Canada's Premier Gaming Industry Magazine
Vol. 3 No. 2
November 2008
Sales Product Agreement No. 40063056
Human Resources Ahead of the Game Inside: Food and Beverage Q & A The Future of Sports Betting in Canada Texas Hold’Em Poker as a Charitable Event The Pari-Mutuel Paradox Canadian Gaming
Lawyermagazine
Special Supplement: Canadian Gaming Lawyer
November 2008
Volume 3 Number 2
Publisher
Chuck Nervick
chuckn@mediaedge.ca 416-512-8186 ext. 227
Editor
Lucie Grys
lucieg@mediaedge.ca
Advertising Sales
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Proudly owned and published by:
President Kevin Brown
President & CEO Bill Rutsey
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wrutsey@canadiangaming.ca
Vice President, Strategic Development Chuck Nervick
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Canadian Gaming Business is published five times a year as a joint venture between MediaEdge Communications and The Canadian Gaming Association 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 2008 Canada Post Canadian Publications Mail Sales Product 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 $44.94 per year, $80.79 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
contents 5
EDITOR’S NOTE
6
MESSAGE FROM CGA
8 GAMING NEWS ROUNDUP 12
Special Report
The future of sports betting in Canada
16
GAMING INDUSTRY Q & A:
A look at food and beverage programs across Canada
19 FIRST NATIONS
Questions about the ability of First Nations gaming operators to do business abroad
21
COVER STORY
Human Resources: Your secret weapon in staying ahead of the game
25
Personality PROFILE
Barry Pritchard retires
26
FACILITY FOCUS
Sonco wins the jackpot
27
OPERATOR PROFILE
28
GAMING SUMMIT UPDATE
30
GAMING TRENDS
32
FACILITY OPERATIONS
34
HORSERACING
36
MARKETING
37
CHARITABLE GAMING
38
MAKING A DIFFERENCE
Gamehost Income Fund Plans are well underway for next April’s Summit What’s New in the World of Slots? Part Two Woodbine’s energy mission hits the mark The Pari-Mutuel paradox Read this and win! Texas Hold’Em Poker from coast to coast St. Mary’s Entertainment Centre in New Brunswick CANADIAN GAMING
LAWYERMAGAZINE
VOLUME 1 NUMBER 2 NOVEMBER 2008
Casino Security A QUESTION OF DUPLICATION
Volume 1 No. 2 Special Supplement Canadian Gaming Lawyer
Inside: Self-Exclusion in the UK Money Laundering: A Criminal’s Perspective Gaming Operators Breathe a Sigh of Relief
Official Publication of the Canadian Gaming Summit
Canadian Gaming Business | 3
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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
Editor's Note
Robin Drummond, Senior Director Spielo, GTECH 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 Brad Johnson, Vice President Marketing Aristocrat Technologies Inc. Ron Kelly, Executive Vice President Arrow Games Michael Lipton, Q.C., Past President, International Masters of Gaming Law and Partner, Elkind & Lipton 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 Jovica Perovic, Vice-President Operations, Gateway Casinos
IN THESE TIMES OF ECONOMIC uncertainty, everyone is feeling the pinch in some way, shape or form. Now, more than ever, it is critically important that companies have access to information that will help them better run their respective organizations. Regardless of the economy, you can be assured that Canadian Gaming Business magazine will continue to provide our readers with timely, informative and relevant editorial content. This issue is a perfect example of our commitment. It contains a number of excellent articles on topics such as Sports Betting, Gaming Trends, Human Resources, Food & Beverage, Horseracing, Marketing, Personality, Facility and Operator Profiles, First Nations Gaming, Facility Operations, Charitable Gaming and more. Beyond the impressive list of individual articles, you will also find our second issue of Canadian Gaming
Lawyer, a special supplement published in conjunction with the International Masters of Gaming Law (IMGL). Experts from the legal community have written a number of excellent articles including pieces on New Security L e g i s l a t i o n , Wr o n g f u l D i s m i s s a l , Self-Exclusion, Gaming Registration, Money Laundering, On-line Gambling Liability, Patents, and more. Our thanks again go out to Michael Lipton, Q.C., the Editor of this supplement. I hope you will enjoy the articles – and as always – please connect with me if you have a budding inner Hemmingway or would like to see an interest explored in print.
All the best, Lucie Grys Editor lucieg@mediaedge.ca
George Sweny, Senior Vice President Lotteries OLG
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
Gaming and the Public Interest By Bill Rutsey, President and CEO of the Canadian Gaming Association
The term public interest is often emplo ye d whe n g am in g is p ub li c ly discussed, written about or the subject of social research, most times from a quite narrow perspective. But when you ask people, “What is public interest, what does the term mean?” you get a variety of responses. Reference tools are no more help – just try Google. There is no single definition or meaning. What you soon discover is that there are many public interests depending upon individual needs. A broader approach to public interest seems to be all about the balancing of various public interests and expectations. This is especially true with regards to gaming. The growth of legalized gaming beyond pari-mutuel and church bingos has been in response to worldwide consumer demand and changing social mores. Stigmatizing and criminalizing the activities of a significant portion of the public was deemed not to be in the public interest, and the diversion of significant revenues from criminal elements to the benefit of society served the public interest. So then, what are the public expectations with respect to gaming, and especially here in Canada, with the various provincial governments so intimately involved? A primary public expectation of government managing any enterprise 6 | November 2008
would be that it be operated successfully and profitably. Another primary public expectation is that any attendant harm also be managed and minimized. At first glance, these two expectations appear contradictory and, with respect to gaming, are often facilely so presented. Who hasn’t been confronted with a v e r s i o n o f, “ H o w c a n w e t r u s t t h e government to protect its citizens when it has a financial interest?” This simplistic yes/no, win/lose approach suggests that public policy decision-making is a zero sum game and more importantly, completely ignores the realities that gaming is legal and has an 85 percent adult participation rate. Governments routinely make these kinds of decisions, for example with regards to encouraging manufacturing while at the same time maintaining environmental standards. Gaming is no different, as can be illustrated by the New Brunswick Government’s strategic approach to gaming – Responsible Management, Responsible Play in a Responsible Environment (November, 2007). To quote from the strategy: “The public should have confidence in the delivery of provincial gaming programs and charitable gaming activities. They should also be confident that the games are conducted fairly, responsibly, and with appropriate accountability.
The Province is committed to embracing its social responsibilities and will take steps to provide the tools and resources to ensure that its gaming products are delivered in a socially responsible manner. To this end, a focus on prevention, awareness, treatment and research of gambling addictions are incorporated in all aspects of gaming in the province. This social responsibility will be balanced with government’s commitment to manage the finances in a way that is fiscally responsible.” This type of approach has been implemented by every province; tailored to the particulars of each province. Balancing the fiscal (profitability) and social (harm reduction) responsibilities has been accomplished through an approach that optimizes rather than maximizes revenues. Buttressing this approach requires information and research, such as that commissioned by the Canadian Gaming Association (CGA). Recently a consortium of 10 provincial organizations representing gaming regulators and research organizations released The Social-Economic Impact of Gambling (SEIG) Framework which was created to “guide decision makers and researchers in measuring the social and economic costs and benefits of gambling in Canada.”
The consortium invited feedback on the framework. As part of our on going commitment to contribute to the public and academic discourse on gaming research, CGA commissioned Dr. Douglas M. Walker, an economist at the College of Charleston to review the framework. Dr. Walker’s research on the social and economic impacts of gambling has been published widely in academic journals. He is also the author of The Economics of Casino Gambling (Springer, 2007). Dr. Walker’s review, Issues to Consider in Implementing the Socio-Economic Impact of Gambling (SEIG) Framework, discusses eight issues to consider in evaluating the SEIG framework. To quote from the review:
“The SEIG framework provides an important contribution to a critical area of gambling research. However, like other methodologies that attempt to address the socio-economic impacts of gambling, the SEIG framework has its own potential limitations. Policymakers, researchers, and research/government funding agencies should consider some of these issues as they contemplate research undertaken in the context of the SEIG framework.” A most important question to ask before undertaking research is, “What do we want to know?” In this case one could ask whether or not social economic impact studies will tell us anything that will be useful in balancing the public interest. As
Dr. Walker rightly points out, applying costs is an uneven and arbitrary exercise for many reasons, a major one being how to account for the co-morbidity that very often presents with problem gambling. How will this help policy makers when prevalence rates for problem gamblers are steady in most jurisdictions (between 0.5 and 1.5 percent) regardless of exposure? A tweak here and there will have little or no impact on those rates. What will happen, I suspect, is what already is the practice of provincial governments and their agencies - balancing the public interest by continuing to deliver fair games in a safe and responsible manner while optimizing revenue for the public benefit.
A Winning Philosophy.
The fundamental goal of the Canadian Gaming Association is to create balance in the public dialogue about gaming in Canada. Our members are the largest and most established gaming operators, suppliers and gaming equipment manufacturers in Canada, including provincial lottery corporations, casino and race track operators, and makers of slot machines and other related equipment. Our mandate is to create a better understanding of the gaming industry through education and advocacy. Visit our web site at www.canadiangaming.ca and find out more about who we are and what a CGA membership can do for you.
www.canadiangaming.ca
Canadian Gaming Business | 7
gamingnewsroundup SGC Names Acting President and CEO The Saskatchewan Gaming Corporation, which operates Casino Regina and Casino Moose Jaw, has named Twyla Meredith as Acting President and CEO. Meredith assumed the role after the departure of Marty Klyne, who left to pursue other professional interests. “We are pleased to have Twyla on board as Acting President and CEO,” said Wes Becker, Chair of the SGC Board of Directors. “Our organization has a strong vision with a clear direction: to be an employer of choice, provide guest service excellence, be viewed as leaders both within our industry and our communities and continue to operate a financially sustainable corporation that benefits the people of Saskatchewan.” Meredith has been with SGC for 12 years, serving as Senior Vice President of Finance and Business Development. She is also very active in the community, serving on a number of boards including the Saskatchewan Roughriders, Regina Downtown, the Capital Pension Fund and is chair of the CIS Women’s Basketball Championship.
Las Vegas Plaza Plans Pushed Back to 2009 Plans to build the Las Vegas version of New York's iconic Plaza Hotel have been postponed, a spokesperson for the project's owners said. The announcement is the latest in a series of stalled, canceled or bankrupt projects troubled by weakened US economy. The Plaza casino-hotel development, a $5 billion project, was scheduled to break ground at the end of this year. Located on the site of the former New Frontier casino, the groundbreaking has been moved to "sometime in 2009," said Michelle Tsang, spokeswoman for Elad IDB Las Vegas LLC, a partnership between the Elad Group, owners of New York's Plaza Hotel, and IDB Group of Israel. 8 | November 2008
The payment deferment of a $625 million loan used to buy the project site has raised a few eyebrows but Ms. Tsang has confirmed that the owners plan to move forward with the project. Elad IDB paid a premium price of $1.25 billion for 35 acres on the Las Vegas Strip last year. County officials in Nevada approved plans for the Plaza this past March. According to a statement from the company, the development will include seven towers, featuring an "ultra-luxury hotel, private residences, retail outlets, a state-of-the-art casino, destination restaurants, an entertainment venue and a convention complex."
judge panel of the U.S. Court of Appeals for the 7th Circuit agreed with WMS, finding “persistent, pervasive, knowing and willing infringement for several years by PartyGaming as it repeatedly refused to cease and desist even after receiving several forms of actual notice of its unlawful activity, from both the [U.S.] Patent and Trademarks Office and from WMS.”
