By GGB Staff   Tue, Jul 06, 2010

There’s a new manufacturer aiming at the top echelon of the industry’s slot-machine supply sector. It is a 32-year-old company.

AC Coin & Slot is known to most in the industry from bonus games like Slotto, Bankroll and many others. But if the games, custom signs and other products the company has produced over the past three decades have defined AC Coin, one development near the end of last year may define the supplier for the next three decades and beyond.

That development was the restructuring of AC Coin’s longstanding agreement with slot manufacturer International Game Technology, which accomplished two things: First, it gave AC Coin a nice chunk of investment capital, the result of IGT paying $20.6 million for the distributorship AC Coin had held since 1983, under which AC Coin had served as IGT’s exclusive distributor in Atlantic City and the Caribbean.

Secondly, and more importantly, the new agreement freed AC Coin to sell its proprietary games, where under the old deal with IGT, they had been available for lease only.

“Having the ability to go out and sell product has been the biggest change in our business,” says Jason Seelig, AC Coin’s executive vice president of sales and marketing, “because we were restricted to selling in a very small niche section of the industry. Now, we can compete on the entire casino floor, instead of 5 percent or 8 percent of the casino floor. The new business model has opened our business up to the other 95 percent of the floor.”

AC Coin is still based in Pleasantville, New Jersey, the town just outside of Atlantic City where the business was built. The company is the fourth-largest private employer within the Pleasantville Urban Enterprise Zone, and New Jersey state officials are currently working with AC Coin executives, including founder Mac Seelig, on incentives that will keep the company—a model corporate citizen and benefactor in many charities—in the state.

However, as noted by Jerry Seelig, the company’s executive vice president and general manager—and the creative force behind many of its top-selling games—the company has manufacturing capacity well beyond New Jersey. In fact, while R&D is centered there, less than half of AC Coin’s employees are in New Jersey, and its main manufacturing operation is an 80,000-square-foot facility in Reno, Nevada, with plenty of room to ramp up production. “The overwhelming amount of our revenue, over 90 percent, comes from outside New Jersey,” Jerry Seelig says, noting that the company is licensed in 180 jurisdictions across North America and Canada.

“We’re going to continue to ramp up our product offerings; we’re going to expand into VLT and Class II markets,” he says. “We’re also going to partner with companies in Europe and Australia. We’re having strategic partnering meetings in Macau. South Africa’s interesting, Italy’s interesting to us.”

The idea, he says, is to deliver more content, spreading the AC Coin product strategy to new markets. “Our main goal is to be able to manufacture the highest-earning content on the casino floor, and to be a company that can deliver that content to all gaming markets,” Jerry Seelig says.

Adds Jason Seelig, “It’s been our philosophy since we started making games and putting them in the field that if it’s not one of the highest-earning games on the floor, you can’t grow your business. And operators will tell you our games are among the highest-earning on the casino floor.”

The company is aggressively marketing its products by offering a variety of creative business models, from outright sales to lease-to-own to traditional lease structures. Jason Seelig says AC Coin is offering “far more creative business models than anyone else,” with an eye to helping casinos maximize their budgets. “We worked under such a far more considerable constraint for 15 years, because again, we played in one 5 percent section of the casino floors,” he says. “We had to get very creative then, and we were still putting out great games. Now, we’re on the other side where we can sell games, and it’s a whole different business.”

How Big?
How large will AC Coin become with its new business model? According to the Seelig brothers (along with third brother Jeff Seelig, they run the day-to-day operations in the company their father, CEO Mac Seelig, founded), much of that depends on the nature of the technology platforms going forward.

Up until now, the company has concentrated on creating unique bonus games to combine with IGT base slots. The new agreement with IGT still centers on game partnerships, but the IGT base games are used much as an OEM-supplied portion of the finished product, and the agreement enables AC Coin not only to sell directly to casinos, but to work with platforms and base games of other manufacturers based outside North America, and other U.S. manufacturers in the Class II and central-determinant VLT markets.

Another possibility is that AC Coin could develop its own proprietary slot platform and produce games start-to-finish.

“We’re evaluating other platforms for their ability to deliver our content in a more expeditious manner to the market,” Jerry Seelig says. “We’re talking to several manufacturers, but we haven’t ruled out doing our own platform,” adds Jason Seelig. “The one thing Jerry does very well is providing very unique games. It’s why AC Coin has been able to do what we’ve done. You can go into a casino and pick out our games immediately. Not very many manufacturers can say that. As we evaluate other platforms and look at our own, we’ll make sure the technology allows Jerry to be able to do what he needs to do.”

While expanding the company’s product base, the Seeligs say they will maintain a balance between volume of product and individual attention to each game. In the past, the company has used its comparatively low production volume as an advantage, concentrating on perfecting each individual game without the distraction of deadline crunches.

“We’ve had a different philosophy than other suppliers,” says Jerry Seelig. “On a casino floor, you only need 30-40 good games. I prefer to make fewer games that perform well on the casino floor. Each game needs to incubate properly, so when it goes out, it earns money.”

“The reality is that it costs a lot of money to make a slot product,” Jason Seelig adds. “To make something today, you have to make sure your story board is on target and will be relevant a few months from now. Our latest community-play game will be on test for three months in the field, before we sell it. When you sell a game and ask the customer to put it out and see how it works, it’s your customer who pays if it doesn’t work. That’s one of the reasons I don’t think we’re ever going to be a slot game mill.”

The trick, he says, is to strike a balance between creativity and production. “The trick is to become a company that can develop a lot more games, but still maintain the philosophy that assures when it reaches you, it will deliver the earnings on your floor.     

That’s why we’re looking at different methods of developing the product we have today, on a much bigger scale.”

That means taking advantage of the same management method that exists today, he adds. “We have a huge advantage in that we’re a private company, competing with a bunch of public companies,” he says. “Four Seeligs sit in a room, and the decision’s made.”

This agility that has served the company so well will now be directed to creating a big splash at this year’s Global Gaming Expo, where the company will have a much larger booth than last year, with “a lot of products people haven’t seen before,” says Jerry Seelig, “and the ability to grow off our own success.”

Spreading the Community
The games leading the charge into new markets will carry AC Coin’s new emphasis on community play. The manufacturer has concentrated on rolling out its new “Double Play” series of two-game, community-play games, headed by “Phat Cats,” and soon, “Rock & Roll Legends.”

The games feature common overhead displays for bonus events, but also the popular “Quick Hit” feature, which feeds the player a bonus event every half-dozen spins or so. “A lot of Quick Hit bonuses are working very well for us right now,” says Jason Seelig. “We’ve done that math model on multiple platforms, and it’s done well in every market. It’s an example of listening to the customers—players are coming in with less money, and they want the same entertainment value. Quick Hit does that.”

Rock & Roll Legends places a unique bonus on top of two games, in which a “rock legend” plays guitar, and notes rise on a musical staff to award bonuses when intersecting with credit amounts. “That intersecting bonus is going to be the unique part of that game, but we’ve added Quick Hit features that are very special and fun to play,” says Jason Seelig.

The two-game setups will be followed by several launches of larger community games, including a six-game “Quick Hit Super Bankroll” game that adds the frequent bonuses to the giant scrolling event that has made the community versions of Bankroll popular. Right behind that is another six-game product, the community version of the “Empire” game—the one with the miniature King Kong-like gorilla climbing the Empire State Building, collecting bonus awards along the way. (In this case, it’s a six-sided building, to accommodate the “bonus gorillas” of players at six different machines.)

It is a series that started with one of AC Coin’s biggest hits, the original Empire, and has grown into what the manufacturer calls the “Climber Series.” Jerry Seelig says this version has a different style of the Quick Hit bonus, one that has played well at three test sites—Foxwoods in Connecticut, MGM Grand in Las Vegas and Greektown in Detroit. “It’s doing the same multiple in all three of the casinos, which were chosen so we could compare it to our community Bankroll game, which currently has 600 installations across the country,” he says.

Next up will be a conversion for the community Empire game that will turn it into a community version of the legendary Slotto game. “That will be the first platform we’ve ever done where operators can do a floor conversion from a Climber game to a Slotto-series game,” Jason Seelig says. “It’s an example of listening to our customers—they love these games, but it’s also a lot of work to go from one game to another. Our engineers went back to the drawing board, and figured out how to take Empire off and put Slotto on, and do it across every jurisdiction.”

While AC Coin’s current customers are placing orders on these new products at higher-than-projected rates, initial response from new markets has been great as well, say Jerry Seelig. “We make a very interesting product they haven’t seen before, so the welcome has been very warm,” he says. “Operators recognize we are focused on helping them maximize their win per square foot, and players seem to pick up very well on the way our products are played.”

“We’re in a very interesting time right now,” says Jason Seelig. “How many times have you heard about a company with an incredibly solid core business, which is growing, but at the same time is able to sit down and engineer a change? We’re a 32-year-old company that has the ability to re-engineer itself.

“How big will we get? It depends on our ability to deliver more games using the same philosophy, but having that opportunity to sell to the other 95 percent of the casino floor is something we’re going after aggressively, so ultimately, we can become a true slot manufacturer and compete in that sector of the business.”

Adds brother Jerry, “It’s an exciting time for us and for our customers.”

By Marjorie Preston   Tue, Jul 06, 2010

In a June issue of Newsweek magazine, an article titled “Why Gaming Has Gone Bust in New Jersey” stated the painfully obvious: the “supposedly recession-proof sin business” of gaming has “shed revenue in 2008 and ’09.”

According to Newsweek, casinos in Nevada and New Jersey are now being “forced to compete with shows, restaurants and other lures for recreational cash.” In a sign of the changing times, the article went on, casinos on the Vegas Strip are adding restaurants, retail and concert halls without expanding their gaming floors.

The story missed one not-so-subtle nuance: casinos, in Vegas, Atlantic City and elsewhere, are not losing out to entertainment, or necessarily competing with it. They are planning it, promoting it and showcasing it in a bid for more market share and renewed profitability.

In the early 1990s, non-gaming activities provided just 42 percent of overall revenue in Las Vegas; that number has risen to about 60 percent today. In Atlantic City, the bulk of casino revenues—about two-thirds—still derives from gaming, but with regional competition taking a bite out of the win, operators are now touting Atlantic City as an entertainment paradise that also happens to have casinos.

