to criticism and rebut inaccuracies.

An important part of this has been CGA commissioning and publishing third-party research about subjects such as VLT gaming, the depth and breath and consequent economic impacts of gaming in Canada, assembling the facts as they relate to rates of problem gambling across Canada and around the world, and the factors to consider when attempting to collate the socioeconomic costs of gaming as well as surveying public attitudes, opinions and habits as they relate to gambling.

Such information has allowed us to put the facts on the public record and to begin to shift the tone of debate – facts such as: • Canada is a world leader on the subject of responsible gambling and spends more money than any other jurisdiction in the world on the 6 | May 2009

research and treatment of problem gambling.

• Approximately 85 percent of adult Canadians gamble in one or more forms.

• More than 80 percent of Canadians who gamble do so with a predetermined budget and stick to it.

• Regardless of time, sample size or methodology of measurement, problem gambling prevalence rates consistently hover around one percent.

• Gaming, at over $15 billion, is Canada’s biggest entertainment industry – about the same size as movies, TV, recorded music and professional sports combined.

• Gaming in Canada directly supports more than 135,000 full time jobs and more than 267,000 total jobs including indirect and induced impacts.

• VLT gaming in Canada is well regulated, and operated openly and transparently by Crown agencies, offers entertaining, fair games in safe, age-controlled environments and raises significant non-tax revenues to fund key government programs and initiatives.

The CGA has gotten out these facts and more by appearing before government committees, speaking to community groups and through media outlets including national and local television, talk radio and opinion editorials in national and local newspapers and online.

CGA also quickly recognized the need to have an annual gathering and event that would be useful and informative to all segments of the gaming industry

and a publication that spoke to and for the industry. So with our partner, MediaEDGE Communications, we acquired and have substantially improved the Canadian Gaming Summit and began publication of the magazine that you are reading, Canadian Gaming Business.

But the CGA is about more than just information and getting the facts out, as important as this is. We are also involved in responding to evolving public attitudes and expectations and market conditions.

CGA has and continues to deal with substantive national gaming issues – issues such as internet gaming, single event sports betting and Senator Jean Lapointe’s current proposed Bill S-226 that would restrict the location of electronic gaming devices. CGA works consultatively and cooperatively with provincial governments and agencies on these types of issues, including making representations to the federal government and agencies as well as individual Senators and Members of Parliament.

With your support, in four short years CGA has gone from “who are those guys?” to becoming a national information source of accurate industry data, a leading participant in developing industry-wide approaches to critical issues, an important voice to address legislative and regulatory issues and a leader in identifying emerging issues.

We look forward to continuing in these roles, including creating balance in the public dialogue about gaming in Canada.

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gamingnewsroundup LOTTO SUPER 7 PREPARES TO PASS THE TORCH LOTTO SUPER 7, Canada's current Friday night lottery, will be coming to an end after 15 years. The Interprovincial Lottery Corporation (ILC), which administers national games with Canada's five regional lottery corporations, announced that starting September 25, 2009, draws for a brand new game will be held on Friday nights.

As a first step towards launching the new game, the three regional lottery corporations that provide LOTTO SUPER 7 subscription services are informing their subscribing customers that the game will end with the draw of September 18, 2009. Players holding current LOTTO SUPER 7 subscriptions with British Columbia Lottery Corporation, Western Canada Lottery Corporation and Lotto-Quebec will be receiving further information in the mail from their regional lottery.

Details of the brand new game will be announced in the coming months.

SIGA Reopens the Painted Hand Casino On March 11, the Saskatchewan Indian Gaming Authority (SIGA) officially reopened the Painted Hand Casino.

The new 43,000-square-foot facility, with a price tag of $30 million, features 217 slots, seven live table games, a restaurant offering full food and beverage services and a state-of-theart multi-purpose room designed to accommodate a variety of different entertainment events.

The new facility will employ 240 full-time, part-time and casual staff members, more than the number employed at the previous location.

Located on the Kahkewistahaw First Nation in the west end of the city of Yorkton, the casino will have a definite impact on the local community.

Painted Hand Casino is one of six casinos in Saskatchewan run by SIGA across Saskatchewan in Prince Albert, North Battleford, Saskatoon, Swift Current, Yorkton and on the White Bear First Nation near Carlyle.

Canadian Gaming Service receives GLI Canadian Gaming Service (CGS) a privately owned Canadian slot machine manufacturer receives GLI approval on their new gaming platform and game theme “Double O Cash”. CGS submitted their new product in October 8 | May 2009

Left to Right: Tribal Chief Gilbert Panipeekeesick, Yorkton Tribal Council, Bob Maloney, Deputy Mayor Yorkton, Chief Louis Taypotat, Kahkewistahaw, Honourable Dan D’autremont, Minister of Saskatchewan Liquor and Gaming Authority, Elder Roderick Cote (holding scissors), Chief Lawrence Joseph, Federation of Saskatchewan Indian Nations).

2008, to the Nevada office of GLI for testing and certification. “Double O Cash” is a 5 reel 20 line game with an exciting second screen bonus, housed inside a NEW dual 19” LCD screen machine that will certainly entertain players for years to come.

Earlier this year, CGS received word that both their game platform and game theme had reached GLI certification for all major gaming jurisdictions in Canada. CGS currently has several other submissions at GLI and will be show casing all their exciting new games at the Canadian Gaming Summit.

CGS was incorporated in September 2000 under the laws of incorporation for the Province of New Brunswick. Mr. Darren Sherwood, President and CEO of CGS is well known and respected in the Gaming Industry. Mr. Sherwood has nearly twenty years experience in the industry and was Director of Operations for a previous employer who was the Canadian distributor for a leading slot machine manufacturer.

Under the direction of Mr. Sherwood the company has continued to grow, developing new markets and has been forecasted to exceed 10M in sales this year.

CGS is located in Moncton, NB, Canada and recently moved into their new 14,000 sq ft state of the art facility in the Caledonia Industrial Park and currently employs ten full time staff. The facility is home to new corporate offices, manufacturing and warehouse, as well as our parts and service departments. For current information on CGS and their GLI approvals, log onto www.canadiangamingservice.com.

Magna Entertainment Corp. Files for Chapter 11 Bankruptcy Protection Magna Entertainment Corp. recently announced that it has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Court") and will seek recognition of the Chapter 11 proceedings from the Ontario Superior Court of Justice under section 18.6 of the Companies' Creditors Arrangement Act in Canada.

The company ’s day-to-day operations will continue uninterrupted throughout the Chapter 11 process while it undertakes to sell its assets and implement a reorganization of the Company. As part of the Chapter 11 filing, the Company has sought emergency relief to ensure the

gamingnewsroundup continued payment of employee wages and benefits and horsemen winnings and its ability to honor existing customer programs.

The company also announced that it received notification from The Nasdaq Stock Market indicating that Nasdaq staff had determined that the Company's securities will be delisted from Nasdaq as a result of, among other things, the announcement that it filed a voluntary petition for relief under Chapter 11 in the United States.

Frank Stronach, MEC's Chairman a n d C h i e f E x e c u t i v e O f f i c e r, commented, "Simply put, MEC has far too much debt and interest expense.

MEC has previously pursued numerous out-of-court restructuring alternatives but has been unable to complete a comprehensive restructuring to date due, in part, to the current economic recession, severe downturn in the U.S. real estate market and global credit crisis. This is a voluntary filing intended to utilize a Chapter 11 process that will allow us to continue to operate the business uninterrupted while we implement a reorganization in a court-

supervised environment. We expect that all employees, customers and horsemen will continue to be paid in the normal course along with all post-petition vendor obligations."

Hastings Park forced to lay off staff for 2010 Olympics Hastings Park racecourse in East Vancouver will have to close and lay off staff during the Winter Olympics next year. A memo from senior management said the park is keen to remain open during the festivities, but is being forced to close by the 2010 Olympic organizing committee, known as VANOC, because it's located in a restricted area.

The closure means there will be no work for seasonal staff and temporary layoffs for others, according to Hastings Park general manager Raj Mutti.

A representative at Great Canadian Corporation, which owns Hastings Park, confirmed the closure, but said the company is working with VANOC to help secure temporary jobs for its staff.

"Obviously if this was the Summer Games it would be far more disappointing because there would

be literally thousands of staff and tens of thousands of visitors to our property for live racing,” Howard Blank said.

Since many Hastings Park staff are already security-cleared, they could get jobs during the Olympics but some employees had already requested time off during the Olympics to volunteer for the Games.

The horseracing venue, which recently added several hundred slot machines to its operation, will be required by Olympic organizers to close from February 1 – March 2.

The facility is next to the Pacific Coliseum, which will host some of the figure skating and short-track speed skating events during the Games.

In Memoriam Andy Bryant, age 46, passed away January 24, 2009 after a tough and determined battle to overcome cancer. He is survived by his wife Terrie and his young children Tessa and Sean.

For those of us at Horse Racing Alberta, Andy has left a big void that is not easy to fill and of which we are reminded daily.

Andy began his career as a Youth

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gamingnewsroundup Volunteer with the PC party and later as Executive Assistant to the Honourable Don Mazankowski, Deputy Prime Minister of Canada and Minister of Finance during the early 1990s.

He subsequently served in several management positions within the horse racing industry, commencing with the Albert Standardbred Horse Association and then with the Alberta Racing Corporation and through its transition to Horse Racing Alberta where he acted as President and Chief Operating Officer.

His interest in politics was important in translating the intent of the Horse Racing Alberta Act into day-to-day operational direction.

