Canadian Gaming Business Winter 2013

Canada's Premier Gaming Industry Magazine

www.CanadianGamingBusiness.com

Inside: Vol. 8 No. 4

Winter 2013-14

Building Canada's Bingo Network Executive Q&A with OCGA's Lynn Cassidy Casino Money Management Solutions

Employee Engagement

PM 40063056

The ace up your sleeve

CanadianGamingSummit.com June 23-25, 2014 Vancouver, B.C

Social Gaming Roundtable

INNOVATION. RESULTS. REVENUE. Driving performance for lottery and regulated gaming worldwide

• Instant, Interactive & Draw Games • Instant Game Product Management • Lottery Systems • Retail Technology • Video Gaming Terminals & Systems • Lottery & Operations Management • Marketing Research & Analytics • Licensed Properties • Loyalty & Rewards Programs • Internet, Mobile & Social Gaming

NORTH AMERICA | LATIN AMERICA | EUROPE | ASIA PACIFIC | AFRICA

www.scientificgames.com

Winter 2013-14 Volume 8 Number 4 Publisher

Richard Swayze richards@mediaedge.ca 416.512.8186 ext. 246

contents 8

www.CanadianGamingBusiness.com

18

26

Editor Matthew Bradford matthewb@mediaedge.ca Advertising Sales Richard Swayze richards@mediaedge.ca Senior Designer

Annette Carlucci

annettec@mediaedge.ca

Designer

Jennifer Carter

jenc@mediaedge.ca

Production Manager

Rachel Selbie

5

EDITOR'S NOTE

linat@mediaedge.ca

6

MESSAGE FROM THE CGA

Proudly owned and published by:

8

COVER STORY

12

GAMING TRENDS

16

EXECUTIVE Q&A

18

GAMING TECHNOLOGY

rachels@mediaedge.ca

Circulation Manager

President Kevin Brown

Lina Trunina

President & CEO Bill Rutsey

kevinb@mediaedge.ca wrutsey@canadiangaming.ca

Senior Vice President Chuck Nervick

Vice President, Public Affairs Paul Burns

chuckn@mediaedge.ca pburns@canadiangaming.ca

Canadian Gaming Business is published four times a year as a joint venture between MediaEdge Communications and The Canadian Gaming Association To advertise: For information on CGB’s print or digital advertising opportunities: Richard Swayze 416-512-8186 ext. 246 richards@mediaedge.ca Copyright 2013 Canada Post Canadian Publications Mail Publications Mail Agreement No. 40063056 ISSN 1911-2378 Guest editorials or columns do not necessarily reflect the opinion of Canadian Gaming Business magazine's advisory board or staff. No part of this issue may be reproduced by any mechanical, photographic or electronic process without written permission by the publisher. Subscription rates: Canada $40* 1 yr, $70* 2 yrs. USA $65 yr, $120* 2 yrs. International $90* 1 yr, $160* 2 yrs. *Plus applicable taxes.

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

Official Publication of the Canadian Gaming Summit

Employee Engagement: The ace up your sleeve

Building Canada's Bingo Network Lynn Cassidy: Executive Director of the Ontario Charitable Gaming Association Casino Money Management Solutions

24 LEGAL

Bitcoin and Land-Based Gaming: How virtual currency is changing the game

26

FACILITY PROFILE

28

CORPORATE PROFILE

Hard Rock Casino Makes Canadian Debut in Vancouver NOVOMATIC Americas Sales: A Q & A with CEO Jens Halle

30 MARKETING

Social Gaming: What role does it play?

32

SOCIAL GAMING SUPPLEMENT

Industry Roundtable: A place for social gaming

38 FINANCe

Customer Dollars are Tight in the Gaming Industry

Canadian Gaming Business | 3

Imagewear improves every first impression.

Imagewear’s extraordinary solutions are helping over 17,000 businesses increase their brand visibility, team spirit and professional pride. Discover the incredible difference premium luggage, luxury accessories, custom uniforms, in-house embellishment experts and over 100 consultants can make at 1-855-592-7444 or imagewear.ca

editor'snote

Laying the groundwork for a new year in gaming It can be challenging keeping pace with the gaming industry.

With every passing year comes new issues, next-gen technologies, and fresh innovations that re-shape Canada's ever-growing industry.

Now, as we set our sights ahead to the products, people, and ideas that will influence the year ahead, it's important to recognize those same influences that defined 2013.

What's your spin on employee engagement? This is the question the Canadian Gaming Centre of Excellence set out to answer in our cover story which showcases employee development strategies and successes in gaming facilities across the country. Our snapshot of the year's trends and accomplishments continues in “Building Canada's Bingo Network”, an in-depth look at Canada's developing online bingo scene, written by GTECH's Senior Vice President of iGaming Matteo Monteverdi; Stuart Hoegner's report on the rise of the Bitcoin; and our latest feature on casino money management solutions, which spotlights some of the newest printer, validator, and cash handling products.

Social gaming was another buzz-worthy topic of 2013. To get a better sense of where social gaming is headed, and what role it has to play in the gambling industry, we asked five social gaming experts to lend their insights and experiences in our Industry Roundtable; and also invited Marshall Fenn's Jim Kabrajee to weigh in on the topic in our regular Marketing feature.

Speaking of today's (and tomorrow's) most influential leaders, we've also included an interview with the Ontario Charitable Gaming Association's Executive Director Lynn Cassidy; and NOVOMATIC Americas Sales, LLC CEO Jens Halle—both of whom see huge potential in the year ahead.

Combined with KPMG's “how-to” for adapting business models, and our profile of the new Hard Rock Casino in Vancouver, we've set our sights in this issue on some of the movers and shakers of 2013 and beyond. As always, if you have any suggestions for future stories, please contact CGB's publisher Richard Swayze at richards@ mediaedge.ca, or myself at matthewb@mediaedge.ca.

o v e r f l o w. . . . .

The Fully Flexible

Progressive Platform

Supernova is a powerful Floor Wide Event and Mystery Progressive platform for the Live Gaming Space that drives increased revenues.

This fully flexible platform adapts to almost any table game and allows casino operators to configure as many different prizes and jackpots as they want.

Developed to radically increase the appeal and excitement of live table games, casinos can now create floor wide jackpots across different game types that generate truly meaningful prize pools and jackpots.

With best wishes for the new year,

Matthew Bradford Editor matthewb@mediaedge.ca

For more information visit:

www.tcsjohnhuxley.com

Canadian Gaming Business | 5

messagefromtheCGA

2013 – The Year of the Groundhog

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

A year ago, the Canadian gaming community was looking forward to a year of promise, progress, evolution, and opportunity. What we got instead was mostly inertia and indecision driven principally by fear and misunderstanding.

That’s not to say that 2013 didn’t have some success stories and advances. There were instances of governments and agencies successfully evaluating current and future markets and opportunities, planning coherently and then moving to execute on their plans. British Columbia Lottery Corporation and Manitoba Liquor & Lotteries' rollout and expansion of online and mobile PlayNow platforms, and SaskGaming’s organizational review and realignment to focus on providing excellent guest services, are both instances of such proactive progress. There were also several notable gaming property initiatives, including the renovations and renewals of McPhillips Station Casino in Winnipeg and Casino de Montreal, the relaunch and rebranding of Hard Rock Casino Vancouver and the relocation of the Vancouver Edgewater Casino getting back on track.

Such successes aside, the big expectations for 2013 were with the Senate, expected to pass Bill C-290 that would legalize single-event sports betting, and Ontario Lottery and Gaming Corporation’s (OLG) modernization plan that was announced in 2012.

By far the biggest opportunity for change was the OLG modernization, the crucial elements of which were transferring ownership and day-to-day operation of its gaming facilities and lottery to the private sector, allowing new gaming sites in convenient locations (including Toronto), and the launch of a full online offering.

This potential huge opportunity for the private sector came to a crashing pause with the January 2013 selection by the governing Liberal Party of a new leader and Premier, Kathleen Wynne, who fired OLG Chair Paul Godfrey and announced a re-think of policy regarding the support of horseracing.

Adding to this was the absolute fiasco surrounding the potential development of a destination resort facility in the 6 | Winter 2013

Greater Toronto Area, compounded by the almost non-stop shenanigans at Toronto City Hall that captured world-wide attention.

On the brighter side, on December 12 OLG released the Requests for Pre-Qualification (RFPQ) for parties interested in developing and operating gaming businesses in the West GTA, Central and GTA zones; with the expectation of releasing the results for the initial round of RFPQ’s soon.

2013 was also supposed to be the year that brought clarity as to whether or not single event sports betting would be legalized in Canada, a change that has been requested by nine provinces. Bill C-290, which had been unanimously approved by the House of Commons, has been in the Senate since March 2012. Unfortunately, the Bill has been held at Third (final) Reading in the Senate by a small group of senators opposed to the change.

Which brings me to the characterization of 2013 being the year of the groundhog. Most of you have seen the movie Groundhog Day, wherein Bill Murray finds himself caught up in an endless time loop – the situation that both OLG modernization and Bill C-290 seem to have been trapped in.

We can only hope that in 2014 the loop will be broken.

For Ontario Modernization this will mean release of the names of the parties short-listed pursuant of the RFPQ processes, quickly followed by Requests for Proposals (RFP) from qualified developers and operators. Overhanging the process is a potential provincial election in 2014 should the existing minority government be defeated.

With regards to sports betting, we expect that the Bill will be finally dealt with in the Senate and pass. Should this happen, look for provincial lottery and gaming corporations to offer sports betting in a variety of forms, including in casino sports books, online and potentially on mobile devices.

Finally, I’d like to wish everyone safe and happy holidays and a prosperous New Year. For me – all I want for Christmas is real progress in 2014.

coverstory

Employee Engagement The ace up your sleeve

By Judith Hayes and Dayna Hinkel

8 | Winter 2013 8 | Winter

coverstory

Organizational Development and Training departments in gaming play a strategic role in supporting an organization’s growth through the development of their most valuable asset – their employees. Lately, there is a lot of talk about the importance of ensuring our employees are truly connected or engaged with their work and with the organization as a whole. But what is employee engagement, how do we get there, and what is the impact?