Widening the Net
With gaming revenues flat at best in many jurisdictions, and competition continuing to rise, casinos are using bigger, better and occasionally unorthodox entertainment to grow the market, attract new customers and give existing patrons more reasons to stop, stay and spend. As a result, the entertainment lineup is expanding beyond rock stars and big-name bands to include celebrity chefs, real housewives—and even former presidents.

At the Atlantic City Hilton, a new summer speakers series is not just expanding the definition of entertainment—it’s turning it on its ear.

The series kicked off last month with Fox News talkers Glenn Beck and Bill O’Reilly, now traveling the U.S. with their “Bold & Fresh” tour. The show quickly sold out, and fans spent big bucks to meet the duo (the rock stars of the Tea Party set) at an exclusive reception.

The Glenn & Bill Show will be followed this month by consecutive one-night-only evenings with former President Bill Clinton and former Vice President Dick Cheney, in an up-close-and-personal showroom setting. And forget about the Fourth of July; the real fireworks will ignite in August, when right-wing firebrand Ann Coulter and super-Democrat James Carville collide on the Hilton stage.

It’s a far cry from the casino entertainment of old, which was designed chiefly as a break from the real game of losing money. That change is just fine with Michael Frawley, chief operating officer at the Hilton, who says response to the bookings has been “amazing.” Atlantic City’s gaming monopoly may be over, he says, but the shore resort can still prevail and prosper if it changes its strategy and diversifies the entertainment slate.

“Casinos have to have all the components—good entertainment, good social opportunities, with a variety of food and beverage—to get people in these days, because the slot machine is just not as important as it used to be,” Frawley says. “Atlantic City was traditionally successful because of exclusivity of gaming. Now it’s time to be non-traditional.”

“What the Hilton is doing is very interesting,” says Clint Billups, president of CFB Productions, an entertainment brokerage and management firm based in Las Vegas. “My guess is that people who come to see someone like Bill O’Reilly will eat in a fine dining restaurant, rent a room and take advantage of hotel amenities. And they will probably have the spendable discretionary income to leave some money at the tables.” That’s just the kind of customers casinos want to see more of.

“Entertainment is absolutely a tool we use to drive customer visits and participation in other activities, including dining, lodging and gaming,” says Don Marrandino, Eastern division president of Harrah’s Entertainment, who oversees four Atlantic City casinos.

“Aside from the traditional entertainment you’re used to seeing in theaters, we’ve really expanded our offerings into a world-class nightlife experience,” says Marrandino. “There are now more places than ever for customers to gather before and after a show. From the gaming floor with unique experiences like the X Bar and the Wild Wild West that combine a nightlife experience with table games, to nightclubs like the Pool After Dark at Harrah’s and Dusk at Caesars, the party can start early, before a concert, and continue afterward, well into the night.”
    
Numbers Game
The new emphasis on entertainment is supported, at least in theory, by the statistics. According to the American Gaming Association, in spite of the recession and the resulting downturn in gaming revenue, 28 percent of the adult U.S. population, or 61.7 million Americans, visited a casino last year—an increase of 13 percent over 2008. While they certainly gambled less, fully 60 percent of those visitors took in a concert or other stage show.

In addition, even though attendance at U.S. concerts overall was down 1.7 percent in 2009, the number of people who attended a live concert or show at a casino increased by one-third. Gaming itself may not be recession-proof, but entertainment can actually see a boost during tough times, as people look for a momentary relief from their worries.  

While consumers from 18 to 34 years of age are the primary target of most business marketing plans—they’re the ones who buy most of the music and clothes, as well as every pricey new incarnation of the iPhone and iPad—the casino sector looks for its bread and butter mostly to adults 35 and up.

This summer’s concert tours reflect that sensibility. Traveling the casino circuit are stars like Steve Winwood with Santana, Mark Knopfler of Dire Straits, Ringo Starr and his All-Star Band, Aerosmith, and even the Village People and one-hit wonders Wang Chung. On the bill at Mohegan Sun are ’70s-era folkies Carole King and James Taylor (who are starting in Vegas and working their way east); guitar hero Peter Frampton, also a ’70s icon; and the ’80s-vintage bands Styx and Foreigner. Of the casino’s top-tier talent, only the Backstreet Boys, appearing in August, still have all their hair.  

At Atlantic City’s premier gaming hall, Borgata, the lineup includes plenty for the younger, edgier crowd, including Adam Lambert, Rihanna and Chelsea Handler. For baby boomers, it’s the Moody Blues, Jackson Browne and Sting. Kids and tweens will be able to drag their parents to American Idol Live, which is also making the casino rounds.    

But baby boomers predominate, says Marrandino, as “the most important segment of our customer base. As such we are committed to providing compelling entertainment to this group at each of our venues.”

The Next Generation
Young adult patrons—the Gen-X and -Y contigent—are more likely to visit a casino for socialization opportunities, particularly at nightclubs. While they tend to be free-spending in that milieu, paying big for bottle service and other luxuries, and flocking to ogle paid celebrities like Paris Hilton and the deejay du jour, young adults are less likely to utilize multiple non-gaming amenities, such as spas, golf courses and upscale restaurants. In most cases, they are not playing at the high-limit tables.

But they are worth courting for the revenue they bring, their aura of youth and excitement, and their potential ongoing patronage, says Steve Gietka, entertainment director for Trump Entertainment Resorts in Atlantic City.

“Gaming appeals to individuals rather than demographics, but everybody in gaming can acknowledge that our core customer base has been more people in their 50s and 60s,” Gietka says.

“When you walk around a casino, you’re not going to see a lot of 21-year-olds, but hopefully entertainment, the nightclubs and shows, will be a gateway as people age and grow into gaming. Meanwhile, everybody is welcome to our party. We’re entertaining all customers in every demographic.”  

Marrandino concurs. “Without question, we offer something for everyone when it comes to entertainment. The 22- to 35- year-old demographic is primarily drawn to our offerings at House of Blues at Showboat and nightlife entertainment at the Pool at Harrah’s Resort. With acts ranging from the Flaming Lips and Diddy to appearances by Kim Kardashian, there are some terrific events that really appeal to that demographic.”

Bottom Line
Every entertainment choice must justify itself on Monday morning, when the casino’s internal auditor looks at the numbers.

“That spreadsheet tells not only what the drop was that weekend, but also what food and beverage business was, what the hotel occupancy was, what the retail sales were, and how well they did in the health spa,” says Billups. “If business was off substantially over that weekend, really the only variable was who was in the showroom. And even if an act sold out, if the average retail sales were below average, it says that people who attended the show didn’t eat in the steakhouse or go shopping. You have to match the artist to the demographic you’re looking for.”

Novelty “acts” like the summer series at the Hilton have worked well in some venues, and fizzled in others. In 2006, Mohegan Sun did an afternoon authors’ series, hoping to reach an older female demographic. That worked for a time, and filled the place on weekday afternoons, which is always a boon. It was a different outcome in 2008, when Mikhail Gorbechev appeared at the Seminole Hard Rock Casino in Hollywood, Florida. The former leader of the Soviet Union was paid a reported $125,000 to deliver a speech on poverty, world peace and the environment. With a ticket price of $85, the event attracted a mostly older crowd, but the Seminoles had to give away blocks of tickets when Gorby failed to pack the house.

Bill Clinton and Dick Cheney are risky choices, and casinos prefer to leave the gambling to the patrons. But the strategy could pay off, and the publicity generated by the events has been its own reward. Frawley says his aim is create events that are “stand-alone and self-supporting, events that don’t rely on gaming revenue, though again, gaming augments the overall experience.

“Gaming is a piece of the puzzle,” he says, “but it’s not the largest piece anymore. It’s just part of what we do.”

By Roger Gros   Tue, Jul 06, 2010

Unlike the 2009 version of G2E Asia, where casino operators in Macau were wondering just how far the bottom was, this year’s edition, held last month at the Venetian Macao, was a celebration of the remarkable rebound experienced by the SAR operators over the past year. The comeback was capped by a revenue increase of 95 percent in May.

With an exhibit hall featuring the latest state-of-the-art products from gaming’s most important suppliers— IGT, Aristocrat, Aruze, Bally Technologies, WMS Gaming, Novomatic, Konami, Ainsworth, Gaming Partners International, Shuffle Master and many more—the event was capped off with a conference that covered the most important issues facing the Asian industry today, including updates on the operational and legal status of gaming in such nations as Japan, South Korea, Vietnam, the Philippines, India and others. Singapore was the focus of its own session, featuring several gaming analysts and Marina Bay Sands President Tom Arasi.

The prestigious G2E Visionary Award was presented to Ainsworth Gaming Chairman Len Ainsworth, the 87-year-old legend who created many of the innovations that are seen in today’s slot machines. With a career that dates back to the late 1950s, Ainsworth recounted how he created Aristocrat in those years and expanded it to become one of the most popular slot brands around the world.

Galaxy Entertainment Co-Chairman Francis Lui presented a keynote speech that outlined the shape and future of the Macau gaming market. He said the current revenue boom should continue well into the future, since the Chinese middle class is rapidly expanding and will have several trillion dollars in disposable income in just a few years.

On the final day of the conference, architect Paul Steelman, whose work is known worldwide and most recently in Macau, gave his view of the Asian gaming industry by recounting some of the mistakes and good ideas that have impacted the gaming industry. In an entertaining presentation, Steelman said new casinos will be less expensive and smaller now that the era of the mega-resort is grinding to a halt.

At a session recounting the possibilities for the gaming industry in Japan, Taiwan and South Korea, Harrah’s Entertainment Asian President Michael Chen said his company is interested in all the opportunities in this market. He expressed hope that the Macau government will one day approve more licenses and that Harrah’s would patiently await that day.

Also at the show, the American Gaming Association released its “Future Watch” report on the future of Asian gaming. Based on interviews with a small number of gaming experts, AGA President Frank J. Fahrenkopf, Jr. said that it showed the Asian gaming industry will surpass gaming revenues in the U.S. within the next three years.

“The study foretells a remarkable future for Asian gaming markets—from continued revenue growth in Macau to the rise of newer jurisdictions such as Singapore,” Fahrenkopf said. “The prospects for gaming in Asia are exciting, as there are many different roads growth and expansion could take.”