It also led him to become involved at the Federal / Provincial level as the industry sought to update old legislation into new rules and regulations that would take horse racing into the 21st century and its associated sophisticated computerized world.

Andy’s experience and talents served the horse industry well during the latter turbulent years as Horse Racing Alberta strived to create a new and

Since 1946

better environment for the growth of horse racing, owners, breeders, and backstretch workers.

As we watch Andy ’s hopes and dreams for a vibrant racing and gaming industry unfold, all of us at Horse Racing Alberta will carry his memory with us.

Andy’s family have established a Trust Fund in his children’s, Tessa and Sean’s, name for those wishing to honor Andy’s memory. Donations may be sent care of 11320 24A Ave. Edmonton, AB T6J 4Y9.

STUDY FINDS POKER IS MORE SKILL THAN CHANCE Cigital, a Virginia-based consulting firm, has recently released a study called "Statistical Analysis of Texas Hold 'Em," According to the study, the outcomes of Texas Hold 'Em poker games are determined more by skill than by chance.

Paco Hope, Technical Manager of Cigital and the lead author of the study has been quoted as saying that "this study uses an unprecedented amount of real data to demonstrate what players have long known: the decisions they make are the

dominating factor influencing the outcome of the game."

The study looked at over 100 million hands of Texas Hold ‘Em poker at PokerStars in December of last year. Of the approximate 25 percent of instances that saw a showdown, only half of those were won by the player who could make the best 5-card hand. The other half of the showdowns were won by someone with an inferior 5-card hand because the player with the best 5-card hand folded prior to showdown.

The issue of luck in Texas Hold 'Em is a much debated subject in legal circles, particularly in the United Sates. The definition of gambling varies from state to state but many legal jurisdictions apply a dominance test showing that if the outcome is predominantly determined by chance, then the game is considered to be gambling. This study, co-authored by Sean McCulloch, Ph.D., Associate Professor at the Department. of Mathematics and Computer Science at Ohio Wesleyan University, will help the poker community with their ongoing legal challenges and support their efforts to protect the game from being categorized as gambling.

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Gaming in Canada: How we got here from there

By Bill Rutsey

Gaming, like just about every other industry in the world, has been on a topsy-turvy wild ride over the last year or so - being at the effect of economic circumstances not of the industry’s making and over which it has no control.

12 | May 2009

The Growth of Gaming Gaming has grown steadily across Canada over the past 14 years, growing by 235 percent to more than $15 billion annually.

This growth has been driven principally by casino-style gaming, VLT’s and electronic gaming devices.

In terms of geography, gaming has grown right across Canada but disproportionately in the West. The share of the pie has

Las Vegas Strip Casino Revenue by Type $20,000

$15,000

$ Milllion

$10,000

$5,000

$0

1990

1991

1992

1993

1994

1995

1996

Gaming Revenue

1997

Rooms

1998

1999

2000

Food

2001

Beverage

2002

2003

2004

2005

2006

2007

Other

Source: HLT Advisory Inc. based on data from Nevada State Gaming Control Board, Nevada Gaming Abstract.

Canada Gaming Industry Win Trends by Sector $16,000

$14,000

$12,000

$10,000

Win ($Millions)

Who among us could have predicted the depth, breadth and speed of the economic downturn we find ourselves in the middle of, and the world of hurt the industry is experiencing.

All in all it’s not a pretty site, especially in the US. According to Global Gaming and Betting Consultants, during the last 12 months, the world’s 50 largest gaming companies saw $140 billion (US) wiped away from their total value. Las Vegas Sands and MGM Mirage are both down about ninety percent, The Donald has stepped aside and Trump Entertainment Resorts has filed for Chapter 11.

The question that I’m constantly being asked by journalists is, “What about Canada - is gaming in Canada experiencing the same declines as the industry in the US, especially Las Vegas, which is reporting real pain?” We’ve all seen and heard the stories - severe double digit declines, layoffs and aggressive discount pricing.

The truth is that the resort casinos have been so successful in diversifying their product that now more than 50 percent of their revenues are non-gaming.

With their businesses now so reliant on food and beverage, hotel, entertainment and retail they have transformed their product into just another mainstream tourism option.

They’ve succeeded so well that their product is now at the effect of the economy just like any other tourism product.

So the question being asked, is the Canadian gaming market suffering like Las Vegas, is the wrong question. The question should be, is a primarily local gaming industry, which Canada’s is, being comprised of approximately 90 percent pure gaming revenues, as affected as a tourism-based industry with more than 50 percent non-gaming revenues?

And the answer to that question is an emphatic NO. When I talk to people across the country what I am hearing is that where there are declines they are single digit and there are some markets still experiencing growth.

$8,000

$6,000

$4,000

$2,000

$0 1995

1996 Pari-Mutuel

1997

1998 Bingo

1999

2000 Lottery

2001

2002

2003

EGDs - VLTs

2004 Casino

2005

2006

2007

2008

EGD Other

Source: HLT Advisory Inc. based on most recent data available from various provincial government agency/corporation annual reports and other documents. Numbers are subject to updates as new information becomes available .

changed, with the western provinces having proportionately bigger pieces.

This growth, which has come primarily from casinos and EGD’s, has been driven by the increased supply of slot machines - from about 15,000 machines in 2000 to more than 50,000 in 2008.

During the same period the supply of VLT’s remained fairly stagnant in the mid-thirty thousands and even decreasing slightly in Atlantic Canada and Quebec, resulting in an overall supply of slots and VLT’s of approximately 90,000 devices across the country by 2008.

Drilling down on those numbers we can look at how the supply of gaming devices has changed over those 8 years, with increases of product available everywhere in Canada west of Quebec and how the win per adult population has risen everywhere west of Ontario.

Now people critical of our industry are apt say – “WOW, all that growth is just terrible!

Governments are getting more and more addicted to gaming revenues.”

And those people would be WRONG. Between 2000 and 2007 gaming either stayed pretty much the same or dropped as a percentage of provincial treasury income – being between one and a half to just over two percent across the country.

To look at it another way, from the perspective of the players, gaming revenues as a percentage of total family income has fallen over that same seven-year period.

The Internet Most everyone agrees that internet gaming is legal in Canada as long as it’s conducted and managed by a provincial government or agency.

We all know that there are limited lottery offerings available in various jurisdictions, Canadian Gaming Business | 13

Total Gaming Win by Identified Canadian Regions $10,000

Win ($Millions)

$8,000

$6,000

$4,000

$2,000

$0 1995

1996

1997

1998

1999

2000

Eastern Canada

2001

2002

2003

2004

Ontario

2005

2006

2007

2008

Western Canada

Source: HLT Advisory Inc. based on most recent data available from various provincial government agency/corporation annual reports, subject to update as further information becomes available.

Note: Gaming Industry Win includes win from all forms of gaming (i.e., bingo , casino, pari-mutuel, lottery, EGDs-VLTs and EGDs-Other.

Slot and VLTs Supply by Province, FY2000-FY2008

25,000

Number of Slots

20,000

15,000

10,000

5,000

0 ATL. CAN.

QC

ON

MB

2000

SK

2004

AB

2008

BC

Source: HLT Advisory Inc. based on most recent data available from various provincial government agency/corporationannual reports and other documents. Numbers are subject to updates as new information becomes available.

Gaming Industry Win per Adult by Province, 2000-2008 $1,200

(Win/Adult $)

$900

$600

$300

including Atlantic Canada, Quebec, Ontario and British Columbia, and it’s no secret that most lottery and gaming agencies are looking hard at the space.

However, there are a few huge roadblocks or impediments. First and foremost - Political Will.

Notwithstanding the facts that internet gaming exists and is flourishing in Canada and around the world (with current estimates of the Canadian market in excess of one billion dollars annually and growing) and that one of the largest iGaming server parks in the world is right here in Canada on the Kahnawake Indian Reserve outside of Montreal (with the Federal Government and Quebec seemingly unwilling to do anything about it) - no provincial premier wants to be accused by the opposition, anti-gaming activists and the media of invading each and every citizen’s home to extract gaming revenues from the general population on a non-stop basis, however inflamed and unfair such characterization may be.

Second is the limitation on individual provincial agencies that they can only operate and market within the four walls of their particular province.

This could be overcome with a panCanadian approach a la national lotteries like LOTO 649, which would allow such single organization to market across Canada and beyond.

Third, and probably most important from a business success perspective, is the ruthless competition that government agencies would face from the existing iGaming operators who won’t go quietly and simply surrender their Canadian players.

For these, and I am sure many more reasons I am not aware of, the solution may be for governments to take a different tack and rather than operate internet gaming that they tax and regulate it. Most agree that this approach will require a change to the Criminal Code to allow licensed private sector companies to operate online gaming subject to provincial government regulation and oversight.

Internet gaming is here and is not going away. It’s growing in Canada and around the world, with current estimates of the market in Canada being in the range of $700 million to more than one billion dollars. Something needs to and will be done to catch up to the consumers and to provide more reliable games in safer and more secure environments.

$0 ATL. CAN

QC

ON

2000

MB

2004

SK

AB

2008

BC

CAN

Source: HLT Advisory Inc. based on most recent data available from various provincial government agency/corporation annual reports and other documents and Statistics Canada, Annual Demographics . Numbers are subject to updates as new information becomes available .

14 | May 2009

Note: Gaming Industry Win includes win from all forms of gaming (i.e., bingo , casino, pari-mutuel, lottery, EGDs-VLTs and EGDs-Other.