The Conference Board of Canada has conducted research around employee engagement and concluded that “business leaders genuinely want and need people who are mentally and emotionally connected to their jobs and willing to apply the effort to help their companies succeed” ( John Gibbons, 2006). So when we talk about employee engagement, we are referring to a framework of actions and strategies designed to build the heart and soul of a two-way relationship that fosters commitment in both employees and the organizations for which they work. Further research through all business sectors conf irms that an engaged workforce is a key factor in a business’s success, from improved customer service all the

way through to an improved bottom line. An engaged workforce provides innovative ideas, solutions to complex issues, builds quality customer relationships, increases employee retention, and plays a critical role in helping an organization remain competitive.

Employee engagement is complex. It is not enough to simply hire talented people; gaming organizations have to continually f ind ways to capture the hearts and minds of their employees throughout their employment. There are many approaches to discussing employee engagement, but through both for mal and infor mal discussions, a number of common factors or dr ivers are identif ied as keys that produce positive employee engagement results.

Canadian Gaming Business | 9

coverstory The casino business in Canada is under pressure to provide innovative entertainment options, higher levels of customer service and state of the art technology solutions to meet demanding customer needs. Engaged employees provide the strategic advantage to achieving these goals. Casino properties across Canada were asked what types of strategies and initiatives their organization supported that led to increased employee engagement and how they evaluated their success. This article provides a snapshot of employee engagement initiatives in leading Aboriginal, private, and public gaming organizations.

Organizational communication

The first driver of employee engagement, organizational communication, encompasses a broad set of knowledge, from an understanding of company vision and current organizational happenings to the critical day-to-day knowledge at departmental levels and between frontline staff and their managers. Without question, this driver ranks as extremely important across all gaming organizations.

Brent Fleming, Vice President HR & Organizational Development, Paragon Gaming said it clearly: “ We believe that Organizational Communication is the most important tool we have in the engagement toolbox. A smart organization facilitates two way communication from all levels, frequently . . .”.

All the casinos we spoke with emphasized how important it is that employees know not only the ‘what’ of what is going on in their organizations, but also the ‘why’ to enable them to better connect with customers, suggest solutions for issues, and clearly see how they fit in the framework. The majority of organizations use communication techniques that include print media such as handbooks, payroll stuffers, and bulletin boards; electronic media including intranets, websites, email, and electronic message boards; and in-person communication strategies at various levels of the organization. These include town hall, pre-shift, and individual one-on-one meetings between employees and supervisors. In our discussions, we also gathered strategies with a twist, such as Ontario Lottery and Gaming Corporation’s (OLG) Annual Site Employee Visits by Larry Flynn, Senior Vice-President; and Saskatchewan Gaming’s (SaskGaming) Coaches Notes, which is a weekly primer distributed to senior leadership to support “what employees need to know” discussions. Other unique initiatives include Casino Nova Scotia’s GM Coffee Breaks, held three times a year, Paragon Gaming’s monthly Tea with the GM, Aseneskak’s twice yearly Manager’s Cook Breakfast Event (for staff), and Manitoba Liquor & Lotteries monthly Lunch with the President (for frontline staff).

Without exception, all the casino properties consulted felt that understanding the mission and vision of the organization, and having the ability to provide input to the direction of the organization, went a long way toward building employee engagement. Strategies such as Grey Eagle Casino’s open door policy allow employees to ask questions, provide suggestions, and share information on a timeframe that works for them.

Performance, clarity, and feedback

The second driver is performance, clarity, and feedback, and it appears to be well entrenched in gaming organizations 10 | Winter 2013

across Canada. While annual performance appraisals are the norm, the focus is also on providing positive reinforcement of work well done and ensuring concerns are addressed at the earliest opportunity. Gaming organizations also say they count on strong compliance training to ensure employees are aware of what’s expected of them. Grey Eagle Casino and Aseneskak Casino support regular, one-on-one employee and supervisor coaching sessions, while SaskGaming and Manitoba Liquor & Lotteries ensure performance appraisals are customized to positions. Elsewhere, Casino Nova Scotia uses checklists in the on-boarding process to help employees realize what is expected of them.

Rewards and recognition

The third recognized driver of our employee engagement discussion, rewards and recognition, includes the positive feedback reinforcement mentioned above, but also encompasses a variety of specialty reward programs designed to support particular positive behaviours such as attendance, customer service, and health and safety, to name just a few. Many properties have developed unique and specific recognition programs at both corporate and departmental levels. For example, Grey Eagle’s Employee Wellness Program provides monetary support to employees competing in sporting or cultural events in the province of Alberta and OLG’s Corporate OPAL Event recognizes individuals or teams for outstanding achievements aligned with the organization’s core values. SaskGaming’s Security Dollars program recognizes positive behaviours exhibited by security staff, and Great Canadian Gaming has developed the Peernominating GEM Awards (Great Experiences & Memories).

Aseneskak Casino provides Christmas hampers and logoed jackets to all employees and an Aseneskak Days event with a fishing derby and walkathons in the spring. Manitoba Liquor & Lotteries puts on a Family Holiday Party for employee families that sees 1800 in attendance, plus a unique Our Babies R Best program that supports staff on maternity leave.

Career development opportunities

Of all the dr ivers discussed, ca reer development opportunities appeal to the greatest number of employees and build the foundation for attracting or developing highpotential employees that will help the organization grow into the future, as well as support the community at large.

Suzanne Barbeau-Bracegirdle, CEO of Aseneskak Casino, stated that, “We look at the casino as a training centre to develop our workforce and even if they move into different employment, we are happy to support their development.”

All casino properties recognize the need to provide some direction for career growth. There were both formal and informal approaches to addressing this engagement driver. A number of organizations offer some type of tuition reimbursement for employees wishing to take formal academic training. Succession planning and talent management initiatives are growing and now play a signif icant role in preparing for the future. This is accomplished through one-on-one career development conversations at Grey Eagle Casino and through more formal programs such as OLG’s Career Pathing (training, tools and resources to support lateral or upward moves) and Skills Enhancement Training Program (training and non-

coverstory training solutions to support site-specific strategic plans).

Sa sk Ga ming prov ides sig nif ica nt resources in training and the results speak for themselves – 50% of administrative, professional and management positions were promoted from within the in-scope ranks of the organization (November 2013). Aseneskak supports employee development at a variety of levels and has worked with University Nevada Reno (UNR) to ensure a large portion of management staff have achieved the Certificate in Gaming Management. Manitoba Liquor & Lotteries has a number of robust, in-house development programs including Essential Skills for Gaming courses, and houses the Canadian Gaming Centre of Excellence, which provides training in both the Athabasca University Pre-MBA Gaming Leadership Certificate and the UNR Certificate in Gaming Management.

Employee engagement surveys

Lastly, these organizations have identified that employee engagement surveys are one way to take the temperature of an organization to see if employee engagement initiatives are reaching the goals of the organization. Some of the organizations we spoke with use a less formal approach to measure results. Of those who conducted surveys, follow up was identified as key. Paragon Gaming ensures results are distributed to executive and then cascaded through the organization, followed by action plans to address concerns. This

process is echoed by organizations conducting surveys, and lauded as a positive tool in building employee engagement. Employees are able to provide input to the organizational plan and take the lead in developing action plans to address problem areas.

A s gaming continues to compete for the Canadian entertainment dollar, gaming organizations that focus on employee engagement will have the house advantage. In discussions with various employers across the country, the Conference Board of Canada (2012) repeatedly heard that, “Employee engagement matters to the people working in our companies and it matters to the bottom line”. Gaming properties will see their employee engagement investments translate into cost containment through decreased employee turnover, improved customer satisfaction scores, higher employee performance and productivity and subsequently stable or increased revenues. With entertainment dollars in high demand from a wide array of consumer choices, fully engaged employees are clearly any gaming organization’s in-house advantage.

If you would like to join the National Gaming Training Advisory Committee and share strategies from your casino propert y, please contact Canadian Gaming Centre of Excellence (www.gamingcentreofexcellence.ca).

Judith Hayes is Director (judith.hayes@mbll.ca), and Dayna Hinkel is Business Manager (dayna.hinkel@mbll.ca), at the Canadian Gaming Centre of Excellence, a subsidiary of Manitoba Liquor & Lotteries

TRAINING & DEVELOPMENT TOOLS FOR THE CASINO/GAMING INDUSTRY  Casino Essential Skills Developmental Workbooks  Casino Interview Toolkit  Casino Skills Assessments  Customer Service for Gaming E-Learning Program

GAMING LEADERSHIP CERTIFICATE PROGRAM (MBA credits) Now in its 3rd year, this is Canada’s premier online program for gaming leadership development, offered in partnership with Athabasca University.

ELP S H YOUR U LET OINT ION IN AT UP YO ANIZ IGHT G ER R N! O TH TIO EC R I D

NEXT SESSION STARTS JANUARY 2014!

FOR INFO VISIT WWW.GAMINGCENTREOFEXCELLENCE.CA

(The Canadian Gaming Centre of Excellence is a subsidiary of Manitoba Liquor & Lotteries) Canadian Gaming Business | 11

gamingtrends

Building Canada's Bingo Network How Canadian jurisdictions and industry partners are taking bingo online

By Matteo Monteverdi

12 | Winter 2013 12 | Winter

gamingtrends

The UK bingo market has grown rapidly over time with a number of sizeable brands and hundreds of skins operating across only a handful of large networks.

Britain is one of the most important countries when it comes to the traditional and soft forms of bingo gaming, despite the small number of networks.

Bingo has been—and (arguably) always will be—a pastime for millions of people either in bingo halls and clubs, at home, online, or increasingly on mobiles and tablets.

Now, new technology, along with the emergence of several newly regulated and regulating markets, is injecting new grow th into the interactive bingo vertical. Although some bingo operators have experienced disappointing third-quarter financial results this year, the base of bingo players is expanding.

Due largely to the boom in mobile products and the explosion in social g a m ing on Facebook a nd ot her global social networks, a number of innovative games and bingo variants have come on stream. This insurgence is allowing the vertical to appeal to an entirely new and younger audience, as well as spread to countries where it may not have previously been popular.

