By Frank Legato   Wed, Aug 05, 2009

Aristocrat Technologies is no stranger to revolutionary change. In the slot business, the manufacturing arm of Australia’s Aristocrat Leisure Limited has caused its own share of revolution—from introducing the world to the multi-line video genre in the 1990s to a series of groundbreaking slot innovations this decade.

This year, the 56-year-old slot manufacturer is embarking on another revolution—this time, of its own operations. After five months on the job, new CEO and managing director Jamie Odell announced a new executive leadership team and a “business transformation strategy,” to be revealed when the company’s half-year results are announced August 25.

“I am confident that we now have the right structure and the optimum blend of skills, industry experience and external perspectives to ensure we will be successful in executing our plans to lift performance to meet our potential and the expectations of our stakeholders,” Odell said in announcing the new executive leadership.

Among the new executives are Toni Korsanos, a veteran of corporate finance who will serve as chief financial officer. Veteran banking executive Sam Nickless has been named “business transformation director.”

Much of the new talent will focus on new slot products. The research and development function has been re-dubbed “Design and Development,” and will continue to be led by David Hughes, whose title will now be chief design and development officer. There is a new chief technology officer, Julius Patta, who will be based in the United States.

And it is the United States—along with the rest of North America—that likely will be ground zero for Aristocrat’s “business transformation.”

American Pie
North America has been the epicenter for Aristocrat’s flat results over the past two years. According to Nick Khin, president of Aristocrat Americas, it also will be the epicenter of the slot-maker’s return to prominence.

That one needs to write of Aristocrat’s “return” to prominence would have been unheard-of early this decade, when Aristocrat was at the apex of a 10-year ride of U.S. market success. It started in the early-to-mid 1990s, with the introduction in Native American markets of the company’s first video slots. Aristocrat’s multi-line video format, with low denominations, a new math model and—importantly—second-screen bonus events, took the U.S. market by storm. Within a few years, all slot-makers would be offering what became known as “Australian-style video.”

It can be argued that Aristocrat’s game format changed the entire slot industry, from the emergence of WMS Gaming as a force in video to IGT revamping its video line, and ultimately to the prominence today of multi-line formats both in video and stepper genres.

Aristocrat, though, saved its biggest innovations for early this decade, when the slot-maker took flight with game styles like the Hyperlink multiple progressive, the “Reel Power” scatter-pay slot, the “Bonus Bank” series of games that offered bonus events with an ante wager, and a host of slots that mixed and matched these new game styles (all, as would soon be seen, to be much copied by other slot manufacturers).

By 2003, Aristocrat had firmly established itself as one of the top innovators in the business. However, what should have been its finest hour was also the genesis of the company’s problems. Former CEO Des Randall was fired that year, for allegedly hiding sales problems that led to profits missing projections by wide marks. (Randall subsequently lost a lawsuit against the company related to his dismissal.)

Randall’s replacement, Paul Oneile, was more a victim of the times than anything. His first few years were spent righting the ship, restoring investor confidence as his marketing team worked to exploit the benefits of the great innovations of the previous few years.

Then, the recession hit, and for Aristocrat the timing couldn’t have been worse. Replacement cycles lengthened, capital budgets dried up and projects went on hold just as the manufacturer was rolling out its new operating system, Gen7, and Viridian cabinet. The new game format was designed to fit seamlessly into the networked slot floor—which, by the way, was also largely put on hold as server-based floors like CityCenter were delayed.

Gen7 and Viridian were introduced to the industry at the Global Gaming Expo in November 2007, just as the recession was deepening. By the time the format was approved and available to casinos, it was the second quarter of 2008, and casinos were not exactly on a buying spree.

“Last year was a bit of a difficult year,” says Khin. “During the first half, we struggled to get the new platform and cabinet approved. That certainly hurt us in ship share, which was around 11 percent for the first half, the lowest in quite some time.”

Added to the problem of shipping new products was a drop in revenue from revenue-sharing slots. “We had issues in getting our key participation games approved,” Khin says. “We had no new participation games approved for the whole year of 2008.”

By the time Oneile resigned last September, Aristocrat was back in the same spot as when he had taken over. Stock price, which was more than A$12 a few years ago, had sunk below $A4. The company’s loss of a shareholder lawsuit related to profit write-downs under Randall only aggravated the situation.

Enter Odell, a former operations executive for Australian beverage giant Foster’s. According to Khin, the new chief dove in with both feet. “His team spent significant time redefining us, establishing our key priorities, making sure we’re playing in the right segments,” he says. “It’s been great having him on board, because it is an opportune time for us to be reexamining where we’re going.

“Another thing he added: a very strong realization in Australia that the U.S. market is really where our opportunity lies right now. It’s almost 50 percent of Aristocrat’s total revenue and total profit, so we need to be more focused on this particular market.”

Next Generation
Aristocrat Americas, the Las Vegas-based subsidiary of Aristocrat Technologies that led the new product surge early this decade, appears to be primed for another product renaissance. “We’re back at around 14 percent in terms of ship share, and Gen7 and Viridian are approved in all jurisdictions, as well as a good number of games in the new format,” says Khin.

In addition to continued rollout of last year’s introductions in the new format, 2009 marks a new direction in slot development and marketing for Aristocrat. Early this year, Khin brought in Seamus McGill, a slot industry veteran who formerly held executive posts at WMS Gaming and Cyberview Technology, as chief operating officer of Aristocrat Americas.

McGill has revamped the sales structure and implemented a new product strategy, beginning with the key area of recurring-revenue games.

“We restructured a part of the business that had not been structured—gaming operations,” McGill explains. “I created a team headed by Dallas Orchard (now director of gaming operations) devoted to getting attention focused on gaming operations that it did not have before.”

There already have been two major participation-game introductions this year, beginning with a reel-spinning version of “The Sopranos,” which takes the famous brand first introduced in video and places it in Aristocrat’s increasingly popular stepper series.

However, the new emphasis on participation games reached a peak more recently with a game that could be the slot-maker’s biggest success of the decade: JAWS.

For Aristocrat, JAWS, a Hyperlink multi-progressive game based on the shark-attack film series of the 1970s, represents both a reliance on the best of the past and a totally new direction for the future. While exploiting the strengths of the Hyperlink and Bonus Bank game styles, the product totally immerses itself in the branded theme, which is something of a departure from Aristocrat’s established M.O.

The games have special ocean-blue cabinets, trimmed in lighting that changes different colors with various bonus events. Each machine has a moving mechanical buoy topper that lights up and rings during game play. There are speakers shaped like shark gills, and even a “shark tooth” spin button.

The JAWS-themed cabinets are banked together under an LCD screen embedded in the signage that shows clips from the films and images from the games’ bonus features. The face of each game screen, framing the reels, depicts a bubbling underwater scene. It is the farthest Aristocrat has ever gone in “theming” a slot machine.

Players are already familiar with the Hyperlink bonus, but with JAWS, they also find a series of themed bonus events in addition to the random progressive event—a feature borrowed from the popular Bonus Bank series, requiring an ante bet from the player. There are events like “Golden Jaw,” which has the player putting his hand inside the shark’s mouth to reveal credit amounts hidden in the teeth (you have to get your hand out before the jaws slam shut); or “Shark Hunter,” which has you touching spots on the screen until you locate the shark.

“The cabinets are different than anything in the U.S. market,” says Doug Fallon, director of marketing for Aristocrat. “Our R&D groups around the world worked together to create the JAWS-themed cabinet. To increase the player experience, our mechanical engineering team worked with our game designers and artists to design a product that would provide mass appeal to a wide variety of players.”

So far, it appears the company has achieved that “mass appeal” with JAWS. A few months after its approval, there was expected to be well over 1,000 units in the field. “And they’re all doing well,” says Khin, who adds that immersion in a theme will be a hallmark of branded Aristocrat slots going forward. “We are going to come out with more fully themed products in the future,” he says. “We’re not taking anything away from our home-grown, organic brands, but as a company, we definitely have realized we need to be more focused on brands and licenses.”

“We’re going to be out there looking for new brands,” adds McGill, “but there are also internal brands we will be reinvigorating over the next couple of years. We’re putting a couple of dedicated development teams together to do that.”

Focus on America
Both Khin and McGill say there are more new product revelations to come at Global Gaming Expo in November, although details are being kept close to the vest.

“New technologies are something we are diligently working on right now,” Khin says. “There will be new product styles, new bonusing concepts and new progressive styles launched at G2E.”

McGill adds that the company also is currently improving its server-based technology, thanks to its acquisition two years ago of Sweden’s ACE Interactive. ACE created a turn-key server-based video lottery system for the Norwegian Lottery.

“We’ve been presenting that technology in North America, not only for VIPs but for casino-style server-based technology,” McGill says. “We’re in the final stages of relocating the ACE development team to the U.S. That will be complete by the end of the calendar year, and we will be offering the ACE product in a banked environment in casinos.”

To market all this new technology, McGill has revamped Aristocrat’s sales structure, dividing North America into four dedicated regions with additional sales reps to focus on existing customers.

New markets in the Americas also will be exploited, McGill says. The company has been steadily increasing its presence in South America, where he says Aristocrat now enjoys a 25-30 percent presence on any given gaming floor. The company also is poised to enter the Mexican market, where Class III games are expected to join the Class II slots already there in the near future. “The beauty of the Mexican market is that we already have developed an extensive library of games in Spanish,” McGill says.

However, the clear focus for Aristocrat for the near future will be on increasing market share in the United States. Khin says that even before the new products are introduced, the current crop of games on Gen7 and Viridian is likely to gain new momentum now that approvals are complete. “I don’t think we as a company have fully taken advantage of the capabilities of Gen7,” he says. “It’s still relatively new in the market, and our MKVI products are still performing extremely well on the floor—that makes it difficult for us to encourage our customers to replace them.”

In addition to continuing the rollout of Gen7, Khin says another reason for optimism for Aristocrat in the U.S. market is an entirely new slot genre for the company, the multi-line stepper. The company has perfected its RFX Stepper series, and is in the process of re-releasing many of its most popular titles in stepper form, as well as a number of new stepper-only titles.

“Up until now, we’ve only been playing in the video space, which is 45 percent of the market,” says Khin. “Our 13 percent or 14 percent overall market share may not seem impressive, but when you’re only working in half the market, that’s pretty good. Now, with our stepper product approved, we will definitely increase sales in North America.”

Even with all the challenges in front of the company—and the difficult economy in which the industry in general finds itself—Khin says he is confident the company’s new direction will take advantage of its strongest attribute, its R&D, and the new technologies that are sure to keep pouring forth from the slot-maker’s engineers in the coming months.
“The RFX Stepper product represents a tremendous opportunity,” says Khin. “Our system business is very strong. We had a record year last year, picking up seven casinos in Oklahoma. And there is a tremendous opportunity in our pipeline of recurring-revenue products.”

The nature of that product stream will become more clear two months from now, when the next generation of Aristocrat innovations is launched at G2E.

“Our U.S. developers really understand the importance of establishing the strength of that division of the company,” says McGill.

“Stay tuned.”
   
   

By Caitlin McGarry   Wed, Aug 05, 2009

Folding tables and dog-eared card decks are still the norm at neighborhood poker nights, but casinos have long since upgraded. Gaming manufacturers have used technological advancements to transform table games into seamlessly automated experiences.

From player tracking systems and radio frequency identification chips to table management systems and electronic games, the world of table technology just got a little more interesting.

Selling Solutions
New technology has been molded and shaped to fit the needs of the gaming industry, effectively ensuring that table games flow smoothly and quickly. From automated deck shufflers to touch-screen monitors that make betting as simple as touching an embedded monitor, gaming manufacturers are always one step ahead.

Roger Hawkins, TCS John Huxley’s CEO for the Americas, said his company’s TouchTable products meld electronic advancements and live-action play with a touch-screen betting process monitored by a live dealer.

“With its unique ability to fuse technology and traditional products, TCS John Huxley has been working closely with numerous operators to develop a range of touch-screen multi-player table game products that still uphold the true essence of live gaming,” Hawkins says. “All these games feature hybrid electronic game platforms and live game content that allows players to play against a live roulette wheel, dice shaker or card shoe, but strike the perfect balance between the thrill of live gaming and the advantages of electronic betting.”

Bally Technologies provides another touch-screen solution for a busy casino floor, though its TableView product is a system intended to aid operators rather than table game players.

“Our host CMS system is all intelligence, all the backbone that they run their floor with,” says Jerry McGowan, Bally Technologies’ regional sales manager for table management systems. “(TableView) is really the access point for that. The nice part about it in terms of the guests is the guests are now getting more accurate ratings. The floor supervisor is given more time to concentrate on them.

“Everyone has spread their floors so thin. We used to watch one table, and that kind of evolved itself to where we watch six tables. They did that over the years to save money, but there was never a tool in place to help them do that. TableView is that tool.”

Solutions like TCS John Huxley’s TouchTable and Bally Technologies’ TableView are evidence that table game technology is being successfully implemented across the board, helping everyone from casino moguls to poker players enjoy the table game experience.

Safe and Sound
Radio frequency identification technology has been used in retail establishments like Wal-Mart to aid in loss prevention, and gaming operators are now putting the technology to use on casino floors. RFID chips assist with both security measures and player tracking for marketing purposes, yet some tech experts think RFID may not be all it’s cracked up to be.

Those companies that have successfully used RFID technology to produce gaming solutions for the casino floor include Gaming Partners International, a company that has had huge success supplying RFID chips to international properties, including the recently opened City of Dreams resort in Macau. GPI Executive Vice President and COO Greg Gronau says RFID chips make table games more secure and prevent counterfeiting activity.

“RFID chips play a dual role,” Gronau says. “First and foremost is security at the table. Chips are the currency of the casinos, and what the RFID does is allow the casinos to make sure that they’re authentic and prevent counterfeiting, similar to the serial number on the dollar bill. This is a serialized chip.”

IGT Director of Table Games Tim Richards says the company has used RFID technology for player-tracking purposes, an aspect of implementing the technology that has been a challenge for gaming manufacturers.

“IGT has been putting out a system for slot purposes that covered the majority of the casino but not table games,” Richards says. “We provide software quickly and easily that covers the accounting aspect, the tracking aspect and the management of table games at the table game itself. The second step in teaming up with PGI initially with the RFID technology is how do we begin to combine bonuses between tables and slots, how do we get accurate play on table games and how do we expand our bonusing concept across table games? How do we take those same winning ideas to table games?”

Gronau says the confusion surrounding implementation of RFID technology is similar to the early years of server-based gaming for slot machines. It took years, but manufacturers and operators have successfully brought server-based technology to the casino floor. The same could hold true for RFID chips.

“When people first heard of RFID, they said, ‘Holy cow, it’s going to be in every casino—you can see who the player is and what he’s betting,’” Gronau says. “You have to step back and look at that and say, ‘Does the end user really want his name out there, and all his information?’

“It’s taken a few years to determine how this technology should come to market. I think it will be successful as the cost of the chips comes down, and it will be integrated more and more. From a security standpoint, it’s been very successful. That’s what’s driven a lot of this, up to today. We’re getting into the next stage, which is how do we fit this into the player tracking and what does that do for the operator?”

Bally Technologies is one company that considered using RFID technology to supply casino operators with better security, but then turned its attentions to optical technology.

“We are still actively looking for a solution for bet tracking, and we feel optics are still the best way to go,” says Jerry McGowan, Bally product manager for TableView. “Domestically, it seems in a lot of ways RFID has been abandoned for bet tracking, not for cage security. It’s good as far as inventory goes. Internationally, I find there is a lot of belief in that still.