AGCO launches Centre of Gaming Excellence The Alcohol and Gaming Commission of Ontario (AGCO) has created a Centre of Gaming Excellence to develop regulatory best practices and gaming expertise across all the AGCO’s gaming business lines, including commercial gaming, charity gaming and lotteries. The Centre will review all gaming standards, develop and manage AGCO policies with respect to social responsibility in the context of its legislated mandate, and better position the AGCO to meet new forms of gaming by more closely aligning gaming regulatory needs and risks with business and operational considerations. George Sweny, former Senior Vice President, Lottery and Bingo Units at the Ontario Lottery and Gaming Commission, has been named as Executive Lead.
WMS Wins $287 Million Infringement Claim PartyGaming is facing the prospect of a US$287 million compensation claim for trademark infringement following a decision this past September in U.S. federal court. A news report in Gambling Intelligence Group stated that the case was brought by slot-maker WMS over Jackpot Party and Super Jackpot Party, two of its trademarks. The allegations charged PartyGaming with infringement between 2004-2006 through “approximate and exact reproductions” of the marks. An earlier ruling against PartyGaming in U.S. court awarded WMS only $2.67 million in damages. WMS appealed the decision and finally won its argument when the Circuit Court reinstated the higher award. A three-
Internet Gaming Tax in Holland The Senate in Holland has approved a proposal to allow the government to tax online games of chance, including those provided by foreign operators. The rate of tax would be 40.85 per cent. The proposal calls for laws on I-gaming to be changed so that illegal gaming will not have an advantage over “gaming in the real world.” A report in iGaming Business states that “the legislation also contains provisions targeting individuals that win on nonDutch online gaming sites, players that authorities have up till now prosecuted in defense of the State monopoly.” Legal table games in Holland are taxed under a separate provision.
World Poker Tour® Returned to Fallsview Casino Resort this past October For the third year in a row, Texas Hold ‘Em players competed in satellite tournaments against the giants of the game in the poker rooms at Fallsview Casino Resort and Casino Niagara in the hopes of winning a seat in the World Poker Tour® (WPT) North American Poker Championship. “All we’ve heard from the players over the last two years is how much they love coming to
gamingnewsroundup Fallsview to play in the North American Poker Championship,” said Greg Medulun, Director of Communications for Fallsview Casino Resort. “That means we’re doing our job as the host property and it also means big fields and big prize purses.” Players could buy directly into the main event of the North American Poker Championship for $10,300CDN or they battled their way to the main event through the satellite tournaments, which have entry fees as low as $70CDN. “While many poker fans focus their attention on the big-name pro players like Daniel Negreanu, it’s the satellite system with its low buy-ins that makes the WPT so exciting,” said Medulun. “We have amateur players who have been working on their poker skills online and in casino poker rooms for years winning satellite tournaments for as little as $70 and getting a shot at big-time professional poker against the giants of the poker world.” Over the last two years, Fallsview has hosted some of the biggest names in the poker world for the North American Poker Championship, including Daniel Negreanu, Gavin Smith, Humberto Brenes, Carlos Mortenson, John Juanda, Dan Harrington, Gus Hansen, Barry Greenstein, Brad Booth and Isabelle Mercier.
The International Gaming Awards: The Industry Oscars The prestigious 2009 International Gaming Awards ceremony will take place on January 26, 2009 in London, England at the Millennium Gloucester Hotel. Over twenty experts and international industry professionals, specialized journalists, analysts and consultants will judge entries in 18 various categories including: Best Bingo Operator, Casino Equipment Supplier, Casino Interior Design, Casino Operator Europe, Americas (Canada, North America, South America), Australasia, Casino Restaurant, Customer Service/Support, Eco-Friendly 10 | November 2008
Company, Innovation Award, Journal/Magazine Offline or Online, Operator/Manufacturer Website, Slot Machine Game, Slot Manufacturer, Socially Responsible Casino Operator of the Year, Technology Manufacturer, Traditional Gaming Equipment Design. Winners will be announced on the night of the ceremony. The International Gaming Awards have focused attention on the highest achievements in the worldwide gaming industry in order to motivate and inspire those who make up the industry and to educate and develop the tastes of those who we entertain. With a focus on creativity, innovation and social responsibility as opposed to commercial success alone, outstanding work is be recognised and rewarded. The 2008 winners include: Casinos Austria International won “Best Casino Operator Europe” and are nominated again for the 2009 Gaming Awards. Casinos Holland won “Socially Responsible Operator of the Year” and are also nominated in the same category for 2009. For more information, visit www.gamingawards.com
Tree Canada and Manitoba Lotteries: Seedling the Way for a Greener Tomorrow Sunday, September 21 marked the beginning of National Forest Week in Canada and this year’s theme, Canada’s Forests – Biodiversity in a Changing World, focused on the important role the forest plays in our daily lives. Manitoba Lotteries Corporation (MLC), in partnership with Tree Canada, is doing its part by planting twenty thousand trees to offset the effects of greenhouse gas emissions associated with its operations. This commitment to the environment has been recognized by Tree Canada, who awarded MLC the status of a “carbon neutral organization.” MLC is the first and only gaming organization in Canada to receive this status. “A focus of Sustainable Development is to balance today’s decisions with tomorrow’s effects,” said Winston Hodgins, Manitoba Lotteries President and CEO. “Planting trees is a great visual reminder of our responsibility to balance the economic benefits of operating our business by mitigating any environmental impacts caused by our energy consumption.” The Manitoba Forestry Association, under the direction of Tree Canada, selected and
prepared an abandoned gravel pit in the Rural Municipality of Springfield (Cooks Creek Conservation District) as the tree-planting site. “Establishing permanent tree cover by planting trees on this recently rehabilitated gravel pit is especially timely,” said Ken Fosty, Tree Canada Community Adviser and Manitoba Forestry Association Extension Officer. “These new trees will help reduce soil erosion, improve water and air quality, restore wildlife habitat and provide recreational opportunities for local residents.” Harold Courchene of Courtander Enterprises stated, “Our hope is that more companies and businesses across the province will follow Manitoba Lotteries lead and do their part in greening Manitoba.”
Eleven Indicted for Conspiracy to Cheat Twelve Casinos Across the United States A federal grand jury in San Diego has indicted 11 defendants for an alleged conspiracy to cheat 12 casinos across the country. The one-count indictment charges each of the eleven with conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos, and conspiracy to travel in interstate and foreign commerce in aid of racketeering. The allegations state that the accused bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" of un-shuffled cards. According to the indictment, after tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and then members of the group would bet on the known order of cards when the slug appeared on the table. By doing so, the indictment alleges that members of the conspiracy repeatedly won thousands of dollars during card games. The indictment also alleges that members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during baccarat and blackjack games.
Please send information and press releases to the editor, lucieg@mediaedge.ca
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Amending the Criminal Code
to Expand Sports Betting
For some time, Canadian pari-mutuel horse-racing associations and provincial lottery corporations have been quietly lobbying the federal government to amend the Canadian Criminal Code (the “Code”)1 to remove sports betting restrictions that make it more difficult for them to compete with offshore online sports books (“I-Gaming”) 2. This effort has recently become more overt, as letters between provincial and federal elected officials have been released to the media, likely for the purpose of gauging the public response to such an amendment. 3 12 | November 2008
to
Options in Canada By Michael D.Lipton, Q.C and Kevin J. Weber
These restrictions were enacted in 1985, at the time of the last major revisions to the gaming and betting provisions of the Code. Parliament believed that these restrictions were needed to protect the integrity of sports; however, technological advances soon rendered these restrictions incapable of serving that purpose. The best way to protect these interests is to remove the restrictions, while introducing a regime that permits the regulation of online sports betting.
Sports Betting Restrictions in the Code Section 207 of the Code creates exemptions that allow the provincial governments and their licensees to lawfully offer gaming and betting services, defined in the Code as “lottery schemes.” For the purposes of section 207, “lottery schemes” are defined to exclude betting on: (i) single sport events or athletic contests; (ii) any fight; and (iii) any race. 4 To understand the rationale behind these exclusions, one must examine the conditions that were present in 1985 when Parliament first enacted the provisions now comprising section 207 of the Code. Parliament enacted these exclusions with two public policy goals in mind: (i) limiting the types of gaming and betting available to Canadians to those types already available in 1985, and (ii) removing gamblers’ incentive to “fix” the outcomes of sporting events.
“Freezing” the Types of Gambling Available to Canadians in their 1985 Form In presenting the 1985 amendments to the public, the Canadian government took the position that these amendments would not expand upon the types of gaming and betting available in Canada.5 To support this position, section 207 of the Code was drafted on the basis of the principle that the provincial governments would only be permitted to offer those types of services that were already being offered, or which had in the past been offered, by the provincial governments. 6 At the time of the 1985 amendments, the only sports betting services the provincial governments had ever offered were “sports pool” lotteries. These lotteries required the bettor to correctly predict the outcome of more than one sporting event or contest before he or she could be declared a winner; in effect, parlay sports betting. In keeping with this rationale, the 1985 amendments “froze” sports betting in the parlay format. When provincial lottery corporations began offering sports betting lotteries in the early 1990s, all betting was offered in a parlay format. To this day, bettors must predict outcomes on a minimum of three sporting events, and all of the predictions must be correct before the bettor can win.