Slot-makers are bullish on the Asian market despite the fact that many Asian gamblers seem to prefer table games, particularly baccarat. That’s because slot machines have made some remarkable strides in the region over the past few years.

Cath Burns, vice president for Bally Technologies’ Asia-Pacific operations, told Reuters that the increased revenues in Macau mean people in Asia are anxious for more gambling opportunities.

“The outlook for slot machines in Asia is very, very positive,” Burns said. “Those record revenues are coming across the board whether they are slots or tables, so that shows the pent-up demand from people coming to play in Macau is there.”

She says the record revenues in Macau recently could be even higher with more slots.    

“Personally, I think we are underdone,” she says. “I don’t think there are enough slot machines for the demand.”

Susan Macke, chief marketing officer for IGT, who was attending her first conference in Macau, said that outside of Macau, demand for slots is very high.

“We think the slot machine uptake in Singapore will be much closer to what it is in Las Vegas, growing much more rapidly,” she said.

By Roger Gros   Tue, Jul 06, 2010

The winning streak on increasing gaming revenues in Macau continues. According to the Hong Kong-based investment firm CLSA Ltd., gaming revenues for May almost doubled over last year, to about 17 billion patacas ($2.12 billion) from 8.8 billion patacas in 2009. The increase continues massive revenue boosts that began last June.

Macau gambling revenue surged 57 percent in the first quarter to about 41 billion patacas. The increasing revenues match an economic boon in China, where economic growth accelerated to 11.9 percent, the fastest pace in almost three years.

“The strong growth for gaming revenue seems to come from more VIP versus mass-market gambling,” Huei Suen Ng, CLSA gaming analyst, said in a note to clients.

The casino companies that gained the most were those that cater to the VIP market, says Huei, including Wynn Resorts, Las Vegas Sands, Galaxy Entertainment and Melco Crown.

Market share, however, remained steady. Stanley Ho’s SJM Holdings Ltd. has 32 percent, according to CLSA’s estimates, followed by Sands China Ltd. with about 20 percent and Wynn Macau with 16 percent. Melco Crown had 14 percent, Galaxy had 11 percent and MGM Mirage had 7 percent.

By Giulio Coraggio   Tue, Jul 06, 2010

The recent developments in the Italian gambling market opened up new opportunities both for online and land-based operators that are matched with more attractive fiscal and licensing rules. New gambling laws in Italy are making the country one of the most attractive destinations for gambling operators in Europe.
 
Gambling History
The Italian gambling market has been the subject of a long and troubled liberalization during the past few years. Indeed, Italian criminal laws prohibit any kind of gambling activity and, up to the beginning of this century, there only existed 329 horse-betting agencies in addition to the current four Italian casinos set up as a consequence of a law in derogation of criminal provisions.
 

In 2000, the number of horse-betting agencies was increased up to 1,000 and, for the first time, an additional 1,000 licenses for sports betting shops have been awarded. Subsequently, license holders have been authorized to upgrade their initial horse-betting or sports-betting shop licenses to online licenses, with the consequential launch of the first online betting websites in the country.  
 

However, the takeoff of the Italian gambling market occurred in 2006 with the award of the so-called “Bersani” online and offline gambling licenses. Indeed, most of the main foreign operators decided to enter the Italian gambling market from 2006 onward, while some other operators challenged the compliance of the Italian gambling regime before local courts and the European Court of Justice.

Italian criminal laws only allow operators holding an Italian gambling license to offer and advertise games to the benefit of people located in Italy, thus compelling operators licensed in other EU member states to apply for a local license. The ECJ was questioned on the compliance of such a regime with the EU principle of the freedom to provide services in several instances. Notwithstanding the different approaches adopted in the Zenatti, Gambelli and Placanica decisions, the ECJ always reached the conclusion that it was up to the member states’ national courts to decide whether there were overriding reasons relating to the public interest justifying an exception to the EU principle.

Despite the fact that the Italian gambling regime has been repetitively challenged, the Italian Gaming Authority (the AAMS) has not changed its approach, but on the contrary it increased inspections on amusement machines located in gaming halls, identifying and seizing thousands of illegal machines, and implemented filters blocking the access to non-licensed websites by Italian residents—forcing online operators to obtain an Italian gambling license if they intend to target the Italian market.

This conservative approach, however, ended up being successful because, following the launch of online skill games and tournament-based poker in 2008, Italy became the first European gambling market in terms of turnover, according to recent research. Furthermore, the 2009 earthquake in the center of Italy encouraged the Italian government to plan the launch of new types of games to raise the funds necessary for the reconstruction of the affected area. This plan is now offering new business opportunities in both the offline and online markets.

Offline Market
The biggest change in the Italian offline market is represented by video lotteries. In a country where there are only four “real” casinos, and criminal laws prohibit the establishment of new casinos, we will see from mid-June 2010 the opening up of a considerable number of “VLT casinos” (i.e. gaming halls where VLTs will be located), where the current 10 licensees will be entitled to install up to 56,697 VLTs able to award prizes up to €500,000.

To understand the potential size of this market, it is sufficient to mention that investments of over €2 billion are expected to be made in the VLT sector during the start-up period, generating yearly revenues for operators and entries for the government higher than €1 billion and more, and more investments are expected in 2011 from additional licensees.    

These figures and a relatively friendly tax regime show the potential of VLTs in Italy, which will be installed only in bingo halls, betting shops and gaming halls according to the decree regulating the sector that—on the contrary—did not prescribe any limitation as to the areas where VLT casinos can be located.

This circumstance has led to considerable complaints from “real” casino operators, who are worried about losing a substantial number of players to VLT casinos closer to their home towns who currently have to drive thousands of kilometers to reach the four properties, all in northern Italy, or the casinos located close to the Italian borders.

The Italian VLT market can become a very attractive target for:

• machines and game manufacturers and suppliers;
• casino operators; and
• providers of services connected to VLT casinos (i.e., hotels, restaurants concerts, etc.).  

Indeed—as confirmed by the recent deals between gaming machine manufacturers and licensees—it appears that the current VLT licensees are mainly looking at foreign VLT suppliers coming from markets like the U.S., where VLTs are very common, to furnish Italian VLT casinos. Likewise, since there are so far only four “real” casinos in Italy, VLT licensees do not have the expertise necessary to run VLT casinos—which in their minds will have to recall the look and feel of traditional casinos—and therefore are hiring foreign casino managers and entering into agreements with foreign casino operators.

Moreover, VLT licensees are developing franchising formats to be reproduced all over the country, coupling them with additional services (hotels, restaurants, concerts, etc.) able to better host tourists that will have a further reason to visit Italy.

Also, the launch of VLTs might boost the Italian offline bingo market, which has faced a crisis recently. The more friendly tax approach adopted by the Italian Gaming Authority in relation to bingo, and the possibility to install VLTs in gaming halls, could indeed represent a good opportunity for the rebirth of bingo in Italy. And this opportunity might be further increased by the upcoming adoption of the regulations on live poker. Live poker is currently prohibited in Italy, but new regulations are expected shortly, and bingo, VLT and poker operators are looking forward to it.    

Online Market
After a wait of more than nine months, the Italian Gaming Authority finally issued the decree regulating online poker cash games and casino games at the beginning of March, after the launch of online bingo in December 2009. These new games are expected to represent one of the greatest developments in the European gambling market in 2010. According to market analysis, the launch of only poker cash games and casino games will generate a turnover of €5 billion and €3 billion, respectively, in 2010.

The new decree provides that:

• licensed operators will need to go through a technical authorization process in connection with their gambling platform and with each game they intend to offer;
• the gambling tax applicable to poker cash games and casino games will be 20 percent of the revenues (i.e. turnover net of amount returned to players);
• at least 90 percent of the amount collected from players shall be awarded in prizes; and
• the maximum initial stake in connection to each gambling session shall not be higher than €1,000.

Also, the decree increased the maximum buy-in for skill games (including tournament-based poker games) up to €250, and allowed the organization of multi-level tournaments where the winner of a gambling session (for example, a qualification tournament) is obliged to invest the win as a buy-in for the subsequent gambling session (for example, the final tournament).

Perhaps the most relevant change introduced by the decree concerns the tax regime applicable to poker cash games and casino games, which is now based on the revenues generated by gambling operators, while the previous regime was based on turnover. This change shows a more tax-friendly approach by the Italian Gaming Authority that—after having been considerably criticized by foreign operators in the past—has now been recognized as a forward-looking authority.

This is also confirmed by the fact that the technical requirements with which licensed operators need to comply greatly take into account social responsibility and fraud prevention matters, making the Italian gambling market a better environment for operators and players.

This development is likely to encourage more and more operators to enter into the Italian gambling market. Such a decision will also be made easier by the fact that the decree regulating the issuance of new Italian online gambling licenses—expected to be issued shortly—will allow operators to locate their legal seat and equipment in any country of the European Economic Area and in any other country (for example, the Isle of Man, Alderney, etc.) that agrees to enter into bilateral agreements with the Italian Gaming Authority.

Under the old regime, on the contrary, the operating seat and the servers of the operator had to be located in Italy. This means that licensed operators will only be obliged to pay Italian gambling taxes, while they will pay the corporate taxes of the country where they are established (for example, Malta or Gibraltar).

Also, the recent decision by the European Commission to close all the disputes against the Italian licensing regime, as a consequence of the forthcoming decree regulating the issuance of new Italian online gambling licenses, and the adoption by other European countries (e.g., France) of a licensing model based on the Italian style are further confirmation that the approach adopted by the Italian Gaming Authority was well grounded.

The increase the Italian gambling market’s turnover generated by licensed operators is likely to be accompanied by the implementation of more stringent measures to block the offer of games by operators who do not hold an Italian gambling license.

In fact, the current filters adopted by Italian internet service providers block only the domain name of non-licensed operators, obliging the Italian Gaming Authority to repetitively update the blacklist of non-licensed websites. However, blocking the IP addresses of such websites will be a more effective measure, and this measure has been urged for a long time.

Therefore, if operators want to enjoy the benefits of the Italian gambling market, they will have to abide by the laws. 