Criminal Code Issues Bill S-226 I am sure that all readers are familiar with

Total Gaming Win as % of Provincial Income FY 2000- FY 2007 3.0%

Win as % of Income

2.5%

2.0%

1.5%

1.0%

0.5%

0.0% Atlantic Canada

Quebec

Ontario

Manitoba 2000

Saskatchewan

Alberta

British Columbia

Canada

2007

Source: HLT Advisory Inc. based on Statistics Canada Small Area and Administrative Data Division (SAADD), Annual Estimates for Census Families and Individuals (T1 Family File), 2006 and various provincial annual gaming reports. Data subject to update as further information becomes available.

Notes: Gaming Industry Win: Includes win from all forms of gaming (i.e., bingo , casino, pari-mutuel, lottery, EGDsVLTs and EGDs-Other.

Provincial Income: Represents total family income generated by all family members from all sources during a calendar year.

Gaming Win as % Income: FY2000-FY2007 Change

0.60%

0.40%

% Points

0.20%

0.00% Atlantic Canada

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Canada

-0.20%

-0.40%

-0.60% Casino + EGD Other

EGD - VLTs

All Gaming

Source: HLT Advisory Inc. based on Statistics Canada Small Area and Administrative Data Division (SAADD), Annual Estimates for Census Families and Individuals (T1 Family File), 2006 and various provincial annual gaming reports. Data subject to update as further information becomes available.

Notes: Gaming Industry Win: Includes win from all forms of gaming (i.e., bingo , casino, pari-mutuel, lottery, EGDsVLTs and EGDs-Other.

Provincial Income: Represents total family income generated by all family members from all sources during a calendar year.

Senator Jean Lapointe’s six years (and counting) crusade to limit slots and VLT’s to casinos, racetracks and betting theatres (defined as locations containing 50 or more gaming devices).

Senator Lapointe has been at this since 2003 with Bill S-226, which received First reading in the Senate on February 11, being his sixth kick at the can. I had the privilege of appearing before the Senate as an expert witness in February 2005, being his third try. His last try, Bill S-213, died as it was coming up for Third reading in the last Parliament due only to the election call. That was just too close for comfort.

Suffice it to say, the Bill is a clear repudiation of the long-standing 1985 Agreement between the Federal government and provinces that ceded

jurisdiction over gaming to the provinces, and to quote from the Agreement, “ensured the rights of the provinces in gaming and betting are not reduced or restricted”, which the Bill clearly does.

The Bill is also a serious attack on Canadian small business in that it will take away the approximately $600 million of commissions paid annually to more than 7,000 small businesses.

It’s time for the provinces to let the Senate and Government of Canada know this - that the proposed Bill is a clear repudiation of the long-standing 1985 Agreement and further, that no province asked for the change and no province has been consulted on the change. In short, Bill S-226 should not be passed.

Single Event Sports Betting As we all know, sports betting in Canada is legal as long as it’s a parlay-style bet offered by a provincial agency.

However, people across the country want to, and are, betting on the outcomes of single events. Be it tonight’s NHL or NBA game, the Stanley Cup Final, the Grey Cup, the Super Bowl, March Madness or the US Open - you name it and people are betting on it.

Unfortunately all this betting is illegal, with the proceeds going primarily to bookies, organized (or disorganized) crime and offshore internet operators.

The issue surfaced in the media last summer when it was reported that the Province of Ontario had written to the Federal Minister of Justice requesting a change to the Criminal Code to allow single event sports betting. The Canadian Gaming Association has spoken to more than sixty Members of Parliament and Senators on this matter as well as provincial agencies, government officials and politicians across the country.

Many MPs and Senators were of the opinion that single event betting was already legal. Most see legalizing it as one or more of: providing the sports betting product most customers want; providing Canadian jurisdictions with a competitive advantage to foster tourism; and a law and order issue (by removing economic activity from the underground economy).

The Federal Justice Minister, Rob Nicholson, and the M.P. from Niagara Falls, has indicated his willingness to act on the matter at the request of the Provinces and there is general all party agreement on the issue. One champion in the House of Commons is NDP Justice Critic Joe Comartin (MP, Windsor-Tecumseh) who has drafted a Bill and made it available for any MP to bring forward as a Private Member’s Bill.

What is required to move this initiative to the front burner is that a number of provinces request the change as Ontario has publicly acknowledged.

In Conclusion Canada’s gaming industry has a strong future with good fundamentals. But as we look ahead to 2010 and beyond, the industry together with policy makers must begin to embrace innovation. This means developing products and games in the formats our customers are seeking while continuing our leadership role in delivering entertaining games in a safe, responsible manner.

Bill Rutsey is President & CEO of the Canadian Gaming Association Canadian Gaming Business | 15

Q&A: Players Clubs: Present and Future Plans Revealed

By Lisa Kopochinski

Canadian Gaming Business recently sat down with Holly Spence, Director of Marketing for Casino & Community Gaming, British Columbia Lottery Corporation; Sandra Bohn, Director of Marketing Operations at Caesars Windsor; Debbie Hancock, Marketing Manager for Grey Eagle Casino in Calgary; Greg Medulun, Director of Communications at Niagara Casinos in Niagara Falls; and Michael Heeb, Vice President and General Manager of the River Cree Resort in Edmonton—to get their take on marketing their Players Clubs, how they have changed, and how they are now marketed, especially in this economy.

CGB: HOW LONG HAS YOUR PLAYERS CLUB BEEN IN EXISTENCE AND HOW HAS IT CHANGED SINCE ITS INCEPTION? Holly Spence: Players programs have been in existence for decades, but have changed over the years to ensure that players are recognized for all play. Table play is included in some properties and casino amenities like hotel rooms, food establishment and gift stores can also be used to ensure players get points for their visit.

Sandra Bohn: In 1995 we launched Club Windsor and it was renamed Players Prestige in 1997. Our program has changed 16 | May 2009

significantly over the years as we strived to differentiate ourselves from the increasing competition in Michigan to satisfy the growing expectations of our customers. Being the only casino in the market at the time, Club Windsor offered only food and limited hotel rooms. We evolved into Players Prestige adding merchandise, cash back on slot play and eventually adding a Premier and Preferred tier. In June 2007, we transformed to Total Rewards opening a whole new world of perks and privileges.

The best change has been in the transparency of the Total Rewards program.

Our message is very clear—this is how you earn comps, this is your comp balance, and this is what you can redeem. Gone are the days of a confusing explanation on how comps are earned and a customer having to approach a host wondering if they have enough to get a buffet.

Debbie Hancock: Our Players Club has existed since we opened on December 19, 2007. It is referenced on our Web site and marketed via internal media and externally, supported by print and radio.

Greg Medulun: When Casino Niagara opened in Niagara Falls on December 9, 1996, Players Clubs were already one of the hottest marketing trends in Las Vegas and other long-established gaming markets, so we have had our PAC program since day one.

One of the biggest changes to the PAC program came on June 10, 2004.

On that day, Fallsview Casino Resort opened to the public and PAC became a two-property program. Suddenly, our long-time, loyal Casino Niagara customers could use the PAC program to access concert tickets, spa treatments, hotel rooms and a variety of dining options that had not been available to them before.

Another major change to the program has been technology. Today, players can log into their accounts from anywhere in the world using their PAC number and a password to get a full range of information on their PAC membership, including their reward points and cash back tallies.

Michael Heeb: Our Players Club has been in existence since we opened in October of 2007 and is constantly evolving with changes from the regulatory body, but most importantly based on feedback from our customers. The more feedback we get, the better the strategies we can put in place for our customers. We are fortunate to have Raving Consulting on board as one of our “shared experts.”

They are an excellent source on providing us with new ways to create greater impact for our Players Club and its members.

CGB: HOW DO YOU THINK CASINOS SHOULD MARKET PLAYERS CLUBS IN THIS TOUGH ECONOMY? Spence: With the current economic conditions facing the world today, your Players Club is the best way to communicate. It costs far less to keep a player than to acquire a new player.

Though most facilities focus on high-end players, the best opportunity for growth is with the light, infrequent and lapsed member. It is hard to influence a highend player to make another visit to your property and ultimately spend more. And, from a responsible gambling point of view, we shouldn’t, but light, infrequent and lapsed members are truly where all the growth can come from. Direct your programs and communication to them, and you can save thousands, and in some cases, hundreds of thousands of dollars in advertising costs.

Bohn: Upon introduction, the primary focus of the Players Club was retention and rewarding existing customers. As competition grew across the border in Detroit, our marketing strategies focused on increasing incremental visits from customers who split play. When we launched Total Rewards, we leveraged the recognition and reputation that came with the program and shifted our focus to acquisition. Our message was simple—this is the program that you want to be a part of. We forced gamers to take a look at what they were getting with other programs and compare it to Total Rewards. We also took every opportunity to reinforce to our customers the value in their membership in each card level.

Another important tactic was to arm our most valuable advocates, our employees, with the training and tools they need to promote the program.

Medulun: The PAC program has always been one of the pillars of the marketing program at Niagara Casinos. Over the last several years, we have worked very hard to get more visitors to our properties to become PAC members, so they can begin enjoying the benefits and so we can build our relationship with them. For example, patrons disembarking from motor coaches at Fallsview can join the PAC program and receive their membership card at our motor coach reception desk within moments of their arrival.

Heeb: Our Players Club is part of our overall marketing campaign, which is focused on several different mediums including direct mail pieces, radio, television, online elements and print (magazine and newspaper). We also do considerable marketing within the casino in a variety of ways from posters to messages on our television screens and our OTB terminals. And of course, word of mouth from our guest services staff goes a long way to promoting the benefits of being a Players Club member.