Meanwhile, in the last six years, severa l m a rk et s a c ro ss Eu rope, North America, and the rest of the world have also opened their doors to reg ulated and ta xed iGaming activities. Countries such as Italy, France, Belgium, Denmark, Spain, and others have realized just how beneficial this type of exercise can be in boosting regional and/or nationwide government revenue when the right tax frameworks are in place.

In Canada, Atlantic Lotteries was the first to offer regulated online gaming and was sw iftly followed by the British Columbia Lottery Corporation (BCLC) courtesy of its Playnow. com portal. Quebec, Manitoba, and (shortly) Ontario will follow suit. And Canadian Gaming Business | 13

gamingtrends

“In Canada, online bingo remains a niche, but it is a rapidly growing segment, and there is an opportunity to attract new players.” with the US gradually opening under a state-by-state model of iGaming, North America appears set for a period of strong growth.

Online bingo has developed considerably since the early days and is rapidly spreading across the globe with the product improving a great deal since the first sites emerged.

Now, the range of games is extensive, particularly since the rise of social gaming on Facebook. Speed versions of the game, new formats, and casino-style mechanics are becoming very popular, and bingo is now appealing to new demographics. These changes are attracting a new, younger, more engaged, and tech-savvy audience who want the latest games on their mobile and tablet.

From an operator and supplier perspective there is now a different approach to player bonuses and marketing, although the impact of television advertising has helped spread the word enormously.

Bingo and Bingo Networks: Key Trends and Success Factors The Canadian Market

In Canada, online bingo remains a niche, but it is a rapidly growing segment, and there is an opportunity to attract new players with the introduction of the Canadian Bingo Network. There is also a big opportunity to develop and deliver the latest and best gaming experience with a number of channels available including online, mobile, tablet, and television. In addition, there is the potential to cross-sell products to both new and existing players while equally sharing marketing costs across the network.

International Networks

There is very little difference in player demographics between varying nations and nationalities, however, variations apply when it comes to the types of games offered. It is important to cater to player preferences, wherever the player is located.

For example, in the UK, players prefer to play 90-ball bingo; whereas in Canada, players prefer 75-ball.

Player Demands

In bingo, it is crucial to present players with easy-touse products that provide the maximum entertainment possible and a warm welcome upon every visit. Bingo is a very social game; hence, a huge emphasis must be placed on chat and chat forums. The product needs to be the ideal place to meet with friends and form new social acquaintances within chat rooms. Games have to offer monetary value; perform f lawless in execution, gameplay, and user ex perience; and players need to have access to the net work with a regular stream of promotional events.

14 | Winter 2013

As technology rapidly changes and players expect the latest game versions, operators and suppliers need to be able to present different types of games, across all channels, with a range of jackpot offerings, and rewards and recognition for loyal customers. It is equally important to ensure clear sign posting and information as well as responsible gambling support and advice.

Size and Scale

Both the size and scale of a bingo network are crucial to allow operators to sustain a successful site and to build enough liquidity for players to have a great user experience and enjoy large bingo game jackpot prizes. Economies of scale are beneficial for each of the partners to share network costs and to monitor network size and scale to ensure a profitable balance.

Typical Player

Bingo was previously associated with an older, and largely female audience, however this has changed considerably.

Although the ratio remains in favour of a female audience, typically, bingo has always been played by both female and male audiences, without characterizing one or the other.

Bingo is ultimately a game that everyone can enjoy.

Bingo in the North

This is an exciting period for Canada as BCLC and LotoQuebec work towards launching the Canadian Bingo Network in 2014, thereby leveraging player liquidity across jurisdictions and becoming the first “legal” multijurisdiction bingo network in North America.

In so doing, the lotteries selected GTECH to set-up and operate the network, based on the company's experience with operating a variety of bingo networks across a number of different international borders.

No doubt, the launch of GTECH’s mobile and tablet products in 2014 is poised to be a game changer, with plans to offer the exact same bingo solutions on both Android and iOS app versions. These solutions will present players with an improved user experience thereby leading to an increase in player numbers and network liquidity. Both tablet and mobile will complement and benefit the online bingo experience, increase player usage time over mobile, and offer a far better experience across any channel, anytime, and anywhere.

The iGaming market in Canada is set to grow in the next five years and all stakeholders are eager and excited with the market’s prospects and the impact that new and exciting game variants--as well as mobile and tablet gaming--will have this year and in the years to come.

Matteo Monteverdi is GTECH's Senior Vice President of iGaming.

executiveq&a

Lynn

Cassidy

Executive Director of the Ontario Charitable Gaming Association

As head of the Ontario Charitable Gaming Association (OCGA), Lynn Cassidy is at the forefront of the province's non-profit gaming initiatives. Canadian Gaming Business reached out to Lynn for a snapshot of what that duty entails and how OCGA is meeting the charitable sector's challenges.

What led you to your current role with OCGA?

I have a long histor y of work ing i n t h e ch a r it a bl e s e c t o r a n d i n gover nment. I st a r ted my ca reer w o r k i n g o n t h e f r o nt l i n e w it h adolescents and families in distress.

Later, I was the executive director of several social ser v ice agencies for children and families and then moved to the provincial government at the Ministry of Community and Social Services where I held several senior management positions.

While at the government, through a former colleag ue who was consulting in the gaming industry, I was approached by OCGA when t hey were seek i n g a n exec ut ive director. They were look ing for someone with experience working in the not-for-prof it sector a nd someone who had k nowledge of government processes.

What attracted me to the position wa s the recog nition from my experience of how important local charities are in making a difference 16 | Winter 2013

to families and communities, and t he ch a l len g e s ch a r it ie s f a c e i n fundraising. For me, the challenge was g aining an understanding of the charitable g aming sector and the complexity of the partnerships, including those bet ween the provincial government and agencies, cha r ities, the pr ivate sector, a nd municipalities. As executive director of a prov i nc i a l a sso c i at ion w it h over 2,000 members, it is a job that always presents new and ongoing challenges.

What is OCGA's role within the Canadian gaming industry?

The role of OCGA is to represent the interests of charities and not-forprofits that use charitable gaming as a means of fundraising. We participate in all signif icant government tables related to charitable gaming and have been involved in every major initiative.

What have been OCGA's most significant achievements in recent years?

Our most significant accomplishment overa ll h a s been t he development

“[OCGA's] most significant accomplishment overall has been the development of very strong and positive working relationships with all of our partners.”

executiveq&a

of ver y strong and positive working relationships with all of our partners. This has enabled us to work collaboratively and effectively to facilitate significant changes in the industry over the years.

We h ave h a d m a ny suc c e s s e s working with the Alcohol and Gaming Commission of Ontario to implement meaningful regulatory changes, thereby reducing administration and volunteer resources, and introducing greater f lexibility and new products in our attempt to improve the industry and benefit charities.

was developed over seven years ago with the establishment of four pilot sites to introduce electronic bingo.

As a result of focused determination, collab orat ion w it h ou r i ndust r y pa r t ners, a nd lobby ef for t s, this pilot has g row n into the exciting Revitalization of Charitable Gaming initiative with Ontario Lottery and Gaming Corporation (OLG). The charitable bingo industry has been in decline 8% to 10% ever y year, which has resulted in less funding for charities to provide ser vices in

“...assuring that charitable gaming will survive in the larger gaming matrix as internet gaming and the potential for casino expansion occurs. This area is our biggest priority...”

Of c o u r s e , t h e m o s t v i s i b l e a c c o mpl i sh m ent w it h t he m o s t impact has been the establishment of a u n ique mo del to i nt ro duce electronic g ames into traditional charitable bingo while maintaining active participation from charities and assuring their revenues. This model

local communities. This initiative is an opportunit y to stabilize and g row t he indust r y in order to support the good works these local organizations deliver.

As of this month, we have nineteen C Gaming sites in operation with new technology that offers customers new

ways to play traditional paper games.

Two thirds of the industry (charities and commercial operators) has indicated a desire to participate in the partnership with the OLG. New sites are scheduled for implementation throughout 2014.

OCGA has an important role preparing the charities for this significant transition and providing ongoing training and support for them in their new roles and responsibilities.

What are the major challenges affecting charitable gaming?

Our challenges ahead include assuring that charitable gaming will sur vive in the larger gaming matri x as internet gaming and the potential for casino ex pansion occurs. This area is our big gest pr ior it y as we work with OLG, A lcohol and Gaming of Ontario, our private sector partners, and various government ministries to ensure charities in Ontario and their contributions to local communities remain a priority.

What do you get out of your role with OCGA?

As the executive director of OCGA, it is truly my pleasure to work with so many dedicated people who sincerely care about the important services across Ontario provided by the thousands of charities and not-for profits and their thousands of volunteers.

Canadian Gaming Business | 17

gamingtechnology

Casino Money Management Solutions

The latest in printers, validators, and cash handling technology

Canadian Gaming Business asked printer, validator, and cash handling manufacturers to tell us how they're meeting player and owner demands on—and beyond—the casino floor. This is what they had to say...

CASH TECH CURRENCY PRODUCTS

In a casino environment where cash management runs the gamut from restaurants, retail shops, cashiers, cash room tellers, slot machines, a nd gaming tables, the amount of personnel required is immense.

From cashier stations to cash ro om t eller st at ion s, f rom slot machines to g aming tables, casinos are f illed with locations where cash and other me d i a cont i nu a l l y ch a n g e hands. Therefore, securely and accurately track ing the The C1-100 Cash Recycling System be controlled by a user-friendly large sums of money moving can touchscreen. throughout the operation is paramount.

The latest in a suite of automated cash management solutions available in Canada is the fully closed loop solution from GLORY. CASHINFINIT Y offers a closed cash management solutions which can easily be configured to 18 | Winter 2013

meet a casino’s specific requirements. Fast, accurate, and secure, this state-of-the-art solution reduces overhead and allows owners to efficiently allocate resources otherwise tied down with a cumbersome cash management process.

The high-tech system includes the CI-10 Compact Cash Recycling System, a dual bank note and coin recycling system that can be implemented together or separately; and a touchscreen operated CI – 100 Cash Recycling System that grants every user a unique User ID and password to allow for easy tracking.