sports betting were of a kind which increased the incentive to cheat.7 Michel Gagnon, who took part in the federal-provincial negotiations that led to the 1985 amendments, stated: “…there are very important restrictions that are being brought forward in what can be done today and could not be done after this bill is passed. In the betting on sports area, today any province or any licensee of a province could organize any betting scheme on any sport. Bill C-81 would restrict the area dramatically: no more betting on races; no more betting on fights…and, with respect to other sporting events, it could not be done on a single event. It could only be done on a series of events. The reason for that is that we do not want the players to get involved in funny games.”8 In an interview with one of the writers, Mr. Gagnon confirmed that the “funny games” which the exclusions in section 207 were drafted to prevent were the “fixing” of sporting events. The drafters of section 207 believed that fights, races and single-event sports betting were the types of betting most likely to encourage people to “fix” outcomes in order to create a betting windfall. In the case of single-event betting, it is clearly far more difficult to “fix” a number of different sporting events than to fix multiple events. In the case of fights and races, these events were seen as so vulnerable to such manipulation that any and all kinds of betting on them should be prohibited. 9
Preventing the “Fixing” of Sporting Events
Other Prohibited Games
The second rationale for limiting the types of betting available to Canadians was that the drafters believed that the excluded types of
Section 207 also excludes a number of specific games from the gaming services which can lawfully be conducted and managed by Canadian Gaming Business | 13
provincial governments or their licensees: three-card monte, punch boards and coin tables. These games are seen as being particularly susceptible to being surreptitiously controlled by the dealer or operator.10 The 1985 amendments also excluded dice games, for this same reason. However, in 1999 Parliament recognized that new technology provided practical methods of preventing the operator of a dice game “switching” or otherwise tampering with the dice, and the Code was amended to permit the provincial governments to lawfully conduct and manage dice games: “…traditionally [dice] games were prohibited, because it was easy — truly and simply — to load the dice… as I now understand it, it’s possible to put computer chips in some of those dice for the purpose of making sure that nothing untoward is done to them. So there was a general feeling among everyone consulted that the integrity of that particular game could be protected.” 11
Provincial Lottery Corporations Take Advantage of the Parlay Requirement It must be recognized that prior to the influence of I-Gaming being felt in Canada, the provincial lottery corporations used the restrictions in section 207 of the Code to their advantage. They increased their revenue by “stacking the odds” against a captive market of sports bettors. Frequently, provincial lottery corporations and pari-mutuel horse racing bodies, entities which have been granted monopolies on gaming or betting by the effect of the Code, condemn foreign I-Gaming operators as predatory and inherently untrustworthy. In this instance, the “legitimate” providers of gaming and betting services tilted the odds against the Canadian betting public, until “illegitimate” I-Gaming enterprises provided a source of relief. The provincial lottery corporations impose requirements considerably in excess of what section 207 of the Code requires of the provincial governments: (i) The Code requires that a minimum of two events be wagered upon, but the lottery corporations generally impose a three-event minimum; and (ii) Nothing in the Code prevents lottery corporations from paying bettors something for getting five of six predictions correct, or four of five, or even one of two. The “all-or-nothing” requirement, that bettors must pick all events correctly before becoming entitled 14 | November 2008
to winnings, is imposed by the lottery corporations out of choice. There are no legal reasons for these additional restrictions. One can easily surmise that they were imposed to maximize revenue for the lottery corporations by providing bettors with poorer odds. Parlay betting offers the bettor some of the worst odds in sports wagering. By choosing this particular model of parlay betting, the lottery corporations made a virtue of necessity – from their point of view. However, that which was virtuous to the bottom line of the lottery corporations was clearly not favourable to the interests of Canadian sports bettors. This model worked for the lottery corporations, when the nearest available sports betting alternative involved hopping a flight to Nevada. Canadian sports bettors could not take their sports betting dollars elsewhere. However, the advent of I-Gaming in the mid-1990s eliminated the obstacles posed by distance. With the click of a mouse, the no-captive market of the lottery corporations was freed of that captivity, and could seek more bettorfriendly options from abroad. Suddenly, the lottery corporations saw the betting restrictions imposed by the Code as a straitjacket.
Benefits of Regulation The protection of the integrity of sport, which Parliament sought to obtain by restricting the forms of available betting, is not achieved by those restrictions. Bets on the outcomes of, or contingencies relating to, single sporting events can be placed online, as can bets on races and fights. The Code no longer serves to guard against abuses relating to such betting. Indeed, the most effective protection against the “fixing” of sporting events now appears to derive from the I-Gaming industry itself. Well-regarded, strictlyregulated online sports betting enterprises have alerted the authorities to suspicious betting activities that might otherwise have passed unnoticed by the authorities. In the summer of 2007, the Britishbased online sports betting exchange Betfair noticed suspicious betting patterns emerging during a professional tennis match between Nikolay Davydenko and Martin Vassallo Arguello. Approximately US$7 million was bet on the Betfair exchange on
this match, which took place during an otherwise obscure tournament in Sopot, Poland. Just as remarkably, bettors were continuing to wager money on Arguello (the underdog) during the match, even after he lost the first set. Davydenko retired from the match in the third set because of an injured left foot. 12 Betfair responded by taking the unprecedented step of voiding all bets on the contest. In the aftermath, many other professional tennis players alleged that they had been approached by gamblers seeking inside information, and some had been offered money to “throw” matches. 13 The lesson we take away from the Betfair tennis affair is that the integrity of the sport was not protected by a government ban. Residents of Canada could well have been involved in the betting which took place on the Davydenko-Arguello match – nothing in the Code would have prevented such activity. 14 The integrity of the sport was protected by the vigilance of a well-run, properly-regulated online sports betting exchange service. It is noteworthy that sports books in Las Vegas began to more closely examine betting patterns on tennis matches following this incident,15 demonstrating that there are things regulated I-Gaming operators can teach regulated land-based sports betting enterprises. Technology has rendered it practically impossible to enforce a ban on betting on particular types of events. Permitting single-event sports betting, betting on fights and betting on races to take place in a regulated environment under the aegis of the provincial lottery corporations at least gives regulators the opportunity to recognize when unusual betting patterns are occurring. In this context, regulated online betting lends itself to the prevention of cheating more than is the case with regulated land-based betting. Online betting leaves behind a permanent electronic trail of transactions, to which investigators may refer while retrospectively seeking evidence of suspicious betting. This facility is not so easily available to regulators of land-based sports betting. Professional sports leagues have traditionally fought to prevent legalized sports betting from being available in any city that hosts one of their franchises. The National Basketball Association (“NBA”) has required the removal
of NBA games from the betting options of a provincial lottery corporation’s parlay sports betting lottery when a city in that province has an NBA franchise. These leagues must realize that in the I-Gaming era, the removal of physical betting facilities does nothing to protect the integrity of the game, as anyone with an Internet connection and a foreign bank account can bet on games without regard to what betting services are available in a given locality. Again, a regime of regulated sports betting provides the best opportunity for regulators to uncover and investigate corrupt betting practices that may potentially call into question the integrity of the game.
Conclusion There is no longer any valid reason for Parliament to maintain restrictions in the Code that prevent the provincial lottery corporations from offering a full array of sports betting options. If the lottery corporations takes steps to ensure the most careful monitoring of betting patterns possible, they will be doing far more to protect the integrity of sport than the current ban on single-event betting, betting on fights and betting of races can accomplish in that regard. However, the public relations effort that has been initiated to persuade the public to welcome these amendments makes heavy use of rhetoric that demonizes foreign-based I-Gaming. A salutary dose of perspective is advised in reviewing these allegations.
If Parliament is moved to allow Canadian bettors more favourable betting options than are presently offered, it is because the democratizing influences of the Internet allowed free market forces to intrude upon the provincial governments’ monopoly. Moreover, the oversight of regulated, reputable foreign-based I-Gaming sports betting entities currently provides more protection for the integrity of international sport than anything Canada’s provincial regulators have to offer in this area. Michael Lipton is senior partner and chair of the gaming law section of Elkind & Lipton LLP. He is immediate past president of the IMGL with an international practice in gaming law. Kevin Weber is partner with Elkind & Lipton LLP & a member of the gaming law section.
1 R.S.C. 1985, c. C-46, as amended.
Gagnon, counsel for the Interprovincial Lottery Corporation, p. 33:14
10 Supra note 6, p. 32:12
2 Toronto Star, “Threat from the Net; Lawmakers sit by as offshore sites poach gamblers and take profits out of the country,” page E1, May 16, 2006; David Wilmot interview on the radio station FAN 590 in Toronto, May 17, 2006
6 This intent was stated plainly in a letter dated November 27, 1985 from John Crosbie, the Minister of Justice of the day, to the Attorney General of Ontario; see Canada. Parliament. Senate. Proceedings of the Standing Senate Committee on Legal and Constitutional Affairs, Dec. 12, 1985, Appendix “Leg-31-B,” pp. 31A:3 – 4
11 Canada. Parliament. House of Commons. Proceedings of the Standing House of Commons Committee on Justice and Human Rights, October 27, 1998, per Yvan Roy, Senior General Counsel, Criminal Law Policy Section, Department of Justice
3 Toronto Star, “Casinos eye sports betting; Province asks Ottawa to allow 'sportsbooks' that would lure U.S. gamblers across border,” July 3, 2008, page A1 4 Section 207(4)(b) 5 Canada. Parliament. Senate. Proceedings of the Standing Senate Committee on Legal and Constitutional Affairs, Dec. 12, 1985, per Michel
7 Canada. Parliament. Senate. Proceedings of the Standing Senate Committee on Legal and Constitutional Affairs, Dec. 11, 1985, per Richard Mosely, p. 32:15; see also supra note 5, pp. 33:8 and 33:9 8 Supra note 5, p. 33:12 9 Michel Gagnon, interviewed by Kevin J. Weber on May 19, 2006
12 “Vegas books to keep closer eye on tennis bets,” Los Angeles Times, August 9, 2007, page D-1. 13 Supra note 12 14 The Code does not criminalize the placing of private bets by persons not in the business of betting: see ss. 204(1)(b) of the Code, as well as [CASES] 15 Supra note 12
A NEW ERA OF GAMING SOLUTIONS AT G2E BOOTH #1282
Members of the GTECH family Canadian Gaming Business | 15
Q&A:
Food and Beverage
By Andrew Coppolino
The approach to introducing casinos to the Canadian landscape years ago was “build-it-and-theywill-come.” That approach worked - and they have certainly come, but guests didn’t really care about the food. If there was a plentiful buffet that offered food-as-fuel for the gaming floor, that was sufficient. However, a new breed of gamer—one more educated in things culinary—has evolved as both the vector of change and its target demographically. Food and beverage, now more than ever a gaming facility’s focus for providing terrific value and a wonderful experience on its own for guests, is in the spotlight and striving to be in the black when it comes to the bottom line.
16 | November 2008
Five casino directors weigh-in on the importance of the food and beverage factor at their facility and in the industry. Carol Thorn
Steve Yates
Michael Heeb
Steve Chase
Patrick McClary
Director Service Programs and
Executive Director, Food and
Vice President and General
Executive Director, Food and
Director of Culinary, Food and
Organizational Effectiveness
Beverage
Manager
Beverage
Beverage
Casinos of Winnipeg
Casino Rama
River Cree Resort and Casino
Fallsview Casino Resort
Caesars Windsor
Comprised of Club Regent
Located about 90 minutes
Located near Edmonton in
Having opened in 2004,
Casino Windsor was re-branded
Casino and McPhillips Street
north of Toronto, Casino Rama
Enoch, Alberta, River Cree
Fallsview is one of the
Caesars Windsor in June
Station Casino, the Casinos of
opened in 1996 and has had
Resort and Casino opened in
facilities in Canada closest to a
2008, following a $400 million
Winnipeg opened in 1993 as
3.3 million people visit its
2006. It has restaurants ranging
glamorous Las Vegas casino,
expansion. It was the first of
additions to existing facilities.
restaurants. Steve Yates has
from fine dining at Sage to the
according to Steve Chase. With
its kind for the brand outside of
Carol Thorn has been with
been at Rama for two years
sports bar Tap 25 and Vegas-
a Chinese restaurant, deli, high-
the United States, and Patrick
Manitoba Lotteries Commission
and has two decades of hotel
style Touch Ultra-Lounge. With
end lounge, fine dining Italian
McClary was given the task
since March 2006, and her
food and beverage experience
previous gaming-industry
restaurant, Fallsview is among
of preparing for the massive
experience in the gaming
including Fairmont Hotels &
experience, Heeb has been with
the largest commercial casinos
re-launch of the enterprise.
industry includes the east coast
Resorts.