By GGB Staff   Wed, Jul 07, 2010

Slot manufacturer International Game Technology announced it has appointed Eric Tom the company’s chief operating officer. Tom, who has been executive vice president of marketing since joining IGT in July 2009, will fill a role that has been handled by the chief executive since former COO Steve Morro left in September 2008.

Before joining IGT last year, Tom worked for more than 20 years in executive sales and marketing positions in the IT and telecommunications industries in the U.S., Europe and Asia.

In his new role at IGT, Tom will focus on improving the operational efficiency and increasing the customer focus of the company, and he will continue to report to CEO Patti Hart. He also will maintain oversight of marketing, sales, services, product management and operations.

IGT also announced that Tony Ciorciari, executive vice president of global manufacturing and operations; and Paulus Karskens, president of IGT International, will retire in the first calendar quarter of 2011. Ciorciari and Karskens will assume executive advisory roles until their retirement, and will assist the company in ensuring a successful transition.

By GGB Staff   Wed, Jul 07, 2010

Cantor Gaming, which currently offers its mobile gaming technology at the Venetian, Palazzo and M Resort in Las Vegas, is expanding its operations to the Tropicana Las Vegas. Cantor recently announced that it will operate the property’s new race and sports book, and introduce mobile gaming to the sports book, which opens onto Tropicana Avenue.

Tropicana’s sports book patrons will be able to play casino games and access Cantor’s in-running sports wagering system on the company’s eDeck product.

“Tropicana Las Vegas is a fantastic propertywith a singular history and we are delighted to be a part of its dramatic transformation as it adds new spark and excitement to the Strip,” says Cantor President and CEO Lee Amaitis. “Our technology has forever changed the playing field in Las Vegas. Our mobile gaming gives customers a new freedom and flexibility to game whenever and wherever they like. This simply wasn’t possible before. We’ve also created the ability to wager on sports in a real-time trading environment, which is a transformative event in the casino marketplace. The vision for the transformed Tropicana reflects our own mission: to launch a brand new era in Las Vegas.

By Caitlin McGarry   Wed, Jul 07, 2010

Product/Manufacturer: Reel-TV

For companies that have longed to have a presence in casinos, Reel-TV may seem like a dream come true. The Las Vegas-based advertising company has recently released a server-based advertising platform that turns slot machines into billboards.

Reel-TV installs a video board in a slot machine, and then downloads video content to the machine from a video server. The database on the server and the video card display advertisements as frequently or infrequently as the casino operator chooses, and only display them when the slot machine has been idle for one minute. Players do not see ads while gambling.

The kinds of ads shown on Reel-TV platforms vary according to what the property’s owner chooses. Reel-TV shows full-length video ads that have been seen on television, and has been known to draw passersby to the machines in its time at the Palms Casino Resort in Las Vegas.

“They will be attracted because of what’s happening on the screen and actually come over and watch the advertisement on the slot machine, and say, ‘Hey, look, a TV,’” says Reel-TV developer Keith Atkinson. “It will stop the traffic, and brings more people to the game. Of course, we can’t say that we can have them sit down and play it, but it gets them to the game and possibly to put in a $20 bill to play.”

Reel-TV works with advertisers and casinos to develop flashy video content, and Reel-TV shares revenues from the ad contracts with the casinos. The properties are also able to market their own amenities via Reel-TV, such as shows, restaurants and deals. Traffic passing by the slot machines is guaranteed to see the advertisements.

“It’s a win for the casino, because they get to promote their in-house capability,” Atkinson says. “Not only do they provide that; they also get the revenue share without any capital expense.”

Reel-TV is currently being installed at the Hard Rock Hotel & Casino in Las Vegas. Atkinson is also in talks with a major Las Vegas-based gaming company to implement the advertising platform at properties along the Strip. Reel-TV is also working with Gaming Laboratories International to garner approval to enter additional gaming jurisdictions beyond Las Vegas.

For more information about Reel-TV, visit www.reel-tv.com.

By Frank Legato   Tue, Jul 06, 2010

Manufacturer: International Game Technology
Platform: AVP
Format: Four 50-line video slots (multi-play)
Denomination: .01
Max Bet: 1,000
Top Award: 200,000, 60,000
Hit Frequency: Approximately 50%
Theoretical Hold: 5.01%—11.43%

House of 9 Dragons, the latest game in IGT’s Multi-Level Progressives series, combines the multiple-progressive format with “MultiPLAY,” the configuration that offers the player the option to bet on up to four individual reel sets, each with its own independent spin.
 

This is offered in a multi-game configuration with two choices of base game, “Coral Reef” and “Saguaro.” Both are 50-line penny games with 1,000-credit maximum bets. The player can bet from one to five credits per line on each of four games—the minimum bet to activate all four screens is 200 credits.

With all the paylines covered, the Coral Reef game offers 1,024 ways to win on each spin, with a wild symbol that can multiply jackpots up to 10X.  Saguaro features stacked wild symbols.

During the base games, players collect a free game each time three scattered golden dragon symbols appear on the reels. Up to 400 free games can be accumulated and played out during the bonus. Players lose accumulated free games if they go more than 30 seconds without playing, or they cash out. A warning screen alerts players they are about to forfeit their collected free games.

Every five minutes on average, the “House of 9 Dragons Group Feature” is initiated. This is a communal bonus event that allows players to choose four dragons that correspond with four of the nine progressive award levels. When the free games are played out during the bonus, dragons may appear on the reels that correspond with the selected four progressives. When five of the same colored dragon symbols appear during free games, that progressive is awarded. Progressives can be won multiple times. Once players have completed their free games, they transition back to the base game.

By GGB Staff   Tue, Jul 06, 2010

The Austrian National Council has amended federal gaming law to the extent that Casinos Austria could see the end of its longstanding monopoly on casino gaming.

The expansion of casino licenses from the current 12 to 15 could result in operators other than Casinos Austria gaining a foothold in the domestic market. Casino licenses from now on must be offered on a European Union-wide basis.

There is still some question as to how “official” such an offering must be, but in any case, if an operator within the E.U. becomes aware of a license being up for bid, he or she will be able to submit a proposal.

In any case, changes to the law in the areas of slot arcades and poker rooms should result in more competition for the existing casinos.

In the past, slot arcades were limited to offering stakes of 50 euro cents and jackpots of €20. But the new law allows arcades with 10-50 machines to set maximum stakes of €10 and payouts of €10,000. The machines must all be linked to a central government accounting system, and arcades will be required to implement strict identity registration systems involving player ID cards.

Locations such as bars and cafés may offer a maximum of three stand-alone machines, but on these devices, stakes are limited to €1 and payouts to €1,000.

Most of the changes to gaming regulations have been made in the spirit of protecting the player. For example, arcade machines will be fitted with a shutdown mechanism, which will automatically turn the machine off after two hours of consecutive play by the same person. In non-arcade settings, the machines will allow a single player only three hours of game time within a 24-hour period.

The increased win potential from arcade machines in effect will put them in competition with casino slots. To counter this, the law prohibits arcades from offering progressive jackpots, allowing only fixed payouts. A further check on the arcades is the ruling that venues with 15 or more machines cannot be located within a 15-kilometer radius of a casino. In cities with population of 500,000 or more—Vienna is the only one—the distance is 2 kilometers.

By GGB Staff   Tue, Jul 06, 2010

The gaming board of Panama is currently studying five applications for casinos to be located in hotels currently under construction.

According to Panamanian news source La Prensa, the properties for which casino permits are being sought from the board, known as the JCJ, include the Hilton Panama, Ritz Plaza and Trump Ocean Club. All are in Panama Province, which includes national capital Panama City.

Another 10 applications for slot hall licenses in various parts of the country also are being considered by the board.

Currently there are around a dozen full casinos and 25 slot halls operating in Panama. These operate 10,500 slots, while officially another 3,500 street- market machines can be found in bars and cafés.

The newest casino to open, the Princess Casino in the Four Points Hotel, was originally the subject of protest by trade group ASAJA, an association of gaming operators. In 2008, ASAJA filed a lawsuit on the grounds the hotel was neither a five-star operation nor had the requisite 300 hotel rooms. However, as the hotel was already under construction in 1997, just a year before the law took effect in February 1998, the casino was allowed.

By GGB Staff   Tue, Jul 06, 2010

Two weeks of intrigue ended in June when Efraim Genuino resigned as chairman of the Philippines Amusement and Gaming Corporation. Genuino was reappointed to the role in March, just one day before a ban on political appointments by the outgoing president went into effect. Four other board members of PAGCOR were reappointed at the same time, but no word has been received on whether they have also resigned.

The new president of the Philippines, Benigno “Noynoy” Aquino III, has designs on the position of chairman for a friend, former classmate and confidant Bong Naguiat. But when it was revealed that outgoing president Gloria Arroyo had reappointed Genuino as chairman before so-called “midnight appointments” were barred, Aquino allies began calling for the chairman to step down. When the pressure increased day by day, Genuino finally agreed to resign. He had said in a TV interview that he wanted to meet with the new president to stress the need for “continuity” in the development of the gaming industry.

Officially, Genuino asked for an “early retirement” that was to begin on June 30 when Arroyo was slated to step down.

Genuino has been chairman since 2001 and has accomplished much, most notably the formation and marketing of PAGCOR’s Entertainment City, an eight-hectare piece of reclaimed land on the shores of Manila Bay. The project is slated to include four integrated resorts, to be built under a budget in excess of US$1 billion each. Three of the parcels have been claimed: Universal Distributing of Japan (formerly Aruze), Genting and the Belle Corp., with the gaming portion reportedly to be operated by Harrah’s Entertainment.

Entertainment City is designed to revive the tourism segment of the Philippine economy. Adjacent to the massive Mall of Asia, Entertainment City would be part of a vast development of tourism-friendly attractions along the bay.

By GGB Staff   Tue, Jul 06, 2010

After announcing earlier this month that he had purchased big stakes in MGM Mirage and Boyd Gaming, investor John Paulson’s hedge fund, Paulson & Co., has acquired a 9.9 percent equity stake in Harrah’s Entertainment. Paulson will exchange $710 million in bonds for the equity. Analysts speculated this could be the first step in restoring Harrah’s as a public company.

Apollo Management and TPG Capital, which took Harrah’s private in 2008, also traded in $408 million of their notes for a 5.6 percent stake of the company.