At the heart of the system is the CI Server, the cash management soft ware that of fers centralized cash management via a web browser. This centralized, secure software makes programming floats and adding or deleting users and individual permissions simple and easy. Monitoring of inventory and collections and sales throughout the store from the front office to the back office can all be done through the software interface. In addition, a variety of reports such as cash flow statistics can easily be generated.

Automated cash management solutions can easily manage all areas of casino cash management. Understanding which solution is best for your casino’s needs is where CashTech delivers. For more information, visit w w w. cashtechcurrency.com

gamingtechnology

Crane Payment Solutions

On average, each bill validator accepts 35,000 bank notes and 50,0 0 0 vouchers. The CashCode one validator provides 9 8 % a c c e pt a nc e r at e on the f irst inser tion due to its multi-sensor technolog y, alignment mechanism, and fourway barcode acceptance, w h ich si mpl y me a n s more cash in the cashbox.

A ll bank notes get updated ever y f ive to seven yea r s. G a m i n g operators need to make sure their validator technology is future-proof, meaning it is able to accept old and new series of banknotes effectively without any cross-credit issue or hardware upgrade. The CashCode one is designed to read most banknote security features in addition to having a higher memory capacity and dual processors. Ultimately, it allows acceptance of new or street grade, polymer, or paper banknotes effectively all the time. It also allows for an easy swap of the BV head from one OEM to the other, or a swap up-stack to down-stack, reducing clients' capital investment.

Gaming operators need a reliable, jam free validator and cashbox that is easy to manage, maintain, and service and provides accurate credits to patrons all the time. Having a CashCode one provides reliability due to the beltless bill transport and the robust and longlasting cashbox design. In addition, having the ability to upgrade from a 600 to 900 size cashbox in the same BV frame can save expensive drop labour costs.

And, of course, who doesn’t want something for free? All CashCode one bill validators come with the oneCheck cash management solution, providing preventative controls to slot techs for when and what to service, while Performance Reports reduce time spent on the number of service work orders by 50%.

A highly efficient, future-proof bill validator is a vital component to all gaming operations, so casinos can't settle for less. For more information, visit www.craneps.com.

Cummins Allison

To d ay ’s g a m i n g prop er t ie s are looking to invest in costefficient, back-room technology like currency handling solutions that elevate time-consuming m a n d a t o r y p r o c e s s e s i nt o more efficient tasks. Cummins Allison’s JetScan iFX® product line offers casinos a full range of innovative and flexible currency h a nd l i n g s y st em s t h at not only help casinos prepare their deposits quickly and easily but are also capable of processing currency and imaging tickets.

Many of the advanced technologies found in larger systems are also available in more modular, scalable devices that provide the same results in a compact and economical way. Additionally, selecting a system that can accommodate cash, cheques, and tickets on a single device not only saves space, but makes employees more efficient, enabling them to spend more face time with patrons rather than counting money. For more information, visit www. cumminsallison.com.

FutureLogic

The economic recovery has been slower than expected and for brick and mortar casinos the f inancial pr e s s u r e s c o nt i nu e to mount, especially with the legalization of online gaming. More than ever, casinos are scrambling to identify a d d it i o n a l w a y s t o entice new players to their casino. Once in Canadian Gaming Business | 19

gamingtechnology

the property, it’s vital for casinos to both identify these new players and find creative ways to keep them in the casino, extend their play, and encourage return visits. Do casinos currently have a method of identifying and marketing to this large group of anonymous players? The answer is yes.

Many operators are look ing to promotional couponing, given the fact that all their games are equipped with the ultimate promotional deliver y system, the TITO printer. And when it comes to selecting the couponing system, FutureLogic’s PromoNet® intelligent promotional couponing solution is the only system to offer a method to reach both carded and uncarded players.

PromoNet® couponing solution allows casinos to create and r un

promotions that identify, track, and reward all customers (both carded and un-carded) instantly, right at the game, and without any delays. By using the data at the slot machine (time of play, amount wagered, etc.) or data gathered from a player tracking system database (i.e., a birthdate), promotions can be developed to enhance the experience for all players, to lure uncarded players to join the Player Club, and enhance the casino experience for existing members.

With PromoNet®’s Online Module, casinos can develop promotions that effectively steer players to online sites and provide a vehicle for tangible awards for a participating player. This helps ensure “player stickiness” by extending the player’s experience and linking land-based and online gaming sessions. And to improve the bottom

Reduce drop processing time by 50% Save time. Save space. Be more productive.

JetScan iFX® i400 Multi-Pocket Sorter. Faster, Smaller and Smarter.

1,000 notes per minute processing speed, including polymer notes Call 1.888.391.8701 now or visit cumminsallison.ca/gaming1 to learn more.

20 | Winter 2013

line, PromoNet® couponing solution gives operators the ability to analyze and modify promotions for optimum effectiveness and conduct business analytics and reports.

For more information, visit www. futurelogic-inc.com.

JCM Global

Bill validators are a casino’s f irst line of defence against counter feit s and cheats.

Criminals have a strangely high work ethic, and they w o r k r e a l l y, really hard at making better counter feit s and other il le g a l de v ice s. T h at ’s why manufacturers are constantly looking for, and developing, better technolog ies that keep validation equipment a nd ca sino customers ahead of counterfeiters and cheats.

JCM Global uses a highly advanced combination of mag netic and infrared sensors to validate currency, and they merge that with high-speed motors and processors to maintain a very high first-time acceptance rate.

It s U BA va lidator set s st a nda rds with a 98% acceptance rate, and now iVIZION’s 99% acceptance rate has raised the bar again.

JCM Global's iVIZION bill validator is a effective, smart, and fast solution for t he g loba l g a m i n g i ndu st r y. iVIZION’s Contact Image Sensor (CIS) Technology captures the full image of a note or ticket, and its 99%-plus acceptance rate is unrivalled. iVIZION has a diligent counterfeit protection, an RFID ICB cashbox with encrypted and web-enabled data, 64 megabit FLASH memor y, a self-calibrating sensor package, modular component design, and the ability to read barcodes horizontally and vertically. It also

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

gamingtechnology

features t wo high-speed processors, a sealed 85 mm banknote path, patented and proven removable stacker mechanism, “Blind Mate” and “Hot Swap” design, and complete compatibility with all gaming protocols. For more information, visit www.jcmglobal.com.

MEI

Looking to Advance your bottom line?

You designed the answer.

MEI has made it possible with

MEI has redefined expectations of note acceptors yet again with SC Advance. Enhancements were driven by customer requests to improve upon core measures of performance— acceptance, speed and security— and do so in a manner that is backwards compatible with the existing installed base.

By maximizing the number of street-grade notes accepted, while simultaneously increasing the security against counterfeit notes, the MEI SC Advance is a step forward on the most important measure…operator profitability.

Learn how to specify cashboxes in your property that fill up faster than ever before. Stop by booth #N7-122 during ICE or contact a BetRite representative at 204-489-8260 to schedule a SC Advance demonstration.

Proven performance.

Increased profits. meigroup.com MEI is ISO 9001:2000 certified. ©2013 MEI. All rights reserved.

22 | Winter 2013

Casino operators understand the value of solutions which deliver the most ROI. Because pay ment s ystems impact so m a n y o p e r a t i o n s w it h i n a propert y, multiple functions can see f irsthand the importance of a comprehensive ca sh m a n a g ement solut ion.

MEI understands the impact of per ipherals a nd suppor t products on overall performance and is proud to offer solutions which positively impact operator profitability.

At the head of MEI’s complete cash management offering is SC Advance, evolved from the award-winning CASHFLOW SC note acceptor. MEI applied new technology to deliver greater performance though an enhanced recognition system, faster noteto-note speed, improved barcode recognition, and the increased noteset memory. SC Advance delivers where it matters matter most: acceptance rate, jam rate, security, and the cost of operation.

C o m p l i m e n t i n g S C A d v a n c e a r e t w o p r o du c t en h a ncement s: E A SI T R A X Sof t C ou nt a nd PPM A dva nce. E A SI T R A X Sof t C ount is a n integ rated soft ware/ hardware solution that places information collected in the SC Advance note acceptor into a database that can be net worked to multiple locations and be accessed to analyze slot f loor performance. It is currently installed in more than 100,000 games and now available as a portal-based system that allows operators to create customized reports and track performance remotely.

PPM Advance, the next generation of MEI support tools, gives operators complete control of their games with enhanced features to configure and control to meet their unique support needs. Previously, PPM (portable programming module) was a one button f lash tool whereas the PPM Advance is a portable version of MEI’s STS (support and test systems) software. The PPM Advance features a display screen and Bluetooth connectivity that allows operators to perform fast and easy in-field updates for currenc y data, conf ig uration data and soft ware, performance diagnostics, and audit data reporting.

For more information, visit www.meigroup.com.

gamingtechnology

Transact Technologies Incorporated

Casinos underst and the value of providing their slot-playing guests with a great gaming experience. Part of an exceptional gaming experience involves players feeling like they’re being rewarded for the time and money they spend feeding a machine, even if they don’t win the big jackpot.

TransAct Technologies’ Epicentral® Print System delivers that much soughtafter reward to slot players. Epicentral’s promotion and bonusing capabilities enable casinos to develop fine-tuned marketing programs that touch their customers at the most opportune time: when they’re seated at the slot machine.

Direct marketing doesn’t get any more direct than a coupon or bonus delivered directly to the player’s hand.

Deployed in conjunct ion w ith the Epic 950® ticket printer and ServerPort™ device inside the slot

machine, Epicentral is designed to work with existing slot systems and games as it operates on a separate and distinct connection with the printer. As a result, casinos can deploy Epicentral to connect to all existing slot machines regardless of the game's manufacturer to enhance their customers' experience on a realtime basis.

The types of offers that can be executed via the Epicentral promotion and bonusing system are virtually limitless and based on any number of f lexible criteria such as un-carded player time on device, coin in, carded player data, rated player level, earned promotions, or randomly awarded rewards.

R e s u lt s a r e c o n s i s t e nt a c r o s s casinos that implement the Epicentral promotion/ bonusing system. They include higher levels of play, more time on the slots, and delighted players. The numbers speak volumes; specifically

the 100% increase in lower-tier player Average Daily Theoretical (A DT), a 87% redemption rate of coupons targeted at carded players, and a 40% redemption rate of coupons encouraging mid-week visits.