“In terms of Bally, we feel more strongly about an optical solution only because the percentages that I’ve been told are in the 93 percent range for accuracy for RFID bet recognition. There are a lot of variables, chips not being read, too many. Our optical was giving us about 99.6 percent accuracy. It depends upon line of sight, but we still believe more strongly in that for table games as a solution. The price point is high because they have to re-chip their floors. What we’re actively working on is a way to use optical technology, but in a way that you don’t have to re-chip your floor.”

Bally is currently working to further develop its optical technology, and has already found several willing sites to beta test the product.

Electric Avenue
With new technology streamlining the table game experience, it seems only fitting that manufacturers turn to automated tables to bring a new generation of table games to life.

Shuffle Master has delivered its i-Table to the market, combining both electronic and personal touches to simulate a live table game. The i-Table is comprised of touch-screen stations embedded within the table itself. While automating the betting process, Shuffle Master emphasizes the presence of a live dealer to provide a traditional table game experience.

“The i-Table is a good example of using technology to its best to enhance the experience for the table and security aspects and benefit for the operator of the property,” says Nathan Wadds, Shuffle Master’s senior vice president of research and development. “It’s quite unique in that it’s been integrated in a fairly seamless fashion. Other products that have been developed over time generally don’t feel and operate like a real table game would.

“Shuffle Master has brought a lot of their expertise in table games and experience to the i-Table product, and the engineering talent in creating a table that plays and looks like an actual table. It breaks down barriers for players. The i-Table gives you that experience of being at a real table and the rubbing-elbows aspect of playing a game of blackjack and seeing what other people’s hands are, and the full experience of playing the game. That’s a unique aspect of the i-Table.”

IGT is also deep in the world of electronic table games, having recently introduced the M-P Series for multi-player table games. The company also distributes DigiDeal, which is another electronic solution. Both the M-P suite and DigiDeal fulfill a niche market—one that needs electronic answers to gaming problems. Many jurisdictions prohibit live table games, and electronic tables circumvent those stipulations with automated betting and dealing. According to Richards, there is a time and place for both electronic and live tables.

“I think live games will continue to exist, especially on the higher-denom tables and in more competitive markets,” Richards says. “Electronic table games are great in slot-only markets, racino markets, lottery markets. That provides a lot of exposure for folks who don’t go to live table game casinos, so when they do go, they’re comfortable with the games. In the live table game casinos, many of the properties are obviously struggling on the lower end; they offer a $5 game as a loss leader just to get people in the door. Today’s pressure is certainly to be profitable, and they’re very much looking at how to make those games more efficient or how to make those products that don’t have the overhead of a live game.”

By Rich Geller   Wed, Aug 05, 2009

Like all companies, Casinos Austria International is wondering what the future looks like.

“Now that we are halfway through 2009 we can see that the casino business in general has been affected by the economic crisis around the world,” says Paul Herzfeld, the operator’s CEO.

Herzfeld is not just stating the obvious. His position, as head of the Casinos Austria AG unit responsible for—as of June 2009—68 casinos in 18 countries on six continents and 10 cruise ships, makes his observations particularly well informed.

“It is interesting to notice that while we see some impact on the revenues in European casinos, we have practically no impact in Australia and also not in South America,” says Herzfeld. “Clearly, there is some distinction between different areas in the world. Maybe this depends a bit on how closely these economies are linked with the U.S., and to what happens in the financial markets.”

Company results for the first half of 2009 were not yet available for inclusion here. But regardless of any surprises good or bad, one big effect of the worldwide economic situation on the Austrian gaming concern has been to hamper previously announced plans to become more active internationally in the areas of lottery, sports betting and VLT operation.

Future Games
If such a move sounds overly ambitious for a company primarily known for its casino operations, perhaps a closer look at Casinos Austria and its subsidiaries is in order.

It all starts with parent company Casinos Austria AG, whose beginnings date back to the first legal Austrian casinos and whose immediate forerunner was formed to take over all casinos in the country in 1967. The company has maintained monopoly operator status in Austria since 1968.

When the company was asked to consult on the formation of a government-owned casino industry in The Netherlands in 1976, it led to the creation of wholly owned subsidiary Casinos Austria International the following year. The reason for the separate entity was to bring all anticipated international activities into a single organizational structure. The move proved necessary as, since having been established, CAI has opened more than 215 casinos in 35 countries and on 90 cruise ships.

In 1983, Casinos Austria AG was asked by the Austrian finance ministry to become involved in the nation’s lottery system. That involvement has grown over the years to where the company currently holds a 68 percent interest in Austrian Lotteries. Games offered include lotto, toto, preprinted raffle tickets, scratch cards and break-open tickets. Austrian Lotteries sales outlets also sell tickets for the pan-European EuroMillions game, which, like the Powerball game in the U.S., offers rollover jackpots that on occasion have surpassed the €180 million mark.
   
Online All The Time
Today, a 50-50 joint venture of Casinos Austria AG and Austrian Lotteries, operating under the name Entertainment GmbH, owns 100 percent of online gaming operator win2day and a string of VLT locations doing business under the brand WINWIN. Entertainment also owns 56 percent of sports betting provider tipp3.

Online gaming site win2day.at debuted in February 2003. It replaced an earlier effort at serving the home market that had been operating since 1998. Users need to supply detailed information when registering, to assure the operator that the individual is a resident of Austria. When accessing by computer, a user can buy virtual and standard lottery products, play a host of online casino games and skill games, and since February 2008, play poker against other Austrians. Mobile device users can participate in a more limited assortment of lottery and casino games.

The WINWIN VLT network was begun in May 2004. The idea is to offer slot machine-like gaming in a less formal setting than a full casino, but to maintain a trendy atmosphere and provide a quality food and beverage service. The product is also competitive in some ways with the low-stakes gaming machine market, which operates in certain provinces with maximum stakes of 50 euro cents and jackpots of €20. A dozen WINWIN venues around the country, each with between 50 and 150 machines, allow players to wager as little as 1 euro cent but can offer jackpots up to €26,050.

Sports betting provider tipp3, launched in August 2001, offers a variety of events to wager on, including ice hockey, skiing, Formula 1 racing and, of course, soccer, the mainstay of European sports betting. Players can get their bets down at 3,700 sales outlets around the country or in one of the betting lounges inside a WINWIN VLT venue. In 2008 there were also 65,000 users registered to bet via the tipp3 website. Also last year, the capability to bet by text message from a mobile device was added.

In 2008, the various games under the Entertainment umbrella provided €1.3 billion—34.3 percent—of Casinos Austria’s €3.8 billion revenue. The Austrian Lotteries games contributed €1.1 billion—29.5 percent—that same year. Casinos Austria International’s operations accounted for €1.09 billion—28.8 percent—while the 12 domestic casinos directly under control of the parent company grossed €280 million—only 7.4 percent of total revenue.

In other words, Casinos Austria has been honing its operational skills in multiple gaming categories, for a number of years. The company is counting on this track record of experience, combined with strong name recognition and a good reputation, to attract new business internationally within these categories.

“We have started to spread the word that we are interested in looking at opportunities in lotteries, sports betting and VLTs, and we have some interesting contacts which we are trying now to follow up, to see if there really is an opportunity,” says Herzfeld.

In November 2008, the company announced the imminent launch of a scratch-card lottery for the Russian autonomous republic of Bashkortostan. At the same time, it was made public that a linked network of 2,000 sales terminals will be supplied to the same client. In April, the order for 2,200 lottery sales terminals went to KEBA, an Austrian specialist in automation and a longstanding partner of Austrian Lotteries. The terminals will be delivered later this year.

It is a good start, but again, the economy has put a lot of actions on hold.

“We are not in a hurry,” says Herzfeld. “We just have to build on this and see how we can capitalize on the network and the experience we have in our international casino business. But already, we see that it can work quite nicely, because people know our name—they know our background, that we have been in the business a long time and that we are serious guys. It’s a nice combination that we can offer and that can be put together in a very flexible setup.”

But It’s Casinos Austria
The domestic casino offering has remained relatively constant since 1992, when the 12th property, Casino Innsbruck, opened its doors in the renowned Austrian winter sport town of the same name.

In 2008, the company’s 236 tables and 1,846 slots produced gross gaming revenue of €196.9 million, up 6.5 percent on the year earlier—but still struggling to get back above the €200 million threshold crossed in 2004 and 2005.

A total of 2.3 million visits were made to the 12 domestic properties last year, with 37 percent of guests coming from outside the country. Of the six highest-grossing casinos, only Casino Bregenz, situated close to both the Swiss and German borders, received more international guests than domestic. Across the country, women accounted for 43 percent of total visits. Seventeen percent of visitors were recorded walking through the doors of a Casinos Austria property for the first time.

Competition is fierce in the region. Every country that borders Austria has casinos. Fortunately for the home team, a portion of that very competition is in the form of Casinos Austria International properties. Of Austria’s seven immediate neighbors, CAI is involved in casinos in Switzerland, Czech Republic, Hungary and Germany—though many of those properties are nowhere near the host country’s border with Austria. Nor are they all fortunate enough to be in equally competitive jurisdictions.

CAI operates 10 casinos in Germany, mainly in the north of the country, which is about as far as you can get from Austria and still be in Germany. That holds true for the operating climate for casinos there as well.

Speaking about conditions in Germany, Herzfeld says, “It is very tough, really very tough. The casinos have always been highly regulated, but at the moment they are regulated like never before.”

Obstacles introduced in recent years have included expensive measures to comply with a partial smoking ban and stricter ID requirements to enter the slot room of a casino, which is generally separated from the table game area and which used to have virtually no barrier to entry.
   
Savage Street Slots
Another problem is competition from the street slot machine market, which is regulated by federal legislation as opposed to the state.

“What I cannot understand is that slot machines outside of casinos are much more liberal and have no access restriction,” says Herzfeld. “In some you can even smoke. This is not what we would call a level playing field.”

Herzfeld is hoping that some of the more troublesome conditions will be remedied when the current agreement between the states expires at the end of 2011.

Much farther afield and in a much better business climate, one of the newer casinos from CAI recently added a hotel. The Gran Casino Los Angeles, in the Chilean town of the same name, opened in July of last year. This June saw the opening of the casino’s new five-star hotel. The 90-room hotel, managed by Starwood, features a state-of-the-art conference center for 500 attendees, a ballroom for up to 260 guests and Restaurante 565, which serves Chilean cuisine. The hotel has a spa, indoor and outdoor swimming pools and a fully equipped gym.

The casino is not huge, with 10 gaming tables and 200 slot machines, plus a bar and restaurant. But it suits the requirements of the local population—about 150,000 inhabitants, according to Herzfeld.

“So far it is mainly a local catchment area,” says Herzfeld. “It is a normal city, not very big, and our visitors come primarily from this area. In Chile there are now several casinos, so each area has its own. When the government issued the licenses, they didn’t want to have too much of an overlap in catchment areas between casinos, so they are more or less evenly spread around the country.”

In an industry populated with multibillion-dollar developments, creating a 10-table casino with a 90-room hotel can sound like a lot of work for not much return. But this is exactly the kind of project upon which CAI has built its name.

“This is our niche,” says Herzfeld. “We are used to running mid-sized casinos efficiently. Chile is perhaps a little far from Austria, where we have our head office, but otherwise, it is not unusual for us.”

A second casino in Chile, in the town of Ovalle, is expected to be completed in early 2011.

Other areas of interest include the U.K., where many of the 16 towns that received licenses under the 2005 Gambling Act still need to select a developer. In the U.S., development company Diamondhead Casino Corporation stated as recently as May that CAI “… with whom the company had a prior letter of intent, remains interested in the project.”
   
Selling a Bit
But as interesting as new acquisitions might be, CAI does not maintain a buy-and-hold strategy—as witnessed by 215 casino acquisitions over the years translating to a current 68-and-counting that are operated by the company.

At the start of 2009, CAI sold its 51 percent of Casino Beograd, in the Serbian capital, to Club Hotel Casino Loutraki, a subsidiary of Israel-based Queenco Leisure International. CHCL, which operates the resort of the same name in Greece , originally held 39 percent of Casino Beograd.

The sale came as somewhat of a surprise, as the casino had been a major project for CAI and only opened fully at the end of 2007. But it was a strategic and timely move.

By David Schugar & Craig Ghelfi   Wed, Aug 05, 2009

Most people in the gaming industry know that, beginning in 2008, the good economic times of the previous two decades were winding to a close, and the very real specter of fiscal insolvency became a looming presence. Companies and managers that once were weaned on easily obtainable loans, rising demand and hotel expansion projects now had to face shrinking revenues, a sharp drop-off in operating performance and crushing debt-service obligations.

In short, many of these enterprises that find themselves in the midst of a recession are now struggling to survive, and they now must modify their operational assumptions and execution standards, while positioning the organization to achieve returns above the risk-adjusted cost of capital.

Companies that recognize the changed landscape and respond proactively are more likely to prevail; others will not. The sad fact remains that their survival probably requires a turnaround.

When revenues start deteriorating and costs rise, and/or financial covenants and other negative factors threaten, immediate action is called for. Management must arrest the organization’s faltering performance and implement a turnaround. But how does one decide on the best course of action?  When the board of directors is confronted with the harsh reality that the company may not survive unless it can conceive and execute a successful turnaround strategy under difficult circumstances and with very little time, where does one begin?

Redirecting a company headed down the wrong path is a matter of judgment and skill, and often only a matter of degree rather than kind. Sometimes only a light touch is needed to correct a company that has headed off course; however, in many cases, a complete reversal of course is necessary.

Replacing the Team
Understanding the economic and marketing forces and risk factors that are putting the company under stress is obviously the first order of business. Equally important, once the decision to institute a turnaround has been made, the question of whether to continue with the present management team or to seek outside help becomes critical.

In most cases, the present team has already responded to the current conditions to stabilize the company. But if their efforts have not already reset the course, the company will likely continue to drift in the wrong direction.

Choosing to bring in new leadership with a turnaround consulting team (whether to supplement or replace), or to retain present management, is often very difficult. Incumbents are not easily disentangled from current dynamics and personnel, and personal friendships and loyalties can get in the way of making clear and sound decisions. In addition, incumbent management is generally ingrained and interwoven into the cultural fabric of the organization, presenting obstacles to changing direction.

Those in charge ultimately must answer these fundamental questions:

Is a meaningful turnaround possible under any circumstance, and if so, can it be achieved in a timely manner through better management of the existing business plan strategies? Further, can existing assets be utilized differently and/or is significant capitalization required?

The increased investment alternative requires both greater risk and revenues for justifiable returns. But business theorists agree that the correct response to these issues is what distinguishes those companies that are more likely to succeed. They are often unable, however, to agree on the proportion each requires.

Bringing in the Professionals
What attributes should a strong turnaround consulting team possess? They would first need significant access to resources in all disciplines of the gaming and hospitality industry, along with proven operational experience and financial advisory expertise in dealing with the various internal and external audiences.

A professional turnaround operational team would take immediate steps to repair the balance sheet and restore stability to the company’s financial outlook. This would include an initial assessment of operations by conducting interviews with all stakeholders, such as owners, boards of directors, executive management and gaming regulators. All aspects of current gaming operations—slots, table games, marketing, food & beverage and hotel management—would be canvassed for specific measurables to determine what has been working and what has not.

Other areas that would be analyzed include property holdings, financial liquidity and the debt capacity of the organization, while at the same time evaluating various capital structures and alternatives to improve liquidity and still support long-term growth.

The next steps entail the development of a detailed, optimal strategy for a financial restructuring, creating value and preserving capital. Along with re-establishing credibility and communications between the company and its constituencies, a new marketing plan to improve cash flow and restore earnings must be developed and implemented. Negotiating with stakeholders and advisers to restructure existing debt, equity and other corporate liabilities might be necessary, as well as arranging DIP financing, exit financing or other capital-raising solutions.