River Cree for about two years.
in Canada.
of Canada, western Canada and Lake Tahoe.
CGB: How has food and beverage been historically viewed in casinos? What has changed? Thorn: Food and beverage was traditionally an amenity for the gaming guest, and the outlets were there to make sure the guests had somewhere to go when they had to eat or wanted a break. What has changed is that many operations look at food and beverage as a driver, meaning it is part of your brand differentiation to have great food and beverage opportunities for your guests. These are not only interesting for regulars and gaming clients but for other people who see food and beverage as an entertainment destination where they come to eat and go to a show. That’s a significant swing that I’ve seen from an amenity to unique exposure on its own as a destination driver. Yates: Over time, there has been increased appreciation and understanding of the need for a good quality food and beverage product. About 93% of our sur veyed guests go to one of our restaurants during their visit, so food and beverage is critically important to customer retention. With television and media, there’s a lot of information out there. People are so savvy and so knowledgeable about food that it’s far different now. It’s important that we are cutting edge for our customers, but we can’t go too far into what’s out there. We’re always gently pushing them as far as we think we can from a food and beverage perspective.
Heeb: I think previously the model had always been the $1.99 buffet deal that had been mainly prevalent through the Las Vegas market. It was quantity versus quality and wasn’t anything special. To our benefit in Canada, the Vegas model really changed. Last year it was announced that 52% of their revenues came from hotel food and beverage and entertainment with 48% from gaming. It never used to be that way. People realized that they weren’t just going to gaming facilities, but that there was some of the best food and beverage product and service offerings anywhere in North America. Chase: Coming from a hotelier’s background my perception was that casinos were all tables and slots and the reputation of the food not very good. Previously, casinos offered few choices—a buffet and a 24-hour restaurant— but now there are many more choices for all types of patrons. We’ve grown leaps and bounds with world-class chefs and fabulous dining facilities. We’ve had to raise the bar as our customers become more educated. One of the biggest trends in the big U.S. casinos is celebrity chefs, but I don’t think Canada is following that trend. The bottom line in Canada is that you don’t need the name—you need good food. McClary: To people who haven’t been exposed to gaming in the last 10 years or so, they probably think of the food as something like they might see on Chevy Chases’ “Vegas Vacation.” Perhaps that’s extreme, but today anyone who has been
around a gaming facility that’s modern and progressive will see that food and beverage is fantastic. The change is to resort destinations that aren’t solely reliant on gaming but have a variety of restaurants, a spa, and shows and entertainment all under one roof. A black jack table is a black jack table, so the amenities help differentiate some of the properties when people choose a casino. CGB: How can food and beverage make money for your facility? Thorn: The best way is the way food and beverage runs in any operation: to keep an eye on the cost of sales, to deliver what the guests are asking for, and to please those guests. Yates: It certainly retains business. We are creative and careful in the offerings we provide for our customers and ensure they are what customers want. We try to have fun with trends—wine flights, for instance, in our steakhouse give them a new experience. That makes money, absolutely, though we are rarely focused only on money. It is the guest experience from which you can get increased revenue. Heeb: We can drive business into our food outlets with a synergy to the gaming floor. People come down for gaming and entertainment and visit our food outlets. We had Jay Leno here in August and that was the busiest night we’ve ever had in our fine-dining restaurant. Traffic volumes help us to make profits in our outlets. Canadian Gaming Business | 17
Chase: People will come to their favourite gaming venue, but given location and driving time a lot of times they will pick where they have a better dining experience. We can make money for our casino by making sure we are their favourite restaurant and taking care of them. It wasn’t by mistake that Fallsview has Chinese and Italian restaurants—the two biggest demographics in the Toronto region. We have focus groups with our customers and ask them what they want. McClary: Convention space and banquets are part of the food and beverage operation. They allow more productivity; they’re volume driven and you know when all of your customers are coming. Food and beverage can help make money for the property by offering a good product and being one of the reasons people come: dinner, a show, gambling. They go to the place that can offer that the best, and we need to be very competitive. People may be there to get in and out quickly, or for a four-hour dining experience. The best food and beverage
people can do is find out what experience that guest wants. CGB: Is it an aim for your facility to profit from food and beverage? Thorn: Any good businessperson is going to tell you that when you are investing, particularly public money, you always want to show a return for investors. That’s our goal here, also. We are looking to do the best we can for the costs we have to incur to make sure the products are delivered in a fiscally responsible manner. Yates: Yes, it is an aim. But it’s a fine balance. Casino Rama will never become a d e s t i n a t i o n l i k e L a s Ve g a s w h e r e entertainment and food and beverage has overtaken gaming revenue. But the more we enhance our offerings, the more we create that overall experience for the customer. Heeb: Yes. We will never go to the extreme of having individual business units, but we do analyze them individually and want all of our amenities to generate a profit. I think previously that food and beverage
was there as a benefit to customers, and it didn’t matter if it made money or lost money. It was more important to keep them in the resort and keep them gaming. There’s now been this shift to revenue streams not entirely dependent on gaming revenues. At the end of the day, we’re all in business to make money. We budget all our outlets to make a profit. Chase: Absolutely. When I first started ten years ago, food and beverage was perceived as a necessary evil and to break even was our goal. We want to do more than that—make money and provide a great experience for our patrons. It is not acceptable to lose money in food and beverage. McClary: Everyone loves to make money, but for us it’s a balance in bringing value to the guest and making sure that whatever we do it’s f or t he r ight reas on—f or customer service. Andrew Coppolino is a freelance writer based in Kitchener, Ontario. He can be reached at andrew@tablescraps.ca
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Questions About First Nations Gaming By Michael D. Lipton and Kevin Weber
On July 25, 2008, published reports indicated that the Saskatchewan Indian Gaming Authority (“SIGA”) had entered into a deal to manage casinos outside of Canada, involving a memorandum of understanding between SIGA and representatives of an aboriginal tribe of Taiwan (the “MOU”). Canadian Gaming Business | 19
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Within hours of the publication of those initial reports, the CEO and president of SIGA issued a press release stating that the individual who negotiated the deal was not an actual representative of SIGA; that SIGA itself had not signed the MOU; and that SIGA was not involved in formal discussions with the Taiwanese tribes. The press release went on to state, “[o]ur company is focused on growing and developing in Saskatchewan,” seemingly ruling out any foreign ventures of this sort. On the surface, such a deal would appear to be a natural fit for SIGA. It is uniquely placed to provide casino management expertise to an aboriginal people taking their first foray into gaming. Moreover, a Canadian First Nations company being recognized for its gaming expertise in this manner would encourage the development of First Nations gaming acumen throughout Canada. There are numerous reasons why SIGA might choose not to adopt the MOU. One reason may be legal uncertainty regarding the authority of Canadian entities to provide gaming services outside of Canada. SIGA is a non-profit corporation created by the Federation of Saskatchewan Indian Nations in 1995 to carry out casino operations. The Saskatchewan Liquor and Gaming Authority (“SLGA”) is a Crown Corporation established by the Government of Saskatchewan to conduct and manage gaming across the province under the authority derived from section 207 of the Criminal Code (the “Code”), which under certain circumstances may exempt entities from the offences in Part VII of the Code. SIGA provides physical infrastructure and personnel to support day-to-day operations at casinos located on First Nations’ reserves in Saskatchewan, pursuant to a Casino Operating Agreement with the SLGA. A 2002 decision of the Prince Edward Island Court of Appeal (the “Earth Future Lottery reference case”) prevented a charity licensed by that province from conducting and managing gaming that would have also been available to residents of other provinces and other countries. Since that decision was upheld by the Supreme Court of Canada, many in Canada have felt constrained in their ability to offer goods and services to the international gaming industry. We can only speculate as to the extent to which such legal concerns prompted SIGA’s reluctance to endorse the MOU. There may well have been business reasons that were
equally decisive. We can state definitively that nothing in the Code or the Earth Future Lottery reference case prevents a First Nations gaming operator such as SIGA from providing operational services to foreign casinos. The Earth Future Lottery reference case was concerned with the exemptions provided by section 207 of the Code. However, those exemptions are not the starting point of the analysis. Before asking whether a gamingrelated activity falls within the purview of section 207, one must first ask whether that activity would otherwise amount to an offence recognized by any other provision of Part VII of the Code. Gaming that takes place in a foreign landbased casino would take place entirely within that foreign country, presumably with the explicit approval of that country’s government. Such activities would likely not have sufficiently substantial connections to Canada to fall within Canadian criminal jurisdiction. There would be no offence committed, and therefore no need for any of the exemptions provided by section 207 of the Code. As well, if SIGA needed to make or print things in Canada and send them to Taiwan to assist in its operational duties, that activity would likely be permitted by section 207(1)(h) of the Code, which was enacted for the specific purpose of ensuring that gaming products and services be included as a dimension of the Canadian export package. First Nations will continue carving out a space for themselves in the regulation of gaming in Canada. In the course of those efforts, First Nations people will gain expertise in gaming. Such expertise is a valuable international commodity, which First Nations companies should trade upon, exploring every legal avenue available for that purpose. Besides the obvious economic benefits that would accrue, First Nations entities that establish internationally recognized credentials in the industry can only assist in the movement towards obtaining selfgovernment for First Nations in the area of gaming regulation.
Michael Lipton is a senior partner and chair of the Gaming Law section of Elkind & Lipton LLP. He is immediate past president of the International Masters of Gaming Law with an international practice in this field. Kevin Weber is a partner with Elkind & Lipton LLP and a senior member of its Gaming Law section.
Human Resources:
Your Secret Weapon in Staying Ahead of the Game
By Brent J. Fleming Canadian Gaming Business | 21
Gaming has always been a human resources business; they just didn’t call it human resources back then. Before the buffets, entertainment, and player club signups, it was all about people delivering on the gaming experience. Without this obsession, you quickly found yourself out of business - a lesson the Flamingo learned the hard way when they rushed their grand opening in 1946. Two weeks after a much touted opening they closed the doors; no amount of marketing could save them. What choice did they have? They were bleeding hundreds of thousands of dollars with customers choosing to get their gaming experience at the nearby Sands. The Flamingo did re-open three months later, but this time they got it right and we all know the legendary fame they went on to achieve in the next 25 years. Somewhere along the timeline though as gaming grew (and grew), many operators began to shift their focus to the numbers, where data became gospel and finance reigned supreme; if you couldn’t measure it, you certainly didn’t waste your resources trying to understand it. And because HR couldn’t numerically translate the direct impact people made to the business, they stayed outside the boardroom, instead becoming a perceived mainstay of bureaucracy. Inside the boardroom, HR was perceived as a necessary but inconvenient speed bump along the road to more important things, like revenues, budgets and the bottom line. Today, the demand for leadership has been outstripping the supply for years as General Managers find themselves promoting a new generation of inexperienced supervisors and managers to deliver the “vision” for the property. Vision takes people and people need leadership. With this gap in leadership experience, managers are turning to HR for answers on how to hire, orientate, train and retain good people so that customers can see and feel the difference of gaming and enjoy your property and not your competitor. 22 | November 2008
Yet to this day, over 80% of most HR functions end up in the routine administrative activities of interviews, reference checks, hiring, payroll, and termination letters, to name but a few. These functions are purely transactional in nature and are typically measured in volume. Pushing paper is important, but if learning isn’t taking place, then it becomes officialdom. While some need for this role is required, a sexual harassment case for example, progressive casinos across the country are turning Human Resources into a major player to bring them answers to hard questions about why people are not performing as they used to and, more importantly, what it takes to have people drive the organization at all levels – as opposed to the organization driving them.