TransAct Technologies’ distribution partner for the Canadian market is Bet Rite Inc. For more information, visit www.betrite.ca.

Don’t miss Canada’s leading industry event...

June 23-25, 2014

Vancouver Convention Centre Vancouver, British Columbia

Summit2014_Gaming_Winter_2013.indd 1

Canadian Gaming Business | 23 13-12-16 12:37 PM

legal

Bitcoin and Land-Based Gaming How virtual currency is changing the game

By Stuart Hoegner In the September issue of Canadian Gaming Law yer, I wrote about the rise of bitcoin and its prospects in the gaming industry. In that article, I focused the bulk of my comments on bitcoin as it relates to internet gaming. But there are also promising applications for bitcoin in the bricks and mortar gaming sector.

It’s almost quaint to look back at the value of bitcoin a scant few months ago.

At the time of writing the CGL piece, one bitcoin was worth $105. Right now, one bitcoin is closing in on $1,000, mak ing the market capitalization almost $10.7B. With recent hearings on virtual currency before the United States Senate, bitcoin is clearly the news story of 2013 that’s not going away.

BITCOIN: A REVIEW

Bitcoin is a completely decentralized, virtual currency that was invented in 2009. Bitcoins are both a currency and a payment system. Bitcoin allows for the private and irreversible holding and transmitting value anywhere and at any time. They can be transferred quickly and with little or no cost or counterparty risk. Bitcoins can be acquired in three ways: you can ‘mine’ them by contributing computing power to securing and auditing the bitcoin ledger (called the blockchain), you can buy them on an exchange for dollars or other currencies, or you can receive them in commerce for goods or services, or as gifts. Bitcoin is a revolutionary concept, tool, and currency, though some might say it’s really the ‘true’ evolution of money, unlike fiat—or government—money.

24 | Winter 2013

KNOCKING AT THE BRICKS AND MORTAR DOOR

Thoug h i t w a s n’t i n v e n t e d f o r it, bitcoin seems t ailor-made for internet g aming and betting. It’s fast, allows for immediate deposits, and is irreversible and low-cost for both players and operators. But I’ve been think ing lately about landbased gaming applications; What can bitcoin offer to terrestrial casinos?

When I blue-sky gaming and bitcoin, I picture bitcoin as one evolution of the casino chip, but better. Chips are handier than cash and can be used to make bets and receive winnings, as well as to buy food and beverages and to tip staff. Within the casino environment, the chip is widely accepted and fungible.

Bitco i n o f fe r s t h e p o s s i b i l it y of conven ience, accept a nce, a nd fungibilit y across all participating casinos. Imagine placing a bet at a craps table by scanning a QR code on t he felt for, respec t ively, t he come line or placing a six or eight.

Winnings could then be paid back to the sa me address from which the bitcoins came. The same basic system could be used in blackjack, roulet te, or even Tex as Hold ’em (with a public tally showing the size of the pot, but not the originating addresses). Picture no stacks of chips needing to be guarded and no casino cages. Bitcoin could be the universal casino chip, only more por t able, convenient, and secure.

Of course, this seems fanciful now.

There are reg ulator y— and likely customer—barriers to such a proposal.

But some bitcoin entrepreneurs are

actively engaging with the land-based gaming industr y. For them, bitcoin has a promising future in gaming writlarge. Bitmarkers, a bitcoin startup in the US, aims to provide a source of liquidity through gaming markers at Las Vegas casinos. One of the ideas behind Bitmarkers is to take deposits from gamblers denominated in bitcoin that can be used at participating casinos for casino credit. At the end of a session of play, the player can buy back her marker or leave the amount to be settled from bitcoins on account with Bitmarkers.

According to Bitmarkers CEO Ardon Lukasiewicz, the concept has received positive feedback from land-based casinos and the Nevada regulatory issues are being fully considered. Lukasiewicz thinks that he could have “the deepest and best source of liquidity in Las Vegas for gamblers.”

The recent Senate hearings and run-up in bitcoin’s price may augur well for the virtual currency. FinCEN and the US Department of Justice appear to believe that no new laws are needed to regulate bitcoin and that those bodies are doing just fine with the tools that they have.

Accordingly, gaming regulators may be prepared to become more engaged with bitcoin. Time will tell if that’s true.

Meanwhile, the power of a decentralized virtual currency is there; we may well have only scratched the surface of what it can offer to land-based gaming.

Stuart Hoegner is a gaming and virtual currencies attorney based in Toronto. He is general counsel to the Bitcoin Alliance of Canada. He can be reached through his firm's website at gamingcounsel.co.

18 Annual Event 18 Annual Event th

th

June 23-25, 2014 Vancouver Convention Centre Vancouver, British Columbia

15

Annual “Where the Canadian Gaming Industry Meets” Canadian Gaming Summit th

PLAN TO ATTEND CANADA’S PREMIER ANNUAL INDUSTRY CONFERENCE AND EXHIBITION!

The Summit sails to Vancouver in 2014

If your company is interested in exhibit or sponsorship opportunities at the Canadian Gaming Summit, please contact Richard Swayze at 866-216-0860 ext. 246 or richards@mediaedge.ca OFFICIAL PUBLICATION:

www.CanadianGamingSummit.com

facilityprofile

Hard Rock Casino Makes Canadian Debut in Vancouver

The entertainment scene in the Lower Mainland got a whole lot sexier with the launch of the Hard Rock Casino Vancouver this December 2013. The first of its kind in Canada, the highly anticipated venue opened its doors on December 20th with a public lighting of the iconic guitar sign, VIP event, and a performance from multi-platinum, Vancouver-based rock band Hedley.

26 | Winter 2013

Located in the vibrant community of Coquitlam, BC, Hard Rock Casino Vancouver is home to unparalleled music, dining, and gaming offerings.

The newly renovated casino boasts an upbeat atmosphere with a new line of amenities and features for guests to enjoy. The 80,000 square foot casino f loor offers more than 950 interactive slot mach ines a nd t able top g a me options such as blackjack, roulette, baccarat, poker, and Pai Gow. “Hard Rock Casino Vancouver is the premiere entertainment destination in Metro Vancouver,” said Raj Mutti, executive director of the Hard Rock Casino Vancouver. “In true rock n’ roll spirit, we’ve designed and extensively renovated the space to offer an abundance of music, dining, and gaming options to appeal to every taste.”

Hard Rock Casino Vancouver has much more to offer than just gaming.

New Horizons in Responsible Gambling Conference

January 27-29, 2014 Vancouver, B.C.

Its 1,100-seat concert venue will welcome many great artists, including Our Lady Peace, Jonny Lang, Macy Gray, Chicago, Taboo from the Black Eyed Peas, and Michael McDonald in the coming months.

The atmosphere of the space truly emanates the Hard Rock Casino vibe.

Music memorabilia is synonymous with the Hard Rock brand. The Vancouver casino pays tribute to the Canadian legends including Neil Young, Red Robinson, Avril Lavigne, and Tegan and Sara.

The Hard Rock Casino’s memorabilia curator, Warwick Stone, is the mastermind behind the extensive collection set to adorn the property. Stone has been a major catalyst in the iconic brand’s evolution, sourcing much of the memorabilia for more than 20 years. It all started when he purchased the Les Paul guitar that belonged to Pete Townsend of The Who for $1,100 in 1986. This piece would later provide the model for the brand’s iconic guitar logo.

For those in pursuit of a party for the senses, Hard Rock Casino Vancouver is home to seven distinct dining spots, including two new bar and lounge venues offering custom cocktails, craft beer and VQA wines. Among the extensive dining and lounge options, two sure to make a mark on Vancouver’s dining scene include STAKE, a destination restaurant that exudes Whistler cabin chic, offering prime cuts, fresh fillets, crisp veggies and perfectly done potatoes every time. At the in-house gastro pub, Asylum, guests will enjoy live music as well as high-end pub fare and cocktails.

Hard Rock Casino Vancouver also offers several casual dining options for those in search for a quick refuel. Four casual eateries include Roadies, a retro-burger window; Fu Express, serving tasty Pan-Asian cuisine; Chip’s, a fresh, made-to-order sandwich counter, and Fuel, a coffee bar with grab-and-go snacks.

Hard Rock Casino Vancouver brings a talented music lineup; an abundance of dining options; artfully displayed rock legend memorabilia; and—of course—the rush one feels while playing on the gaming floor. It is a playground for adults. From ages 19-99, whether younger or older, local or visiting from out of town, there is no lack of entertainment to meet any guest’s preference.

Conference highlights Keynote speaker: Dr. Jeff French, CEO of Strategic Social Marketing How to Design and Deliver Social Programs that Influence Behaviour Live focus group: players discuss what responsible gambling means to them Bonus workshop: energy conservation in gambling facilities

Register today at HorizonsRG.com @HorizonsRG

Canadian Gaming Business | 27

corporateprofile

NOVOMATIC is a familiar name throughout the global gaming industry. The Austrian-based group of companies making up the NOVOMATIC family, form one of the largest global gaming brands. It has built its success on innovation, excellence, and service. Now, NOVOMATIC is in the process of another challenge: building its place in North American markets.

Canadian Gaming Business spoke to Jens Halle, CEO of NOVOMATIC Americas Sales, LLC, to discuss that challenge.

What is NOVOMATIC, and what is its position in the global gaming industry?

The NOVOM ATIC company was founded in 1980 by the entrepreneur Prof. Johann F. Graf and in 2012 had a turnover of 3.2 billion EUR, making the NOVOMATIC Group one of the biggest producers and operators of gaming technologies, and one of the largest integrated gaming companies in the world.

The group employs more than 20,000 staff worldwide, has locations in 43 countries, exports high-tech electronic gaming equipment to 80 countries, and operates more than 215,000 gaming machines in over 1,400 traditional and electronic casinos under ownership and via rental concepts.

And now NOVOMATIC is setting its sights on America?

NOVOMATIC has had business in North America—particularly in Canada—for some years, but we took the decision a year ago to make a carefully planned strategic entry into the mainstream US market and increase our business in Canada.