After stakeholders’ approval of the plan, the new direction of the organization must be made clear to the staff and management to avoid any alienation or anxiety that could lead to retaliation, sabotage or a decline in customer service.

Once the new plan has been implemented, a frequent and periodic evaluation/performance monitoring must be undertaken using operation metrics like revenue per FTE, EBITDA per FTE, etc. These analyses assure the financial health of the organization, allow mid-course corrections to the business plan, and assist in the overall evaluation of the new management direction.

Dealing With Change
After a turnaround operation, the management and staff must recognize that things cannot be the same as before. The new organization will bring new performance standards, operational procedures and policies that mean letting go of the old ways of doing things.

The changes involved in a transition can be understandably unsettling for many, but setting short-term, achievable targets can help discouraged team members regain their footing and restore confidence more quickly. However, this might possibly involve realizing further declines, albeit decreased and short-term, until the financial performance actually improves.

Effective turnarounds offer a mix of both internal and external strategies, often referred to as “defensive” and “offensive.” Defensive moves primarily involve cost-cutting throughout the organization in an attempt to streamline operations by increasing productivity while decreasing overhead. At the same time, offensive maneuvers try to reduce competitor inroads with successful advertising and marketing campaigns designed to gain market share.

Each organization subject to a turnaround presents a particular case in which both defensive and offensive strategies have to be uniquely formulated. Finely tuned management skills are important, too, since even a good turnaround strategy might possibly miss the mark if it is not executed with precision—one that addresses the specific needs of the situation efficiently and effectively.

Major moves designed to cut costs by reducing payouts or levels of service could possibly alienate customers and send them scurrying to competitive establishments. A careful balance must be struck between turnaround imperatives and anticipated revenues, and customer expectations and player loyalty.

Thus, implementing a turnaround is usually quite delicate: there is an extraordinary need for clarity and objectivity in understanding the critical components, in determining the right strategy, and in executing it with the precision required for any complex operation.

But before you begin the procedure, it’s critical to know exactly how much force you will be applying—whether surgically trimming with a scalpel, or hacking away with a meat cleaver.

A minor flaw in the overall strategy or a botched execution could result in further misdirection of the company and possibly lead to an unnecessary failure. On the other hand, careful and competent guidance could mean much more than simply survival—it just might result in an outstanding success: a thriving organization on the road to recovery!

David Schugar, owner of Equity Gaming LLC, has worked in gaming for over 30 years, including operations in Nevada, Michigan, Mississippi and Indiana. His career includes 10 years with Mandalay Resort Group as vice president and general manager.

Craig Ghelfi, senior director of Conway Mackenzie, began in the family-owned Golden Gate Hotel Casino in Las Vegas. After earning a B.S. in business administration at Arizona State, Ghelfi operated casinos in Nevada, Mississippi, West Virginia, California and Michigan, where he was the CEO of Detroit’s Greektown Casino.

By Chris Brammer   Wed, Aug 05, 2009

We have all worked in organizations where the boss is either someone who is unapproachable or a somewhat feared figure. The old expression “I’m just a mushroom,” which translates to “I’m kept in the dark and fed crap,” is amusing, but carries with it a poignant message: that the employee really doesn’t know, or care, what’s going on.

Such a work culture stifles business, as the potential for getting ideas and feedback from your employees is lost. If one considers the number of employees in a typical resort casino, somewhere in that group of people rests an exciting idea that just might make the difference between your operation and the guy next door.

The problem is, how does the organization extract that information if the boss is unapproachable, and if the employee is uncommitted and feels unimportant? Without a change to the employee culture, that idea will remain locked away.

Consider this: Who is the person who is always talking to your guests? Who is the one hearing their comments? It’s your employees, and to get your employees to come forward with those comments and their creative solutions is a convoluted process—and one that is not easily solved.

The first part of that process is to eliminate fear and create freedom, because if your employees are afraid, there is no starting point to build on.

“The Four Freedoms” were originally authored and circulated in 1987 by Keith Reinhard, and he revised them slightly in 2003. They have been slightly modified here to fit the gaming industry, but they remain, at heart, true to his thinking. Without eliminating fear as the first step, casino leadership will never unlock the freedom to access the employee talent, input and ideas that are waiting for them.

Because talent is the ultimate resource of any creative enterprise—and to survive, a resort casino must be creative—an operation committed to creative achievement must first be an operation committed to the identification and nurturing of the latent talent that is within it.

Talent is rare, hard to identify and, it must be said, only moderately useful in its raw state. To realize talent’s full potential, those responsible for the success of the operation must provide talent with an environment that encourages creative accomplishment. And this means creating a culture of freedom.

FREEDOM FROM FEAR
Talent freezes in the grip of fear. The creative mind shuts down, constricting the natural flow of ideas. Fear is paralyzing beyond reason.

It is not “the truth” that people fear. Fear results from “not knowing the truth.” Fear is created by motives that are suspect, by decisions made in secret for which the basis is not fully disclosed, and by the arbitrary use of power by those who control an idea’s destiny.

Fear is created by intimidation. Management by intimidation has no place in our operations.

FREEDOM TO FAIL
It is in the very nature of creative talent to venture beyond the known, to investigate the un-heard of, to pick through scary places untrod by conventional minds, to go where no one has gone before. Because there are no assurances that such creative forays will succeed, the explorers must be granted the freedom to fail, to sustain their desire to venture forth again.

It is the job of management to first point talented people in the right direction, then judge the value of their discoveries. But if the quest for the new is to be responsible and intelligent, talent must not be criticized for daring to fail.

FREEDOM FROM CHAOS
A degree of healthy ferment is required in any creative organization. But talent flounders in the chaos of uncertainty caused by management indecision, inconsistency or vacillation; talent requires benign discipline.

The talented mind may seem erratic, but it welcomes an understanding of responsibilities that is clear, yet roomy enough to permit the floating dream. These responsibilities must be well understood and freely agreed to by all parties before an individual joins the operation. Once committed, all parties must live up to the agreement.

It is particularly important that all management actions and communications be consistent with this understanding.

FREEDOM TO BE
The first priority of an operation that depends on its people for success must be the well-being of every individual.

Each has a right to be treated with dignity, to be encouraged and supported in his or her ambitions for higher achievement, and, to the extent possible, to be provided with a place where a career can grow in the direction of the individual’s own choosing.

But beyond providing for professional growth, talented people must also be allowed to enjoy a life in which there is time for personal fulfilment, and for laughter and love and celebration.

If it was suggested to you that a successful manager makes 51 percent good decisions and a very successful manager makes 80 percent good decisions, then by implication, bad decisions are a normal part of the management process, no matter how good a manager is.

Perhaps it is a truism that management may be judged by the way it manages the bad decisions, not the good ones. Given, then, that bad decisions are part of the normal management process, the gaming organization must not have managers afraid of taking the risk to make decisions and, further, to encourage the freedom to make them without fear of retribution.

For employees, there must be freedom to speak up, to think outside the box, to come forward with information and ideas. They can only do so if they feel the freedom flowing throughout the operation.

When an operation fails to create freedom as an integral part of the operational plan, it will fail to maximize its potential, and instead of being a leader it will end up following in others’ footsteps. Not being the leader may well mean not creating the revenues needed for sustainable growth. So, spend a moment thinking about fear and freedom in your operation.

Chris Brammer is an associate of Gaming Market Advisors, one of the gaming industry’s leading consulting firms. He has over 25 years of experience in the industy, and is well-known as an innovator in casino management, design and marketing.

By Michael Soll   Wed, Aug 05, 2009

There is a long history of branding in gaming, beginning with independent Las Vegas and Atlantic City properties, which over time have expanded to multi-property national and international chains. This would include such high-profile names as Harrah’s, Tropicana and MGM Grand.

In addition, a host of casino brands were founded in emerging markets during the early 1990s, some of which have been consolidated into larger companies. Isle of Capri, Boomtown and Argosy are representative of this group. Finally, there is a handful of non-casino entities that have made their way into gaming, including Hilton and Sheraton, and entertainment brands such as Hard Rock and House of Blues.

With all of these players in the game, it is somewhat surprising that many of the world’s most recognizable casinos are unbranded properties—or at least began that way, before developing brand-like qualities due to their successes. Foxwoods and Bellagio (prior to acquisition) are two examples. The results of such properties can emanate from such business advantages as location, competitive position, quality of facility and management expertise.

Despite the proliferation of brands in gaming, what actually defines a casino brand (and subsequent brand value) remains subjective. As casino companies, Native American tribes and private developers all ask themselves whether they should seek or expand a brand, it is worth exploring whether or not it could make a difference.

Characteristics of Casino Brands
The definition of a brand can be broad, varying from its simplest technical description (a “mark” distinguishing one product from another) to more evolved characterizations that consider identity, experience, customer interaction and relationships. And brand definition varies further, depending on the product or service being sold.

Take Coke and Pepsi, for example. Both are colas with successful brand identities and highly channeled advertising, but their ability to touch a consumer’s overall lifestyle is limited. By contrast, the ability of a leisure or service brand to affect a consumer can be much more experiential. Branded properties, in particular, offer many avenues beyond gaming through which a customer’s lifestyle can be impacted (consider dining, spa, retail and other experiences).

In fact, research shows that customer-brand interaction both on-site and through CRM or social marketing is even more important for reinforcing casino brands than for many other goods or services. This is because reaching casino players with traditional advertising channels—television, billboards, print, radio, websites—can be inefficient, simply because of the limited distribution of the property type.

Even Harrah’s, with the widest brand distribution in gaming, has historically relied minimally on television advertising because the convenience in selecting a destination typically outweighs the expenses associated with wide-reaching campaigns. There are, of course, exceptions to these limitations, particularly in competitive markets where channels such as en-route billboards can actually influence a player’s destination decision.

Categories of Casino Brands
In evaluating casino brands, consideration should be given to which brands have been built through differentiating product, and which have grown out of circumstance, keeping in mind that the two are not mutually exclusive. The limited distribution of gaming venues can sometimes provide business advantages such as location and accessibility that far outweigh brand. And when the financial rewards attained through these advantages are reinvested (future license bids, lines of credit, etc.), further brand proliferation can occur.

In this vein, we have distinguished five categories of brands. While these categories are not the only way to organize and analyze industry brands, they do provide a logical framework to discuss their characteristics.

Single Properties and Limited Offspring
Single-property brands are represented by a handful of stand-alone properties that have become widely known through one or more of their operating or physical features. There is often some debate as to whether or not many properties in this category would be technically classified as brands at all, but they all share the characteristic that their potential to be a brand was not anticipated or known until after the property initiated operations. Similarly, once a single property gains brand-like notoriety, it often remains unclear how to leverage the brand value, and whether or not it makes sense to roll the brand out to new locations. As such, when appropriate, we extend the meaning of “single properties” to include limited offspring, where companies such as Las Vegas Sands with “The Venetian” (Las Vegas and Macau) and the Mohegan Tribe with “Mohegan” (Connecticut and Poconos) have taken the brand identity and expanded it on a limited basis.

Purist Corporate Casino Brands
Purist corporate brands are companies deploying a single brand at nearly every portfolio property. The number of companies fitting this profile has diminished over time as mergers and acquisitions have added non-core branded properties to purist brands. The benefit of a “purist” brand is unclouded consistency and efficiency, and unwavering legitimacy to brand commitment.

Branded Collections of Brands or Properties
Companies with a “collection of brands” have typically started out as purist brands, but through mergers and acquisitions have become companies with multiple brands. In many cases, brand logic has been reorganized within these companies through the disposition of non-core properties and the reflagging of certain properties to manufacture a multi-brand architecture. Volume often proves to be a benefit for such companies, since economies of scale allow reduced expenses for many corporate-level functions and purchasing at the property level. That said, it has been challenging for some companies to remain focused on brand-building for each identity when it comes to juggling two, three or even four brand offerings.

Unbranded Collections of Brands or Properties
Unbranded collections of brands are distinguished from the previous category by virtue of the parent company being unbranded or otherwise never having been a casino brand itself. The companies have also expanded largely through mergers and acquisitions, but most were originally parimutuel interests, entertainment companies or holding companies.

Other Leisure Brands
The “other leisure” brands are comprised predominantly of entertainment brands, often rooted in restaurants, and chain/franchise hotel brands. In the case of entertainment brands, the involvement of these companies in gaming is often as the brand licensor to a third-party owner and/or manager. Lodging brands have typically arisen in the gaming space through legacy associations with the past combined lodging-gaming companies such as Hilton and Sheraton, or by virtue of amenity casinos within hotel-brand resorts.

Business Models for Supporting Casino Brands
There are several business models for introducing a casino brand, each with variable degrees of control and reciprocal risk. Brands in most industries are created and cultivated with a deployment strategy in mind, though some are established by association, over time.

Large consumer brands, such as Hershey or GAP, tend to produce their own products or services and brand them for sale with little or no third-party involvement. By contrast, fast-food brands are typically created with the licensing and franchise community in mind. And there are hybrids of both varieties, such as airlines, which manage their own fleets and license their flag to regional carriers.

Casino brand license fees generally range from 1 percent to 3 percent of revenue, depending on the power of the brand and the volume of revenue being generated. License fees are also typically coupled with centralized brand marketing fees in the 1 percent-to-1.5 percent revenue range. More effective brands command higher reciprocation to brand owners.

The license model is attractive for many brand owners, since third-party capital investments often yield higher returns. However, the increased risk that goes with more partners typically also means a need for tighter brand control.

Along these lines, there are two primary categories of risk exposure: (1) brand devaluation due to poor operating or design implementation; and (2) regulatory risk where a third-party property owner might prove unsuitable for a gaming license.

Because of these risks, most pure casino brands are owned by a full-service casino operator, who manages the brand and most properties where it is found. Alternatively, a property can be managed by the brand owner but with passive third-party ownership, thus mitigating regulatory risk exposure by taking the owner out of day-to-day operations. Fees for licensing a brand and managing a property typically include a revenue share as well as an incentive fee based on profit, where total fees, including brand license fees, are 2.5 percent to 4 percent of revenue and often some percentage profit, depending on the quality of the brand, management agreement, and volume of revenue generated. And again, centralized brand marketing fees are often assessed as well.

This control-risk equation has left pure casino brands largely inaccessible to independent managers, including most Native American tribes. However, independent casino owners have found easier access to leisure brands borrowed from food and beverage, entertainment or lodging enterprises that have proven to work well in gaming. Playboy, Planet Hollywood, Hilton and Sheraton are among the most notable examples, as well as Hard Rock, for which the Seminole Tribe went as far as to acquire the entire brand.

Measuring the Value of Brands
Brand value varies depending on market conditions and the extent to which customer databases and global marketing programs are leveraged. At a minimum, a brand should help influence a property’s profile in a competitive market situation. Any time there is a cluster of unbranded or “soft” branded properties that are largely undistinguished from one another, there is likely to be significant opportunity and profitability in a brand deployment.

To measure brand value, we begin with information from two main sources: (1) customer sentiment and (2) historical revenue impact. In the case of customer sentiment, we rely both on quantitative survey data and qualitative data gained through focus groups.

Revenue impacts are based on historical success of branded versus non-branded venues in an appropriate sample group of markets. Using these two measures, total revenue impact from branding can then be estimated for a specific casino. Then, brand-related operating and capital costs can be factored in to generate ROI. This impact can be positive or negative, depending on whether or not a brand results in higher revenue, and whether that revenue lift, if it exists, exceeds branding costs.

Customer Sentiment
Both periodic casino brand benchmarking and project-specific survey work play roles in the customer component of brand valuations. Customer opinion and behavior surrounding brands varies, depending on the specific brands and markets involved in an opportunity. In any given market, there are players who are predisposed to neutral or negative opinions on branding, based upon what they value. Where customer service, as an example, is the primary driver of satisfaction among multiple gaming options for a player, brand may take a back seat. Alternatively, where a customer is interested in a broader experience including identifiable dining and entertainment options, brand can be an important factor in determining where to play.