Measuring the Immeasurable To beg i n t h i s t r a n s f o r m a t i o n o f expectation, HR professionals in the gaming industry understand it is not enough to know the regulatory people side of the business; they too have to become fully knowledgeable about the business.
In business, the following maxim applies: • If you can’t measure it, you can’t understand it. • If you can’t understand it, you can’t control it. • I f y ou can ’ t con trol it, y o u ca n’t improve it. A study by Deloitte Human Capital backs this up when they stated that over 80% of organizations they polled measure their return on investment from employees using intuition, perception and observations. Intuition, perception, observations – not very convincing tools of measurement, but HR is changing all this by communicating in the language of business, yes – the language of numbers. This is where your HR function becomes your secret weapon – by transforming the role HR plays in your business into your in-house consultant who shines the light on the other business maxim: people are your greatest asset. Gone are the days of a mindset that perpetuates the belief that you simply cannot measure “soft” skills, i.e., anything to
do with human behaviours. Today a skilled HR professional can show you, if it moves, they can measure it.
Turnover measured six different ways HR teams go well beyond measuring traditional company-wide turnover by measuring turnover department by department, position by position, what the exact cost is (day by day if you want) to the company for involuntary (we leave them) and voluntary (they leave us) turnover. HR can measure “preventable” turnover in key jobs where exit interviews identify reasons individuals leave the organization and how the separation could have been reasonably prevented. HR can measure “performance” turnover in key positions where top performer turnover is "weighted" more heavily than average or bottom performer turnover. Strategically this ties back to specific gaps in leadership competencies that exist with supervisory and management teams, getting to the root cause of the problem. HR uses this information to create essential skills training that may include better employee on boarding and/or performance coaching. Turnover in your company now becomes a very real and highly ranked management issue rather than a rudimentary number that was generally accepted as just another, “Oh? That’s interesting,” piece of information. HR can show, in real dollars, the effect retention is having on your bottom line. One key instrument of measurement used to understand what is preventing or helping you succeed in motivating your people, is for HR to regularly conduct third party anonymous employee satisfaction surveys. For example, we measure 10% of our employees at every property, every month, and 100% of our employees twice a year to ensure we Canadian Gaming Business | 23
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are meeting their needs and our expectations on the same page to serve customers. This gives employees an engaging voice in the continuous process of improvement and provides your management team direct feedback on where to make those improvements or provide more education.
From the Micro to the Macro With the gaming business so concentrically focused on the customer and HR speaking the language of business, the next shift comes when you have HR view the operation from a macro (customers) view rather than from a micro (transactional) view. From this organizational wide big picture perspective, HR takes stale and glossed over clichés about the customer being number one and consults strategically on how frontline managers can work with core service standards. These standards of service can then be implemented and quantified into strong positive feedback messages for your employees. With core service standards being measured, senior management can use actual data to confirm whether outstanding “customer service” is actually taking place on your property, and if not, where and why specifically. Another function often maligned is the performance appraisal. Micro minded HR departments see their role as the curator of a set of rules and forms regarding the performance appraisal process with no regard as to what their customer, the manager, supervisor and employee, have to go through. HR comes across as a bureaucrat twice removed from the user. Managers miss the forest for the trees by viewing this process as another administrative task they have to perfunctorily perform. This scenario discourages everyone because it reinforces old stereotypes about HR. The strategic HR department consults with both managers and employees on why the appraisal exists in the first place and how this can be leveraged in a way that serves everyone involved.
The Next Killer App? Jack Welch, far and away the most successful CEO in business history (the man who led General Electric to become the most valuable company in the world by growing their stock 4,000 %) said this: “Look, HR should be every company’s “killer app”. What could possibly be more important than who gets hired, developed, promoted or moved out the door? If you owned Real Madrid, for instance, would you hang around with the team accountant or the director of player personnel? Sure, the accountant can tell you the financials, but the director of player personnel knows what it takes to win: how good each player is and where to find strong recruits to fill talent gaps.” For HR to be the “killer app” it has to move away from the administrative mindset and walk the floor everyday becoming fully knowledgeable about why each position exists, what its function is and how it all fits together and competes within the market. Then, when combined with its knowledge of human behaviour, HR professionals can get to the important work of building the organizational culture your business will need to compete and succeed.
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Brent J. Fleming, CHRP, is the Vice President of Human Resources, Organizational Development with Paragon Gaming
24 | November 2008 1763 Cdn Gaming Bus Ad 1.indd 1
3/19/08 11:37:19 AM
Barry
personalityprofile
Pritchard Senior Vice President with Casino ABS in Alberta, retired at the end of October of this year. By Roy Bricker
Considered a gaming pioneer in Alberta, Barry Pritchard joined the business in 1975, skipping the entry-level positions and starting as a manager. Moving to Bazaar & Novelty in 1976, Pritchard became the Casino Games Manager working out of the Northgate Entertainment Centre. In 1980, he was hired by Heinz Oldach to open the first free-standing casino for Casino ABS. One year later, in 1981, he moved to the first purpose-built casino in Edmonton as Director of Casino Operations. In this capacity he also looked after Casino Edmonton - located on the southside of the city. Pritchard played a key role in the opening of two additional casinos for Casino ABS: Casino Calgary and Casino Lethbridge. During this time he was called upon frequently by the provincial gaming regulators for advice and assistance in the formulation of gaming policies that are still in place today. In 1998, he took on the new responsibility of overseeing the operation of the Royal City Star, a riverboat casino, located in New Westminster. He eventually took over the dayto-day management and relocated to New Westminster until Gateway Casinos took over operations in 2003. Barry Pritchard became the Senior Vice President of Casino ABS in 2000 and continued in that capacity until his retirement. He maintained active in casino gaming and has been widely respected
for his knowledge of gaming not only in Alberta and Canada - but worldwide. He has consulted in Europe and the Pacific. Gerry McLennan, CEO of the Alberta Gaming and Liquor Commission has known Barry Pritchard for over 13 years and indicated that he, “always relied on Barry to provide accurate and knowledgeable information about the casino industry.” McLennan went on to say that Barry Pritchard is “known for his integrity.” On April 4, 1988, Pritchard was honored by his peers in the gaming industry. He was selected to receive the much-valued “Display of Excellence Award” at the Canadian Gaming Summit in Montreal. The award, in part, recognized his role across Canada as a statesman within the charity casino industry. Lori Potter, General Manager of Casino Lethbridge, has known Pritchard for her entire gaming career, having hired her as a table games dealer some 20 years ago. Potter says, “Barry has been my mentor and friend throughout my career. He taught me about the gaming industry and gave me the opportunity to participate, develop and grow.” She indicated she will miss his visits to Casino Lethbridge, his thoughtful insight and his ability to “understand issues, solve problems and provide wise counsel.” Nykie Starr, Director of Casino Marketing at Casino ABS, has worked with Pritchard for over 32 years and has grown up in the gaming business with him. He hired her to work for Casino ABS in 1981. “I will miss the daily coffees with Barry and the yearly trips to gaming conferences,” Starr notes. “Barry is a friend for life, whether he likes it or not,” she adds. “He
was always there to discuss issues, listen and provide advice,” Starr says. “I have the utmost respect for Barry and he stands above anyone she has met in the gaming industry.” Prior to his distinguished gaming career, Pritchard spent over 20 years serving his country as a member of the Canadian Military Police. He remains a strong supporter of the Canadian Armed Forces and is more than willing to share his insights. Pritchard has always been active in the community and this remained the case in Edmonton. Quick to volunteer his time for worthwhile causes, he has been a volunteer with the Palliative Care Unit at the Edmonton General Hospital and has organized and served meals to the less fortunate on a yearly basis. In addition, he has been a strong supporter of community organizations and is Past President of the Edmonton Strathcona Rotary Club and Past Secretary of the Avenue of Nations Business Revitalization Zone. Outside of his career, Barry Pritchard has maintained a wide variety of interests. He is an avid reader and remains current on the state of the economy and the political environment – which he is prepared to debate without too much encouragement. Known for his love of golf, he will “shoot a round” whenever the chance presents itself. His golf game has improved with age and no doubt contributed to the great shape he has kept himself in. We wish Barry Pritchard all the best in his retirement and acknowledge the great contribution he has made to the gaming industry in Canada.