CGB: HAS THERE BEEN A DECLINE IN PLAYERS CLUBS DUE TO THE RECESSION? Spence: I am not aware of this.

Hancock: We have not seen any decline.

Our club continues to grow given our facility is fairly new in Calgary.

Bohn: The opening of the Colosseum produced a growth in our membership year over year. However, had it not been for the entertainment centre, we may have experienced a decline in membership.

The economy would have definitely been a primary reason, but as a border property other factors such as exchange-

rate fluctuations and border delays heavily influence our numbers.

Medulun: We have been very pleased that, despite the challenging global economic situation, our business has remained very strong. As a result of our strong marketing efforts, membership in our PAC program is actually increasing.

Heeb: As a matter of fact, our Players Club membership has steadily increased in the past year as we develop new ways to promote its benefits. One way we’ve done this is by alerting our Players Club members that we are doing more messaging to them via e-mail blasts for such things as specials in our restaurants and pre-sale access to shows in The Venue at River Cree.

CGB: WHAT ARE YOUR PLANS FOR 2009 AND 2010 REGARDING PLAYERS CLUBS? Hancock: We are looking to expanding our rewards by offering new point redemption options. We are also looking to add additional ways for members to collect points through jackpot wins, food purchases and point promotions during slower periods.

Bohn: Our largest initiative is to launch “Rewards Credits for Cash” in April. This program replaces our “Cash Back” program, which rewarded slot players based on coin in. “Reward Credits for Cash” is available to both table and slot players and allows them to redeem their comps for cash, in addition to all of the other benefits we offer. This added benefit reinforces the concept of putting members in control of how they earn and redeem rewards. We are also working on a number of programs from “Reward Credit” multipliers, which allows members to earn their comps at a faster rate to acquisition and retention programs.

Medulun: We feel our customers are responding very well to the program as it stands today. They are very comfortable with it and are using it to get the most out of their visits to our properties. We plan to keep doing what we’re doing—building additional PAC membership while ensuring the program continues to add value to the Niagara Casinos experience for our customers.

Heeb: Our goal is to continue to grow our Players Club by making our current and new customers more aware of the benefits.

One way we will work towards this goal is by increasing the connection between the Players Club and all of our outlets in the resort, such as our buffet restaurant and sports lounge. Our aim is to match the growth of our enrollment in the Players Club with new incentives—many of which will come directly from our patrons.

Canadian Gaming Business | 17

operatorprofile

Gateway Casinos &

Entertainment Gateway Casinos & Entertainment owns and manages nine casinos in Canada with a dedication to service that the company views as the foundation for its growth and success.

“It’s all about service. That’s what ultimately determines preference in the marketplace,” says Chief Executive Officer Dave Gadhia. “Whether our guests like gaming, entertainment or dining, we know that a positive experience each time means increased loyalty and return visits.

You can have the most beautiful casinos in the world – and we think we do – but if you aren’t welcoming your guests and showing them that they’re important to you, the glitter will fade in their minds, and they’ll move on.”

Canada and has grown rapidly from just two facilities with 150 employees to nine facilities with over 3,000 employees.

Recently, Gateway was named one of the strongest companies in the Vancouver Sun’s BC Business Top 50 companies. This kind of positive perception is only one of the reasons Gateway looks toward the future with confidence.

Another is Gateway’s recent acquisition by New World Gaming which is a partnership between Macquarie Group and Crown Limited. Macquarie is headquartered in

“We recruit locally, and based on the tremendous response we’ve received, we’re obviously the employer of choice.”

The service attitude extends to the communities where Gateway Casinos & Entertainment are located. “We’re part of the neighbourhood, and we take that responsibility seriously,” says Gadhia.

“We recruit locally, and based on the tremendous response we’ve received, we’re obviously the employer of choice.

That’s not surprising. The opportunities we offer to talented and dedicated Team Members are virtually unlimited.”

Growth surge in British Columbia and a footprint throughout Western Canada Gateway is one of the largest casino and entertainment companies in Western 18 | May 2009

Australia and is a leading provider of full range investment banking, financial markets and retail financial services. Macquarie is also one of Australia’s top 15 companies with over 13,000 employees in 24 countries and has reported successive years of record growth and profits since it was listed on the Australian stock exchange in 1996.

Crown is one of Australia’s largest diversified entertainment groups and its market capitalization of more than $5 billion, places it among the top 50 companies listed on the Australian Stock Exchange.

Recognized as one of the world’s leading gaming and entertainment companies, Crown has a history of innovation and

success in Australia and Asia, and will incorporate these strengths into building exciting and entertaining new facilities for locals and tourists.

15 Years in Business – and a World of Potential Celebrating its 15th year in business, Gateway’s portfolio of properties includes the new Grand Villa Casino, Starlight Casino, Cascades Casino, Lake City Casinos in Vernon, Kamloops, Kelowna & Penticton and Baccarat Casino and Palace Casino in Edmonton.

The Grand Villa Casino in Burnaby opened in the fall of last year and represents the future that Gateway envisions: breathtaking casinos and hotels with every amenity a guest could want.

Featuring an expansive 100,000 feet of space with more than 50 gaming tables and over 1,000 slots, Grand Villa Casino is the largest on the Western Mainland.

The casino’s unique Signature rooms provide a quiet haven for serious players who enjoy high-limit slots and tables. Each room has its own host, refreshments, private washrooms and all the amenities a guest could want.

“These rooms are a beautiful escape for someone who plays for bigger rewards,” says Gadhia. “They were carefully integrated into the casino design with the idea that our best players should have the kind of environment they want and the service they deserve,” he adds.

With casual and sophisticated dining, top-name local and international entertainment and a Grand Villa Hotel under construction, Gateway Casinos & Entertainment is making waves in Western Canada, but will never forget the philosophy that made its success possible. “ We w a n t t o b e t h e a c c e s s i b l e neighbourhood casino with international flair,” says Gadhia. “That’s a promise we work every hour of every day to deliver,” he continues.

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Edgewater Casino

Vancouver, BC The Edgewater Casino project marks itself as one of Vancouver’s success stories. In 2006, Paragon Gaming took over the once struggling casino and has since reinvigorated the casino, its employees and its community. As the Vancouver 2010 Olympic Winter Games fast approach, Edgewater is preparing to welcome the world to Vancouver and offer world-class entertainment and unparalleled service to guests.

Leading the Edgewater team is Paul Ahluwalia, Vice President and General Manager with over 11 years of experience in the B.C. Gaming & Entertainment Industry. Through great leadership skills and business expertise, Ahluwalia guides a team of over 900 employees. During his career, he has played integral roles in opening three casinos and in 2006 he took on the challenge of re-launching the Edgewater Casino.

From his career start in slot games to management, Ahluwalia has excelled at every level of service and understands the business inside and out. His passion for gaming and his ability to create a thriving organization has helped him become a recognized leader in B.C.’s casino industry.

Ahluwalia states, “Edgewater Casino has played an instrumental role in putting Vancouver, British Columbia on the map as an exciting entertainment destination since 2006. The Edgewater team’s vision is to see 20 | May 2009

our casino play a continual role in shaping hospitality and tourism in Vancouver.”

One of the ways that the Edgewater has become instrumental in changing B.C.’s gaming industry and affected how other casinos operate is with its prize offerings.

The Edgewater Casino gives away more than $3 million in promotional prizes each year. Just last month one lucky winner took home a brand new Porsche Cayman during Drive Your Dream. Currently the casino is offering $100,000 in cash prizes by inviting guests to submit their Pro Hockey picks during the Free Face-Off Hockey Challenge between now and April 2009.

This is the first-ever hockey pool of its type to be offered in the province.

With over $5 million dollars in upgrades and enhanced gaming amenities, Edgewater Casino’s 35,000 square feet of gaming floor offers guests the sophistication of table games, such as Craps, Roulette, Baccarat,

Blackjack and Pai Gow; or the fast-paced action at over 500 slot machines. All machines feature ticket in/ticket out technology, an innovative coin-less system. Edgewater also boasts the city’s only poker room and a High Limit Room for more serious players. Recently, poker pro Brad “Yukon” Booth hosted and beat out over 340 players in the Edgewater’s Vancouver Downtown Showdown Poker tournament.

The casino’s modern glass building is the gem of the Plaza of Nations and creates a unique atmosphere. Visitors can enjoy action packed games in the midst of the casino’s waterfront view of the False Creek shores.

Edgewater also borders nearby Yaletown, the city’s bustling entertainment district, the Vancouver 2010 Olympic Winter Games Athlete’s Village, BC Place and GM Place. As you enter the city or drive over the Cambie Street Bridge, this beautiful waterfront property cannot be missed as its sloping glass rooftop illuminates the night sky with lights.

Once known as the B.C. Pavilion, the casino is actually a legacy building and was originally built for Expo 86. The pavilion, now known as the Plaza of Nations, hosts exciting festivals, feature film productions and outdoor concerts. After a show, guests can wander over to Edgewater for some gaming and drinks with friends at the Vue Bar & Lounge.

The Vue is the perfect spot to enjoy a cocktail while gazing at passing boats in False Creek.

Upstairs, the revamped Stadium Club offers everything from nuevo Burlesque shows and exclusive red carpet events, to pay-per-view sports games on three 18’ big screens. Or if you are looking for something on the go, the Splash Bistro on the main floor is always great value. The Bistro also features an outdoor BBQ patio where you can enjoy the idyllic waterfront location and a delicious burger or smokie.