The Innovation Group has conducted extensive customer research both for specific client-related projects and periodically to build its own database of statistics regarding gaming consumer preferences and behaviors. The pie chart summarizes results from a national survey conducted by the Innovation Group and YPBR for the notable industry publication Portrait of American Gamblers. In that survey, the vast majority of respondents (70 percent) said they considered the brand to some degree in their casino choice. And more than 25 percent considered brand an important factor.

In addition, we can draw distinctions from quantitative research between customer awareness and receptivity to different types of casinos. The table below is based on research conducted by the Innovation Group in 2007, comparing awareness and proclivity to visit/recommend single properties, casino brands, and entertainment-branded casinos. The table summarizes the results and implies that despite having the highest awareness, chain casino brands are most likely “not” to be visited or recommended because they are considered more ordinary than entertainment and stand-alone properties.

The Innovation Group also conducted a series of qualitative brand research studies in 2008, comparing entertainment brands brought into existing casino properties against those developed independently. Entertainment brands have proven to be an attractive option for third-party owners because license deals are typically more easily implemented with non-casino companies. Although the focus was on entertainment brands and additions to existing properties, customer responses were indicative of a wider set of brands and branding opportunities.

For the purposes of this article, we compared research responses for three highly successful entertainment brands, and organized customer sentiment across several telling categories. In addition to determining which brand stood out in particular in a subject market area, we learned that customers have strong emotional views on different brands. The following summary maintains anonymity as a professional courtesy:

Brand Impacts of Revenue, Expense and Project Returns
Branding initiatives will typically affect both project revenue and expense. The challenge, of course, is to make sure the revenue benefits outweigh these costs. Incremental profit must be measured carefully, by taking less obvious items such as a property’s diminishing competitiveness into account. In addition, there will usually be intangible items affecting brand decisions that cannot be quantified, such as a threat to tribal identity or desirability of third-party relationships.

Specific examples of brand revenue lift are difficult to isolate, as many factors contribute to a property’s success. Still, some examples do stand out. In the Atlantic City market, national casino brands such as Caesars and Harrah’s have historically fared better than unbranded properties, with market-share premiums of more than 30 percent in some years. In Joliet, Illinois, Harrah’s has in some years enjoyed a 60 percent premium over its soft-branded competition, the Empress casino. In nearby northern Indiana, branded facilities have earned a premium of between 64 percent and 117 percent over the past four years.

Again, greater facility quality and superior locations are partly responsible for this premium, but branding plays an unquestionable role. Looking back to 2001, the Empress Casino in Hammond was re-branded as a Horseshoe facility. With that change, the casino enjoyed a substantial jump in win per position—17.8 percent in its first year, and another 21 percent in the second. Finally, in Iowa, a state with a long history of riverboat casinos, branded casinos were added incrementally and have typically enjoyed an average win-per-position premium of between 23 percent and 31 percent.

Win per unit across a large number of markets makes a more convincing case for the overall impact of brand. The Innovation Group compared win per unit in 111 properties in 16 markets. Average win per unit across branded properties was $293, compared to $216 across unbranded properties, for a premium of 35 percent. Again, accepting that factors other than brand influence revenue and win per unit, in aggregate there is an undeniable impact from branding.

Offsetting much of the generally positive revenue impact of branding is a limited number of operating and capital expenses. The nature of brand-related expenses varies depending on the whether the casino owner and the brand owner are the same, or whether the brand is being secured through a third-party license deal. Operating expenses related to branding can include marketing expenses, usually the most significant expense category, as well as customized supplies including logos and other brand-conforming standards.                 Additionally, enhanced (and more expensive) levels of service may be dictated by new brand ownership. On average, we believe that these combined operating expenses represent between 4 percent and 8 percent of added expense margin depending on a subject property.

Capital expenses associated with brand implementation are usually borne by the property owner, whether it is also the brand owner or a third party. These expenses relate to the overall level of finish, which can often be held to a certain brand standard (such as three-star or four-star), as well as unique brand finishes and equipment, signage, art or décor. The cost of such items varies widely from project to project; we would benchmark the total capital impact for branding to be in the 5 percent to 10 percent range for total project cost. While the initial investment is typically the costliest, ongoing capital expenditures to maintain brand compliance should also be expected.

We have demonstrated that casino brands and branding deals come in many forms, and that there are a multitude of associated benefits and costs. On balance, we remain confident that casino brands do matter, and that they can give properties a distinct market advantage, particularly in highly competitive environments.

In the end, though, when considering the revenue premium that branded properties achieve compared to non-branded properties in markets throughout the country, the question is not whether brands matter, but rather, whether or not a facility is in the appropriate strategic position to take advantage of the value and benefits that the right brand affiliation is sure to bring. 

Michael Soll is an executive vice president for the Innovation Group, the industry’s premier consulting and advisory firm. One of gaming and hospitality’s most recognizable brand specialists, Soll’s experience includes senior-level management positions with such organizations as Caesars Entertainment, Hard Rock Café International and Starwood Hotels & Resorts. He can be reached at the Innovation Group’s Orlando office at 407-702-6648 or at msoll@theinnovationgroup.com.

By   Wed, Aug 05, 2009

What happens in Las Vegas came to the Cornell University School of Hotel Administration in April for the 84th Annual Hotel Ezra Cornell.

Hotel Ezra Cornell is an annual, weekend-long educational conference hosted by the students of the Cornell School of Hotel Administration for leaders of the hospitality industry. Comprised of educational seminars, leisure activities and food-and-beverage events, the weekend strikes a thoughtful balance between education and entertainment.

The purpose of the weekend is for students to practice the skills they have learned in the classroom and to showcase their talents to industry professionals. In the past, Hotel Ezra Cornell, or HEC, has had themes such as “Sustainability Through Innovation” and “A New Era of Leadership.” This year, the HEC board of directors decided to focus on the Las Vegas industry with a tagline of “Illuminating the Possibilities: Learning from Las Vegas.”

“We chose the theme because Las Vegas encompasses a variety of different aspects of the hospitality industry,” says Program Director Alison Harrigan. Harrigan, a Cornell senior, is in charge of the educational and leisure programming for the weekend. “What’s great about Las Vegas is that it has everything—food and beverage, design, operations, ties to Wall Street—but bigger and better than anything anywhere else in the world. Everyone who works in this industry can truly learn something from the large scale of the Las Vegas community.”

Harrigan is one of 17 members of the 84th Annual Hotel Ezra Cornell board of directors, appointed annually to lead the organization. Every year, 400 students—over half of the Hotel School—are involved in Hotel Ezra Cornell. Students do everything from cooking and serving meals to marketing and public relations to turndown service and a “Personal Concierge” program. “It has been an amazing experience to lead such a talented group of individuals,” says Kira Gailey, managing director of HEC. “I truly believe that Hotel Ezra Cornell is a hotelier tradition that brings to life what we learn here at the Hotel School.”

This year’s HEC featured a lineup of speakers that included Harrah’s Entertainment CEO Gary Loveman, Echelon Place CEO Bob Boughner, former Las Vegas Sands executive Brad Stone (Cornell class of ’77) and Four Seasons founder Isadore Sharp.    

The conference hosted over 250 guests despite the economic downturn, a testament to the draw of Las Vegas and the interest in learning more about gaming.

The weekend, which took place at the Statler Hotel on the Cornell campus in Ithaca, New York, started on Thursday evening with a nightclub-themed opening cocktail party featuring addresses by Gailey and Hotel School Dean Michael Johnson. Later that night, HEC guests gathered in the lounge for a speakeasy-inspired “afterglow,” where they were joined by  Las Vegas executives.

State of Las Vegas

The two-day program included a “State of the Las Vegas Industry” address by Marc Falcone (class of ’95) of Goldman Sachs, who also ran through a brief history of the Las Vegas Strip. Loveman’s presentation followed, covering topics from managing in a down economy to questioning age-old industry practices.

Hotel industry icon Sharp gave a keynote speech addressing operating in the down economy. “The fundamentals of our industry are sound and will weather this economic storm, and we can all look forward to the continued growth and prosperity of this industry,” Sharp said. His discussion also featured commentary on how luxury has redefined Las Vegas, and vice versa. His Four Seasons Las Vegas is one of the many Las Vegas hotel properties now focused on the high-end traveler.

The day of program events was rounded off by an intriguing presentation by Boughner, who discussed the history and complexity of developing in Las Vegas. He showed photos of different Las Vegas developments and answered questions about the prospects of developing in the current economic conditions.

Guests that evening enjoyed a choice of two different dinners: one dinner themed as “Las Vegas in the 21st Century,” which featured eccentric colorful design and contemporary Italian cuisine; and another dinner themed as “A Night In Historic Las Vegas” which featured tableside-tossed Caesar salad and servers (students, of course) dressed in bow ties and top hats.

Stone gave a presentation Saturday morning addressing the global expansion of the gaming industry. Stone spoke on how Las Vegas was the birth of what has become a global gaming industry as well as how the economy will affect hotel casinos in Macau, Singapore and other emerging and potential gaming jurisdictions.

A panel titled “Operating a Mega Resort Destination” was moderated by Mark Birtha (class of ’94), vice president of Las Vegas development for Marriott International. The panel featured operations experts Arthur Keith (class of ’84), president and general manager of the Stratosphere Hotel in Las Vegas;  Andrew Klebanow (’91), principal, Gaming Market Advisors; and Sid Vaikunta (’99), assistant general manager, Suncoast Hotel and Casino. Discussion focused on the challenges of large-scale hotel casino operations.

Following a “Spa Lunch,” a second panel focused on the “Las Vegas Restaurant Industry.” Moderated by Hotel School Professor Chekitan Dev, the panel, brought together by Las Vegas restaurant mogul Blau, featured Todd English (celebrity chef/restaurateur), Jason Lapin (’90) of Blau and Associates; Steven Schussler, founder and CEO of Schussler Creative; and Damian Mogavero, founder and CEO, Avero LLC. The panel covered topics from design to renowned chefs to the importance of quality ingredients.

Later in the afternoon, events included the sixth annual Culinary Mystery Box (the HEC version of Iron Chef), where guests could compete with surprise ingredients to present a meal judged by Hotel School chef Bob White, Elizabeth Blau and Todd English. Guests could also choose to attend a “blind wine tasting lesson” by Greg Harrington (’92) of Gramercy Cellars fame. Lastly, Tom Breitling, senior vice president of business development for Wynn Resorts, spoke on the “Wynn Business Personality” and discussed “inside the boardroom” details on being one of Steve Wynn’s closest executives.

The weekend was topped off by a spectacular Saturday night gala banquet with an illuminating design featuring several courses influenced by molecular gastronomy. After the banquet, guests were able to mingle with students and other guests at the “Breakfast at Midnight”-themed cocktail event.   

The Cornell Hotel School currently features an introductory-level class on casino operations, and has produced notable gaming-specific research through its Center for Hospitality Research.

By GGB Staff   Wed, Aug 05, 2009

Leading slot manufacturer International Game Technology announced that Eric Tom will be joining the company as executive vice president of sales and marketing for North America, including Canada and Mexico, subject to regulatory approval.

Tom has more than 20 years of experience in executive-level sales and marketing positions with large corporations operating in the U.S., Europe and Asia. He was most recently vice president of strategic channels, corporate and business development of Force10 Networks, a $200 million network equipment manufacturer. He also was CEO for Broadband Interactive TV, and sales VP for Qwest’s sales and marketing organization.

By GGB Staff   Wed, Aug 05, 2009

Slot manufacturer WMS Gaming announced the opening of a new technology facility in Chicago that will focus on products that will lead to a networked slot floor. The manufacturer opened the Casino Evolved Advanced Technology Lab, or CEATL, at its Chicago technology campus.

The new technology lab, according to a company statement, “features products built on WMS’ foundational network gaming technologies and will be used to debut new technologies and applications that demonstrate how a networked gaming environment enables casino operators to increase top-line performance by consistently engaging slot players on the casino floor, while improving efficiencies and returns on capital.”

The products showcased in the CEATL underscore WMS’ commitment to optimize the casino patron experience by leveraging the company’s WAGE-NET platform technologies—Remote Configuration and Download, Account Based Wagering, Networked Gaming Enablement and Patron Services. These foundational advancements are designed to further casino operators’ understanding of the near-, mid- and long-term benefits of networked gaming.

WMS’ Central Game Controller and FreedomPort technologies are key technology features of the new lab. Central Game Controller technology is a distribution server that administers secondary network applications to gaming machines on the casino floor. These applications are managed by the CGC server and sent directly to the game, adding new, differentiated gaming experiences and features that increase the entertainment level for players.

In addition to these technology platforms, the CEATL also features WMS’ Account Based Wagering technology and GamEdge, the company’s focused loyalty management and patron services offering.

“Opening the CEATL represents a significant milestone for WMS and our customers, as it clearly demonstrates the real-world benefits of networked gaming,” said Orrin J. Edidin, president of WMS. “Simultaneously, it serves as a platform for the future evolution of products and services that will allow entertaining gaming content to be enabled on new platforms and in new mediums. Customer interaction is integral to WMS, and our product offerings, and our approach in designing the Casino Evolved Advanced Technology Lab, was to cultivate a two-way dialogue with our customers, regulators and players for addressing the constantly evolving shift in player expectations and the needs of our casino customers.”

By GGB Staff   Wed, Aug 05, 2009

Slot game manufacturer AC Coin & Slot announced that Jason Seelig, currently executive vice president of corporate sales, has been named executive vice president of sales and marketing.

Seelig is returning to this role after having held the position between 1997 and 2004, as the company was rapidly expanding into new territories throughout the U.S. During this expansion period, Seelig ensured that AC Coin & Slot remained in a prominent position to support new casinos, growing the sales force to support the company’s growth across North America, opening offices in several new locations across the country, and successfully marketing the company and its diverse product offering to a wide range of new casino properties.

Seelig has spent the interim years focused on strengthening individual corporate relationships and partnerships on behalf of AC Coin & Slot and structuring complex negotiations with larger customers such as MGM, Harrah’s and Boyd Gaming, among others. He will immediately resume leading the company’s sales efforts throughout North America while continuing to oversee all current marketing initiatives.  

“One of AC Coin & Slot’s greatest assets is its commitment to personalized service and products,” said Seelig. “I look forward to taking a customer-centric approach, working closely with each of our casino customers to tailor our solutions to best meet their needs.”  

By GGB Staff   Wed, Aug 05, 2009

Aristocrat Leisure Industries, the Sydney, Australia-based parent company of slot manufacturer Aristocrat Technologies, announced a new leadership team structure. According to Jamie Odell, CEO and managing director, the new team “ensures the right people, with the optimum skills and industry experience, will be in place to oversee the development and execution of Aristocrat’s business transformation strategy.”

(The company announced that Odell will outline that new business strategy when its half-year results are announced on August 25.)

Aristocrat’s new corporate leadership team includes Toni Korsanos, who has been named chief financial officer. He joined Aristocrat in 2007 as general manager, group finance, and has almost 20 years experience in financial and general management at companies including Kellogg’s Australia/New Zealand and Goodman Fielder Ltd.

Julius Patta was named chief technology officer. He has extensive experience in software engineering, game design and development, and has led a number of leading-edge gaming operations and technology businesses in North America, Australia and Europe. He will be based in the U.S.

Sam Nickless was named business transformation director. He has over 15 years experience leading complex strategic change programs, most recently at the National Australia Bank and previously with McKinsey & Company in Australia and in the United States. Nickless will provide the expert program leadership and commercial skills required to drive the execution of the company’s turnaround strategy.