Canadian Gaming Business | 25
facilityfocus
Sonco Wins the Jackpot in NB By Lucie Grys
The site is currently being prepared and soon the work will begin on New Brunswick’s first ever casino, hotel and multi-use entertainment and convention centre. Officially announced this past May by Finance Minister Victor Boudreau, the Sonco Gaming New Brunswick Limited Partnership will build the new facility in the surrounding area of Magnetic Hill in Moncton, New Brunswick. Sonco Gaming Inc., an Atlantic-based real estate and casino development company, was founded in 1995 and is active in the ownership, operation and development of gaming properties. Sonco plays a role in joint projects with many multi-national gaming and entertainment companies, First Nations and an array of other interested groups. The company’s previous successes in gaming enterprises include the Great Blue Heron Charity Casino that opened in 1996 on the Mississaugas of Scugog Island First Nation in Ontario and The Grey Eagle Casino, which opened last year on the Tsuu T’ina Nation near Calgary, Alberta. Sonco has embarked on this joint venture with Clairvest Group Inc., a publicly traded merchant bank, private equity investment fund, Navegante Group Inc., a US-based casino operator and Riseley Gaming Inc. Jim Warren, President and CEO of Riseley Gaming Inc. remarks, “this is a great team with varied experience in both public and private sector partnerships.” The project, expected to cost $90 million dollars and open in 2010, marks a big win for Moncton, New Brunswick. The Sonco partnership was awarded the bid after being evaluated by five teams formed to help make the decision. The four submitted proposals
26 | November 2008
were carefully reviewed by financial consultants from KPMG, industry experts HLT Advisory Inc. and by select government officials. As part of the evaluation, the proponents’ expertise, financial backing, business plan and economic impact on the region were carefully reviewed. In a news release, Michael Novac, Sonco Gaming New Brunswick Limited Partnership President and CEO notes, “We are very pleased to build and operate a destination casino that the people of New Brunswick can be proud of.” He continues, “This significant investment in New Brunswick will result in the direct development of jobs as well as incremental leisure, entertainment and tourism infrastructure. We have chosen the Magnetic Hill-Moncton location so that our direct investment in the destination casino will also attract spin-off investment in the surrounding attractions and existing hotel properties,” he adds. Expected to create over 700 jobs during the construction phase and 400 full-time jobs once open, the complex will consist of three distinct buildings integrated into one linear design. An interior corridor will function as a pedestrian gallery to connect the three buildings. A lighthouse theme will celebrate the marine heritage of the region and photographs of 69 of the province’s lighthouses will dot the interior walkway. Architecturally inspired by majestic and grand resorts such as the CN Hotel in Banff, Alberta and the Fairmont Algonquin in neighbouring St. Andrews-by-the-sea, the hotel will feature 128 rooms, a pool, spa and coffee shop. The gaming floor will boast 600 slot machines, 20 table games, eight poker
tables and a high limit room. There will also be food and beverage seating for 350 guests. The Palladium, a concert and multi-use entertainment space, will draw big name entertainment to New Brunswick. With a 1500 seating capacity, everything from weddings, corporate events, conventions and theatrical productions will be hosted. Finance Minister Victor Boudreau noted how pleased he was with the successful bid and future facility. The government is expected to receive $25 million dollars in annual revenue from the casino. Boudreau notes, “this is a first-class project which will have many spin-off and direct economic benefits for the region, and I applaud Sonco’s commitment to the region and the province. Government is also tremendously pleased with the very rigorous and professional manner that the entire selection process and signing of the service provider agreement have followed.” The development is being funded by the private sector, with no government funding involved. Sonco will be responsible for all costs related to design and building, financing and equipping the space. The project is part of a responsible gaming policy announced by the province last November. As part of the policy, the number of Video Lottery Terminals will be cut by nearly 50 per cent from 600 to 325, while the number of machines will be cut nearly 25 per cent. In addition, funding for responsible gaming initiatives and research was doubled to $1.5 million per year and charitable gaming policies and guidelines to allow for more charitable gaming initiatives are currently being reviewed.
operatorprofile
GamehostIncome Fund By Lucie Grys
Gamehost is an unincorporated open-ended limited purpose trust established under the laws of the Province of Alberta. Formed in 2003, gaming and hotel assets of the publicly traded company, Service Plus Hospitality Ltd., and several privately owned assets were acquired through a plan of arrangement in June of that year. The Fund’s activities are confined to the Province of Alberta, Canada. It operates two casinos, a hotel, and a multi-tenant commercial complex, all of which are located in Alberta. The Boomtown Casino is located in Fort McMurray, and the Great Northern Casino, Service Plus Inns & Suites and the multi-tenant complex, which includes a restaurant, pub and liquor store are all located on the same site in Grande Prairie. David G. Will, Chief Executive Officer, Darcy J. Will, President, Elston J. Noren, Chief Operations Officer and Craig M. Thomas, CMA, Chief Financial Officer and a board of directors manage the Fund. Gamehost is also a 40% joint venture partner in Deerfoot Inn & Casino Inc. in Calgary and a 20% joint venture partner in the new Stampede Casino in Calgary. Deerfoot Inn & Casino Inc. comprises a 13-acre parcel of land in southeastern Calgary. The hotel and convention centre attached to a live entertainment and casino gaming facility opened for business on November 21, 2005. The new Stampede Casino opened this past June and with fifteen days to ‘warm up’ before the ten day Calgary Exhibition & Stampede, the early results were favourable. Although it will take a number of months before the Fund can get a good sense of what a normal month at the new facility is, management will continue to adjust marketing efforts and product offerings to appeal to what is a different customer base within the same city. To understand how an income trust operates is really quite straightforward. An income trust is an investment consortium
that pools its money to buy a cash flow generating asset. The cash flow, after expenses, is distributed back to the unit holders. Typically, trusts do not take on exploration, development, construction or manufacturing and its primary goal is on ownership and management with a view to generating income. The overall purpose of a trust is to provide unit holders with a steady income stream and the opportunity to participate in the growth of the company. One of the main identifiers of all income trusts is that they are publicly traded on a stock exchange. In Canada, they all trade on the TSE with the suffix UN. Gamehost trades at the Toronto Stock Exchange under TSX: GH.UN. Gamehost Income Fund qualifies under the Canadian Income Tax Act as a mutual fund trust. Units of the Trust qualify as investments for Registered Retirement Savings Plans, Deferred Profit Sharing Plans, and Registered Retirement Income Funds. The gaming operations of the Fund include Fund owned and operated table games and the operation of government owned slot machines and lottery ticket outlets. The hotel operations include full and limited service hotels, banquet and convention services. Food, beverage and entertainment are offered at each of the Fund’s casino locations. Revenues for the second quarter of 2008 totaled $13.5 million, down 5.6% from the $14.3 million posted in the second quarter from the previous year – but up 1.6% from the previous quarter when revenue totaled $13.3 million. As with many casino operations across the country, the state
of the global economy has impacted the industry and people are holding on to their discretionary income. Despite the economic forecast, the management team believes in the success of a combined entertainment and hospitality model. The model targets the entertainment seeker and social occasional gamer. Clean, inviting venues that deliver live entertainment, lounging and dining, rest and relaxation together with gaming are situated in community-based locales. Continually upgrading and improving, Gamehost looks to the future with promise. Dedication to community involvement continues to be a cornerstone of its marketing approach. A specific corporate priority has been raising funds for health and wellness, an area that arguably has the most impact on all citizens. The company also encourages all staff to be active volunteers in the community. Maximized revenues matched with smart business sense and cost controls have garnered some of the highest margins in the industry. All of this translates into stable earnings for those who are unit holders. Recently announced this past August, the fund now offers monthly distributions to its unit holders. Moving forward, the Fund’s growth strategy will include systematic internal expansion accompanied by external growth through new developments and acquisitions. Gamehost Income Fund is committed to maximizing the growth and potential of each of the facilities and attributes their success to great locations, terrific talent, unsurpassed customer service and innovative marketing strategies.
Canadian Gaming Business | 27
13th Annual Canadian Gaming Summit The 2009 Canadian Gaming Summit will be held at the newly renovated Caesars Windsor in Windsor, Ontario from April 28 – April 30, 2009. Overlooking the riverfront trails of the Windsor waterfront and the Detroit Cosmopolitan skyline, Caesars Windsor defines modern luxury in the midst of timeless elegance. With beautifully appointed hotel towers and over 100,000 square feet of state-of-the-art convention space, Caesars Windsor is the largest, most indulgent casino resort in all of Canada. The Canadian Gaming Summit is the only conference and trade show in Canada that serves the Canadian Gaming Industry. This annual event delivers face-to-face interaction with senior-level decision makers directly involved in purchasing gaming-related products and services. Summit attendees are from all gaming sectors, disciplines and regions within Canada and beyond. Attendees include Senior Gaming Executives from Provincial Lotteries, Casinos, Race Tracks, First Nations, Slot and Table Games, Procurement, Operations, Entertainment, Marketing and Communications, Security, Chari t a b l e G a m i n g / B i n g o , H u m a n Resources, Finance and Investment, Legal 28 | November 2008
and Regulatory, Food & Beverage and more. Each year, the event continues to develop and gain momentum as the gaming industry in Canada builds and extends its reach across the country. The 2009 Conference Program will provide an educational platform offering an interactive setting to learn the latest trends in several gaming industry sectors. Beyond the broad spectrum of our traditional Gaming Summit educational sessions, we are proud to announce a series of programs that will add significant depth and appeal to the show. Working with our Program Advisory Committees, we are preparing an excellent series of new conference tracks including Food & Beverage, Marketing & Entertainment, Communications & Public Relations, Facility Operations (non-gaming), First Nations Gaming and I-Gaming. We have also enhanced the tracks from previous Summits that include Legal & Regulatory, Charitable Gaming, Standardbred Wagering and Security. The conference programming that has been developed for 2009 appeals to an even wider range of gaming professionals. We are proud to announce that the 2009 Summit will host the International Masters of Gaming Law (IMGL) annual North
American Conference. The IMGL will help organize and run the Legal & Regulatory conference within the 2009 Summit. This session track will have great appeal to all legal professionals, regulators and senior gaming executives. Additionally, we have some fantastic networking opportunities in store for delegates. The Canadian Gaming Summit Golf Classic will be held at the prestigious Ambassador Golf Club. The Canadian Gaming Awards Reception and Charity Gala has, since its inception 13 years ago, honoured achievements in industry leadership. Again for 2009, the event will benefit a designated charity. Join your industry colleagues for an evening of fun, fine food, drink and entertainment – while at the same time supporting a worthy cause. Please stay tuned for more information on the 2009 Summit educational program and mark your calendars to attend the 2009 Summit in Windsor.
Visit www.canadiangamingsummit.com for more details or call Chris Torry at 416-512-8186 x 280 with any immediate questions.
It’s easy to recognize the real thing.
It’s been more than a decade since Aristocrat changed the way people play, and over that time we’ve seen games designed to look like our product – even sound like our product – yet none of these imitators delivers our performance. The reason? Pure and simple: they’ve lacked the forward thinking of the original. Casinos with seasoned slot players come to us time and again because of one undeniable fact: our enhanced playability and proprietary mathematics keep people playing longer. So to maximize revenues at your casino, look no further than the original. Contact Aristocrat today.
aristocratgaming.com
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Canadian Gaming Business approached major manufacturers of slot machines to get their input on the future of their industry. We wanted to know why slots are so popular and some of the challenges they face in attracting and maintaining players. We also wanted to discover some of technological improvements in the slot industry. This is what IGT and Aristocrat said. IGT Slots remain so popular because they’re entertaining and fun to play, they’re easy to play and don’t require skill, they have lots of features like bonus rounds and wheels that add to the entertainment, and because people can win money on them – sometimes millions of dollars. The biggest change in the future is that slots are becoming vehicles for serverbased technology which will increasingly customize the gaming machine experience by placing options in the hands of the player. The possibilities are vast but include a current innovation called the sb Service Window, a video screen that lets the player make restaurant, show, nightclub and room reservations at the machine. It also lets the player access his/her player club points total and special casino promotions. Those innovations are also already evident in IGT’s new upright and slant machine models and in its REEL depth themes that use MultiLevel Display (MLD) technology to create actual depth animation sequences. It also allows players to switch between spinning reel game play, video slots and video poker on one gaming machine. 30 | November 2008
While age-based preferences do exist, we create games for as wide an audience as possible, and most of what we do appeals to all demographics. That's why our games are so popular. The age range should be 21-35; we don't target underage players. That said, there are social aspects to many of our games that appeal to younger players. Group bonus games and multi-player games are two examples.