You chose Florida as your base, why?

Florida is the perfect location for us. We established our base in Fort Lauderdale, giving us easy access to the Caribbean plus excellent travel logistics for Latin America.

Florida won’t be our only US location. We 28 | Winter 2013

recently employed industry veteran Rick Meitzler as our vice president of North American Sales and he is currently setting up a base for us in Chicago. We are also making plans for the west coast territories and that will be another important footprint for us.

Why now? And how do you plan to conduct this expansion?

“Now” because the time is right. We needed a hub location to co-ordinate and support NOVOMATIC’s extensive business in Latin America and Caribbean markets. As managing director of Austrian Gaming Industries, the GmbH, the NOVOMATIC subsidiary responsible for the design, manufacture, sales, and service of world-leading gaming equipment, I am responsible for our Latin American subsidiary companies and the markets they serve. Clearly, having an American base from which I could operate made perfect sense. Having done that, we then addressed NOVOMATIC’s intention to move into North American markets also.

Why has NOVOMATIC never entered the North American market? The tried and tested NOVOMATIC method of market entry is ‘when the time is right’ and always ‘step by step’.

Your company name suggests more than just the continental US. Does that mean that NOVOMATIC will be purely a supplier or do you foresee future operations?

NOVOMATIC Americas covers the entire purpose of the company. It means

all of the Americas, north and south. As for future operations, we never say never.

While we progress with the necessary licensing and product approvals process, further opportunities may present themselves. We will develop our future business on merit, but only after careful research and evaluation in each case.

What are your specific plans for Canada?

Canada has always been an excellent market for NOVOMATIC and we intend to achieve further success in the future. We will be exhibiting at the 2014 Canadian Gaming Summit and we are excited about offering Canadian operators new opportunities to work closely with us in order to extend their gaming offerings.

Any final thoughts?

As one of the largest gaming groups on earth it is natural that NOVOMATIC should be a major force in North America. Our task is to make that happen, so now the real challenge begins. We have the resources of the NOVOMATIC Group behind us and we are building our team here in America.

Add to that our world-leading products, our reputation for excellence, and the high standards of service and support for which NOVOMATIC is world famous, and all the pieces are in place. Our task is to overcome the challenges and succeed in bringing NOVOMATIC to a market where it really belongs.

For more, visit NOVOMATIC's website at www.novomatic.com

Bring your guests the freedom to play their favourite NOVOMATIC NOVO LINE™ machines everywhere in your casino WLAN! Any of the casino‘s configured tablet PCs can be used to play in your smoking area, in a bar or a restaurant or in the comfort of a VIP lounge.

Novomatic Americas LLC Jens Halle • +1 754 333 8000 • jhalle@novomatic.com • www.novomatic.com

marketing

Social Gaming: Does it fit into the gambling landscape?

By Jim Kabrajee

It seems that you can’t attend a gaming/gambling conference today without seeing social gaming/ gambling on the agenda, but where does it fit with gambling in general? Depending on who you ask, it’s either a threat or a gateway to full out casino gambling. Without doubt it is new and growing at a remarkable rate.

First, some statistics; the number of people playing online games worldwide is approaching one billion; nearly three times the number who play online casino games. In North America, the number is closer to 200 million, but surprisingly only 1-2 per cent of those players are playing for money.

Social Gaming has grown exponentially in the past five years and new information confirms that the majority of today’s growth is coming from one device—mobile. This makes sense when we tie in the fact that smartphones now represent 60 per cent of all connected devices worldwide. New growth in social gaming will continue to be dominated by mobile.

Social gaming shouldn’t be confused with online gaming as the players are very different. Social gamers play for the social experience, the interaction with the game and with friends playing the game. The reward is the shared fun and competition with friends and peers. In some games like Candy Crush, players can actually give away their rewards to friends in order to help them advance to higher levels.

30 | Winter 2013

By contrast, online gambling is usually a very private activity. The reward is winning money and losing isn’t a fun experience. There is little social interaction and only some cross-over between the players; the psychology of these two activities is very different.

Fuelling the growth in social gaming are online networks like Facebook. The viral component is the main driving force behind these games and making players on networks like Facebook more valuable because of their social connectivity than players who come to a game site directly. But this also has its downside. Facebook is starting to lose some of its younger users to more picture oriented social networks like Snap Chat or Instagram, which do not lend themselves as well to gaming.

Moreover, social groups tend to burn out on games fairly quickly; their expectation levels are high and their attention spans are inversely low.

Studies show that an average player will only wait seven seconds for a game to load before moving on, and they expect

the game to be immediately intuitive and easy to play. If the game doesn’t meet these expectations, they will reject the game and never return. And even when they do embrace a game, the average life cycle is about seven weeks before they leave for the next game.

While there are many games and play for money games in the market, the fact is that only a small percentage reaches critical mass and therefore profitability. Of all the apps available in the Apple App Store, 85 per cent never get uploaded at all.

I don’t believe that social gaming for money is a true threat to terrestrial casinos and the jury is still out on whether it’s a threat to online gambling. The player bases are very different, their motivations for playing are different, and the playing experience they are get from their game is different.

Jim Kabrajee is the CEO of Marshall Fenn Communications, a marketing agency specializing in casino marketing and lotteries based in Toronto.

Jim can be reached at jimk@marshall-fenn. com. Special thanks to Aideen Shortt, an online gaming consultant in the U.K., for some of the facts presented here.

Don’t let the reviews say “great service, bad air.”

Ensure optimal indoor air quality with state-of-the-art solutions from Clinicair.

Your building is so sealed to the elements that dust, humidity, volatile organic compounds and hidden gases gets trapped inside. and unless treated properly and regularly, this air can become a reservoir for potentially unsafe contaminants and irritants for your staff and guests. trust Clinicair to provide state-of-the-art services specially designed to have everyone breathing easier.

• Medical Grade duct Cleaning • indoor air Quality & Mould testing • superior filtration solutions

Contact Clinicair today to schedule medical-grade duct cleaning and indoor air quality assessment services from Canada’s only professional air quality specialists.

For a free estimate call 647-777-1044 Toll Free: 1-877-318-3588 • clinicair.ca CliniCair is Proud to offer Proud MeMber of

socialgamingsupplement

Industry Roundtable A place for social gaming

The growth of social gaming has given rise to questions concerning its connection with the Canadian gambling industry. What are social games and what role do they have to play in the gaming arena, if any? We asked social gaming experts to weigh in on this evolving issue.

Arryn Blumberg Director National Gaming Practice PwC

Peter Czegledy Partner, Aird & Berlis LLP

Partnerships between gambling companies and social games developers are growing in number. What is the motivation behind this trend?

AB: There are many similarities and synergies between social gaming and traditional gaming companies across a number of areas. Firstly, there's the continued monetization of social gaming.

Traditional gaming companies, especially those that have online experience, understand in detail the process and complexity of converting a play-for-fun player in to a play-for-money player.

32 | Winter 2013

Luc Delany CEO, International Social Games Association (ISGA)

Kenny Huang CEO and co-founder BlueBat Games

Conversely, as with any business, traditional gaming companies are always looking to expand and grow m a rk et ow ner sh ip a n d r e venu e a nd so c i a l g a m i n g h a s so m a ny si m ila r it ies i n it s st r uc t u re a nd format that it’s a natural space for them to move in to. For example, Zy nga launching play-for-money poker on Facebook in the UK. Lastly, there is the expectation that social gaming still has the potential to be “the next big thing” and traditional gaming companies are looking to hedge their bets—excuse the pun—by

David Zbar Senior Vice President, Digital Marshall Fenn Communications

aligning or partnering with those social gaming companies that they see as having the most potential.

PC: Industry partnerships are typically driven by convergent opportunities, whether they a re present in the product model, the customer base, t he t ech nolog y, t he con su mer 's investment in a brand, or any other key element of business. It is the presence of such opportunities, and the desire to capitalize on them in advance of the competition (or at least a fear of potentially not being left behind by the

socialgamingsupplement

F2P (free-to-play) business model, there needs to be a motivating force that drives eng agement based on progression. This is where traditional video game makers thrive; the metagame needs to be rock solid.

The third reason is product content.

There are very high quality gambling gaming content from the gambling companies that have already been made or can be efficiently developed.

And as we know in the social gaming world, content is key.

competition), that is the key motivating factor behind such partnerships.

Originally, many people saw only a simplistic value proposition between the gambling and social gaming industries, with gambling companies extending beyond their historical customer base to reach a broader, younger community, and social gaming companies accessing deeper pocketbooks. While there is some truth to that paradigm, it is a relatively unsophisticated perspective.

A s the social g a ming indust r y continues to evolve and face increasing scrutiny, the brand management, reg ulator y and political lobbying expertise, social protection strategies, a nd cross-m a rket i n g k nowledg e of gambling companies can prove highly beneficial to help shape a more successful result. Similarly, gambling companies, facing expanding markets online and learning to appreciate the need to develop a new kind of customer relationship, will realize enormous value from the socialization constructs, creativity in game design, customization of experience, cross-platform technology capability, and other attributes that are norms in social gaming.

LD : The social games industry and gambling industry are clearly different industries with their own areas of expertise. The gambling industry has a

tried and tested business model with a long history. The social games industry is just a few years old, incredibly fast moving, and innovative.

Some social games companies and some gambling companies feel it is of interest to divest into the other markets, taking their knowledge and modifying it for the relevant audience.

It is important to note that although there may be some overlap between

DZ: One only has to look at the success that Facebook and Zynga have had with social games like Candy Crush Saga and Texas Holdem Poker to understand why there has been a rise in partnerships between gambling companies and social games makers.

The fact is Facebook is the number one portal for social game players and those in the industry want to capitalize on the rising trend of social gaming.

According to SuperData Research, "there are over 35-million monthly social casino players in the United

“The social games industry and gambling industry are clearly different industries with their own areas of expertise.” people who play social games and people who gamble, they are distinct sectors with separate audiences.

KH: The motivation is three-fold. The first is the separation of expertise, as gambling companies have spent years and millions of dollars in research and development into what makes gambling games fun and engaging.

The math models is not something that social game companies can just pick up readily.