Trevor Croker was named managing director, Australia and New Zealand. He has much experience building high-performance sales organizations, and is familiar with Aristocrat’s core markets. In his new role, he will focus on driving performance in these markets, in particular executing an effective turnaround strategy in key Australian jurisdictions.

Patrick McGlinchey was named chief legal officer and company secretary. He has extensive international corporate, commercial and governance experience gained in both listed companies and private practice. He was previously the chief legal officer of Aristocrat, and the addition of company secretary to his title will provide continuity in management of current litigation, according to the company.

Aristocrat Americas President Nick Khin, Chief Human Resources Officer Tony Weston, Chief Marketing Officer Paul Kitchin and Group Manager CEO Office Gillian Findlay will continue in their current roles.

By GGB Staff   Wed, Aug 05, 2009

Slot manufacturer Konami Gaming announced the appointment of Ted Jeude as the company’s new senior director of manufacturing and supply chain. According to the company, he will focus on “implementing supply chain and lean manufacturing techniques to support the firm’s growth.”

Jeude brings over 30 years of manufacturing and global value chain management experience to Konami. As director of opearations for FoxConn Assembly LLC in Houston, Texas, he implemented lean manufacturing and business process improvements that resulted in revenue growth from $12 million in 2004 to $1.3 billion in 2008.

By Roger Gros   Wed, Aug 05, 2009

In the midst of the difficult economic downturn, there is one bright light on the horizon in Atlantic City: the $1 billion project still under construction by Revel Entertainment. Although most major projects in Atlantic City (and Las Vegas) have been either put on hold or canceled outright, Revel continues to build, even though it has yet to receive its full complement of financing. Kevin DeSanctis has had to grapple with these changing times. A former executive with Mirage Resorts, Trump, Kerzner International and Penn National, DeSanctis’ single-minded determination to get Revel built has been impressive. He spoke with Global Gaming Business Publisher Roger Gros in July in Atlantic City. The full audio version of this interview is available as a GGB Podcast.

GGB: There are a lot of misconceptions about the Revel development in Atlantic City. Some people believe it is mothballed, but it’s still under construction. Tell us what’s the next goal at this point.

DeSanctis: I think I created a little confusion in January when I announced that we were going to stage the project. Unfortunately, some folks thought we meant we would stop or stall the project. What we meant to convey was that we are staging the project in alignment with the funds we had to complete the project, and it seemed that the most appropriate way to do that was to complete the structure and the enclosure for the three primary elements of the project and hold off on the interiors until we had the final piece of funding.

So, we are almost complete on the hotel structure. The parking structure is complete. The structural steel is complete, and the podium and the enclosure is going up throughout the project, so probably in the next four months or so we will be in real good shape with the overall structure and enclosure.

Everybody’s wondering what the status is with the financing at this point. Your partner is Morgan Stanley, so you obviously have a lot of access to Wall Street investment. How badly has this credit freeze affected you?

If you had asked me that question two or three months ago, it would probably be a different answer than it is today. Frankly, there was no one issuing credit two or three months ago. We’ve been pleasantly surprised over the last couple of months that credit has started to be issued again, which is a good sign.

Unfortunately for us, a “Greenfield” project, we’ll probably be the last type of project, one of the more risky projects to get funded. But unless there is a relapse in the economy, we think it will be very possible to go out and secure the financing maybe in the fourth quarter of this year.

Now, there is a silver lining to all this; when we were unable to secure the last piece of financing earlier in the project, because we had a strong financial backer like Morgan Stanley, we continued to de-risk the project. So now, it’s no longer, “Can you build it for this amount of money?” Fundamentally, the project is built. We understand exactly what the cost is, so the only real question now is, “What, from a profitability perspective, can this project do?”

Should the financing proceed as you hope, what’s the opening date?

From the point where we know we have the financing, it will be a 16- to 20-month period to complete the interiors.

Let’s speculate. If we were to receive financing by the end of this year, we would be open by May of 2011.

Have you had to rework the economic model?

We have. Having said that, because we believe we have a completely different business model even than Borgata, we’ve been really hesitant to change our thought process on how we’re approaching the model. When we talk to our internal group here and investor types outside our circle, they clearly have a view that one needs to discount their pro forma dramatically, and frankly, we just don’t agree.

There are three segments to our business: the hotel cash guest, the hotel comp guest and the walk-in guest. Well, we built our model from the ground up, so based on the assumptions that we’re making, the numbers are what the numbers are. Do I think that the spend will be a little bit less in today’s environment than it would have been before? Absolutely. But the reality is, we have a new product, we have a different product, and I believe that one has to look at this on a situational and a merit basis. Yes, we have changed numbers a bit, but probably not as dramatically as people would think.

There is a lot of competition surrounding Atlantic City, even though it’s all just pure gaming. What does Atlantic City have to do to separate itself from those pure gaming facilities?

First, we have to recognize that the convenience customer is no longer a customer that Atlantic City can depend on. It was a great run, but it’s over. Second, there have been a lot of good things that have happened here, and sometimes I’m a little disappointed when people don’t recognize how Atlantic City has changed over the past several years. You have the Borgata, the Walk and the Pier, you have the Quarter and the Chelsea. The Taj just completed a remodel. Harrah’s completed the Pool and a new tower.

We don’t take advantage of the critical mass of amenities that we have in Atlantic City. From my perspective, Atlantic City has to start working together as opposed to against each other to attract more people in this market. The industry should be thinking of itself as a unit of properties as opposed to fighting each other. That’s a directional change that should happen.

By Frank Legato   Wed, Aug 05, 2009

This new video slot is one of a special group within Konami’s K2V video series, designed for high denominations. Lion’s Law is a five-reel, five-line video slot available in quarter, 50-cent, dollar, $2 and $5 denominations.

The game itself is simple and volatile, with comparatively low hit frequency and a free-spin bonus event. Three, four or five “RICH” symbols trigger five, eight or 12 free games, respectively.

The bonus event is spiced up with Konami’s “MirrorReels” feature. During the feature, the outer reels will display the same symbols, and the second and fourth reels will display the same symbols. This jacks up the hit frequency significantly for the bonus round. Additional free spins can be won during the free-spin round.

Konami is one of few manufacturers taking the bold move of offering high-denomination slots in an atmosphere where most slot-makers are concentrating on pennies. The novelty of higher denominations plus the familiarity of the multi-line video format should go far toward merging two diverse segments of the player base.
   
Manufacturer: Konami Gaming
Platform: K2V
Format: Five-reel, five-line video slot
Denomination: .25, .50, 1.00, 2.00, 5.00
Max Bet: 5—250
Top Award: 1,000 times line bet
Hit Frequency: 37%
Theoretical Hold: 4%—18%

By Caitlin McGarry   Wed, Aug 05, 2009

Standing nearly eight feet tall and three feet wide, Bally Technologies’ gigantic Alpha Elite Jumbo cabinets are sure to make a bold statement on casino floors.

Available in video or stepper configurations, these massive games actually look and play exactly like their standard-sized Alpha Elite V20, V20/20 and S9E counterparts. This means they can take advantage of Bally’s complete library of video and stepper titles. The cabinets also share common components with Bally’s existing Alpha Elite product line, such as horizontally mounted 32-inch video monitors, standard iVIEW Smart Screens, button decks and universal reel glass.

In a stepper configuration, the Jumbo cabinets offer three, four or five oversized reels. A back-lit LED active-light bezel around the reels adds an extra dimension of visual impact to the gaming device.

Additionally, such common features as the slot-card reader, cashless ticket dispenser, bill acceptor and iVIEW display are all positioned just above the standard-sized button deck within easy reach. The ergonomically designed button deck is also tilted slightly forward for ease of use.

Adding an extra dimension of visual interest is the Alpha Jumbo stepper cabinet fitted with Bally’s trademark Instant Spin roulette-style circular top box.

A Bally representative said, “Jumbo action, thrills and fun are what separate the new Jumbo video and stepper cabinets from the competition.”

For more information about the Alpha Elite Jumbo cabinet, call 702-584-6865 or visit www.ballytech.com.

By Jeffrey Lowenhar   Wed, Aug 05, 2009

For the worldwide legalized casino gaming industry, the economic crisis of the past 18 months or so has been particularly painful.

For the United States and the major international operators on the famous Las Vegas Strip, all levels of revenue generating business are down significantly. And for the balance of 2009 into 2010, only at the margin do things look slightly better. Regional and local operators from the Northeast to the far West are suffering as well—albeit local operators outside of Las Vegas are doing a little better.

As would be expected, senior management throughout the system has engaged in substantive cost-cutting, hiring freezes, faster attrition programs, benefit cutbacks, contracting, and in effect stopping of all but the most necessary programs needed to run the business. Moreover, the whole budgeting process has been put in disarray.

Aggressive and costly promotion-driven programs designed to maintain a certain level of activity are the new business mantra. At the same time, advertising budgets have been slashed, long-term investments in branding and equity building reduced and even terminated, and the development and execution of effective and necessary market research postponed, put on hold and in some cases abandoned.

The Question
From a marketing research perspective, in these tough economic times and with significant changing patterns of consumer behavior (perhaps permanent), should not senior management be engaging in more (and maybe different) marketing research interventions vs. less? Interestingly, during the rather robust economic period of 2003-2007, it was research, research, research all the time, almost independent of the value-added contribution to the business.

The Challenge
So what research ideas (programs) should enlightened managements consider in tough times? And what research programs should be jettisoned, and why? What new and potentially incremental revenue-building research programs should be invented?

Interestingly, and in a sense disappointingly, there is scant evidence in the marketplace that such judgments are being or have been made. And for the most part, most casino organizations do not have in place either a strategic research program or even a tactical day-in, day-out research program that provides a reasonable set of scientific, defensible and actionable answers to business questions.

Using the very cost-effective internet as a substitute to capture scattered, often unreliable and by definition not valid consumer insight is not (even in tough economic times) the path to effective decision-making.

So, what is the correct or at least a better series of questions to ask?
• Why did we engage in marketing research in the first place? And what were the coverage areas?
• What information do we believe is most valuable and needs to be monitored on an ongoing basis, vs. what areas within the full range of potential consumer behavior issues should we keep on our radar screen? A target list.
• Given the dramatic change in business climate over the past 12-18 months, what customer behavior interventions should we have engaged in—and as a post mortem, why didn’t we? Finally, what should we be doing today?

Some Suggestions
On the various financial news networks, we are constantly informed about the state of consumer confidence, consumer sentiment, and consumer well-being—useful leading indicators for the economy. So why don’t casino operators do this for themselves—the analysis and monitoring of their patron database?

There are 10-12 areas one would want to measure on an ongoing basis. And in the spirit of full disclosure, when it has been suggested to senior management that this is worth doing, the all-too-frequent response is (to paraphrase): “It’s a significant dollar investment; I’m not sure I want to spend investment dollars this way.”

Given the absolute decline in visitations, the absolute decline in individual budgets (fairly easy to track) and overall leisure spending retrenchment, it is critical for management to assess the permanence of this consumer behavior trend. As the economy improves in 2010, will this “new normal” remain, or will prior levels of product interest return?

Implied here are a number of business investment and eventual financial performance expectations for individual property performance—and for larger casino organizations, significant, system-wide implications.

In proposing the question to senior gaming executives about “thinking strategically” vs. “short term,” even in this very challenging economic environment, most cannot get by the very near-term financial imperatives facing their organization. However, and paradoxically, a strategic research initiative that examines in great detail the strength and potential longevity of the “new normal” can pay substantial dividends for those management teams attempting to not only secure and maintain patron loyalty, but critically, to steal share over time from the competition.

In thinking about this complex “big picture” question, managers should consider several significant areas of investigation, all designed to leverage brand-building and customer-capturing, whether as an individual operator or a multi-property operator in a number of gaming jurisdictions.

In the final analysis, the challenge for all operators, whether large or small, is to think strategically longer-term. Casino operators need to concentrate on what they need to know now, and that given the full range of behavioral/demographic dimensions involved, how their customer base (and those of the competition) will come out of this economic tsunami… and whether a “new normal” will require a revised and perhaps different level of research and changing knowledge as it applies to business decision-making.

Dr. Jeffrey Lowenhar is president of Gaming Research, Inc., a boutique marketing research firm in Las Vegas focused on serving the worldwide gaming industry.  As an executive, researcher and consultant, Lowenhar has been responsible for completing almost 300 major gaming research assignments worldwide over the past 20 years. He can be contacted at 702-889-3100, GamResInc@aol.com, or through the website  www.GamingResearchInc.com.

By Caitlin McGarry   Wed, Aug 05, 2009

Data Financial’s gaming division, Casino Gaming Source, was recently granted approval for its eWizPro product from the Nevada Gaming Control Board. eWizPro is a software tool that manages a casino pit’s fills and credits. Its inspiration? Customer demand.

“Our customers were the driving force behind our development of the eWizPro,” said Data Financial, Inc. President and CEO Jim Holtz. “The need for a stand-alone fill and credit audit system still exists, and likely will exist for years to come.

“Customers have told us they are tired of machine jams, custom forms and lack of controls. The eWizPro product addresses all of these concerns at a very economical cost. We are especially pleased to receive acceptance from the Nevada Gaming Control Board.”

With the gaming board’s approval, Data Financial will now begin bringing eWizPro to casino floors. The software features a touch-screen display that is used to enter fills and credits. The user-friendly screen replaces custom-imprinted forms and hand-written data entry. Computer experience is not necessary, so it can be easily and quickly integrated into the casino environment.

The eWizPro was designed and built to adhere to the strictest gaming security standards. A custom-locked journal printer safeguards fill and credit receipts, and casino staff members are required to log into the system with a unique PIN.

Built-in auditing functions improve accuracy and efficiency. Daily reports are generated automatically and specific transactions can be queried with ease. The paper and electronic audit trail relieve the tedious work of audit functions.

With added security, an easy-to-use interface and improved auditing functions, Data Financial expects eWizPro to be a hit.

For more information about eWizPro, call 1-800-814-1377 or visit www.casinogamingsource.com.

By Frank Legato   Wed, Aug 05, 2009

You dirty rat. You dirty, gamblin' rat.

I am referring, of course, to those dirty gamblin' rats over at the University of British Columbia. It seems researchers at this institution have proven that rats gamble just like humans.

Alright, the goal of the study wasn't just to see if a rat will take the hard-8 bet in a game of craps. (They will, every time, by the way.) The goal was to identify what neurotransmitters or brain chemicals are involved in regulating gambling behavior, be it in rats or humans. Or humans who also are rats. But I digress.

The study was funded partly through a grant from the National Center for Responsible Gaming, which is delving into the science of what drives the gambling impulse, for the purpose of identifying, preventing or treating compulsive gambling disorders. It's only because it involved rats that it ends up as fodder for "Frankly Speaking."

And rightly so. Research projects involving gambling primates have provided the very backbone of this column, and if I didn't pass up the gambling monkeys last year, I certainly wasn't going to miss out on the gambling rats this year.

The monkey story last year was a godsend. Nothing funny was happening the day my column was due, and there it was-some scientists hooked monkeys up to machines and put them in front of what was really a makeshift slot machine, to see if the monkeys-they're really nature's nightclub comics, aren't they?-would risk a sure thing for a shot at a more rare, but much larger reward.

Put another way, it was essentially a study to see if a monkey would bet the hard 8. Turns out they did. Repeatedly.

And now, after the latest study, it appears a rat will take the hard 8 as well.

The study was published in the popular scientific journal Neuropsychopharmacology. As you may suspect, I never miss an issue. Dr. Catharine Winstanley (yes, "Win, Stanley"), one of the study's authors, called it "an important first step in offering clues into what neurotransmitters or what brain chemicals are involved in regulating gambling behavior." Not to mention one more wired-up critter being permitted to enjoy gaming entertainment.