Edgewater is acclaimed for providing its guests with the ultimate dynamic gaming experience 24 hours, 7 days a week. A breathtaking venue, superb customer service and cutting edge gaming ensures guests have an experience like no other at the Edgewater Casino.

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executiveprofile

Rick Josephson Manitoba Gaming Control Commission How did the microbiologist become a gaming regulator? What sounds like the beginning of a riddle is in fact a question often posed to the Manitoba Gaming Control Commission’s (MGCC) Executive Director & CEO, Rick Josephson. “There have been some interesting twists and turns through the years, but I think the constant is always people and how you deal with them and their interests”, he acknowledges when asked about his leadership roles with Metropol Security and

“You need to identify common ground and develop a culture of cooperation” Arctic Operations with Fisheries and Oceans Canada. “Whether you are working with a VLT siteholder or a commercial fisher, you need to identify common ground and develop a culture of cooperation as the foundation of every relationship.”

His current leadership role with the MGCC certainly has given him many opportunities to apply this strategy as he has navigated through sometimes turbulent w a t e r s i n v o l v i n g : h i g h p r o f i l e V LT infractions; a Supreme Court challenge to new VLT municipal option legislation (the challenge was unsuccessful); a significant gaming policy shift intended to narrow First Nations’ economic development gaps; and the first pilot program for Texas Hold’em charity tournaments in the country.

Asked about his most significant accomplishments, Josephson is modest, 22 | May 2009

“this kind of attention is unusual for me. I prefer to focus on others and their interests.” MGCC’s Board Chair, Darlene Dziewit confirms this reserve

with her observation, “Rick embodies the saying that you can accomplish just about anything when you don't care who gets the credit.â€? But, reflecting on one of MGCC’s highest profile roles, its policy advisory and support to government on First Nations gaming, Dziewit notes, â€œâ€Ś it is widely recognized that his work with Aboriginal leaders and community members has been positive and productive, leading to strong framework agreements that navigate between the tenets of the Criminal Code and First Nations’ sovereignty interests.â€?

This perspective is echoed by Grand Chief Ron Evans, head of the Assembly of Manitoba Chiefs, "Rick's Danielle Bush s 2ESPECTED AS ONE OF #ANADA S LEADING GAMING LAWYERS knowledge of the issues and his gracious personal s ,AND BASED AND ON LINE GAMING LEGAL EXPERTISE relationships combined with his problem solving skills s (AS SUCCESSFULLY REPRESENTED CASINO OPERATORS LOTTERY CORPORATIONS SKILL have been most impressive in our working together. His GAMING COMPANIES FANTASY SPORTS LEAGUE OPERATORS SPORTS HANDICAPPERS

work in dealing with First Nation issues has always been GAMING SOFTWARE DEVELOPERS WHITE LABEL WEBSITE DEVELOPERS AND respectful and in the spirit of cooperation."

OPERATORS lNANCIAL SERVICE PROVIDERS AND ADVERTISERS While First Nation gaming issues have occupied his s 0ROVIDES SOUND STRATEGY AND ADVICE ON PARTNERSHIPS MARKETING AND attention more recently, Josephson’s first order of business REGULATORY MATTERS when he assumed MGCC’s leadership in 1997 was to s .EGOTIATES AND DRAFTS MISSION CRITICAL CONTRACTS SUCH AS TECHNOLOGY AND operationalize the new legislation that split regulatory and INTELLECTUAL PROPERTY LICENCES AND STRATEGIC RELATIONSHIP AGREEMENTS s !N ACTIVE MEMBER OF THE #ANADIAN 'AMING !SSOCIATION AND THE 'AMING operational responsibilities and established the MGCC as #OMMITTEE OF THE !MERICAN "AR !SSOCIATION an independent regulator. Recalling that time, he notes that the real challenges came with the development of a Delivering exceptional results without compromise. new registration regime for industry employees, suppliers and equipment and powers for research and public 4 s DBUSH CHITIZPATHAK COM consultation. He acknowledges that it was the business community’s interest in how the new regulatory regime Chitiz Pathak LLP would affect their operations that called upon him to 320 Bay Street, Suite 1600, Toronto ON M5H 4A6 phone 416.368.6200 fax 416.368.0300 demonstrate his preference to work collegially as opposed www.chitizpathak.com to proscriptively. “Fortunately I am a real Manitoban, I love to golf in the summer and curl in the winter�, laughs Josephson. “I attended a lot of these kinds of events as a way of networking with the hospitality industry and Chitiz_April_2009.indd 1 4/14/09 business groups�.

In taking this approach, Josephson opened doors and built relationships by focusing on what he describes as “practical regulation�. “The laws and regulations that govern gambling must be flexible enough to permit the market to develop and change. At the same time, the legal framework must meet the public interest mandates for honesty and integrity, social policy concerns and, of course, consumer trends and demands.� Josephson notes that practical regulation enables a range of measures, beginning with the confirmation of honesty and integrity, though to regular monitoring and, in instances of contravention, progressive discipline through dispute resolution and order making.

The MGCC has rarely had to invoke its powers to suspend or revoke, but when necessary it has exercised its mandate to protect the public interest. “We took some heat from the media following a joint police investigation that led to raids and the arrests of a number of people.�

Media reports from that time revealed that critics felt the pursuit of illegal poker operations was over the top – but in Josephson’s view, “unsanctioned operations jeopardize legal events and compromise public confidence in gaming activities; this is a negative for the gaming industry�.

In this respect, he emphasizes the need for industry to understand the importance of independent regulation as a risk management tool for the industry. “Good regulation protects the gaming industry, its employees, operations and suppliers.�

4:52:30 PM

Canadian Gaming Business  |  23

finance&investment

TAX HARMONIZATION COULD BE EXPENSIVE

By David Schlesinger

As the Ontario budget date approaches, speculation is rising that Ontario may be poised to harmonize its Retail Sales Tax (RST) with the federal Goods and Services Tax (GST), which may lead to other provinces to follow suit. This harmonization could provide a much-needed boost for many Ontario’s businesses by reducing their costs and making them more competitive. However, sales tax harmonization will likely be expensive for some organizations, including Provincial Gaming Authorities (PGAs) and the Operators that manage PGAs’ gaming facilities.

Like most businesses, PGAs would benefit from the reduced administration under a harmonized sales tax (HST) system. However, under the existing HST system, PGAs would pay more sales tax due mostly to a broader range of goods and services subject to tax and the PGAs’ special tax calculations.

Under RSTs systems, PGAs pay RST on their taxable purchases but do not remit any RST with regards to their gaming revenues. Under the GST system, the taking of a bet and any pay-out are GST-inclusive.

Thus, harmonization would mean an expanded sales tax base.

While GST/HST is deemed to be included in gaming revenues, the calculation of the tax to be remitted is based on the taxable purchases rather than on the revenues. PGAs are required to remit GST with respect to their gaming activities based on a complex formula that generally requires PGAs to remit 200 percent of the GST on taxable purchases and 100 percent of the GST on the amount paid to Operators. In the harmonized p r o vi n c e s o f N o v a S c o t i a , Ne w Brunswick, and Newfoundland and Labrador, the PGAs currently remit 26 percent of tax on most purchases 24 | May 2009

and 13 percent on the Operators’ fees, which is significantly higher than the RST currently paid by other PGAs. For example, in Ontario, the tax cost on purchases subject to RST would increase from 18 percent (i.e., 200 percent of 5 percent GST and 8 percent RST) to 26 percent under an HST system. However, the tax cost on items currently not subject to RST would increase from 10 to 26 percent.

In addition, many legislative interpretation and application issues remain unresolved for the gaming industry—due to the complexity of the rules. The affect of any adverse interpretation to these issues would be more significant post harmonization since the current GST rate is lower than the HST rate.

When the three harmonized provinces implemented the HST system in their respective provinces, the combined sales tax rate was reduced from as high as 18.8 percent to 15 percent. In Ontario, an HST lower than 13 percent (5 percent federal GST and 8 percent provincial component) is unlikely due to the significant revenue generated from unrecoverable RST paid by businesses.

In fact, an estimated 40 percent of RST in Ontario, generated from RST paid by businesses, would become recoverable

under an HST system.

The current harmonized provinces receive their share of the HST based on a formula set out in the C o m p r e h e n s i v e I n t e g r a t e d Ta x Coordination Agreement (CITCA).

The formula is based on the provincial and federal rates, national and economic data supplied by Statistics Canada, administrative data provided by the CRA, and other data sources determined by Finance Canada.

However, it is difficult to determine if the provinces that have or will harmonize will be fully compensated for the additional tax paid by PGAs under an HST system.

An HST system does provide one important common benefit for most businesses: reduced administration costs once fully implemented and RST audit periods are closed. However, absent any relief or administrative concessions, the additional tax burden from the provincial component of an HST would significantly affect the profits of the PGAs and their ability to pay dividends to their owners, the provinces.

David Schlesinger is a Partner in KPMG LLP’s Indirect Tax practice. He focuses on sales tax issues for the gaming industry.

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gamingtrends

Charitable and not-for-profit gaming

By Andrew Coppolino

Charitable gaming has left behind its legionhall roots—roots that stretched out to virtually every small town in Canada—only to evolve as a complex gaming sector which pumps millions of dollars into Canadian communities each year.

26 | May 2009

But like any other gaming sector within fluid and often uncertain economies, not-for-profit gaming must cope with pressures and fluctuations that change its business complexion.

Competition from various sources, new revenue models, fragmented markets, and cannibalization conspire to challenge charitable and nonprofit community gaming.