Furthermore, games with contemporary themes and stylish-looking cabinets (our new G22 and G20 models, for instance) give our games a modern look and feel. To retain the older demographic, we stick to the basics of great design (which are timeless and transcend demographic boundaries); we keep the games simple and fun to play. Large, bright displays with vivid graphics, coupled with sounds that accent the game play, create a compelling package that players young and old will enjoy. IGT sees the new technologies taking the industry into a realm of player interaction and choices that we can only imagine right now. New technologies will make the entire casino experience – hotel, entertainment, food and beverage, retail – available to the player through the machine that he/she is playing. Whichever innovations become available in the other areas of entertainment and leisure – from computer games to movies – will be adaptable to gaming machines.
Rick Sorensen, Manager of Public Relations for IGT
ld of slots Part Two of a Two Part Series
Aristocrat Slot machines maintain their popularity for many reasons – they are easy to play; they are games of chance rather than skill; the amount and variety of machines available within any one casino; each and every slot machine is different - different math, different graphics, different sounds, different jackpots, different payouts etc. Slot machines offer consumers a simple and exciting median of entertainment through a variety of game and product choices. Technology adoption remains the largest variable in the changing slot environment. All manufacturers continue to drive the technology envelope, working with the operators and regulators in the creation of new standards and rules accommodating solutions like networked gaming devices, advanced consumer marketing and customer relationship management capabilities. The gaming experience is not just about slots and tables anymore, it's about a complete venue experience. Direct marketing and advanced CRM initiatives allow the venue to monitor their customers in real time - drilling down and customizing player rewards, food services, retails promotions etc giving their customers a satisfying and memorable in-venue experience. A great product can appeal to all age demographics, but the challenge many industries have had with Generation Y and
X has been the difficulty to attract, retain and create long-term loyalty. Aristocrat continually produces and markets new and innovative gaming concepts to provide the younger generation more variety and choice, ensuring a complete gaming venue experience. Providing products under brand names as well as marketing concepts like community and multi-station gaming, help attract young people to the slot market through brand recognition and social values. New technologies and ways to interact with the younger generation also play a key role. Younger generations expect anywhere, anytime access to online browsing, banking, email etc. and video gaming fits into this space. We are constantly looking for new touch points and ways for players to access their favorite games whether it be through hand-held devices, iTV's, cell phones, online etc. and cater for the mobile entertainment aficionados. Age doesn't necessarily define the proper demographic in the slot industry, but may have a correlation to it. "Older" demographic refers to age, but more important might be player "maturity". Maturity defines the frequency and knowledge of the slot player as they look for new, innovative and more complicated game play. These mature players may or may not be older
in age, but certainly more experienced. Generally the more experienced consumer is more 'brand' conscious and has built and maintained a bond through the many years of memorable experiences on our machines. These brand awareness elements such as recognizable sounds, symbols, and graphics are combined with innovation in game design to deliver new exciting games of chance for players to enjoy. Technology will change the industry how fast and by how much depends on the adoption rate of manufacturers, operators, regulators and ultimately players. All global industries continually innovate and launch new products, services and applications telecommunications, banking, education, etc; the gaming industry is no different. New content delivery methods and marketing capabilities in server-based gaming, new mediums to play slot games through mobile phones or hand-held devices, or even the regulation of online gaming provide greater access to gaming experiences; all of these technological innovations will change the way we produce, sell, deliver and market our slot games to both the casino operator and end user.
Doug Fallon is Director of Marketing at Aristocrat. Canadian Gaming Business  |  31
facilityoperations
WEG’s Energy Mission Hits the Mark
Photo of John Marhong by Michael Burns Photography/WEG.
By Lisa Kopochinski
Many companies just talk the talk when it comes to reducing energy consumption, but how many actually walk the walk? Toronto’s Woodbine Entertainment Group (WEG) has always been mindful of the environment, and is proving it again with its recent $5-million energy retrofit project that will save nearly $500,000 annually in energy costs. Canada’s largest horseracing operator entered into this project three years ago with Direct Energy Business Services, one of North America’s largest energy-related services providers. “The evolution to incorporate energy management and waste-reduction strategies has been a natural progression,” explains John Marhong, WEG Director of Facilities, who is responsible for the implementation and management of the project. “Our energy management effort did not start out as one single project. It was composed of a variety of projects; some were energy specific and 32 | November 2008
some were parts of several construction projects.” Direct Energy undertook the project of updating WEG’s infrastructure to more energy- efficient standards that included installing power-saving lighting controls, updating building automation systems, modifying rooftop units to reduce heating and cooling requirements and retrofitting the boiler plant. Woodbine’s inefficient 1950s steam boilers were replaced with five new boilers. The original boilers required four engineers to operate them 24/7. “It’s a real winner,” says Frank Cammalleri, Manager, Energy Engineering Services, Direct Energy Business Services. “You don’t need staff anymore to operate them. Natural gas savings alone amount to about $250,000 a year.” The installation of the new building automation system provides visibility and feedback of all the key equipment within the Woodbine facilities. The system can be
accessed from anywhere in the world where the Internet is available. Problems can be troubleshot without the need of having to physically go to the facility. “Every minute, every hour that we shave off using a piece of mechanical equipment saves us energy,” explains Marhong. For example, lights will automatically turn off in certain parts of the building if sensors detect no movement. In the slot machine rooms, which are open 24/7, carbon dioxide sensors have been installed as part of a demand-control ventilation system. More CO2 is released into the air as the number of players increases. Other updates include a new weather station that sits on the inside of the track. Sensors monitor temperature, wind speed, particulate levels, ground-level ozone, and moisture level on the track. In the past, it was guess work as to when the track needed to be watered, resulting in the unnecessary use of water. Storm drain water is now collected in ponds and used for track watering to reduce the need for municipal water. WEG also recycles most of its cardboard, glass, kitchen waste and up to 70 percent of plastic. Betting tickets that have been thrown on the ground after each race are now recycled along with horse manure that is collected and sold to a mushroom farm. In honouring WEG’s success at an event earlier this year, Ontario’s Chief Conservation Officer Peter Love presented Nick Eaves, WEG’s President and COO with the prestigious Certificate of Recognition. The Certificate recognizes WEG’s leadership in pursuing an aggressive plan to reduce its energy usage across its facilities. “These retrofits will save energy, save money and reduce greenhouse gases,” said Love. “I urge others to follow suit and help us build a culture of conservation across Ontario.”
Added Eaves, “With over 5 million visitors to our facilities each year, we wanted to demonstrate to these customers that it is possible to significantly reduce one’s energy usage and carbon footprint if you make a longterm commitment.” At this same event, WEG was recognized by Enbridge Gas Distribution, BOMA Toronto and Toronto Hydro for its energy conservation. Enbridge presented WEG with a cheque for more than $37,000 as part of its retrofit incentives program. WEG is also affiliated with the Toronto & Region Conservation Authority (TRCA), which recently launched North America’s largest eco-business zone—Partners in Project Green: A Pearson Eco-Business Zone. This initiative is aimed at helping businesses surrounding Toronto Pearson International Airport improve its financial and environmental performance, while acting as a catalyst for attracting green investment to the 120-square-kilometre area. “WEG has been a great supporter since day one,” says Chris Ricketts, Project Manager for TRCA’s watershed management division. “They have come onboard and are on the steering committee and provided funding to develop a green job corps.” If that weren’t enough, Buildings magazine also identified WEG as 11th in the top 44 companies that are slashing energy costs, improving customer service, building with the end user in mind, and investing heavily in employee training and development in mind. “WEG is the only Canadian organization listed,” says Marhong. Direct Energy has enrolled WEG in its Demand Response program. This is a contractual peak-load shedding agreement between the Ontario Power Authority and energy aggregators with the objective of reducing electricity usage when the Ontario electricity grid is overly stressed. Michael Flores, Vice President, Demand Response Business, North America, explains that in partnership with its clients, “Direct Energy has committed to reduce electricity demand by 25MW when requested by OPA. Ontario’s economic competitiveness requires a reliable and environmentally responsible energy infrastructure. Our present power demands are straining the capacity of our electricity grid. Without changes now, Ontario businesses could be faced with electricity reliability challenges. OPA’s Demand Response 3 (DR3) program rewards commercial and industrial businesses for commitments to voluntarily reduce surplus
electricity consumption during periods of peak demand.” As a socially responsible corporation, WEG hopes other racetracks will also become proactive in reducing their environmental footprint. “We recognize while there are upfront costs to implementing the strategies, there is also a long-term financial gain,” says Marhong. “It is just a matter of staying ahead of the curve.” He says 3Rock_1(2ISL.pdf new and pending legislation will 2/7/2008 9:55:13 AM force action from corporations who are
slow to react. “WEG has taken advantage of incentives when they become available to help mitigate initial costs. By utilizing best practices, there is no need to reinvent the wheel or waste precious dollars with studies and developing strategies. The methodologies are there and we are more than willing to share our experiences with others. It is the prudent thing to do given that this industry is agriculture based.” Lisa Kopochinski is a Sacramento-based writer and can be reached at lisakop@sbcglobal.net.
Canadian Gaming Business | 33
horseracing
The Pari-Mutuel Paradox An Industry update
By Darryl Kaplan
Imagine a roulette player sits down at a table and bets $10 on “Red”. She hits and pulls off her $10 profit. Feeling lucky, she takes out $200 to bet “Red”. This time, when the spin goes her way, she is 34 | November 2008
rewarded with just $100 profit. Despite the poor payout, the woman proceeds to bet $1000 on “Red”. The ball falls, she wins, and the dealer pays her only $250 profit. When she eventually loses, the
woman, now angry and annoyed, leaves the table swearing off roulette. While the example of the decreasing payout would never happen in Canada’s casinos, it occurs constantly at Canada’s racetracks. Pari-mutuel betting at the vast majority of the nation’s racetracks punishes players for making bets. Waning attendance and expanded simulcasting has resulted in pools simply insufficient for pari-mutuel play. A $200 bet in any pool at any track in the country will result in less money returned per dollar bet than a $2 wager. Horse racing in Canada has had many problems in the year 2008, but the pari-mutuel system, currently the foundation of racing in this country, is perhaps its biggest. Customers are asked to arrive at the track, bet on odds that fluctuate tremendously at a commission rate often exceeding 20 per cent, and at the same time are punished for each additional $10 bill they pass through the windows. The pari-mutuel model is broken and with very few exceptions, nobody has any interest in fixing it, because slot
revenues and the potential for other gaming dollars supersede the need for customers to bet the races. In Australia and parts of Europe, the betting exchange model of person-to-person wagering is gaining steam. Betting exchanges, assuming a fair level of liquidity, solve all the problems felt in pari-mutuel wagering. Like the stock market of horse betting, exchanges allow players to buy and sell positions on horses, locking in odds, and like pari-mutuel wagering, offering no risk to tracks or horsemen. The pari-mutuel model, if not changed, will kill Canadian horse racing because its limitations become more and more pronounced with each passing day. It’s time for the industry to seek change, for its survival.
Darryl Kaplan is the editor of Trot Magazine, Canada’s leading horse racing publication.
It’s good when business comes together. Every year, OLG supports events all across Ontario. Proceeds from our Lotteries, Resort Casinos, OLG Slots and OLG Casinos go towards festivals and events in communities large and small across the province. OLG is proud to be a sponsor of the 12th Annual Canadian Gaming Summit.