Paulson, Apollo and TPG will also purchase $835 million in senior notes from Harrah’s subsidiary Harrah’s BC, Inc., netting Harrah’s $557 million.

Harrah’s has $19.3 billion in debt, which will be reduced by the $1.5 billion in cash it is receiving from the deals. The company also has a $1.5 billion revolving loan.

“This is an important transaction for Harrah’s Entertainment for a number of strategic reasons,” said Harrah’s Chairman and CEO Gary Loveman. “We are raising capital for emerging domestic and international growth opportunities, and upon closing of the exchange, will reduce our debt and lower our interest expense. The investment from Paulson, an independent third party and a large, sophisticated investor, reflects the strong and resilient performance of our company, particularly as we emerge from a difficult economic climate, and the encouraging prospects for our future. We also are gratified by the confidence in Harrah’s demonstrated by our sponsors, Apollo and TPG.”

Harrah’s must register Paulson’s shares with the Securities and Exchange Commission after receiving regulatory approval of the deals.

By GGB Staff   Tue, Jul 06, 2010

At the annual MGM Mirage shareholders meeting at CityCenter last month, shareholders approved the company’s name change to MGM Resorts International. Chairman and CEO Jim Murren said the new name reflects the company’s business goals.

“We believe that this change honors our rich entertainment heritage, better represents the growing global presence of our company and positions us to move forward under a united brand, strategy and common vision,” Murren told the shareholders.

MGM has signed 15 agreements with different companies around the world to develop projects under the MGM Grand, Bellagio and Skyloft umbrellas. The company’s subsidiary, MGM Mirage Hospitality, has been developing properties all over the world, and is indicative of the larger company’s future plans. That subsidiary will now be known as MGM Resorts Hospitality.

The dropping of “Mirage” from the company’s name does not indicate that the Mirage in Las Vegas is for sale, Murren said.

MGM also is introducing a player reward program called M Life, which was announced at the shareholders meeting. The program will be introduced at MGM’s regional properties before rolling out to Las Vegas later this year.

Steve Wynn, owner of Wynn Resorts and the Mirage’s original owner, had some choice words for MGM’s name change. “Mirage was a name associated with a very conservatively run and very successful company, not one with the kinds of overextended issues they face today,” he told the Las Vegas Sun. “MGM got themselves into that, so I think that ought to be their name.”

By GGB Staff   Tue, Jul 06, 2010

On June 15, the Shinnecock Nation of Long Island got what it’s been waiting for: word from the federal government that it is an officially acknowledged tribe. The good news was met with drumming and an Algonquin victory song.

As a listed tribe, the nation will be eligible for government assistance and a host of grants and programs. It will also be able to establish a casino, on or off the Long Island reservation, which could provide substantial and enduring economic benefit to more than 1,200 tribal members.

The tribe may build on its 800-acre ancestral home in wealthy Southampton, or choose a remote site, such as a tract in Calverton, Suffolk County. Some observers have speculated that the tribe could consider a racino at Belmont Park, join the bidders hoping to run the Aqueduct slot parlor (even though they missed the deadline), or establish a gaming facility at the Nassau Coliseum.

The Southampton site could be problematic for several reasons, including anticipated opposition from the community’s wealthy residents, the inaccessible location and insufficient infrastructure—especially roadways, which are already choked during the busy summer months.

“We are surrounded by water, we have a very fragile ecosystem, and our population pretty much doubles during the high season,” Anna Throne-Holst, the Southampton town supervisor, told the New York Times. “There’s no telling what a casino might do, but the tribe is very sensitive to that.”

In addition, a Class II tribal casino on the reservation could have thousands of slot machines, but no Vegas-style games like blackjack and poker. An off-reservation, Class III casino with table games would be potentially far more lucrative.

The economy could also have a discouraging effect on casino plans, and there is likely to be “well-financed opposition” to another tribal gaming hall from Foxwoods and Mohegan Sun in Connecticut, according to the Times. Some 30 percent of Foxwoods’ customers hail from the New York City area, the casino reported.

For now, tribal officials are not showing their cards when it comes to future gaming plans. “This is the most historic moment in Shinnecock history,” trustee Lance Gumbs told the Associated Press. “Any discussion of a casino is a secondary thought.”

In 2003, the tribe broke ground on a casino on Long Island, but Southampton officials complained and a federal judge issued an injunction to halt construction. The Shinnecocks then sought to circumvent the federal approval process by seeking recognition in federal court, but a judge rejected that effort in 2007.

Even with federal recognition, the tribe needs additional federal and state approvals before it can open and operate a casino.

New York Governor David Paterson, who has been vocal in his support of the tribe, said his administration would gladly “explore with them ways in which they might be able to partner with us and bring revenues into the state.”

By GGB Staff   Wed, Jul 07, 2010

William Speller abruptly resigned his position as president of Connecticut's Foxwoods Casino Resort, after only 18 months on the job. The casino, owned by the Mashantucket Pequot Indian tribe, announced only that Speller resigned to "pursue other career opportunities," and that he would not be available for media interviews.

The tribe also announced that William Sherlock, a former president and CEO of Foxwoods, has assumed the role of an interim president while a search for a new chief executive is initiated.

Speller's short tenure at Foxwoods—the latest in a succession of short runs atop the troubled property—was a stormy one, as the tribe has searched for ways to restructure debt exceeding $2 billion, its lawyers peondering whether bankruptcy would be an option for a sovereign entitiy. Declining revenues in Connecticut left the tribe unable to finance the debt, bilt up as Foxwoods expanded through several projects—the latest being the new MGM Grand at Foxwoods casino and hotel.

The tribe has received extensions from lenders while negotiating with banks an and bondholders on refinancing arrangements. Meanwhile, the Mashantuckets were unable to secure financing for the Foxwoods Philadelphia project, leaving their local partners searching for a new financing deal while on the brink of losing their Pennsylvania license.

Speller joined Foxwood when it opened in 1992,  and was named president in Deceber 2008. He introduced the "rolling chip" reward program for bacccarat, making Foxwoods the first U.S. casino to offer the popular Asian promotion, and emphasized first-class service during his tenure.

In the tribe's statement announcing the resignation, Tribal Council Chairman Rodney Butler thanked Speller for his "success in assembling an effective and cohesive management team and heading Foxwoods in the right direction."

Sherlock was president and CEO of Foxwoods for six years, retiring in 2006. During his tenure, he oversaw a $300 million expansion and played a key role in planning the MGM Grand addition. He his currently chairman of the board of a Texas-based casino operator Nevada Gold, a position he will retain and return to at the end of the Foxwoods executive search, which is expected to take several months.

By GGB Staff   Wed, Jul 07, 2010

Leading slot manufacturer International Game Technology announced that its “Sex and the City” slot, based on the popular HBO series, has reached No. 1 in earnings among all stand-alone progressive slots in its wide-area MegaJackpots series, and remains “among the most popular slot themes worldwide.”

“It’s clear the Sex and the City slot’s following is strong,” said Susan Macke, IGT’s chief marketing officer. “We’re thrilled to offer fans and slot players this superior gaming experience. The slot machine is filled with all the fun and fashion we’ve come to expect from Sex and the City, and it’s the perfect accessory to any girls’ night out at the casino.” Sex and the City games offer a chance at five progressive jackpots and four bonus games. With each bonus game, players will get to watch video clips from the TV series, hosted by “Mr. Big,” a.k.a. actor Chris Noth, who did the voice-overs for the game.

Meanwhile, IGT announced that the Cosmopolitan of Las Vegas will open in December with a fully integrated, server-based slot floor equipped with a majority share of IGT machines, linked to the sbX server-based gaming system.

The new casino also will use the IGT Advantage casino management system, with the full suite of software modules including Machine Accounting, Patron Management, EZ Pay ticketin/ticket-out, and a full suite of Advantage Bonusing including Xtra Credit, PointPlay, Carded Lucky Coin, Delivery Games and IGT’s new Intelligent Bonusing, pending regulatory approval.

The contract includes a full table management system featuring Cage & Table Accounting and Table iD, plus add-on products including Virtual Drawings and the IGT Tournament Manager solution. The Cosmopolitan casino floor will feature IGT’s server-based network, which incorporates the company’s Service Window, sbX Floor Manager, Media Manager and access to the game library. The floor will also feature IGT’s 3D Multi-Layer Display technology.

“When our doors open, we’re confident we’ll be offering our players the best casino experience possible with IGT’s exclusive gaming system,” said Cosmopolitan CEO John Unwin. “Being a new property, we were able to evaluate all manufacturers’ products and systems from a fresh perspective. After we saw what IGT has put into motion with their sbX system, we knew they were the right partner for us. All of IGT’s components add up to one thing: performance.”

“IGT offers operators more choice than ever in how they operate their casino floors,” said IGT President and CEO Patti Hart. “The Cosmopolitan of Las Vegas is now going to be part of this ongoing momentum of operator flexibility, functionality, value and player choice—all driven by IGT and the open network. We’re proud to be driving this gaming revolution, and are honored to work with forward-looking partners such as the Cosmopolitan.”

By GGB Staff   Wed, Jul 07, 2010

Product: Summer 2010 Gaming Business Directory
Manufacturer: Casino City Press

Gaming publisher Casino City Press’ Summer 2010 Gaming Business Directory was recently released. The updated version contains 600 pages of current information about commercial and tribal casinos around the world.

The directory lists 5,600 casinos, including expanded profiles on 1,800 properties in the United States, Canada and the Caribbean. Profiles list executive contact information for 23,000 gaming officials.

The Gaming Business Directory is continuously updated to reflect ever-changing contact information, as well as information about property location, number of table games, slot machines, hotel rooms, square footage, entertainment venues, restaurants, bars and other types of facilities. The updated directory includes information about projects that are under construction, as well as tribal casinos, casino cruise ships and other types of properties. The Gaming Business Directory also ranks casinos according to number of employees, hotel rooms, table games and slot machines.

Casino executives can purchase the directory in print, on CD or online.

Marc Weiswasser, senior VP of the search firm Executive Search, says he uses the directory “on a daily basis and have been for well over 10 years. Besides having a list of all the executives that are in the gaming industry across the U.S. and internationally, it has excellent stats on the sizes of properties, slots, table games—just valuable information. This is a great product.”