Competition on all sides Tony Rosa, President and CEO of Community Gaming and Entertainment in Windsor, Ontario, operates five bingo halls in Windsor and Tecumseh. But Rosa also straddles the Canada-United States border as he keeps a close eye on gaming developments to the south.

“Things are a lot more advanced here in Ontario at this point than in Michigan, but Michigan made changes in March 2007 to improve the status of bingo in the state and it has had an impact on our side of the border.”

Rosa’s halls are border-city venues working with two currencies and he’s eager to retain his American clients within a relatively small Canadian demographic—Essex county only has 300,000 people.

He contends with a combination of issues: border crossing logistics, high gas prices, the high Canadian dollar. “There’s been a multitude of things that create an impact on our American clientele, and they’re important to us,” he said.

Indeed, the issues for charitable gaming have been tough ones. Though she sees improvements, Lynn Cassidy, Executive Director, Ontario Charitable Gaming Association (OCGA), remains guarded. “On the bingo side, it is a downward trend in Ontario with declining revenues, facilities and opportunities for charities to fundraise through bingo.”

She adds that while the mega-raffle area was growing in recent years, “there’s increased competition because that seemed to be an area of potential success for charities despite significant risk. Now, some of the big charities are thinking about not doing mega-raffles because the competition is so stiff.”

A complex of factors is at play, including the draw from other forms of entertainment and, for bingo, a somewhat traditional and static product. The non-smoking ban has also had an impact on every single jurisdiction in Canada, although Cassidy says that is starting to come back.

Then there is the crucial variable of human resources that not-forprofit and charitable gaming faces: the sheer numbers of frontline workers in the trenches at the halls.

“An obstacle going forward in the industry is the volunteer aspect of charitable gaming. It requires tremendous support from volunteers and unless you have that, it creates some challenges,” Cassidy said.

New landscapes As for the static product, that’s where Ron Kelly comes in. Executive Vice President of Arrow Games/Bazaar & Novelty, Kelly is part of the world’s largest manufacturer of charitable gaming products, with Canadian operations based in Brantford and Niagara Falls.

The company’s break-open “Nevada” tickets—which correlate to the bingo game itself—were introduced to Canada a few years ago and have boosted funds in the charitable-game industry significantly.

“The tabs open up to display numbers in conjunction with the game in the hall. It’s exciting, it’s played quickly, and it allows players to win a little bit more money,” Kelly said.

He also gives full marks to electronic bingo, which was introduced into Canada in the last few years. The hand-held devices permit players to play several faces at the same time, injecting some more excitement into the game.

Ontario, in fact, has had four electronic bingo sites up and running for over three years and are showing good potential, while fitting the bill as a step beyond the legion hall.

“They are beautifully renovated facilities with new technology and improved customer service. Those marketplaces, although they still are experiencing challenges, are definitely performing better than many of the marketplaces that don’t have (these features),” according to OCGA’s Cassidy.

Cassidy refers to attempts to “strengthen the partnerships that we have with OLG and Alcohol and Gaming Commission of Ontario to introduce new technology into bingo to grow the marketplace.”

Evolving partnerships are a part of the landscape in several jurisdictions. According to British Columbia’s Betty Gilbert, Executive Director of the British Columbia Association for Charitable Gaming (BCACG), not-for-profit “community gaming centres” will include slot machines as well as electronic bingo.

Trends and change, however, come at a price. The industry’s new revenue model implemented in Ontario in 2007, including a 70 percent prize-board payout, has nurtured flexibility in bingo game design allowing the industry the potential to grow. Yet inside-the-hall practice doesn’t always mesh smoothly with the guiding theory.

“We thought we would be able to make a lot of changes and acquire a new-found interest, but we couldn’t. We took a step back and looked at

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Canadian Gaming Business | 27

gamingtrends the games and products we were offering and had to adjust them to bring our customer base along slowly. They wouldn’t change as fast as we thought they would,� noted Community Gaming’s Rosa.

The 2007 model allowed non-profits to maximize revenues as well as improve the operators’ viability on their facilities and stimulate re-investment, while the rules were made more flexible regarding games that could be operated. The cumbersome approval process through AGCO was improved, but there were still growing pains.

The anticipated quick return of lapsed players and a drive of new players into facilities did not materialize, according to Rosa. “We realized that slow-paced growth and not rapid growth is required.�

Cannibalization, rationalization, fragmentation Competition is one thing; a centre that has difficulty holding is another. The market is fragmented with municipal regulators, provincial regulators, gaming-service and gaming-equipment suppliers, manufacturers, and not-forprofits and charities.

“Even though the overall gaming dollars in the province have increased, something gets cannibalized in order to create a greater dollar somewhere else.

Our industry has been particularly hard hit,� Rosa said.

Cassidy agrees. The number of venues (from 240 bingo halls in 1997 to 70 in 2009) has “gone down considerably, but many of the stakeholders believe it has bottomed out and there’s a bit of a resurgence in the last little while in bingo.�

With the ALGO reviewing charitable gaming about two and half years ago, there is an effort to redefine the industry, states Cassidy. “It’s a strategic working group of representatives from the supplier side, manufacturing side, the hall and charity sides, and from the municipality side.

Together we provide advice to the regulatory commission around gaming change. We’re working through a host of proposed changes.�

At the BCACG, Gilbert indicates that rationalization has resulted in relatively stable numbers. Where there used to be 43 halls, there are now 23: in 1997, 5,000 charities and non-profits shared

a pool of $110 million; in 2008, 6,663 charities shared $147 million. “In communities like Kamloops, Port Alberni, and Kelowna, where there might have been two bingo halls they’ve been combined into one large community gaming centre with some communities having no hall and others closing because they could not compete.�

Yet, Gilbert maintains the non-profits generally haven’t suffered. “Over the last 12 years, our funding has increased dramatically and allowed us to increase the number of organizations that can access that funding.�

For non-profits everywhere, that trend might be good news. But at the end of the game, the bingo hall is less and less a remnant of its legion-hall ancestor—and one that can survive only through sound business practices, says Cassidy. “The trend on the regulator side is for the regulator to try to step out of making business decisions and make regulatory decisions only, allowing the industry to make the business decisions for better or worse.�

Andrew Coppolino, andrew@andrewcoppolino. com, is a freelance writer based in Kitchener, Ontario.

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operatorprofile

PENN NATIONAL GAMING: The most coveted balance sheet in gaming

By Dr. Aubrey Zidenberg

Many people are truly not aware of the size and success of Penn National, a diverse gaming company that has grown quietly over the last decade with unprecedented success. Recently, a Wall Street analyst described the unique and enviable position Penn National Gaming finds itself in as “the Most Coveted Balance Sheet in Gaming.”

Penn operates almost one million square feet of live gaming, with over 25,000 slots, 400 table games, 1,884 rooms, 60 food outlets and 16,000 staff in their 19 casinos which operate in 15 different jurisdictions, along with 6 racetracks and 5 off-track wagering facilities. The company today has estimated annual revenues of over $2 billion.

From Colorado to the west, Louisiana and Florida to the south, Bangor Maine to the east and Casino Rama to the north and all points within, Penn National is recognized as the third largest publicly traded gaming company in North America today.

Beginning in 1972, Peter Carlino served as President and later Chairman of the family’s first gaming venture, Penn National Race Course, one of Pennsylvania’s original horse racing licenses. Through acquisition of gaming properties and racetracks Penn National has grown from a single track to become one of the nation’s largest and most broadly diversified gaming and pari-mutuel wagering companies.

30 | May 2009

operatorprofile

In 1994, Carlino, the current Chairman of the company and one of the gaming industry’s true visionaries, lead its initial public offering. With the company’s growth and efficient approach to managing its assets, it has been named to Fortune magazine’s list of 100 fastest growing U.S. companies for a record six consecutive years, and has been ranked by Forbes for the last three years as one of America’s Best Big Companies. In 2007, Forbes named Penn National the best-managed company in the hotel, restaurant and leisure industry.

Carlino, the low key chairman of Penn prefers that recognition for the company’s success go to the powerful executive, management teams and dedicated frontline employees that handle the day to day operations and individual gaming projects.

His ability to assemble the finest of management teams has been his greatest success, according to industry analysts.

The most recent addition to the corporate structure at Penn National is new President and Chief Operating Officer, Tim Wilmott, one of the world’s most seasoned gaming industry experts. Mr. Wilmott, who earned an MBA in corporate finance from Wharton School of business, most recently served as COO of Harrah’s Entertainment and has over 22 years experience of managing and developing gaming operations in diverse regulated jurisdictions across North America and internationally. Wilmott is credited with advancing Harrah’s player tracking and customer rewards programs, increasing its customer acquisition and marketing efforts and developing and introducing analytical tools aimed at driving growth and customer satisfaction.

The success of Penn National has been their focus on attracting local customers to gaming venues that are staffed with a team of dedicated and motivated employees. The focus has always been WMS_INSERT_41309.indd 1 customer service, something Wilmott understands well - especially during these very difficult economic times.

It is also notable that the company has not ventured into the Atlantic City or Las Vegas market. They have concentrated on smaller localized gaming markets where they have successfully maintaining the highest levels of customer service.

In Canada, Penn National has been the operator of Casino Rama since 2001. It is one of the country’s most successful commercial casinos and Canada's largest First Nation employer. The host nation, under the leadership of Chief Sharon Stinson Henry, is recognized as one of Canada's most progressive First Nation communities.