(OK, you PETA people out there... Come on. The other option for the rats was to root around in garbage somewhere or die inhaling poisonous fumes from an exterminator. At least here, they got a shot at a buffet comp.)

Our gamblin' rats (I think they were bused in from North Jersey) were given four options that differed in the probability and the generosity of the rewards. The high-stakes option offered a bunch of sugar pellets with long "penalty periods" between rewards. Lower-stakes options yielded fewer pellets with more frequency.

According to the study, the rats "learned how to be successful gamblers." According to the article in (wait for it) Neuropsychopharmacology, the rats "selected the option with the optimum level of risk and reward to maximize their sugar-pellet profits over time."

I can't remember the last time I walked away from a casino with a sugar-pellet profit. But I'm sure it was someplace with a slot club that offered same-day pellet-back rewards.

Now that I think of it, the monkey study last year reached a conclusion similar to the rat study this year-both primates exhibited human-like gambling behavior. I do believe a monkey/rat slot tournament is in order. Or, at least a new painting to replace the poker-playing dogs.

But in any event, they weren't done messing with the rats yet. The study also found the rats' decision-making abilities were significantly impaired when they were stoned. They gave them little rat drugs, to affect their levels of dopamine.

It was no surprise that hopped-up rats made bad decisions. (Isn't that always the way? I've always said you can't trust a hopped-up rat.) But the good news: Some of the drugs actually controlled the gambling impulses of the rodents, which is being viewed as a potential breakthrough that could lead to new treatments for problem gambling in humans-even those humans who are not rats.

So, what have we learned here? We've learned that there is hope for new treatments related to problem gambling. We have learned that gambling primates are not only good companions for a visit to a casino, but can serve as useful subjects in important scientific research.

But most of all, we've learned that rats and monkeys are suckers for the longshot bet.

Now, that's information we can use. Thanks, Neuropsychopharmacology!

By Frank Legato   Wed, Aug 05, 2009

This is the latest game in IGT’s “MultiWay Xtra” series. These games feature scatter-pay operation, with  the player paying to activate reels with all wins paid as scatters. The “Xtra” version also features a unique pay window: The outer two reels contain three symbols; reels 2 and 4 contain four symbols. The middle reel contains five symbols. This configuration results in a possible 720 ways to win on each spin.

Fire Horse features beautiful artwork on the wide screen, and a volatile penny program with enough features to keep players coming back. IGT’s AVP video format adds much to the visual impact of the game.

The primary game features “Stacked Wild” symbols—clustered wilds that result in multiple wins for a spin—and a random free-spin program that can award up to 96 initial free games. A special set of bonus reels appears for the free-spin round. Special symbols on consecutive reels during free spins extend the free spins.

IGT officials say this game has tested anywhere from 70 percent to 140 percent above test-zone averages in the manufacturer’s game tests alongside its top performers. According to the manufacturer, the game performs best when banked with other MultiWay Xtra themes, including Fire Opals, Carnival of Mystery Masquerade and Hexbreaker II Return of Hoodoo.
 
Manufacturer: International Game Technology
Platform: AVP
Format: Five-reel, scatter-pay video slot
Denomination: .01
Max Bet: 500
Top Award: 2,500 credits times per-reel bet
Hit Frequency: Approximately 50%
Theoretical Hold: 4%—15%

By GGB Staff   Wed, Aug 05, 2009

Reed Exhibitions and the American Gaming Association, organizers of Global Gaming Expo and its family of events, will partner with international gaming event organizer Monografie to produce the South American Gaming Suppliers Exhibition Buenos Aires 2009.

SAGSE Buenos Aires 2009, one of the largest gaming trade shows in Latin America, will take place September 30 through October 2 at the Costa Salguero Convention Center in Buenos Aires.

“As the gaming industry continues to grow globally, it is important industry leaders have the opportunity to come together to share best practices and discuss trends and technologies,” said Frank J. Fahrenkopf, Jr., president and CEO of the AGA.

“This new partnership with Monografie will serve to strengthen the already-impressive offerings at SAGSE Buenos Aires, and ensure it remains the premier venue where the Latin American gaming market can be part of the industry’s evolution.”

SAGSE Buenos Aires brings together the region’s leading manufacturers, operators and regulators. Exhibition space showcases the latest products, technologies, services and supplies in the industry.

By GGB Staff   Wed, Aug 05, 2009

Slot and system manufacturer Bally Technologies announced that it has leased approximately 77,000 square feet of additional office space in Las Vegas and Reno, Nevada, creating new corporate campuses to accommodate company growth.

According to Bally Chief Operating Officer Gavin Isaacs, the company has added 36,000 square feet of space in Las Vegas, relocating 175 game development, advanced development and project management employees to the former Carter Burgess building on Bermuda Road.

“The property is leased over a long-term basis, which, including options, spans more than 20 years,” Isaacs said. “Along with a smaller building across Bermuda Road housing about 100 employees, we truly have created a Las Vegas campus environment in a great location in the Hughes Airport Industry Center five minutes from the airport. Recent upgrades to the landscape and main lobby are being followed by remodels of our showrooms and customer conference center during the early part of fiscal 2010.”

In Reno, a new 41,000-square-foot facility adjacent to Bally’s existing facility will provide more work space for R&D, customer service, product management and technical support and administrative personnel. The new space will provide Reno employees a campus-style environment similar to Las Vegas.

By GGB Staff   Wed, Aug 05, 2009

Currency-handling equipment supplier JCM Global announced an exclusive contract with the Kickapoo Tribe of Oklahoma to supply bill validators and cash-box equipment to the Kickapoo Casino in Harra.

The 657 gaming devices on the Kickapoo floor will use the JCM Universal Bill Acceptor and Intelligent Cash Box to manage currency transactions. It is JCM’s 31st exclusive casino contract for UBA and ICB as a combination.

“We looked at every product available, and we chose JCM Global simply because their products and service are superior to everything else we looked at,” said Kickapoo Casino Executive Director of Gaming Development Jack Parkinson. “We needed a total solution, and we found that
in JCM.”

By GGB Staff   Wed, Aug 05, 2009

The Las Vegas Convention and Visitors Authority has inked a three-year deal with public relations firm R&R Partners. The wizards behind the city’s most popular marketing campaign, “What happens here, stays here,” agreed to lower media commissions and a stipulation that enables the LVCVA to terminate its contract with R&R with 90 days notice. “That should give us quite a bit of comfort in terms of approving this contract,” Boyd Gaming CEO and LVCVA board member Keith Smith told the Las Vegas Review-Journal. “In some respect, we’re not signing a three-year renewal; we are signing a 90-day contract.” R&R will also expand the services it provides to the LVCVA, which range from media and production services to social networking and international public relations.

By GGB Staff   Wed, Aug 05, 2009

 In July, Riviera Holdings Corp., owner of the Riviera casino on the Las Vegas Strip, missed an interest payment on a $245 million loan from Wachovia Bank. In March, Riviera decided to skip a $4 million payment due to declining business at its properties in Las Vegas and Colorado. “The company continues to engage Wachovia in discussions regarding events of default under the credit facility,” the company said a regulatory filing.

By Frank Fahrenkopf   Wed, Aug 05, 2009

The commercial casino industry sustained a difficult loss last month with the passing of Bernard “Bernie” Goldstein, founder and chairman of Isle of Capri Casinos, Inc. Bernie was a pioneer and an innovator; he will be remembered as one of the most significant figures in the history of our industry. He helped bring gaming entertainment to millions of people living in America’s heartland.

Bernie once said, “Don’t make me out as a mogul. I’m just plain like everyone else.” Without a doubt, he was the “salt of the earth”—wholly unpretentious and genuine—but he also was an extraordinary businessman. With just a snap of his suspenders, he could disarm his opponents and command a room.

Bernie built Isle of Capri Casinos from the ground up. What began as a riverboat casino in Bettendorf, Iowa, later blossomed into one of the country’s largest publicly traded gaming corporations. His stake in the commercial casino industry created jobs for as many as 100,000 people across the country. Today, Isle of Capri Casinos operates 14 properties in six states and serves nearly 2 million visitors annually.

People often referred to Bernie as the “father of modern riverboat gaming.” That epithet is especially appropriate, because Bernie considered Isle of Capri Casinos one big family, and he treated his colleagues accordingly.

Bernie first made his mark on the commercial casino industry in the late 1980s. He was a pivotal lobbying figure for the original legislation in favor of riverboat gaming in Iowa. At that time, Eastern Iowa’s river communities were plagued by the farm crisis, which had brought about a prolonged recession and a severe drop in population. Elsewhere in the Midwest, precipitous revenue declines in the automobile, chemical and heavy machinery production industries had led to sky-high unemployment rates and inflated welfare expenses.

Eager for new sources of revenue and jobs, legislators in Iowa legalized gambling in 1989 with the passage of the Iowa Excursion Boat Gambling Law. Land-based gambling was prohibited throughout much of the country, and riverboat gaming offered a palatable alternative. Two years later, on April 1, 1991, Bernie’s M/V Diamond Lady—the nation’s first riverboat casino—set sail. Back then, I’m sure Bernie could scarcely have imagined just how quickly riverboat casinos would evolve and expand to play such an important role in America’s tourism culture.

Soon after the M/V Diamond Lady opened, additional riverboat casinos dropped anchor in Iowa and in nearby Illinois. By the end of 1991, six casinos were operating along the Mississippi River, and one was operating on the Illinois River in Peoria, Illinois. Riverboat casinos proved to be strong economic stimulants, boosting tourism and breathing new life into struggling industrial towns. In the years that followed, nine additional riverboat casinos opened their doors in Iowa and Illinois. Gaming community leaders who witnessed firsthand the advantages casinos brought to their cities frequently praised our industry.

Riverboat casinos quickly established a reputation as a major entertainment force in Middle America. In 1993, gambling was legalized in both Missouri and Indiana in an effort to attract tourists and promote economic development. Shortly afterwards, additional riverboat casinos were developed along the Mississippi and Missouri rivers, revitalizing waterfront towns throughout the state. In Indiana, though legal challenges delayed the implementation of riverboat gaming, legislators eventually authorized boats along Lake Michigan, the Ohio River and Patoka Lake. In December 1995, Indiana’s first riverboat casino opened in Evansville and fast became one of the region’s most popular attractions.

Today, more than 70 riverboat casinos operate in six states in the Midwest and South, including Louisiana and Mississippi. They entertain millions of visitors and generate billions in revenue each year.

Without question, riverboat casinos provide their communities with numerous benefits. Tax receipts from these casinos fuel important infrastructure projects and education programs. In addition, riverboat casinos encourage local development, provide thousands of good-paying jobs and stimulate local businesses. For example, Iowa’s riverboat casinos helped jump-start the state’s stagnant economy by purchasing many products and services from Iowa-based vendors. They also have a well-established track record of reinvesting gaming dollars into various charitable initiatives.

Today’s riverboat casinos have changed considerably since the M/V Diamond Lady was launched nearly 20 years ago. Operators have broadened their business models to include cutting-edge games, fine dining options and luxurious hotel accommodations. For example, the recently opened Hollywood Casino in Lawrenceburg, Indiana—the largest riverboat casino in the country, which opened its doors this summer after six years of planning and construction—offers guests more than 3,200 slot machines, 88 table games, a 300-room hotel and several high-end restaurants. The new facility is so impressive that it recently was selected as a stop on the World Poker Tour.

Indeed, the riverboat gaming sector has come a long way in the past two decades; as he reflected on his career, Bernie must have felt a deep sense of pride about the role he played in the sector’s expansion. I am so grateful that Bernie’s achievements were recognized last year when he was inducted into the American Gaming Association’s Gaming Hall of Fame. In truth, there never was a more worthy member of that esteemed group.

Bernie will be sorely missed by his many friends in the commercial casino industry. Perhaps his colleague, Jim Perry, Isle of Capri Casinos’ current chief executive, said it best: “He will be remembered fondly as a man who stood by his word, who cared deeply about all those who worked for the many companies he led and loved his family with all his heart.”

By GGB Staff   Wed, Aug 05, 2009

Using capital raised in April, New Zealand casino and theater operator SkyCity Entertainment Group Limited has announced it bought back NZ$84.5 million—$53 million—of U.S. private placement debt due to mature in March 2012. “We are pleased to have achieved a significant buyback of our March 2012 USPP maturing debt,” said SkyCity CEO Nigel Morrison. “When we raised equity capital in April, we advised that the primary purpose of the equity-raising was to reduce debt, and this transaction is the first stage in that process.” The April equity capital-raising brought SkyCity NZ$228 million. The recent debt purchase was executed at a discount of 2 percent of face value. The offer was made to all holders of the USPP debt, a total of NZ$627 million. The NZ$84.5 million buyback reduces SkyCity’s total debt by 9 percent.

By GGB Staff   Wed, Aug 05, 2009

The Meadows Racetrack & Casino south of Pittsburgh, Pennsylvania, has opened the final phase of its casino—a 24-lane bowling center. The development was marked with a “First Ball” ceremony hosted by casino executives. A conference and meeting center also was opened.

By GGB Staff   Wed, Aug 05, 2009

The plan for a slot casino in Perryville, Maryland cleared its first potential hurdle, as the town’s commissioners approved a preliminary site plan. The casino is planned for a 30-acre parcel near Interstate 95 in Cecil County, near the Delaware  border. It is one of five slot locations approved for Maryland.

By GGB Staff   Wed, Aug 05, 2009

A new study funded by the National Center for Responsible Gaming found that rats “played the odds” during a gambling experiment. Laboratory rats were found to take high-stakes options to earn a larger portion of sugar pellets, even though the option was more likely to trigger longer periods without any treats. The study is expected to reveal clues into what neurotransmitters or brain chemicals are involved in regulating gambling behavior.

By GGB Staff   Wed, Aug 05, 2009

Lawmakers in Delaware are keeping a proposal alive that would create a new $550 million casino in rural Sussex County, near the beaches and Maryland state line. The bill to create the project, called Del Pointe, had stalled in a committee, but was forced out by state House Majority Leader Peter Schwartzkopf, whose Rehoboth Beach district is near the proposed 377-acre site. Any vote on the measure, though, will wait for the next legislative session, as lawmakers adjourned last month. The project is fiercely opposed by the three current racinos and their powerful lobby.

By GGB Staff   Wed, Aug 05, 2009

Lawmakers conducting a special legislative session in Indiana dismissed the gaming industry’s request for relief from license fees and from costly requirements that they maintain working engines and crews for riverboats that never leave the dock. Indiana casinos asked lawmakers to reduce the excessive and unnecessary costs in light of their struggles to maintain business during the recession. Lawmakers did toss the casino operators one bone during the special session, though—they created a special committee that will conduct a comprehensive review of the riverboat casino industry over the summer. Recommendations of the committee are due to the General Assembly by December 1.

By GGB Staff   Wed, Aug 05, 2009

Pennsylvania’s Philadelphia Park casino fired up the new name for its permanent slot venue, Parx, in a Fourth of July fireworks display over the property. Dave Jonas, president of casino operations, calls Parx a “gaming brand that competes with every other casino in the country.” The $250 million permanent slot casino is slated to open in December.

By Frank Fantini   Wed, Aug 05, 2009

Stocks of casino operators and their suppliers, having endured an earlier and deeper bear market than other industries, outperformed the overall market through the first half of 2009.

And even though there was a bit of a sell-off after June 30, gaming stocks still remain outperformers.

The 15 large casino and supplier stocks listed below rose 22.5 percent through June 30, compared to a 16.4 percent gain for NASDAQ, 1.8 percent for the S&P 500 and a 3.8 percent decline for the Dow.