For more information about the Gaming Business Directory, visit www.casinocitypress.com.

By Frank Legato   Tue, Jul 06, 2010

Manufacturer: Aruze Gaming
Platform: G-Enex/G-Comfort AP-7
Format: Five-reel, 50-line video slot
Denomination: .01—10.00
Max Bet: 250, 500, 1,000
Top Award: 1,000 credits times bet (one credit/line); 500 credits times bet (two credits/line)
Hit Frequency: Approximately 50%
Theoretical Hold: 1.95% - 11.94%

This 50-line game, one of the latest in Aruze’s “G-Series” collection, features intricate artwork and a unique twist on triggering the free-spin feature.
 

This is the third installment of the “Qin Dynasty” series, a theme that has been extremely popular for Aruze in Pacific Rim markets. As in the other two installments, there are several wild symbols that come into play during the primary game. It is a penny game, available in two versions—the traditional one-credit-per-line setup and a version in which one credit activates two lines (essentially a half-penny game).

Three feature symbols on the first three reels trigger the bonus sequence, called the “Emperor Feature.” The game includes a second-chance feature for the bonus sequence: If two feature symbols land on a spin, after the player is paid for winning combinations, the reels with the feature symbols freeze and the remaining reels spin again for a second chance to trigger the feature.

The feature starts with a “Mini Game” that displays five symbols. The player is asked to pick one to unveil the number of free spins—five, eight, 10, 12 or 20. Once the free spins begin, the feature can be retriggered in a free game. The Mini Game screen appears again to determine the number of extra free games.

The game also includes one of Aruze’s enticements for players to bet the maximum, called “Rescue Spin.” With max-bet wagered, when the player goes a long time without a significant win, a meter counts down to a “Rescue Spin” bonus spin, with a guaranteed win to keep the player in the game.

By GGB Staff   Tue, Jul 06, 2010

Cyprus President Demetrious Christofias is being urged by local business groups to change his stance and allow development of casino gaming in specific locations. At the same time, the government is hoping to take advantage of recent E.U. court rulings that would support its efforts to ban online gaming.

The Cyprus Mail reports that Hermes Airports Chairman Nicos Shacolas fully expects the government to allow construction of a luxury hotel and leisure complex, with a casino, next to the new Larnaca airport. MIG Group Chairman Andreas Vgenopoulos wants to get more out of his investment in the Nicosia Hilton by obtaining a casino license, and the Limassol Chamber of Commerce is supporting a public venture that is bidding for a license.

The state itself has a deal with Qatar to develop a luxury complex in central Nicosia, which could also include a casino.

Those asking Christofias to change his mind on casinos include the Cyprus Investment Promotion Agency, the Cyprus Chamber of Commerce and Industry, the Employers and Industrialists Federation, and hotel operator organizations PAYXE and STEK. The groups all believe casinos would attract quality tourism to the island.

Meanwhile, Christofias and governing party AKEL are pushing for a ban of online gaming as a means to combat what they see as a growing social problem. Online gambling falls under the Betting Law, which was amended in 2007 to comply with E.U. legislation for the free provision of services. But now, the effort is under way to re-amend the law to exclude electronic gambling from this list of E.U.-agreed services.

Discussion of a bill currently in parliament is now on hold, pending mandatory consultations with interested parties and the preparation of an impact study of such a bill.

“What we have determined is that the necessary consultation with all those involved was not carried out,” DIKO deputy Nicolas Papadopoulos said.

A third form of proposed gaming could receive an unexpected boost from the economic crisis in Greece. As part of its budget-crisis fix, Greece is looking at licensing electronic gaming machines linked to a central, government-monitored system.

By GGB Staff   Tue, Jul 06, 2010

The Ontario Lottery and Gaming Corp. is seeking bidders to operate one of the province’s largest employers, Casino Rama. Penn National Gaming has run the casino since April 2001. Its contract expires July 31, 2011.

According to the Barrie Examiner, this is the first time in a decade that OLG has issued a request for a resort casino operator. Casino Rama Media Relations Manager Jenna Hunter said the situation is “no reflection” on Penn National’s operations.

“It’s a very routine process when dealing with contracts of this size and when you’re looking to provide value to the Ontario taxpayer,” she said. Hunter said there would be no effect on day-to-day business operations or staffing levels during the pre-qualification process.

Proposals are expected to be under consideration by the spring or summer of 2011.

By GGB Staff   Tue, Jul 06, 2010

Now that he’s fully engaged in designing his latest resort on the Cotai Strip in Macau, Steve Wynn says he’ll be ready to break ground on the project sometime in 2011.

Talking to the Macau Post, he said the new resort will be something completely different for the SAR. It will hold 400-500 table games, 1,800 slots and approximately 1,400 to 1,500 rooms and suites.

While Wynn told CNBC a few weeks ago that he would not move his corporate headquarters to Macau, he still considers the company to be transnational.

“We are not just a U.S. company but we are also a Chinese company,” he told the Post.

Meanwhile, Linda Chen, the COO of Wynn Macau, says the estimate by Macau’s chief regulator that gaming revenue could grow by 30 percent is “too conservative.” Chen says the SAR won’t keep pace with the explosive growth of the first half of the year, but will do better than analysts are estimating.

By GGB Staff   Tue, Jul 06, 2010

The Massachusetts Senate leadership is readying to release the “core of the outline” of a bill that would authorize three resort casinos but, unlike the House bill passed in April, would not include four racinos as part of the mix.

The Senate first had a closed-door meeting on the bill and then began hearings in mid-June. No one is yet predicting when it will come up for a vote, although Senate President Therese Murray had earlier predicted that a bill would be adopted by July.

This sets up a collision course with the House, whose Speaker, Robert DeLeo, powered through a bill on a vote of 120-37 that allowed all four of the Bay State’s racetracks, including two in his district, to add 750 slots each. According to some Senate leaders, senators themselves are split “all over the place” on the issue of racinos.

DeLeo was sticking to his guns, with a spokesman saying, “Speaker DeLeo remains committed to the gaming and jobs legislation passed overwhelmingly by the House in April.”

The Senate plan would establish zones wherein casinos could be located, but does not say exactly where each casino would be sited.  

Likely to favor the Senate plan is Governor Deval Patrick, whose own plan two years ago was very similar. DeLeo’s predecessor killed that plan in the House.

The Senate plan, also unlike the House version, sets aside a spot for an Indian casino. The House bill had been criticized by many for failing to consider the impact of Indian gaming on the market.

Patrick warned the town of Fall River not to get ahead of itself in its excitement about forming a partnership with the Mashpee Wampanoag tribe. According to the Standard Times, Patrick said Fall River “needs to take a deep breath,” noting that no legislation has been passed, and that even if it does, Fall River will have to compete for the privilege of hosting the casino.

The proposal includes a casino, three hotels, retail shopping, a convention center and a spa.

By GGB Staff   Tue, Jul 06, 2010

San Diego’s Barona Resort & Casino is teaming up with the Venetian and Palazzo resorts in Las Vegas. Player card members at all three casinos will be able to use their points at any of the partnering properties.

“Our frequent casino guests occasionally want the Las Vegas experience and their gamblers occasionally want the San Diego experience,” Rick Salinas, Barona’s general manager, told the San Diego Union-Tribune.

The properties will not be sharing databases, but rather giving their lists to a third-party company to send two mailings with Las Vegas offers to Barona players and two mailings with Barona offers to Venetian and Palazzo players.

The partnership is a rare one for the gaming industry. Harrah’s Rincon and Cherokee offers their players Vegas stays, but the tribal casinos are operated by Harrah’s and affiliated with the Harrah’s player reward program.

By GGB Staff   Wed, Jul 07, 2010

Fred A. Buro, the longtime Atlantic City casino executive who served as president of both Trump Plaza and the Tropicana, has been named general manager of the Presque Isle Downs & Casino in Erie, Pennsylvania.

Buro, who was president of Trump Plaza in the late 1990s, last made news in 2007 as president of the Tropicana, when he was fired for refusing orders from William Yung, CEO of parent company Columbia Sussex, to slash the Trop’s workforce. Yung later was stripped of his license because of the massive layoffs, which led to claims of sub-standard service at the casino resort. Buro’s testimony before the Casino Control Commission was a key factor in Columbia Sussex losing the license, which was eventually picked up by current owner Carl Icahn.

By GGB Staff   Wed, Jul 07, 2010

U.K.-based TCS John Huxley has supplied the new Casino New Brunswick in Canada with a range of gaming tables and displays, chips, seating and assorted accessories.

The newly opened casino is part of a C$90 million project, which also includes a hotel, spa and convention center. The casino has 22 tables and 500 slots, plus a poker room with eight tables.

The supplier worked closely with New Brunswick management to produce an assortment of tables and seating that work with the design scheme of the casino interior. The gaming floor is done in shades of vibrant red and electric blue, colors highlighted in the table layout cloths and seating. The furnishings fuse warm, rich mahogany finishes and accents of chrome to keep the look and feel up-to-date.

Steve Hancock, general manager of the Moncton, New Brunswick property, said, “The decision to have TCS John Huxley provide Casino New Brunswick with gaming equipment was based on their solid reputation in the industry for providing a full turn-key solution to some of the most notable casinos worldwide. The Canadian sales and service team has proven themselves as top-notch from the inception, coordinating with our designers, management and investors. Each member of the Canadian team has gone above and beyond to make Casino New Brunswick a success, and we look forward to a long and profitable relationship going forward.

By Frank Legato   Tue, Jul 06, 2010

Manufacturer: Konami Gaming
Platform: K2V/Podium
Format: Five-reel video slot
Denomination: .01
Max Bet: 165, 315, 1,515
Top Award: 4,000 credits times line bet
Hit Frequency: Approximately 50%
Theoretical Hold: 8.08%—12.69%

The latest game in Konami’s “Xtra Reward” series, Masked Ball Nights features the standard free-spin bonus plus a random extra bonus event that transforms certain symbols into wild symbols.

Games in the Xtra Reward series require the player to cover the lines plus make a 15-credit ante bet to qualify for the additional bonus feature. That bonus feature is unique to each game in the series.