En affaires, l’union fait la force. Chaque année, OLG soutient des événements à la grandeur de l’Ontario. Les revenus provenant des loteries, des casinos dans les complexes de villégiature, des salles de machines à sous OLG et des casinos OLG sont versés à des festivals et à des événements qui se tiennent dans les grandes et les petites communautés de la province. OLG est fière d’être un commanditaire du 12th Annual Canadian Gaming Summit.
OLG.ca 1-800-387-0098
Canadian Gaming Business | 35
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Casino marketing d e p a r t m e n t s a r e heroic when it’s time to come up with promotions. When the call comes to ramp up the action in a casino, those in charge of promotions shine! Although sometimes — in their excitement, in their efforts to one up their last success — they can work too hard. No, really. It is not easy to make an easy promotion. And it’s not hard to make a promotion too difficult. We often see a nice promotion get bogged down with complex qualifiers, bizarre redemption rules or multiple layers. It’s done with the best interests in mind, to make the promotion better, but it seems to always have the opposite effect. Quite simply, a great promotion should be simple. Last fall, the Silverton Casino in Las Vegas ran the simplest of promotions – Walk Up and Win. I don’t really have to say anything else, you know what you have to do to win. Players Club Members could literally, "Walk Up And Win" an assortment of prizes up to $10,000 cash by swiping their Player’s Card at designated kiosks. All members who participate were guaranteed to win a prize valued over $5, including points, dining certificates, free slot play, one night's stay at the hotel, a $5 straight table bet, and one spin on a giant wheel for a chance to claim $10,000 cash. It’s easy to promote. It’s easy to understand. And it’s easy to execute - all measures of a great promotion. The wonderful thing is, it can involve an endless number of partners, yet it remains easy to understand. In fact, the name really does say it all.
Most great promotions are that simple. An idea that can instantly be understood, whether it’s through the name – like Tim Horton’s Roll Up the Rim or GM’s Ring In and Win – or through the cross promotion like McDonald’s Monopoly or Subway ’s Scrabble. You don’t need anything but the name or playing piece to get the idea. And, I suspect the reason they are all so successful is their simplicity. That, and they all play to common emotions and desires. As Gary Loveman said at the Canadian Gaming Conference this past year, gamers are looking for the rush, anticipation and excitement that comes when an uncertain result is realized. That is what you should shoot for in your promotions. Those are the emotions you should evoke: anticipation and excitement. As a casino you should know those emotions well. Casino Nova Scotia has run a great promotion several times, dealing its players a hand of Texas Hold ‘Em, through the mail. You literally get your cards in the mail, but the community cards are at the casino. Talk about an engaging invitation for card players. It’s irresistible! There’s the rush and anticipation that comes with the game and it’s instantly understood. When you’re planning your next promo, think about the player. Make it easy and make it exciting.
David Bellerive is Vice President Creative and Media Services for Phoenix Group.
Poker as a Charitable Gaming Event By Lynn Cassidy
I know from the continuous requests our association receives, asking whether poker is legal to raise funds for charities, that there is a substantial demand out there. I was told by several university students who called for advice (in some cases calling to see if they could raise funds for themselves!) that poker’s popularity here in Canada was really boosted by the hockey strike a few years ago. As well, the popularity of poker tournaments, Internet poker and television broadcasts have increased the demand. With the increased popularity of this game and an increase in the number of illegal events occurring, many provinces started to address this challenge a few years ago. Each province has taken a slightly different approach as the Criminal Code allows each province to define the scope of their charitable gaming within the limitations of the charitable gaming section of the Code. However, it appears that the game of choice is Texas Hold’Em Po k e r. H e r e i s a s a m p l e o f w h a t i s happening across the country. The first province to test the waters on Texas Hold’Em Poker was Manitoba with the launch of a pilot project in May 2006. Twelve charities ran a total of 23 tournaments over a two-month period. Based on the experience, Terms and Conditions and policies were developed and in February 2007, Manitoba Gaming Control Commission began licensing these events. Expenses are limited to a maximum of 15% of anticipated registration/entry fees. A minimum profit of 15% must be retained by the charity. There are strict regulations regarding card quality, chips, training requirements,
d e a l e r t a b l e c o n t r o l , r u l e s o f p l a y, spectators, minors and re-buys. Events being approved vary from one-time events to ongoing weekly or monthly events. A few charities are using registered suppliers but most are using volunteers. Venues range from community halls and legions to bars/lounges. Saskatchewan was next out of the gate with approval for charities to conduct and manage Texas Hold’Em Poker in July 2007. Prizes are limited to a maximum of $5,000 (cash or merchandise) with no single prize over $2,000. Paid workers, including use of supplier companies, are not allowed. Liquor may be sold at the event. A charity is limited to a maximum of 12 tournaments per year and a facility may host only one event per week. As in Manitoba, there are strict requirements regarding all equipment used, rules of play, minors and volunteer staffing requirements. The number of charities being licensed for these events is growing over time. Events tend to be small with fairly low proceeds for a charity (average $380). The Saskatchewan Liquor and Gaming Authority has gathered feedback and identified areas for future discussion. These include the potential role for management companies and paid dealers; the limit on re-buys and the number of events; higher limits on prizing and the potential relationship of Texas Hold’Em poker to bingo events. British Columbia approved No Limits Te x a s H o l d ' E m Po k e r i n N o v e m b e r 2007. Charities are limited to 52 events over 12 months with an event maximum of 100 players. Gross revenue is limited to $10,000 per event and $20,000 for
each 12-month period. Prize maximums of $2,000 per event and $1,000 for an individual player are significantly lower than those in Saskatchewan. To date, there has been a slow uptake by BC charities on this new initiative. The most recent province to approve poker for charitable gaming is New Brunswick. As of May 2008 registered charitable groups could apply for a license to hold Texas Hold’Em tournaments with a maximum of 35% of the proceeds for prizing and no individual prize over $3,000. Entry fees may not exceed $100 and a maximum of 20% of entry fees may be used to cover all allowable expenses. New Brunswick charities are now starting to use this new fundraising tool. In Ontario, through the “Modernization of Charitable Gaming” initiative with the Alcohol and Gaming Commission of Ontario, licensed poker for charitable gaming has been identified for future discussion and charities are hopeful that there will be an option available in the near future. Charitable gaming across the country continues to face ongoing challenges and regulators are making concerted efforts to develop strategies to support charities in their important fundraising efforts. Through partners in the industry working together – charities, private sector and regulators, it is hoped that needed new games and products can be developed in all jurisdictions.
Lynn Cassidy is the Executive Director of the Ontario Charitable Gaming Association. Canadian Gaming Business | 37
Making a Difference: St. Mary’s Entertainment Centre in New Brunswick By Shannon Larsen St. Mary's First Nation is one of six Maliseet Nations located along the St. John River and is a vital part of New Brunswick's capital city of Fredericton. Evidence shows that the land now known as St. Mary’s was once used as a campground by European settlers as early as 1818. In 1842, the community was first referred to as an Indian Settlement and, in 1867, the year of Confederation, St. Mary ’s First Nation was officially recognized. The First Nation community resides on approximately 125.8 + 1 hectares of land and is governed by a Chief and Council. As of January 2005, the Band had a membership of 1225 people with 673 living on the reserve. The population continues to grow. Many facilities exist in the community for the benefit of all band members. Fisheries, health, economic development, logging, policing, security, powwow radio and recreation are just a few of the programs and services available to residents both on and off the reserve. One of the first businesses started on the St. Mary's First Nation land was the Entertainment Centre which opened its doors in 1996 as a standalone bingo hall. Unfortunately, by October 1997, the operation was losing money, employed 87 people, and was only able to maintain 60 players per night. The St. Mary ’s band fired its outside management team and started a screening process for new management within the reserve. On January 1, 1998 tribal member, Walter J. Brooks was hired on a contract basis to see if he could achieve success. Brooks brought with him his lineage and family roots belonging to the band. His greatgreat grandparents settled on the reserve 38 | November 2008
land over 100 years before, and his sincere desire was to make a difference. Brooks faced many challenges to get the Entertainment Centre off the ground and make bingo viable. He put his full heart and many long days and months into the project. When he began, his first step was to speak with the players, to listen to what they liked and disliked and combined his ideas to completely restructure the game. The second task he faced was reorganizing employees and trimming the staff from 87 to 25. The cuts, as unfortunate as they were, enabled Brookes to reduce expenses so he could make further improvements, take control and focus on improving customer service. On January 1, 1999, one year later, Brooks had turned St. Mary’s around to make a $250,000 profit. By 2000, he was appointed the position permanently. It was then that the real challenge began and Brooks implemented many successful plans such as advertising and marketing strategies, organizing busing throughout New Brunswick and Nova Scotia and including larger payout games on a regular basis. Most recently, Brooks put St. Mary’s on the map by making it the first facility to include electronic bingo handheld devices in Atlantic Canada. St. Mary ’s Entertainment Centre Bingo has been immensely profitable and has helped to fund many of the programs for the First Nation. The centre now employs 135 people, of which 90% are native. Many of the employees have been with the centre for years. When asked for his thoughts on his success, Brooks aid, “ the staff and management, professionalism, providing a friendly, courteous service to the players, making them feel welcome and safe in
a clean environment is what continues to bring St. Mary’s bingo success.” He is very proud of his staff for providing stellar services and that they too, want to make a difference, not just for St. Mary’s, but for themselves also. Today, St. Mary’s Entertainment Centre is the largest bingo facility in Atlantic Canada, with both smoking and non-smoking halls. It has a capacity of 1500 and includes a restaurant that makes the best poutine and aptly named Wally Burger. There are also 14 uniquely comfortable lounges - each outfitted with Video Lottery Terminals. Bingo is played seven nights a week, year-round. There are large payout “Giant Games” every six weeks and an annual $160,000 payout MEGA BUCKS game. People travel from the eastern United States and surrounding provinces to be part of the excitement at this facility. Looking into the future, Brooks plans to continue to grow St. Mary ’s Entertainment Centre, making it the premier facility in Atlantic Canada where all can come and enjoy the entertainment, and friendly, courteous surroundings. Wa l t e r J . B r o o k s , S t . M a r y ’ s Entertainment Centre, and the Maliseet Nation should be applauded and very proud of making a difference with its accomplishments for both their First Nation and New Brunswick.
For more information about St. Mary’s, visit www.stmarysfirstnation.ca or e-mail Walter Brooks at walterjbrooks@stmec.com Shannon Larsen is a 3rd Rock Gaming Consultant and can be reached at 1 (585) 298-7299, at slarsen@3rdrockgaming.com or at www.3rdrockgaming.com.
Mark your calendar today! April 28 – 30, 2009 Caesars Windsor — Windsor, Ontario
“Where the Canadian Gaming Industry Meets”
13th Annual Canadian Gaming Summit The Summit remains Canada’s premier conference and trade show for gaming professionals. This annual event delivers face-to-face interaction with senior-level executives from all gaming sectors, disciplines and regions within Canada.
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Canadian Gaming Business | 41