The average gain goes down to 13.6 percent when predominantly lottery company Scientific Games and predominantly racing company Churchill Downs are factored in.

The best performance was by the regionally diversified casino operators. Those five—Ameristar, Boyd, Isle of Capri, Penn National and Pinnacle—rose an average of 73.7 percent for the year and a whopping 231.76 percent from their collective 52-week lows.

Next came the Big Three suppliers, Bally, IGT and WMS, up 23.1 percent for the year and 124 percent collectively above their lows.

The big-glamour casino operators, stung by worries over debt and over-capacity in Las Vegas and Macau, have fared the worst. They finished the first half 20 percent lower than where they started the year. They are 180 percent collectively above their lows, but that says more about how far down they had fallen than anything.

The list contains a couple of surprises for those who just tuned in. As much as there has been a Bally buzz and WMS wonder all year, IGT has been the best investment to date among the three.

And though Wynn is perhaps the most highly regarded of the glamour companies, its shares are still down double digits, perhaps a testimony to just how worried investors are about Las Vegas and Macau.

Isle of Capri topping the list also could be considered a surprise, but it started the year near its low.

Of course, gaming stocks are still well below their 2007 highs, and it could take a while to return to those levels. To get some sense of relative value among them, let’s look at enterprise value to EBITDA.

A caveat: These figures are trailing, so they don’t reflect big EBITDA increases that some companies should enjoy as projects open, such as Pinnacle’s River City, Churchill Downs’ Calder slots or, as MGM Mirage surely hopes, CityCenter.

Throw out Melco Crown and its 53.7 times number, and the 14 other casinos and suppliers are selling at nine times enterprise value to EBITDA. That figure rises to 9.1 when CHDN and SGMS are added.

The Big Three suppliers, which are expensive on price-to-earnings and some other fundamental measures, are the cheapest of the group on EV/EBITDA at a 7.15 percent average.

The five regional casino companies are next at nine times, which may make them fairly valued.

And the Big Three glamour casino operators come in at 13.5 times, showing that despite their troubles, a lot of investors are valuing them highly.

The big issue, of course, is where we go from here.

As always, there are bull and bear arguments to leave the rest of us in a quandary.

Bulls will point to the declines in gaming revenues having slowed down, in some cases stopped, as the likes of New York and Pennsylvania continue to rise.

Bears will say that New York and Pennsylvania may be rising, but it’s at the cost of cannibalizing Atlantic City and other markets.

Bears will say that valuations are still high by historic standards. Bulls respond that valuations are based on the performance in the recession, and they are cheap compared to growth ahead.

Bears respond with, what growth? If gaming companies have staunched the bleeding on the bottom line, it’s no thanks to the top line. It’s because of cost-cutting, and they can’t cut any more without driving away the customers they’re spending so much in promotion expense to lure.

And on it goes.

Our take is that Las Vegas is a big question mark for investors. The town will come back. Wanting to have fun is part of human nature, and no place is as fun as Las Vegas.

But who will own what casinos and emerge profitable after the building boom is the question.

There’s even question of which way the boom will lead the industry—back to recovery in public thrall over CityCenter, and other new mega-resorts? Or into restructurings and forced asset sales thanks to too much capacity built at too great a cost?

Regional casinos represent a mixed bag. Companies like Penn National and MTR Gaming benefit from slots in Ohio, but their properties like Hollywood in Indiana and Mountaineer Park in West Virginia are hurt by those same slots.

And companies can find opportunities by moving into new gaming jurisdictions.

On balance, the regional casino companies have affordability, geographic diversification and relatively low debt working in their favor.

If there is an industry segment that appears poised to rebound, it may be the suppliers.

Among trends in their favor:
• Gaming expansion in regional markets and internationally.
• Aging slot floors that must be replaced.
• New technology that offers both revenue and operating expense benefit.

Of course, many investors already have begun thinking that way, which is why supplier stocks enjoyed healthy first and second quarters.

But if the positives play out, growth can drive their shares higher.

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll-free 1-866-683-4357 or online at www.gaminginvestments.com.

By GGB Staff   Wed, Aug 05, 2009

WPT Enterprises, in an effort to maximize the value of its World Poker Tour brand, is reportedly looking at a possible sale of the poker tournaments. The company has not commented on the potential sale, but Gaming Intelligence is speculating that bwin might be the buyer. Bwin has the ability to increase poker TV coverage as well as offer live, streaming interactive entertainment opportunities. The two companies worked together earlier this year during the WPT tournament in Italy, in which bwin customers were able to bet on the players at the final table while watching live action play on their screens. “We’ve had discussions with, and exchanged documents with, some companies that have expressed an interest,” Steve Lipscomb, WPT’s CEO, told the Wall Street Journal.

By GGB Staff   Wed, Aug 05, 2009

The gaming industry in the U.S. has mixed feelings about online gambling. Some operators like Steve Wynn think internet casinos could embarrass the industry, while others like MGM Mirage and Harrah’s feel there is something  to be gained by moving into the online gaming world.

As a result of the mixed feelings, the American Gaming Association has taken a neutral position on the issue.

But Harrah’s Entertainment in particular has come out as a strong supporter of regulation. And the company has a lot to gain from it.

Harrah’s recently launched a spinoff company, Harrah’s Interactive Entertainment, to help it grow its online presence. The company will focus on markets like Europe and Asia, and sees it as a way to grow its already-powerful World Series of Poker brand.

Coupled with its customer database from the Total Rewards player’s club, the company is primed to be a leader in the online world.

By GGB Staff   Wed, Aug 05, 2009

As the Caribbean island of Jamaica moves forward with its plan to introduce licensed casinos, Prime Minister Bruce Golding is adamant about what investors’ responsibilities will be.

“Before you can get a license, you have to give us a bankable, guaranteed commitment that you are going to build new hotels, with not less than 2,000 rooms and an investment of not less than US$1.5 billion,” said Golding, according to the Jamaica Gleaner.

The Casinos Gaming Bill that is currently in the House of Representatives seeks to establish a gaming commission with broad powers. The commission would regulate casino gaming and oversee the procedures involved in the granting of licenses to operators as well as individuals employed in gaming.

The new legislation would also establish fines, from JDM$50,000—about $590—for failure to surrender a license that is no longer valid, up to JDM$50 million for removing seals from gaming machines, for example.

Minister of Finance Audley Shaw has also presented a bill that would amend the existing Betting, Gaming and Lotteries Act, which would have bearing on the current gaming commission, which was established in 1975.

Golding reportedly told a town-hall meeting that the tabling of the bill had been delayed to ensure that “every sentence was right, every ‘T’ was crossed and every ‘I’ dotted.”

Golding stressed that he expects casino resort developers to do right by Jamaica.

“We want hotel rooms, we want employment, we want to be sure that when you get a license you are going to use that license to bring thousands more visitors to Jamaica. That is how we are going to continue growing the tourism sector,” said Golding.

By GGB Staff   Wed, Aug 05, 2009

When Harrah’s decided a couple of years ago not to tear down its resorts on the east side of the Las Vegas Strip to build a huge “CityCenter”-like project, the company lost an opportunity to put its own stamp on a collection of disparate casinos. While that decision may seem prescient given the economic collapse that followed, there has always been a desire to link the properties with a signature development.

A recent story in the Las Vegas Sun indicates that time is now.

The development, known as “Project Link,” would be built between O’Shea’s Casino and the Flamingo on a wide street that is now essentially a lightly used alley. It will be modeled after similar pedestrian entertainment centers found in New Orleans, Memphis and Los Angeles.

At the end of the street, adjacent to the monorail, would be a 600-foot ferris wheel, similar to the London Eye and the Singapore Flyer.

Greg Miller, Harrah’s senior vice president of resort development, told the Sun the idea of a huge casino resort isn’t in the cards.

“It’s tough to make that math work,” he said.

No budget or timetable for construction has been released. While the project would undoubtedly be more economical than a new casino, it will require access to credit, something that has been virtually impossible for any Las Vegas gaming project.

But Harrah’s is also facing the opening of CityCenter late this year, an event that may shift foot-traffic patterns on the Strip further south, endangering the millions of strollers who now pass by the east-side casinos owned by Harrah’s. So an attraction at that end of the Strip is deemed essential by company officials.

By GGB Staff   Wed, Aug 05, 2009

The Tropicana Las Vegas’ financial troubles are over—or so it seems. Earlier this year, Canadian private equity firm Onex Corp. purchased 58 percent of the Strip property’s debt. As of July 1, the resort is out of bankruptcy and will be managed by former MGM Mirage President Alex Yemenidjian.

Yemenidjian was granted approval to run the property by the Nevada Gaming Commission last month. He is now the resort’s chairman and CEO.

As part of the bankruptcy agreement, the Tropicana’s debts were cleared and the property emerged from bankruptcy with more than $10 million in cash. Onex has also promised to invest capital into the property to boost its reputation and revenue.

In a statement released by Onex, the firm said it intends to begin renovating the property this year. Remodeling will conclude in 2010. Changes to the hotel’s 1,850 rooms and casino floor are expected, and Onex said it plans to build a nightclub on the property.

The changes come after a long period of uncertainty. At the end of 2007, Tropicana Entertainment’s New Jersey property was stripped of its license, which sparked the bankruptcy proceedings. The two properties have been split and are no longer part of the same company, with billionaire gaming veteran Carl Icahn expected to take control of the New Jersey resort by the end of the year.

By GGB Staff   Wed, Aug 05, 2009

After working 24 hours a day, seven days a week, the two casino resorts slated for Singapore announced last month that significant milestones had been reached in the construction process.

At Marina Bay Sands, the $5 billion resort owned by Las Vegas Sands, the three 55-story hotel towers were topped off. The towers will offer more than 2,500 rooms and suites when completed.

“We are certainly excited to have reached the top floor of the hotel towers and celebrate another milestone in the development of this iconic resort, and come one step closer to opening the doors and showing it off to the rest of the world,” said Sheldon G. Adelson, LVS chairman and CEO.

Adelson later admitted, however, that the opening of the property will be delayed until the first quarter of 2010.

“We can’t control the flow of sand to make concrete, the availability of steel or the availability of labor,” he said at a news conference in Singapore.

Following the completion of the towers will be the addition of the two-acre “SkyPark,” which will include three swimming pools, several restaurants and bars, landscaped gardens and expansive views of the Singapore skyline.

The Singapore project was one of the few construction projects that LV Sands continued last winter after the crash of its stock price and an investment by Adelson of hundreds of millions of dollars into the company. LV Sands halted all construction on Macau’s Cotai Strip and postponed the non-gaming elements of the Sands Bethlehem in Pennsylvania, which opened earlier in May.

Across the city from Marina Bay Sands, Genting’s Resorts World Sentosa is also sprinting toward the finish line. The company announced last month that it also expects a first-quarter opening, probably around March.

The $4.5 billion project contains six hotels with around 1,800 rooms, the world’s largest oceanarium, a water park and maritime museum, and Asia’s first Universal Studio theme park to be built over the next two years on 121 acres of Sentosa Island, south of the city’s center.

The company has also adjusted the number of visitors it expects in the first year from 15 million to 12 million, as well as the expected rate of return from revenue, down to between 12 percent and 13 percent from 15 percent.

“There have been some revisions to the revenue numbers,” Resorts World spokeswoman Krist Boo said. “What we think will decrease is spending per visitor.”

Michael Chin, Genting’s executive vice president of projects, said the project will open with about 60 percent of its features completed. Singapore had originally pressed the developers to open fully completed, but have recently backed off that demand for both LV Sands and Genting.

By GGB Staff   Wed, Aug 05, 2009

At a workshop on tourism and gaming in Taiwan, the minister of transportation and communications explained the reasons the nation will legalize gaming on the Penghu islands and how the process will proceed.

Mao Chi-kuo said the goal of the government was to promote tourism in the islands, and that the gaming facilities would be required to include “international tourist resorts” and would follow the Singapore model.

Mao said the process will contain four steps, the first of which occurs next month when Penghu residents vote in a referendum on gaming. Should that referendum be approved, the legislature will then pass the Gaming Operations Regulatory Act by the end of the year. The bidding process also happens in this phase, which includes the awarding of the two licenses. The stipulations of the gaming floor—the size of the facility, the number of slot machines, the tax rate, regulations and more—will be decided at this time as well.

Like Singapore, Taiwan will impose strict regulations to control the “negative” aspects of gaming. Steps three and four will include the implementation of controls, the construction and the opening of the two gaming resorts.

By GGB Staff   Wed, Aug 05, 2009

Revenues continued their downturn in Macau in June, when the city's casinos posted declines of more than 17 percent from the previous June. The decline escalated in June from the 10.2 percent slide in May, even though Melco Crown's City of Dreams debuted on June 1 and reportedly attracted more than 1 million people.

Revenues for the first half of 2009 were down 12 percent from 2008, with the second quarter seeing an even steeper decline than earlier in the year. According to the Macau government, casinos won US$7.43 billion in the first six months of '09.

SJM, the company controlled by Stanley Ho, which controls 19 of the city's 32 casinos, achieved a 30 percent market share, while the properties operated by Las Vegas Sands-Sands Macao, Venetian Macao and the Four Seasons-took second with 26 percent. The other operators were farther back: Wynn Resorts (14 percent), Galaxy Entertainment (12 percent), Melco Crown Entertainment (9 percent) and MGM Grand Paradise (8 percent).

Some attributed the steeper decline to fears of swine flu, which has all Asian countries, including Macau, screening passengers for high temperatures when they arrive.

By GGB Staff   Wed, Aug 05, 2009

This has the potential to be the busiest weekend in Colorado gaming history,” said Christopher Abraham, a spokesman for Golden Gaming, as Colorado’s three casino towns welcomed an increase in gaming limits in the state.

Voters approved the changes in a statewide referendum last November. Just after midnight on July 2, bet limits were raised, new games were added and operating hours increased, resulting in huge attendance and record casino wins.

According to the Denver Post, the Lodge and Gilpin casinos in Black Hawk had nearly three times more gamblers than they did on the same day in 2008.

“It’s fair to characterize the launch as successful,” said John East, a vice president with Jacobs Entertainment, which owns the Lodge and Gilpin casinos.

Gamblers flocked to the new craps and roulette tables until well into the morning, East told the Post.

The new regulations allow casinos in Black Hawk, Central City and Cripple Creek to add craps and roulette and raise betting limits from $5 to $100. The casinos can also stay open 24 hours a day, seven days a week; the previous closing time was 2 a.m.

Preliminary figures showed that business at the Isle Casino Hotel Black Hawk was up about 60 percent, according to General Manager John Bohannon.

By GGB Staff   Wed, Aug 05, 2009

The Bahamas may be on the verge of liberalizing some of its gaming laws. Possible changes could include allowing legal residents of foreign origin to play in casinos and the establishment of a national lottery.

The tourism minister of the Bahamas, Vincent Vanderpool-Wallace, told the Nassau Guardian that a committee composed of tourism industry operators and government officials has been formed to study the existing legislation. The committee could come with its recommendations as early as the end of August.

At present, only visitors to the Bahamas are allowed to engage in gambling there. Bahamian citizens and legal residents are not.

Before the committee was created, the president of the Bahamas Hotel Association, Robert Sands, said the association supports allowing foreign residents to play in casinos, as well as the creation of a national lottery.

Although the BHA officially is not in favor of granting that same privilege to natural-born Bahamians, not all of its members are in agreement.

Sarkis Izmirlian, chairman and CEO of Baha Mar Resorts Ltd., has said he would be happy to host Bahamians at his Crystal Palace Casino. He also is in favor of a national lottery.

“Our gaming laws in the Bahamas are just not competitive versus jurisdictions in the U.S. and other places in the world, and we really need urgently to address our gaming regulations here in the Bahamas,” said Izmirlian.