The base game for Masked Ball Nights applies an operatic/costume ball theme to a 30-line video format. The diamond symbol is wild, substituting for all but the bonus-trigger symbol.

The main bonus event is the free-spin round, triggered by three or more scattered masked-woman symbols. The feature awards 15 free games, with all jackpots doubled. The free-game feature can be re-triggered within the free games.

The Xtra Reward bonus occurs randomly at the beginning of a spin, if the player has made the minimum wager covering the paylines with the 15-credit ante wager. With the qualifying wager made, any or all of four symbols—the mask, the fan, the lamp and the carriage—turn into wild symbols at the beginning of various spins. The wild symbols then substitute for all but the masked-woman symbol for that spin.

By GGB Staff   Tue, Jul 06, 2010

Switzerland-based Escor is opening a new casino in the Montenegrin port city of Bar.

The Grand Swiss Casino will operate 12 tables and 80 slots in an area of 1,750 square meters. Two bars also are planned, one indoor and one outdoor.

Escor is investing around €6 million in the project. The gaming license fee for the casino is €2 million.

In the company’s home market of Switzerland, Escor has a 36.5 percent share in Casino Locarno, in the town of the same name. Casino Locarno S.A., comprised of Escor and partners ACE Admiral Casinos & Entertainment and German Casino Management Group, is bidding on the long-anticipated license for the city of Zurich.

The proposal calls for an SFR 25 million (US$22.5 million) casino on the city’s prestigious shopping avenue, the Bahnhofstrasse. The license is for a B casino, which allows a maximum of 150 slots. The 1,900-square-meter casino would also have 14 table games.

The casino would be expected to draw 900 visitors a day and produce annual gross revenue of SFR 60 million, about US$54 million.

A decision on the license is anticipated sometime within the next year.

By GGB Staff   Tue, Jul 06, 2010

A request from Star City casino in Sydney for an additional 1,000 slot machines has been denied by New South Wales Premier Kristina Keneally.

Together with Star City’s existing 1,500 slots, approval would have put the casino on par with Crown Casino in Melbourne in total slots, reports the Daily Telegraph. Management wants to increase the current 24,000 visitors a day to better compete with Crown’s 46,000 a day.

The extra 1,000 slot machines were intended to help with additional redevelopment plans for the property. Along with the A$575 million project now under way, which includes construction of a new five-star hotel, the operator wants to add an event center costing A$65 million.

“We’re looking to build an events center which would hold about 4,000 people, and it could host some really big international events, and we’re looking at varying funding options with the government,” said Star City spokesman Peter Grimshaw. “We’re hoping we can fund it without cost to the taxpayer. At this stage the government has given no indication it will agree to it. What we have got approved is a A$575 million upgrade.”

By GGB Staff   Tue, Jul 06, 2010

Galaxy Entertainment Group has announced the closing of a six-year, HK$9 billion club loan from a consortium of leading banks in Asia. The loan is expected to fully fund the group’s Galaxy Macau development in Cotai, Macau.

The Loan Market Association defines a “club loan” as “a loan where a group of lenders agrees to take and hold an asset at the outset of the transaction with no intention of reducing their commitments through subsequent syndication.”

On April 12, Galaxy announced the club loan had been oversubscribed at HK$8.8 billion. The amount was upsized to HK$9 billion with strong support from the participating banks. The participating banks also undertook to “take and hold” the loan with no sell-down requirement.

As collateral, the group has put up its StarWorld Hotel and Galaxy Macau. Quarterly repayments of 1 percent of the aggregate loan outstanding are to commence on the 30th month post-signing, gradually escalating up to 5 percent of aggregate loan outstanding, with a balloon of 49 percent at maturity.

By GGB Staff   Tue, Jul 06, 2010

One Arizona tribe has gone to court to try to keep another Arizona tribe from putting land into federal trust to create a competing casino.

The Gila River Indian Community of Arizona last month filed legal papers with a U.S. District Court to try to prevent the Tohono O’odham Nation from putting 135 acres into federal trust, which would allow it to create a competing casino in Glendale, very near to the casino that the Gila River community operates in Sun City.

The Gila River tribe says the reason it opposes the Tohonos is that it has doubts about their legal claims. It calls the tribe’s attempt “reservation shopping.” The Tohonos claim the Gila River Tribe just doesn’t want the competition.

“I wish they would really call it what it is, and as far as I’m concerned, it is an issue of market share,” commented Tohono Tribal Chairman Ned Norris Jr., according to the Arizona Business Gazette.

A spokesman for the Gila River Community retorted, “In the past, every Arizona tribe has respected boundaries and history. It’s disappointing to see the Tohono O’odham Nation treat our culture and aboriginal history like some kind of back-room real-estate deal, where promises are made to be broken.”

An act of Congress in 1986 gave the Tohono the right to buy land in three Arizona counties after a federal dam project flooded some of its reservation. It secretly bought land near Glendale and only recently petitioned the Bureau of Indian Affairs to make the land reservation land. It then sued to get the BIA to move faster on its request after the bureau didn’t act for more than a year.

The Gila River Community is opposing that lawsuit.

By GGB Staff   Wed, Jul 07, 2010

The Pascua Yaqui Tribe and Sol Casinos announced the appointment of Mark A. Birtha as president and chief development officer. Birtha will have general management responsibilities for the operations of Casino Del Sol, Casino of the Sun and the 4,500-seat AVA Amphitheater.

In addition, Birtha will oversee the design, construction and operations of Casino Del Sol’s $120 million hotel expansion development.

Birtha is a veteran of gaming and hospitality management. Most recently, he was vice president of development and project manager for Marriott International, where he oversaw the development of a $3 billion hotel, casino and convention center in Las Vegas as well as other brand opportunities. Prior to that he was vice president of development, operations and administration for the W Las Vegas Hotel Casino Convention Center project. Birtha has held executive positions with Las Vegas Sands Corp. in corporate development, casino marketing and conference management.

By GGB Staff   Wed, Jul 07, 2010

Shuffle Master Europe announced a new business alliance with E-Service.

E-Service will provide casino operators local technical support for all Shuffle Master products and offer on-site service contracts for monthly visits, for the purpose of performing preventative maintenance.

An advance replacement service will ensure that spare parts and devices are sent the same day as requested, to reduce downtime and maximize operator income.

Mike Clokie, director of E-Service, said, “We are looking forward to working with Shuffle Master Europe. They have great products that are widely used and respected across the U.K. Our service is designed to save operators the time and inconvenience of in-house repairs, or sending off their machines for service and repair.”

E-Service was established in 2004 to provide a one-stop solution for the electronic peripherals and sub-assemblies of modern coin and banknote-operated equipment. Supported devices include coin mechanisms, banknote readers, TFT LCD displays, monitors and touch screens, background music systems, power supplies, MPU boards, PC equipment and associated peripherals.

Additionally, E-Service offers specialist service and support on major global hardware brands including TransAct Technologies printers, Shuffle Master casino chippers and card shufflers and JCM banknote acceptors.

By Frank Legato   Tue, Jul 06, 2010

Manufacturer: Bally Technologies
Platform: Alpha Elite
Format: Five-reel, 50-line, dual-screen video slot
Denominations: .01, .02, .05
Max Bet: 250
Top Award: Progressive; $10,000 reset
Hit Frequency: 48.43%
Theoretical Hold: 11.18%—13.92%

This game is Bally’s latest take on community play—in this case, two-person play. The game is formatted as a wide-screen video with a love-seat-style bench that fits two players. There is one large spin button in the middle—it is what Bally calls “Cooperative Play.”
 

On the screen are two 25-line reel sets, although the math is worked out as a 50-line game. The first reel set contains lines 1-25; the second, lines 26-50. Wagers must be made on both sides to activate the game—there are “Easy Select” buttons that assure enough is wagered to activate all the paylines. The reel sets land combinations independently of each other until the bonus event lands.

Bonus symbols on the first, third and fifth reel of either game screen trigger three free games and three picks from 12 “mystery locks.” The dual screen disappears and the mystery locks appear across the wide screen. The players select locks to unveil additional free games, multipliers or additional picks. The players continue to select locks until the picks are exhausted.

The free-spin round includes a reel symbol that awards five additional free games. This can keep awarding extra games up to a total of 50 free spins.

This is also a “Quick Hit” progressive game. There are four progressive jackpot levels. The three lower progressives are won by five, six or seven Quick Hit symbols on either individual reel set (or both). Five Quick Hit symbols win a progressive resetting at $10; six symbols, at $25; seven symbols, at $150.

Thirteen or more Quick Hit symbols across both reel sets combined trigger the top progressive jackpot, which resets at $10,000.

By GGB Staff   Tue, Jul 06, 2010

The national gaming commission of Paraguay, known as Conajzar, has declared the casino license tender announced in February null and void. Conajzar President Patricia Marchewska said the decision affects the licenses awarded for Asuncion, Central and Itapua.

The reasons given were that no offers were forthcoming for licenses in the interior of the country, and that there were unnamed problems with the applications from those seeking the Asuncion licenses, according to Latin news services Yogonet and La Nacion.

Marchewska said a revision of the documents will indicate which clauses assure more participation, and that another tender process will take place as soon as possible, probably within 30 to 60 days.

Separately, an investment group from Spain wants to develop a luxury five-star hotel casino in the Asuncion port zone. The group, Casco Antiguo, has acquired four blocks in the historic section of the city.

By GGB Staff   Tue, Jul 06, 2010

The first full month of operations at Marina Bay Sands has gone so well that the expectations of the gaming analysts will be exceeded, said the owner of the property, Las Vegas Sands Corp.

Despite being the second of two casinos to open in Singapore, interest in the integrated resort is strong. Las Vegas Sands President and COO Michael Leven said that about 550,000 people visited the Marina Bay Sands casino in the first 25 days of May, even though only about a quarter of the property was open.

Based on an average of 13 gaming analysts contacted by Bloomberg, Marina Bay Sands will generate $329 million in 2010 EBITDA.

Leven expressed a little disappointment with the results on slot machines, adding that the company will add more electronic roulette and baccarat machines to compensate.

He acknowledges some difficulties in the phased opening, but predicts that once the entire project is open— by the end of the year—things will be running like clockwork.