On the f lip side, because of the

States and an estimated 170- million players worldwide”. These numbers are sure to increase and the casino industry wants to capitalize. This rapid growth has led to new partnerships and a number of social game makers being acquired. For example, Caesars Entertainment bought Playtika, a leader in the social gaming space, in 2011 to enhance its digital portfolio. It also partnered with Microsoft to showcase brands like the World Series of Poker on the Xbox gaming platform. Moving forward, new relationships between Canadian Gaming Business | 33

socialgamingsupplement

gambling companies and social game makers will help fuel collaboration and innovation making the industry stronger as a whole.

as spur to gambling companies to try and experiment with new and more innovative games, and move away from what some consider to be a a largely uniform market at present.

What role does social gaming play in the gambling industry?

AB : It plays a ver y impor t a nt role. A s w ith bingo, sports betting, land based, online, etc., social gaming is becoming just another line of business for a fully diversified gambling company.

This space cannot be ignored—especially for the large multi-nationals that offer gaming across many or all lines of business. Social gaming is a new way to engage with a new demographic and generation of players who, honestly, are just not interested in bingo or slots no matter how glitzy companies try and make them. The Facebook generation expects and demands the ability to game in a way that suites them and their social circle. A slot machine (virtual or physical) can never give them that and not everyone has the time or inclination to go to a casino on a regular basis.

Social gaming also goes hand in hand with the expansion of mobile devices, as it leverages the simplicity of single unified identities and e-wallets that Facebook or Google already offer, making the “gaming experience” both seamless, and fun. As well, it offers the promise of getting back to what gaming is all about at its heart—something that is simple and offers fun with friends for a reasonable cost that can be accessed whenever and wherever a player wants.

KH : There are two school of thoughts. One is upstream conversion, meaning converting social casino players into gambling players; however there are very limited number of successes so far. The other is downstream conversion, converting gambling players into social players to extend the life time value of the player, which is another way to increase revenue. At the moment however, most of it is a brand proliferation exercise and just another separate revenue stream from social.

PC: The role most people originally focus on is the social game as a “gateway” experience to traditional gambling. This is an understandable initial focus given the similarities of key elements of the gaming and gambling experience and their use of the same basic game format archetypes of poker, slots, blackjack, bingo, craps, etc. For some, this role presents a lucrative goal, while for others it presents a feared calamity.

That role is still heavily debated today.

However, I think that more recent and objective analysis has indicated that the “gateway” role, to the discontent or elation (depending on the hopes or fears one originally had) of many industry participants, is not as clear-cut as was originally assumed. The differences between the activity paradigms have proven to create barriers to what originally was thought to be a smooth path in the “conversion” of social gaming customers into gambling customers. Some gambling businesses have found that a linkage between the two experiences does, in some instances, create customer flow in the reverse direction.

Looking beyond the “gateway” concept, and given the convergence opportunities noted earlier, social gaming—or more specifically, elements of the social gaming experience— have the potential of creating long-term change in the gambling industry, notwithstanding that such change may take some time and may be less overt in nature than the casual observer would appreciate.

LD: Social games do not have a specific role in the gambling industry. They are a fundamentally different game type.

However, as the center of games innovation they may well act 34 | Winter 2013

DZ: Casinos are looking for new audiences, brand extension, growth opportunities, and additional revenue streams. Social games and the "free play" aspect they offer become an important tool to identify new audiences and increase the player base, a key objective in the industry. Social games play an important role as they can be utilized by the industry as a player acquisition tool, allowing casinos to present offers and promotions through this channel. Social games also provide a great opportunity for casinos to introduce their content to new audiences in an engaging manner which increases brand awareness. Social gaming companies bring a new level of innovation to the table which the gambling industry can leverage in many different ways.

What are the misconceptions surrounding social gaming?

AB: The first major misconception is that all social gaming is gambling, it’s not. Social gaming is about playing something just for the fun of it with no expectation or the ability to win real world goods or money. Think playing Monopoly with your family or friends, but online on Facebook for example.

Secondly, social gaming is sometimes painted as this covert channel that gambling companies invented to hook kids in to becoming proper gamblers, while abusing their parents’ credit cards. Social gaming arose as an almost natural evolution out of social media and as with all social media channels is now trying to become a viable, profitable, and long-term business.

PC: There are many misconceptions, particularly with the public at large. To start, there is an assumption that all significant social gaming enterprises were originally developed by--and are currently operated by—gambling companies. This is incorrect; social gaming gambling businesses that have evolved independently from businesses are numerous.

There is also a belief that social gaming enterprises are essentially unprofitable businesses run purely to fulfill the “gateway” role for gambling companies referred to earlier. This is also incorrect; social gaming businesses, not withstanding that they operate under a relatively young and still evolving business model, can be very profitable.

Such misconceptions, while surprising to anyone with any measure of experience in or observation of the social gaming industry, still have a remarkable staying power in the minds of the general public.

LD: There is a misconception that social games and

socialgamingsupplement

gambling games are essentially the same. It is important to set out the fundamental differences. Gambling typically requires consideration, chance, and prize. Even though some social games do have the ability to allow players to pay for elements in a game, they do not have the chance to win a prize or cash out any winnings. There are no stakes and no loss of money as there are no winnings,.

Moreover, social casino st yle g ames are a subset of social games that allow people to play games that resemble the type of game you would typically f ind in a casino. However, these games simply borrow from the mechanics of well-known casino games and deliver them to users in the innovative and social way that is typical of social games. You cannot win money or chase losses.

A further myth, alluded to earlier, is that of crossover.

Out of those that do play casino-style social games, there is no evidence that they are more likely to engage with real money gambling. At a recent conference, Big Fish, one of our members, when accounting for its commercial decision not to engage in real money games, outlined its experience that the audiences for two types of game are different.

For example, gamblers do not want to show off their wins, whereas social casino players want to share their success with their friends. Sharing f inancial gains in a social environment is likely to be awkward. In essence, reasons people play social games include having fun, gaining a sense of achievement, socializing, and just having something to do. They lack a core ingredient of why people gamble—to win money.

KH: The biggest misconception from an investor or someone looking into the social casino industry is the real money cash out perspective. The F2P social gaming business model is not the same as online gaming model.

Another misconception from the gambling companies that are new to the social casino space is the consideration of the low average revenue per user (ARPU). If we are to compare apples to apples, then we should really be considering the average revenue per paying user (ARPPU) of a social game vs the ARPU of a gambling game, which are comparable.

DZ : I think the challenge now comes in determining what qualif ies as entertainment and what qualif ies as gambling. Social gaming, in its truest form, is about being social and has an entertainment value attached to it. You play with and compete against others. You are aware of activities happening around you and the overall environment is very different from traditional on-property casino gambling.

For starters, most participants never spend any money.

Players are being rewarded with additional time or free currency to play more. If they are spending money it is generally to buy more time to play the game again.

Gambling, by def inition, involves a buy-in and the opportunity to win a prize. Stakes can rise quickly and the entertainment value can decrease depending on the environment. I think as the two become more entwined it will be harder to separate one form from the other.

What lessons can the social gaming community take from the gambling industry?

AB: There are many lessons that can be shared, from how not to do things to leading practices. I would say that the lessons go both ways though, given that many social gaming companies have fantastic e-commerce experiences that traditional gambling companies looking to go online could benefit from.

One of the key areas is regulatory compliance. Although social gaming is not currently regulated, I have a feeling we will quickly get to a point where it is. Taking the lessons from how traditional gaming companies manage compliance and engage with regulators proactively could really save time and effort.

“The social gaming community is seeing growing calls for standardization, customer education and protection, and regulation.”

The second lesson is premium branding. Traditional gaming companies tend to have access to sought after brands like Star Trek and Plants Vs. Zombies. These are also brands which could be of benefit to social gaming companies.

Then there are the player rewards. Bonusing and player incentives is a key part of what traditional gaming companies do. Social gaming companies could definitely learn from this as they move to real money play.

Lastly, there's the back office. Although not sexy, the reality of inter-jurisdictional tax compliance, running a multinational company, distributed workforce, shared service centers, etc., is something traditional gaming companies are very good at. As social gaming companies grow, they are going to have to get good at it too, quickly.

PC: The social gaming community is seeing growing calls for standardization, customer education and protection, and regulation. This will require a response, whether internally or externally generated. As a relatively mature industry with significant overlapping elements and a long history of experience in all of these areas, the gambling industry can offer significant guidance.

Gambling businesses operate successfully in a heavily regulated and scrutinized environment, perhaps more so than any other industr y. Consequently, they have developed hir ing, secur it y, f ina ncial t ra nsactions, operations and information management, and other practices that are highly evolved and standardized, and which operate within minimal tolerances. Such internal practices, although not all fully applicable or adaptable Canadian Gaming Business | 35

socialgamingsupplement

“As social gaming and casinos become more entwined, there will be a need for social gaming companies to differentiate and stand out from their competition.” to the social gaming industr y, can still serve as valuable developmental guides. Just as important are the lessons that g ambling companies can provide in external areas such as customer experience design, customer suppor t , m a rket i n g, operat ion a l transparency, social protection, and adherence to relevant reg ulator y structures.

Social gaming may be very different from gambling, but it can significantly benef it from the experience of the gambling industry.

LD: As mentioned, social games and gambling pose different levels of risks and therefore should be subject to different regulatory and practice f r a me work s. T he concer n s t h at gambling regulation tries to prevent or solve, such as gambling addiction, are not relevant to social games. However, in so far as the gambling industry upholds socially responsible values, the ISGA believes our industry must do the same and in a way which is appropriate for social games.

Earlier this month, we released a set of best practice principles as a first benchmark to help ensure the industry acts responsibly and consistently with standards designed for appropriate consumer protection. The principles cover f ive areas intended to ensure that games and their providers adhere to necessary laws and regulations, are transparent in their functionality, treat purchases and payments responsibly, manage player privacy appropriately and use appropriate advertising models.

At the same time, we have launched resea rch into socia l g a mes. The research will comprehensively analyze social games from both business and consumer perspectives. We hope it will offer new perspectives on social games, 36 | Winter 2013

and help policy makers and the public differentiate between real and perceived risks. Importantly, it will help refine and inform our best practice principles.