Vanderpool-Wallace wants any proposed changes to the legislation to address matters relating to the Financial Transactions Reporting Act and to include cruise ships as well.

By GGB Staff   Wed, Aug 05, 2009

The general director of the agency that oversees Uruguay’s state-owned casinos has announced he will close the property that has been operating in the Four Seasons Resort in the town of Carmelo.

“I will not subsidize venues that generate losses,” said Fernando Nopitsch, according to Yogonet. “The casino that operates in Four Seasons hotel generated a deficit of $500,000 annually.”

Nopitsch had already reached agreement with the directors of the hotel to temporarily close the casino until the National Audit Office and the government can issue a statement.

Nopitsch has also closed the seasonal summer casino located near Merín Lagoon.

Separately, the government is going ahead with its plan to take bids for the country’s 29 casinos from private operators. In these cooperative agreements between government and the private sector, the government controls the casino and provides the personnel, while the private company supplies the gaming equipment and receives a share of revenues.

By GGB Staff   Wed, Aug 05, 2009

While there looks to be increased support for efforts by U.S. Rep. Barney Frank to create a system to regulate online gaming, hearings on his legislation will not be held until September.

The hearings were originally scheduled for the middle of July, around the time the Poker Players Alliance planned to send a number of representatives to Washington, D.C. The House Financial Services Committee, the body that would hold the hearings and which Frank chairs, has been occupied with the ongoing economic crisis.

Frank introduced two pieces of legislation this year. The first is HR 2267, the Internet Gambling Regulation Consumer Protection and Enforcement Act, which sets up a regulatory system for internet gaming in the U.S. The second bill, HR 2266, seeks to delay implementation of Unlawful Internet Gambling Enforcement Act provisions from January 2009 to January 2010. It has been rendered moot by the hearing delay.

A companion bill introduced by Rep. James McDermott, HR 2268, the Internet Gambling Regulation and Tax Enforcement Act, is also now delayed.

While the legislation may be stalled, there is a growing contingent of lawmakers lining up to support it. The support is strong enough that the opposition is getting worried.

“It’s going to be an uphill battle to stop it this time,” said Alabama Rep. Spencer Bachus, a longtime gambling opponent who knocked Frank’s efforts to repeal the UIGEA off track last year. “We caught them off guard last time. This time, they won’t be off guard.”

The growing support for a new approach to online gambling—in part spurred by a growing number of World Trade Organization rulings against the U.S.—even has some opponents taking notice. The National Football League, for example, was instrumental in getting the UIGEA passed and in defeating Frank’s efforts last year to delay its implementation.

The league was even able to turn a number of Democrats against the legislation last year, but Bachus thinks the league might now be working with Frank on a compromise that will keep in place bans against sports betting online.

Observers and analysts also believe there is growing support for online gaming, with Goldman Sachs writing to investors that it expects the U.S. will eventually regulate and legalize the online gaming industry.

“We believe it is logical to assume that the U.S. market will eventually regulate, given the potential implications for U.S. tax take, if nothing else,” Goldman Sachs wrote in a note to investors.

By GGB Staff   Wed, Aug 05, 2009

The bill put forward by France to allow competition from private online gaming operators has drawn requests for a degree of revision and clarification from the European Commission.

According to GamblingLaw.eu, the French are being asked to “clarify and amend” certain aspects of the proposed law to bring it into compliance with European law.

Requested clarifications and points subject to amendment include:

• more detail on the amount of consideration that will be given to the legal system of the jurisdiction where the operator is licensed;

• the obligation of an operator to receive the consent of the rights owner of a sporting event;

• the provision of a maximum payback ratio; and

• the obligation to establish a fiscal representative in France.

The E.C. opinion gives France another month to submit its proposal for a bill, moving the deadline to July 8. If the government refuses to modify the bill by that time, or ignores the E.C. opinion, the E.C. could choose to start an infringement procedure.

By GGB Staff   Wed, Aug 05, 2009

Online casino 32Red is the latest to partner with online payment processor PayPal, owned by auction giant Ebay. The site joins PartyGaming, Paddy Power and 888 in using PayPal’s services.

PayPal backed away from online gaming in 2002, but a subsequent relaxation of its policies has seen it contract with as many as 75 different online gaming operations in recent months.

“I don’t know where the caution came from but I think it was the company being mindful of American regulation,” 32Red operations director Pat Harrison said. “But I believe the U.K. Gambling Act and the European Union directive on money laundering have acted as a security blanket, and that PayPal is far more open to gaming companies than it used to be.”

By GGB Staff   Wed, Aug 05, 2009

Harrah’s Cherokee in North Carolina expects to complete a new 532-room tower this year that will give the property the largest hotel in the state. It’s the third hotel expansion at Harrah’s Cherokee since 2002.

The first tower opened with 252 hotel rooms, and a second tower in 2005 expanded the room count to 576. The latest addition will bring the hotel’s total room count to more than 1,100, including 78 new suites.

The expansion is part of a $633 million project designed to turn the casino and hotel into a full-purpose resort destination and make it more competitive once the economy rebounds.

The project will also include a new hotel entrance and lobby, and by 2012, the former entrance area will be turned into a 16,000-square-foot spa.

The casino will also be renovated, nearly doubling in size from 88,000 square feet to 150,000 square feet with 1,200 new games. Six new retail shops, six new restaurants, a 3,000-seat event center and a second eight-story parking garage also will be added.

By Roger Gros   Wed, Aug 05, 2009

As you’ll see by reading the Dateline Asia department on page 8, the opening of the Singapore casinos has turned into something of a horse race. Even though Las Vegas Sands won its license almost a year before the government granted the second license to Genting’s Resorts World, the race to the start has tightened up substantially. 

While initially LV Sands was expected to open its spectacular Marina Bay Sands by the end of this year, shortages of supplies and labor have forced it to revise the opening date to early 2010. That happens to be the same quarter that Genting has estimated Resorts World on Sentosa Island will open. 

Why does this matter? After all, a difference of a few weeks or even a few months would be rather insignificant in the grand scheme of things, particularly if you use that time to fine-tune operations and the overall facility. 

But it matters in Asia and to those companies for a few very important reasons:

For Las Vegas Sands, there’s a sense that the Marina Bay Sands is a make-or-break moment for the company. When LV Sands was teetering on the edge of insolvency earlier this year, Sheldon Adelson and his executives continually pointed to MBS and its potential impact on the company. 

At $5 billion-plus, it’s one of the most expensive casino complexes (or integrated resorts, as they prefer to call it in Asia) ever built. So the return will have to be very good to justify that expense. 

For Adelson, it’s a matter of demonstrating that he still has the “Midas touch.” After jettisoning much of the executive team that directed the growth of his company over the past 10 years, Adelson is clearly running the show. More than ever, it’s his reputation, and more importantly to him, his legacy, that is on the line. A successful opening and operation for MBS would be the crowning achievement to an incredible career, and would set the company up for even more growth in Asia. 

While the stakes aren’t as high for Genting, Resorts World is still an important development for the company, coming in at more than $4 

billion. Its Genting Highlands in Malaysia is a legend in the gaming industry, but aside from its Star Cruises operation in Asia, Genting hasn’t often ventured outside its home country operationally. 

The Sentosa Island project is designed to be much more than simply a casino. While MBS is focused on business with its MICE (meetings, incentives, conventions and exhibitions) space, Resorts World is a full-on resort, with Asia’s first Universal Studio theme park, an “oceanarium” that will be the largest in the world, and a variety of other entertainment options. 

So if Genting wants to be seen as a major player in the gaming industry, it is crucial that it open before MBS. 

Another reason it’s important to both parties is the local market. One of the strangely Singaporean stipulations placed on the two casinos is that locals cannot visit them without first paying a S$100 (US$70) daily fee or a S$2,000 annual fee. Since these fees are specific to the individual casinos, the one that opens first may be the one that gets the lion’s share of the local customers, who are quite affluent. 

And of course, the integrated resorts are important to the Singapore government. With legendary strict laws (no chewing gum!), Singapore expanded its morals to allow gaming in order to attract more tourism, both business and leisure. While it assuredly desires the tax revenues and jobs being created by the casino, the government wants gaming to work—but under its rules and guidelines. Whether that is reasonable to expect, given the sometimes-excessive “harm minimization” strictures, is yet to be seen. 

But the most important reason these properties want to be the first to open is one that is purely Asian. They want the “face” that makes them appear to be the luckiest and the most desirable casino in Singapore. Westerners don’t really understand this trait, but I’ve been assured that it is one of the key drivers behind that rapidly intensifying race to be the first casino to open in Singapore. 

By GGB Staff   Wed, Aug 05, 2009

The long-awaited shutdown of all existing casinos and slot halls in Russia appears to have gone smoothly. At least, that was the situation two days after the July 1 deadline for the gaming stop.

In Moscow, authorities began their checks on the city’s more than 500 now-illegal gaming venues just after midnight, as June turned to July. According to the Moscow Times, Deputy Mayor Sergei Baidakov said that 440 of the 513 businesses had been visited by 2 a.m. July 1, with the remaining operations scheduled for their turn by Wednesday evening.

In St. Petersburg, the head of the city police said his force had gone to 10 closed casinos on the first day—the city had had over 110 gaming businesses—and experienced no problems.

“All 10 places were duly closed,” said Vyacheslav Stepchenko, St. Petersburg chief of police, according to the St. Petersburg Times. “All the former entrances were marked with special notices explaining that the casino or club had stopped its operations. Some of the casinos have already removed the gambling equipment.”

With the disappearance of the casinos and slot halls, Russian gamblers will have to be content for the time being with playing lotteries, frequenting sports betting shops and playing poker—which is officially a sport—in specially licensed sports clubs. Casino gaming will return to Russia when new properties have been completed inside the four officially designated gambling zones.

It all sounds very orderly and promising. But a closer look at the situation reveals potential chaos waiting just around the corner.

None of the new gambling zones has seen even rudimentary development, according to all reports. To turn these remote locations into resort areas that might be attractive to visitors would require an estimated investment of $40 billion.

Even with the promise of improvements, experienced local casino operators have refused to consider moving from the major cities—where all the money is—to gambling zones in the relative middle of nowhere.

“They are just not lucrative for the business,” Lavrenty Gubin of Storm International told the Moscow Times. “Nothing is done there. Besides, no wealthy people will go gambling to a place like Azov,” he said, referring to one of the designated regions.

Storm International operated five of the major casinos in Moscow until last month. When the change became inevitable, the company began moving its business to countries like Armenia, Belarus, Kyrgyzstan and even Mexico.

Since January, Storm has laid off 5,000 of its employees in Russia. That is only a fraction of the estimated 300,000 to 400,000 gaming positions that have been lost across the Russian gaming industry, according to estimates. The government, however, says the number of jobs lost is only 60,000.

One problem expected sooner rather than later is the rise of illegal gambling clubs. The St. Petersburg Times reports there are already rumors of a coming network of private clubs around the city for VIPs.

But the reality of the situation is that the law is the law, and it is not likely to change anytime soon. Like it or not, if casinos are going to be part of the Russian cultural landscape, they are going to be built in the gambling zones.

By GGB Staff   Wed, Aug 05, 2009

Hard Rock International will provide one of its signature casino resorts to the EuroVegas project planned for Hungary.

U.S.-based Hard Rock is the first operator to join forces with EuroVegas Hungary Ltd., a joint venture of Austria’s Asamer Group and Supersberger Group.

The EuroVegas concept calls for the establishment of a tourism complex with five U.S-style casinos plus the usual attendant amenities. EuroVegas Ltd. has obtained five licenses from the Hungarian government to operate casinos, valid for 20 years plus a potential 10-year extension, each allowing an unlimited number of gaming tables and slots.

The location of the project—less than an hour’s drive from Vienna, Austria and Bratislava, Slovakia, and 90 minutes from Budapest, Hungary—puts the resort within easy driving reach of over 8 million people.

The Hard Rock Hotel and Casino Hungary will be the first of EuroVegas’ five planned
casinos. To be constructed in phases on 30 hectares of land, completion of the initial phase is estimated by 2012. The hotel will then have 316 rooms and a spa, and the casino will have 100 tables, 1,500 slots, a sports book and a 10-table poker room. Following a second phase of construction the facilities are to be expanded to encompass over 600 hotel rooms, a larger spa, 200 gaming tables, 3,000 slots and a 20-table poker room.

After six years, EuroVegas expects to have grown to over 1,200 hotel rooms, 400 gaming tables and 6,000 slots. Total area reserved for development is 335 hectares, about 828 acres.

Amenities at the Hard Rock property will include a pool with a deck for entertainment and a branded Rock Spa for relaxing and—according to the company’s press release—“detoxing.” A Rock Shop with branded merchandise, signature restaurants and bars, a convention center, concert venue, nightclub, high-end retail shopping and over 2,500 parking spaces will complete the offering.

By GGB Staff   Wed, Aug 05, 2009

There is one month left before Florida Governor Charlie Crist and the Seminole Indians have to reach a gaming compact, but any deal that benefits the state could go south if blackjack and other Class III card games are removed from the tribe’s Immokalee casino.

If tribal leaders reject the state’s compact guidelines—which mandate the removal of the games—they could appeal for approval to the federal government, which would cut state government right out of the minimum of $2.3 billion it would receive from the casinos over a 15-year term.

The tribe first agreed to pay $100 million annually in a 2007 deal made directly with Crist. That deal was undone a year later by the state Supreme Court, which ruled that Crist did not have the authority to broker the deal without approval from the Florida legislature. Lawmakers then redrafted the guidelines. The pending compact requires a minimum of $150 million in annual payments and bans banked card games at three of seven Seminole casinos—Immokalee, Big Cypress and Brighton.

State Rep. Matt Hudson said the tribe will never sign off on the deal as it now stands, particularly since Chairman Mitchell Cypress lives on the Big Cypress reservation.

“The reality is this is a business decision—it’s a business decision that doesn’t work out for all of them,” Hudson told the Naples News.

The Seminoles also want exclusive rights to Class III games in the state outside of current parimutuel slots, and the current compact holds no guarantees. One provision could permit banked card games in Miami-Dade and Broward County parimutuels, which already offer Vegas-style slots.
In that case, the tribe would still have to make its annual payment, although the sum would be
lowered.

Barry Richard, the tribe’s attorney, has been quoted as saying the lack of exclusivity will force the tribe to reject the deal.

Crist has until August 31 to reach a deal with the tribe. Meanwhile, a concerned Hudson, who voted against the compact guidelines, said he hopes negotiations reopen and the Immokalee issue is reexamined.

By GGB Staff   Wed, Aug 05, 2009

A report on the effects of legalized gambling on Connecticut’s economy criticizes the distribution of the money and says not enough has been done to address the effects of the Mohegan Sun and Foxwoods casinos on the towns where they are located.

But it also credits the building of the casinos with rescuing the region from the effects of the loss of the defense industry that followed the end of the Cold War.

The $700,000 study, “Gambling in Connecticut: Analyzing the Economic and Social Impacts,” was conducted by Spectrum Gaming Group, based in New Jersey.

According to Michael Diamond, who directed the report for Spectrum, the effect of the two casinos “cries out for a regional approach. What affects municipalities doesn’t stop at their boundaries. We found there was tremendous frustration on the part of the towns. We point out that other casino jurisdictions have set up separate funds for specific local impacts.”

The report cited the town of Norwich as having had the biggest negative impact from gaming, because it is near both casinos. It uses almost all of the money that it is paid from gaming to address its negative impacts, such as building new schools to educate new residents who work at the casinos, and additional policing, rather than to lower property taxes or for public improvements. But many other towns were also listed as having suffered negative impacts from gaming.