At the same time that Penn National was selected to develop and operate Casino Rama, it also acquired Carnival Hotels and Casinos, the original company selected by the Our unrivalled range of Ontario Lottery and Gaming Corporation to operate the innovative touch screen destination gaming resort. Located just north of Toronto in gaming products deliver a region of beautiful lakes and vacation properties, Casino the perfect balance between Rama has 300 suites, full spa, 5,200-seat entertainment the thrill of live gaming complex and a beautiful native themed casino with 2,300 and the advantages of slots and 120 table games. electronic betting.

Penn National is definitely the company to keep your For further information visit eye on as they continue to deliver their successful brand of www.tcsjohnhuxley.com management and customer service to the gaming industry around North America.

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Dr. Aubrey Zidenberg has been a licensed strategist to the International gaming, Tourism and Entertainment industries since 1975.

Canadian Gaming Business | 31 canadian gaming business.indd 1

11/2/09 16:51:46

igaming

Poker Initiatives in The U.S. and Canada

By Mark Balestra

Canada's provincial governments have generally been more progressive than U.S. states in the adoption of Internet gambling, but U.S. initiatives to regulate online poker could soon mark a significant change in this area.

32â&#x20AC;&#x201A; |â&#x20AC;&#x201A; May 2009

As federal legislators in the world's de facto capital of I-gaming prohibition are working diligently to loosen some of the shackles put in place by Unlawful Internet Gambling Enforcement act of 2006, state legislators are considering all options for preserving fiscal solvency, and expansion of legalized gambling always comes into play during times like these.

The real momentum in the States is taking place in California, where economists are projecting a $6 billion budget deficit by June 2010. Poker is the most palatable option from a socioeconomic standpoint, and Assemblyman Lloyd E. Levine, Democrat of Van Nuys, believes regulating and taxing online poker could play a major role in chipping away at the deficit. Levine in

igaming February 2008 introduced AB 2026, a bill that would order a study on the Unlawful Internet Gambling Enforcement Act to find out whether a California-only online poker scheme could work within the confines of federal law.

Levine's poker bill traversed peaks and valleys throughout the year, transitioning from a study bill to a regulatory bill and back to a study bill, and ultimately dying at the end of the session, at which time Poker Voters of America President explained, "We just ran out of time for the current legislative session." The bill's supporters vowed to reintroduce it in January 2009, but it has been slow to materialize.

It is difficult to pinpoint the precise effect passage of such a bill would have on the legal landscape for Internet poker in Canada, but the prevailing factor in decisions moving forward is potential revenue. Canadians' current exposure to online poker is via offshore jurisdictions and landlocked sovereign territories such as that of the Kahnawake nation outside Montreal. While Canadian businesses can't offer online poker to Canadian residents, the barriers between Canadian consumers and operators based outside Canada are far from insurmountable.

One could argue, then, that significant tax revenue is being lost to offshore businesses.

Legalization in the States would have not immediate economic bearing on Canada, however, a success story in the ledgers could present a compelling blueprint for moving forward with regulation. As Michael Lipton, a partner with Dickinson Wright LLP in Toronto, points out, "Canada would then have two major western countries (the United States and the United Kingdom) very influential to Canadian policy regulating online gambling."

If such a movement gains traction in Canada, Lipton said, the provinces would have a very heavy hand in operational aspects. A game of mixed skill and chance, Internet poker would not see the light of day as a regulated activity conducted in the commercial markets without a change to the criminal code; the provinces are the only entities that would be authorized to provide such services.

Lipton says an interesting jurisdiction to watch could be Nova Scotia, where gaming regulators have expressed a strong interest in the adoption

of I-gaming. Poker might not be an immediate fit for Nova Scotia, however, because the game relies on player liquidity - something a population of less than one million probably can't deliver. But if Nova Scotia regulates I-gaming, one can expect more provinces to follow, and then you've got the prospect of developing an inter-provincial model in the mold of what's already been accomplished successfully in the lottery space. In this sense, Canada might be sitting in a better position to regulate online poker than the Unites States, where an interstate model could open a can of worms on the federal level thanks to the legacy of the Interstate Wire Act. Regardless, it is abundantly evident that regulation in both countries is heavily reliant on one very important factor: the emergence of a catalyst. For now, under the political environments on both sides of the border, the scales have yet to tip from risk to reward, and history has taught us that shifts of this nature are very slow to come.

Mark Balestra is the head of publishing for Clarion Gaming. He can be reached at mark.balestra@ clariongaming.com.

Canadian Gaming Businessâ&#x20AC;&#x201A; |â&#x20AC;&#x201A; 33

awards

Canadian Gaming

Industry Award Winners

(Lett to right) Art Frank, Paul Newton and Dave Gadhia are this year’s recipients of the Canadian Gaming Industry Award for outstanding industry leadership.

Art Frank, President, Niagara Casinos has held almost every position possible and comes by his responsibilities honestly. He began his gaming career in 1978 as a dealer and was subsequently promoted to Floorman (Blackjack and Craps) and to Scheduling Supervisor of Table Games for Resorts International in Atlantic City.

At Paradise Island Casino in the Bahamas, he started the managerial stage after holding the positions of Pit Boss, Shift Manager and Special Events Coordinator. Following his time in the Bahamas, he returned to the U.S. as the first General Manager of the Par-A-Dice Riverboat Casino in Peoria, Illinois.

Prior to joining Casino Rama in 1998, he was Senior Vice President, Gaming Division, with Carnival Resorts & Casinos and was responsible for the opening of Carnival’s Casino Rouge property in Baton Rouge, Louisiana. As Vice President of Casino Operations, he was also responsible for marketing and operational plans at Carnival’s Lucayan Beach Resort & Casino, Grand Bahamas. Before this, he was the 34 | May 2009

Casino Manager at Carnival’s Crystal Palace Casino in Nassau.

While with Casino Rama, he spearheaded a major expansion project that included an entertainment centre, an all-suite hotel, several restaurants and a spa. The casino experienced record financial performance during his last three years there.

A r t Fr a n k a r r i v e d a t N i a g a r a Casinos in 2006 and encountered less than favourable market conditions including rising gasoline prices, increased border restrictions and a weaker US dollar. Sensing an opportunity to expand, he added a deli and two restaurants and doubled the size of the spa, started hotel renovations and built a luxurious martini lounge overlooking the Falls.

Revenues at Niagara Casinos have since stabilized and profitability is on the upswing. Upon hearing that he was one of this year’s winners, he said, “I was extremely surprised to hear from Bill Rutsey that I was the recipient of this years award. I am honoured and flattered to even be considered, let alone receive it."

"Working and living in Canada for the past 11 years has been a tremendous experience; one that I will always look back on fondly. As the years pass, this award will be a nice reminder of the times I have enjoyed in the industry."

Paul Newton, Senior Vice President of Strategy and Business Development with the Saskatchewan Indian Gaming Authority (SIGA).

Paul Newton has worked extensively in the gaming industry over the past two decades including posts with Mikohn Gaming Corporation, Rideau Carleton R acetrack, Saskatchewan Gaming Corporation, Western Canada Lottery Corporation and his current employer, Saskatchewan Indian Gaming Authority, (SIGA), for the past five years.

Newton lends a unique combination of public and private sector experience encompassing all aspects of gaming.

A strong background in the gaming industry and extensive project management experience has supported SIGA in its pursuit of expansion and reinvestment opportunities.

awards He has exhibited remarkable versatility, managing three expansion projects simultaneously and demonstrated exceptional negotiating skills by collaborating with complex stakeholder groups to reach common ground. Perhaps, the greatest accomplishment was that all three of these capital projects came in under budget.

Due to his efforts, SIGA’s expansion program created an additional 750 new positions for the company and First Nations labour hours during the construction phase far exceeded targets. Nominated by Zane Hansen, CEO of SIGA, Hansen remarks, “SIGA has benefited from Paul’s passion, commitment and enthusiasm for our business. He makes an effort to share his knowledge and experience with others and inspires them to strive for excellence.”

Newton’s strong interpersonal and communication skills along with his

ability to build teams of task-orientated, motivated individuals have contributed to his personal and professional success. Throughout his career, he has demonstrated a passion for the gaming industry and enthusiasm for delivering outstanding value to our patrons.

Dave Gadhia, CEO of Gateway Casinos & Entertainment Headquartered in Burnaby, British Columbia, Gateway Casinos & Entertainment Inc. is one of the largest casino operators in Canada operating nine casinos and employing over 3,400 people in British Columbia and Alberta. Gadhia has been with the company since its inception in 1992 and has served as a director of a number of other private and public companies. He has been awarded the Canadian Gaming News’ Outstanding Achievement Award

and the Business In Vancouver ’s Top 40 Under 40 Award. He is also a director of the Canadian Gaming Association.

Nominated by Monique Wilberg, she notes, “Over the 17 years that I had the great opportunity to be developed and mentored by Dave, I directly experienced what it was to be led by a visionary, a risk taker, a consistent dedicated, ethically sound person to the highest of standards.

The impact of this great spirit moves across a large organization and touches everyone's hearts and souls. Dave inspires all those around him with the confidence and strength to make challenging decisions.

His thumbprint of leadership is exemplified best in the latest facilities brought to market by Gateway Grand Villa Casino Burnaby, Starlight Casino-New Westminster and the Cascades Casino in Langley B.C.”

This year’s winners of the Volunteerism and Community Service Awards are Woodbine Entertainment Group and Manitoba Lottery Corporation.

Woodbine Entertainment Group Woodbine Entertainment Group (WEG) actively supports and lends its leadership to a number of community organizations and causes like Toronto Children’s Breakfast Clubs. WEG is the sole sponsor of the Woodbine Children’s Breakfast Club and also partners with the charity for the annual holiday toy drive.