KH : Security and privacy are always concerns, even if we consider that they don't need to be as stringent. There are certain best practices that the gambling community does well related to design that I think should be picked up by the social gaming community. Designs that are related to chance based on the fairness of the math model. We still hear certain social games that “rig” certain play sessions to leverage retention.

Ultimately, such “rigged” practices will be counter-productive and players will eventually play enough to recognize the real math models.

DZ: Social gaming can look at the casino industry for best practices on how to capture new audiences. The social gaming market is becoming increasingly saturated. As social gaming and casinos become more entwined there will be a need for social gaming companies to differentiate and stand out from their competition. Inf luencing player behaviour is one way to do that, and casinos can offer valuable insight in this area. For example, venue design can influence player behaviour, and casinos have been testing new design concepts for years to ensure players are happy in the environment they play in. I think when you combine the data available from social gaming analytics with tactics used to capture new audiences by casinos you have a very powerful combination.

Outside of gambling, what are the major concerns surrounding social gaming?

AB: There are many nuances and perspectives on the concerns, and

ma ny of the concer ns I hea r a re very similar or the same for online g a ming, e- commerce, a nd socia l gaming. One is the question, “Is it gambling or not?” This seems to remain as one of the main concerns or questions that those in and around the industry want answered.

Further concerns revolve around IT security and data management when it comes to player data; the targeting of underage vulnerable players; and whether or not social gaming is addictive considering you have to pay real money as part of play or at least to get started, and whether that has a social aspect.

Furthermore, there are concerns about whether or not social gaming should be rated much like console games or films; issues as to where the games are located and who is operating them; and general concerns around corporate transparency and governance; that is, giving both investors and players the comfort that social gaming companies are well run responsible corporate citizens that can be held accountable for their actions PC: Social gaming is a business that involves customers participating in an online game experience. Regardless of what the actual “game” is, it will therefore always be susceptible to the concerns that are associated with any online activity. Such concerns include ensuring that the activity is not taking advantage of the customer unfairly by allowing an inappropriate customer to participate (either because they are too young, vulnerable, or are not permitted to participate because of applicable local law); appropriately protecting and managing the collection, use, retention, and destruction of customers’ personal and financial information; providing a clear understanding to the customer of the terms and conditions of participation, making clear what are the for-pay elements of participation and ensuring that the agreed expectations in relation to such payment are consistently met.

Further concerns regard managing the proper usage of the interactive and other elements of participation that allow for creative (but potentially inappropriate) ex pression by the customer, and maintaining regulatory compliance in a business that is cross-jurisdictional and multi- platform based.

socialgamingsupplement LD: Commercial practices aimed at children are a concern for certain regulators. On September 26, the UK’s Office of Fair Trading (OFT) published its report on Children and Online Games. The report is the result of an investigation into the ways in which online and appbased games encourage children to make purchases. The report sets out eight draft principles, which show the OFT’s view of how social games companies can ensure legal compliance. The OFT’s principles may set a precedent for regulatory bodies in other countries to follow.

The principles cover the application of consumer regulations to the social games industry in general. However, the central issues which they aim to address are exploitative commercial practices in games for children and children overspending on their parents’ accounts. In-game commercial practices in online games have also been the subject of a ruling in Germany where the law does not allow for direct exhortations to children to purchase.

The ISGA believes that games aimed at children should be regulated accordingly and look s for ward to work ing w ith regulators to make sure that this is the case. However, it is important to note that social games are far from an activity just for children. Statistics regularly identify the average player as being female and over 30. It is also worth noting that the problem of children overspending on their parents’ accounts is not particular to the social games industry.

We hope that regulation of in-app purch a ses does not under m ine t he free-to-play model which has been so successful both in making creative content commercially viable and bringing value to the consumer in terms of lower cost, choice, and flexibility.

KH: Any social games that replicate casino genres should have an age limit, even if it's just through the Facebook/Apple/Google permissions. Although not social casino specific, we hear stories in the media about kids running up thousands of dollars buying virtual goods on their parents’ credit card in certain games. Every time there’s a story like that, it hurts the whole gaming industry. Even if there’s no cash out, I believe there should a way to protect the upper limits of the whale spending.

The other big concern is the time spent in the games themselves. This is more of a general concern regarding games in

general. For example, we’ve heard of World of Warcraft stories. I believe there can be some best practices at the root of design to break the flow when the player’s time reaches dangerous levels (i.e. control time using ticketing system or daily virtual consumptions).

F i n a l l y, t h e r e a r e c o n c e r n s regarding the specific social casino genre. The argument is that it’s a gateway and can lead to gambling.

I’m of the opinion that the innovation in social gaming will create certain hybrids that will make it very hard to label a game a specific genre. Thus, I would say certain best practices need to go back to the root of design.

For example, are we leveraging the skinner box principle a little too much?

Ultimately, both the players and the g ame ma kers have to share responsibility for these concerns.

Some form of best practices from the design would be a good step. We can also take some lessons from the traditional video gaming industry where they use a rating system for age

appropriateness regarding issues such as sex, violence, etc.

DZ: I think online safety is a major concern surrounding social gaming.

A large amount of time is being spent online by social gamers which creates risks for those playing. Technical risks can occur from viruses, spy ware, and malicious software. There are online predators roaming the internet who start social interactions with individuals in order to gain personal or financial information.

There are also social risks that can be exposed through social gaming.

Once upon time, playing a game on the computer was an individual activity, but with multiplayer games and online communities growing in popularity, instant chat capability and messaging occurring during play, there are new opportunities for illegal activity like identity theft and child solicitation. It is important to educate the social gaming community on the associated risks and how best to prevent them.

ANALYTICS

Predict and influence consumer behavior and the bottom line.

sas.com/ca/CFMCasino for a complimentary white paper

© 2013 SAS Institute Inc. All rights reserved. S117182US.1113

Canadian Gaming Business | 37

finance

Customer Dollars Are Tight in the Gaming Industry

Adapting your business model offers both short- and long-term gains

By Simon Beer and Lesley Luk Virtually all industries are still dealing with the effects of the global financial crisis. The gaming industry is no different, with organizations facing the common challenge of a slowly improving economy where capital is limited and revenue growth difficult.

Unfortunately, the gaming industry faces an additional challenge of changing customer demographics. The changing demographics of the gaming customer complicate matters, as younger players are not bolstering the weekly purchase patterns of traditional, older lottery ticket buyers.

In an environment where revenue growth can’t be relied on, cost optimization becomes critical for gaming organizations looking to prepare for a more propitious future. Importantly, optimization means more than cost cutting. While direct reductions are a key optimization component, it’s also critical to transform the operating model into one that can sustain those cuts, so the same expenses don’t creep back into the business.

Gaming organizations can learn from some of the cost optimization strategies and drivers that are prevalent in all industries in the postfinancial crisis economy. Gaming organizations have significantly more control over operating costs than over margins, so applying immediate cost optimization measures, such as the following, can deliver faster, more demonstrable returns:

Understand the cost of different products and focus on what you can affect. This can be more challenging than it sounds. Everyone looks to

innovate, but leading organizations have a deep understanding of their internal cost structure and employ robust allocation methodologies, so they can assess each product line, target investments, and quickly respond to market changes. By effectively navigating these complexities, organizations can make the structural, process, and capabilities changes they need to sustain performance going forward.

38 | Winter 2013

Obtain accurate information to drive business insight. To optimize

costs in ways that support strategic business objectives and financial goals, organizations need data and information that is as insightful and accurate as possible.

This includes streamlining and standardizing finance operations; designing and establishing performance management systems; applying business intelligence initiatives; optimizing overall internal supply chain costs; improving product design efficiency; looking for opportunities to reduce your effective tax rate, if applicable; and establishing more effective approaches to planning, budgeting, and forecasting.

Undertake specific optimization measures.

Consider centralizing services for regional back-office and midoffice operations (and outsourcing where advantageous). This

represents a structural change that can improve organizational flexibility, drive lean operations, and significantly reduce your cost base.

Look at maximizing the use of lower cost delivery channels, such as online gaming, which has the additional advantage of appealing to the more youthful gaming demographic that is increasingly less prone to buying tickets.

These are just a few options gaming organizations can look at as they begin to consider cost optimization, a process that pays its advantages forward quite nicely. For example, although it can be difficult to uncover revenue growth opportunities, once you have a more efficient, leaner cost structure in place, it can be significantly less expensive to test different revenue growth options and develop new gaming and lottery products.

This is critical, as innovative and new products are needed to re-acquire some of the customer base that has been lost.

Knowing how and where to focus those innovation dollars is another advantage of an efficient, forward-looking, strategically relevant cost structure.

By focusing on cost optimization and the sustainability of changes to your operating model, you can not only adapt more effectively to industry change, but you’ll also have the operating/cost structures in place to seize key opportunities that will lead to success in the future.

To learn more about cost optimization opportunities and strategies for your organization, please contact Simon Beer at beer1@kpmg.ca, Senior Manager, Advisory, Transactions & Restructuring, KPMG; or Lesley Luk at lluk@kpmg.ca, Senior Manager, Audit, Technology, Media and Telecommunications, KPMG.

GTECH brings the best gaming products to players around the world through millions of hours of expertise across all segments and channels.

From land-based to interactive, we are Bringing Gaming to Life!

WWW.SPIELO.COM

FOR MORE INFORMATION CALL 1.800.561.GAME (4263) or 506.878.6000 Email us at lottery.gaming@spielo.com

Š 2013 GTECH. All rights reserved. All trademarks and logos noted herein are trademarks owned by, or licensed to GTECH Corporation.

The highly anticipated encore to Michael Jackson King of PopTM Michael Jackson Wanna Be Startin’ Somethin’™ delivers all the fun of Michael Jackson King of Pop with even more bonuses, more music, and more Michael! Put the power of the world’s greatest pop superstar on your floor and prepare for another record-breaking performance! © 2013 Triumph International, Inc. under license from Bravado Merchandising.

All rights reserved. © 2013 Bally Technologies. All rights reserved.Images are for illustration purposes only and are subject to change.

40 | Winter 2013

BallyTech.com Protm • V22/42