WEG maintains on-going relationships with its partners to ensure long-term success with its community partners and charities. As the only not-for-profit corporation that is a member of Imagine Canada, WEG donates 3 percent of its net revenues to the charity.

A strong believer in hiring locally and supporting internships and co-operative education programs, opportunities are extended to students to gain hands-on experience. Through their community support programs, WEG also sponsors the Youth Gang Exit and Ambassador Leadership Program, which helps young people develop the skills to help reduce crime while giving young people hope and a meaningful future after gang life.

The Gatehouse is yet another service that WEG supports.

Providing community response to child abuse victims, WEG is the largest single corporate sponsor of the program. The goal is to break the cycle of violence and since 1998, over 8000 people, including children, have been helped in connection with the Toronto Police.

Manitoba Lotteries Corporation Manitoba Lotteries Corporation (MLC) is also very deserving of the award’s recognition. Through two unique programs, ECHO (Employees Care by Helping Others) and through their creation of a Legacy Fund which helps Habitat

for Humanity build homes for families, MLC fosters a deep spirit of community involvement.

In 2006, a group of employees at MLC created ECHO to reach out into the community and allow employees the platform to fundraise for a charity of their collective choosing. To date, over $200,000 has been raised for two Charity of Choice recipients: Children’s Hospital Foundation of Manitoba and the Children’s Hospital Asthma, Allergy and Clinical Immunology Renovation Project. Managed by a Board of Directors consisting of MLC employees, ECHO is part of the corporate social responsibility framework of the organization.

As a supplemental program to ECHO, REAP (Rewards for Employee Action and Participation) acknowledges employees who volunteer in the community. An incentive program to encourage employee volunteerism and community involvement, MLC donates $125 on behalf of each employee who has completed over 50 hours of volunteer service or canvassed $500 or more.

Another project supported by MLC is Habitat for Humanity (HFH). Since 2007, MLC has helped HFH with financial contributions and recently through the creation of the Legacy Build fund. The new fund is worth up to $5 million for the construction of homes.

MLC employees have committed hundreds of volunteer hours towards building projects and as a result, many lowincome families have been given keys to their own home.

“We will build not just homes,” says HFHW Past Chair, Janet Milne, “but a stronger community for us all.”

With six chapters in Manitoba, HFH and the benefits of the Legacy Build fund will be felt around the province.

Legacy Build hopes to triple the number of homes built by HFH by 2012.

Canadian Gaming Business | 35

marketing

Three ways to get more E power

By David Bellerive

Chances are you’re already sending out an email newsletter, or email bulletin or email something. Moving to, or adding an email newsletter will save you money and increase the contact with your patrons. It is extremely easy to set up a newsletter template. If you build it in a content management system, all you need to do is cut and paste from your word document and you will have nice looking, consistent e-newsletters every time. Make it weekly, monthly or send them as needed.

36 | May 2009

Ours is so simple that clients literally don’t need us after we’ve set it up. (Maybe not the smartest idea from our point of view – but we figure if it helps our clients’ business, it’s going to help us.)

Blast out a weekly coupon. Send out a monthly entertainment calendar. If a show is not selling, or a promotion needs a boost send out a note to your biggest fans – your subscribers. And the cost per issue is pretty much a big fat nothing. Honestly, if you’re not doing this yet, you must make it a priority for 2009.

Now here’s something else to consider. Have you added the media to your email list? If your newsletter really has news, why not send it to the papers, radio stations and TV stations as well? They love a positive news story, and you can’t beat getting free coverage of an upcoming promotion, or a past winner. They might even profile an upcoming act. I think you’ll be surprised how much they pick up.

Survey says…

What’s one of the first things you do when you get something new? A new outfit, a new toy, or a new car, usually we show it to our friends. Then we ask, whadda ya think?

You can do the same with your players.

Ever wonder what players think of that whack-a-mole promotion? Or the new five dollar entrees you added to the menu? Do they really want sushi? Or is your F & B manager out to lunch. And how come nobody plays the new vampire slot machine you’ve just added? Well, ask them. Build a panel of players and use them as feedback.

It can be very sophisticated; we have a very fun, interactive way to run these online that players love. Or you can dip your toes in the idea and do it yourself. Use an inexpensive online tool like Survey Monkey and build yourself a quick questionnaire. Maybe tie it in with your new e-newsletter and send your players on assignments. “Hey Joe, we just got a slot machine, I’d love to know what you think. Please come in and give the game a try, then let me know what you think.”

To get into trending and the real analytical work you’re going to need help, but there’s lots you could try on your own.

Social Media All media is becoming social media. CNN promotes and uses Twitter heavily. To the point where you can watch TV and share your thoughts with a group of like-minded people while watching the news. Or share your thoughts with the show.

I think it’s crazy, but I love this new way of watching TV; interacting with my TV and my friends.

Where is this going to go for casinos?

You need to learn this stuff. Twitter is rocketing up the online charts. Facebook just recently made their website more Twitter-esque. Have you Twittered yet? (Are you on Facebook) At the very least, you need to try them, and get comfortable with the formats, language and the ideas. Facebook, Twitter, LinkedIn. Play with them, keep an open mind and I think you will quickly think of ideas and ways to make them work for your casino.

If you’re not sure where to start, Twitter me, I’ll be your first follower!

David Bellerive is the Vice President Creative Services and Media at Phoenix Group.

Canadian Gaming Business | 37

My Life and Gaming

A Dream Comes True Dr. Aubrey Zidenberg

With boundless energy and filled with dreams I grew up in Toronto the 1950’s and 60’s. After graduating York University and a short stint working for the Ministry of Correctional Services, I had the opportunity to revisit an old memory that I had tucked away years earlier. In 1969, as a longhaired hippy, I ventured to California in an old sports car and ended up at the Riviera Hotel Las Vegas - an experience I knew I would never forget and promised myself I would revisit.

I was 22 in 1974 and I returned to Las Vegas, dazzled again. I broke into the casino business, taking weekly, overnight gambling junkets to Freeport from Toronto. A year later, I got a Vegas Sheriff ’s card, filled out a onepage application and started to work with the Hughes Corporation at the old Frontier Hotel. This was at a time when tumbleweed still blew down Las Vegas Blvd., Mort Saiger, America’s last Pony Express rider, who had delivered mail on horseback in L.V. was a host, gorgeous women worked the baccarat tables as casino shills and everyone had a “street” nickname. No fax machines, no beepers, no cell phones and no computers!

I was moving plane loads of high rollers from Canada to legal gaming Mecca’s of the world: Panama under General Omar Torrijos, Haiti under Jean Claude “Baby Doc” Duvalier, plane loads of whales to the Playboy Club in the Bahamas, Aruba, St. Maarten, St. Kitt’s, Puerto Rico and Antigua.

In the late 70s, I worked for the first casino in Atlantic City, Resorts International. Harrah’s opened around 1981 and they hired me as V.P. Marketing in Canada; they only had 4 casinos at that time. After 8 years with Harrah’s, I went to work with the Trump Organization. During those 38 | May 2009

years we moved almost a hundred planes and hundreds of millions of dollars a year into the resorts.

As my appetite for gambling grew, I expanded my footprint into Monte Carlo, London, Australia and Africa, in some cases administering marketing programs with as many as 35 licensed junket representatives working around North America.

I returned to Toronto in 1989 determined to be part of the development of the industry in Canada.

Lobbying began as we tried to open Ontario’s first casino at the Canadian National Exhibition. We simulated the Calgary Stampede which operated under a legal umbrella from the Criminal Code through the Agricultural Fairs Act. With an operating partner, we grew from 20 blackjack tables to 165 assorted games and 1,200 staff in 3 years. The province allowed us to operate the “Roving Charity Casino’s” which ran for 3 nights once a month in approved venues in Toronto, Windsor, Niagara Falls and then the rest of Ontario. We operated 8-10 casinos a week - trucking, setting up, operating, tearing down and moving to the next city.

The province soon announced its first commercial casino for Windsor and I went to Vegas and met with my old friend Steve Wynn to see if he was

interested in the deal. The answer was yes and Mirage Resorts sponsored my Nevada key investigation. To advance the project, Steve put me together with his V.P. of Development, James Ritchie, who later became my partner. Jim, was a retired Brigadier General - Judge Advocate Military Operation with the Pentagon, a senior prosecutor with the organized crime division of the U.S. Department of Justice, Executive Director of the first Presidents Commission reviewing gambling in the United States and for 20 years my teacher, mentor, friend and like a father to me until he passed away in December 2008.

Wy n n e v e n t u a l l y p a s s e d o n t h e opportunity and I looked for a new partner. After reviewing many companies, I invited Carnival Hotels and Casino (CHC) to discuss a joint efforts opportunity. Once inking our deal in 1994 we bid on the Casino Rama project and won the opportunity to build and operate it. In 2001, Penn National Gaming purchased CHC, but I stayed in the deal as an associated company in the operating agreement.

Since then there have been more exciting projects like building out the Fort Erie Racetrack slots, developing the Degree Poker Championship and operating an international junket marketing program involving over 50 American cities; while human rights and responsible gambling have been my community focus for which I received I received an Honourary Doctorate of Laws Degree in 2007.

The 35 years I’ve spent in the industry have been very exciting - and I’ll elaborate on them in future columns.

It’s been one hell of a ride and enjoying this wonderful journey with me and working side by side as my partner in the industry over the last 25 years is my wife Debra, who has kept my life in order while I was pursuing my dream.

I am extremely proud of the gaming industry in Canada and yes, we have experienced our growing pains, but we are well on our way to achieving our intended goals.