“It’s really a work in progress,” Leven said. “The amount of complaints we’re getting are pretty typical of any opening.”

By GGB Staff   Wed, Jul 07, 2010

Slot and system manufacturer Bally Technologies announced that former longtime International Game Technology executive Jean Venneman has joined the company as vice president of product marketing and licensing.

Venneman spent 18 years with IGT, first as a sales executive for the IGT Europe subsidiary in Holland, and eventually as a vice president in game development. Her last position at IGT was vice president of external innovation and licensing, in which she secured a number of entertainment brand licenses and managed a team of engineers, product specialists, artists and mathematicians.

During her tenure at IGT, Venneman was directly involved in the development and licensing of numerous trademarked or patented IGT slot products. She was on the January 2007 cover of Global Gaming Business magazine as one of the year’s “Top 25 People to Watch.”

“We are extremely pleased to welcome Jean to Bally,” said Dan Savage, Bally Technologies’ vice president of marketing. “She is a proven leader with an outstanding gaming industry track record of success, having played a key role in the sales and development of several games and brands. Jean’s experience in strategic and tactical product planning and execution, coupled with her extensive contacts in the entertainment industry, means she will play a pivotal role in the expansion of our portfolio of licensed entertainment brands, brand libraries, and overall product marketing.”

“Bally Technologies’ 78-year history as the leading innovator in gaming and systems products speaks for itself,” Venneman said. “I am excited to join Bally’s tremendous team of professionals. I look forward to helping Bally further enhance its position as one of the world’s premier gaming-technology organizations.”

By GGB Staff   Tue, Jul 06, 2010

The Calgary Stampede has repurchased the casino it sold two years ago in a transaction reportedly worth $6.75 million.

The Calgary Herald reported that the acquisition was a demonstration of “faith in an industry that has faced challenges related to the global recession.”

In August 2009, owner Calgary West Hospitality Inc. went into voluntary receivership due to the economic slump. Since that time, the Stampede Casino had been under court-appointed receiver Deloitte & Touche.

“We’ve done our due diligence,” said Doug Fraser, spokesman for the Calgary Stampede. “We’ve gone over from the perspective of where we can take the casino. We believe it's viable; we feel that a casino is still good for us.”

The Alberta Gaming and Liquor Commission board approved a new casino license for the Stampede last month. The agreement of sale is expected to close June 14.

The casino, built at an estimated cost of $40 million to $50 million, officially opened in 2008. The 100,000-square-foot facility has three restaurants, two lounges, a 400-seat theater and underground parking.

By GGB Staff   Wed, Jul 07, 2010

Leading table-game equipment supplier Gaming Partners International Corporation announced that it has received orders from all nine casinos currently operating in Pennsylvania for their introduction of newly legalized table games.

GPI will supply gaming tables, casino chips and other table games equipment to all the casinos. The company recently received the necessary conditional licenses from the Pennsylvania Gaming Control Board to conduct business in the state.

The company has orders for a total of over 400 of its custom-built table games from six Pennsylvania casinos. GPI also will supply a total of over 2 million of its popular Paulson line of casino chips to eight casinos in the state, along with precision dice, table game layouts, playing cards and other related table equipment, including casino seating from Gary Platt Manufacturing through its recently announced distribution agreement.

By GGB Staff   Wed, Jul 07, 2010

Charlotte Skinner is now head of marketing for Aristocrat Europe.

In her new position, to which she was appointed in May, Skinner will define and execute marketing strategy, plan actions, communicate with the media, oversee advertising and coordinate financial management of the marketing department. Skinner is well-known in the industry from her previous position as marketing manager for Clarion Events Ltd, a position she held from 2007. Clarion is the organizer of the annual London casino and online gaming show, formerly known as ICE but now as IGE.

Before coming to the gaming industry, Skinner served as marketing manager at the U.K. Ministry of Defense, senior marketing executive and marketing manager for RAC Motoring Services, and as a marketing executive and assistant for other companies starting in 1997.

By Roger Gros   Wed, Sep 01, 2010

By Frank Legato   Tue, Jul 06, 2010

I was watching the Massachusetts Senate hearings the other day, and I... What, you don’t think I attend state legislative hearings on gaming-related matters? Why, my press credentials get me into any legislative chamber in the country! They even let me into the back rooms so I can help when they cut shady deals.

So, I was watching the Massachusetts Senate hearings on legalizing casinos. The state House passed a casino bill in April that would create two resort casinos with slots at racetracks, and the Senate is considering casinos without the racinos. The senators were hearing testimony from local mayors, who all sounded like JFK. (“I’ll suppaht this with vigah... We need the jobs ‘cause my friends are pahking cahs...”)

Besides the funny accents—OK, I talk funny too; I’m told I still have a Pittsburgh accent, which leads me to say things like “Goin’ daahntaahn and then to Saahthside”—I noticed that there were a lot of union members in the gallery, all “suppahting” the casino bill. They were all wearing T-shirts that said “Casinos Now! Jobs Now!”

That’s not strange in itself, but these T-shirts were bright, prison-style orange. The gallery looked like someone had just emptied out the county jail. (Or a Philadelphia Flyers hockey game.) (OK, same thing.) I expected all the casino proponents in the gallery to voice their support for expanded gaming in Massachusetts, and then go out to the highway to pick up litter.

Note to AFL-CIO: Next time, go with a nice blue T-shirt, or even red. Something that doesn’t make you look at the wearer’s ankles to make sure they’re shackled.

The hearings themselves were quite instructive. Testimony revealed that Massachusetts would stand to make a lot of money from casinos, and lots of people who are unemployed would get good-paying jobs, and gaming dollars currently going to Connecticut would stay in the state.

Then came the inevitable bone-heads railing about how casino gaming is sure to bring about Armageddon. “We may be raising revenue, but we’re destroying families!” said one. Yes, destroying families by creating jobs. I get it. Where do they get these people? They testify that casinos will line owners’ pockets by taking money from people who can’t afford it.

Guess what? Casino owners don’t cater to poor people. They want to take money from rich people. Very rich people who arrive in chauffeured limousines and have casino employees running around getting them their favorite Scotch, cigars and prescription pain-killers.

Yeah, that’s right. That guy’s back in the news.

Terry Watanabe, the millionaire from Nebraska and official Biggest Loser in the History of Nevada, goes on trial this month in the bizarre case in which he originally said he lost $127 million at the Rio and Caesars Palace in a year, mostly because he was drunk and the casinos kept him daffy by feeding him prescription pain-killers. That’s what he says in his counter-suit against Harrah’s Entertainment, anyway. He’s going on trial for passing bum checks for $14 million to pay back the last of his debts to the casinos.

Only now, he says records submitted last month in discovery show he actually lost more than $200 million at the casinos, in a single year.

As I said the first time I wrote about this guy: Aren’t high-rollers supposed to be smart? Aren’t they supposed to weigh the odds and play with the advantage? Casino employees have said Watanabe never appeared intoxicated. To lose $200 million—officially the biggest losses ever in a Nevada casino; if he was Bugsy Siegel, the mob would have shot him 3,000 times over—you would have to be so stoned you were essentially a drooling mannequin. I think someone would have noticed that. I also think someone would have noticed if he had a pet chimpanzee making his bets for him, which is the only way I can imagine losing that many baccarat hands.

And, I still don’t buy the prescription pain-killer thing. I’ve been asking slot hosts for Vicodin and Oxy every time I play video poker, and you know what? They just look at me strange and ask me to leave.

Oh, so I’m not a millionaire philanthropist from Nebraska, so I don’t get to be hopped up on goof balls? You don’t want me to be loopy so I lose my $300 gambling budget? Well, the heck with you, then. I’ll get my illicit prescription pain-killers elsewhere, thank you very much.

As for Terry, he’s looking at 20 years. I think they’re going to be fitting him for his own orange shirt pretty soon.

Then, he can go to Massachusetts.

By Rich Geller   Tue, Jul 06, 2010

It was just a few years ago that the French government was having online gaming operators arrested. The alleged crime was offering sports betting and other forms of online gaming to the nation’s residents, without having a license from the French government to do so.

It didn’t matter that the operators were licensed by other governments within the European Economic Area, an expanded commercial treaty zone that includes non-E.U. jurisdictions like Malta and Gibraltar. It didn’t even matter that the subjects were elsewhere in Europe than France when the arrests were carried out. The government was determined to exercise its sovereign rights, and it looked like online gaming was going to be the exclusive province of the French monopoly gaming operators for at least the foreseeable future.
    
Change Comes Swiftly
And then suddenly, in April 2008, French budget minister Eric Woerth came with the announcement that the online betting market could open up for a testing period within the next two years. At the time the move was said to have come from the Sarkozy government, as President Nicolas Sarkozy had previously indicated he was open to experimentation in the online betting market. The plan that gradually came together called for online betting companies to be licensed by the French authorities and be subject to the same rules and regulations as the then-monopoly horse-race betting operator PMU.

Now, last month, just in time for the World Cup football tournament, the government issued the first 17 licenses to commercial companies taking bets online for sporting events and horse racing, and for companies offering online poker. In fact, several of those licenses have been awarded to the companies whose CEOs were arrested not so long ago.

The licenses were awarded by Arjel, the independent authority created for the newly sanctioned sector. Arjel is an acronym for the French words that basically translate to “online gaming commission,” L’Autorité de régulation des jeux en ligne, for those who need to know. Each license is valid for five years, although Arjel has the power to revoke a license, given proper cause. Each activity engaged in by a company requires a separate license, so a company offering sports betting, wagering on horse racing and online poker would need to have all three licenses. The fee for an individual license is €5,000, for two licenses €8,000 and for three licenses €10,000.

At present, the regulations allow only for sports betting, horse racing and online poker. Online casino games and slot machines are not permitted. That situation could change in the future, but no additional activities are expected to be introduced during the first 18 months of the new situation.

One of the controversial aspects of the regulation is the tax rate on sports betting and horse racing. Unlike other jurisdictions, where a tax of a few percent is applied to bets won by the operator, the French law specifies a tax that works out to about 8.8 percent of the total amount wagered. In other words, the house is paying tax on money it doesn’t win as well as on money it does win. Poker is saddled with only a 2 percent tax rate.

Sports betting for the licensed operators was in place for the start of the World Cup football tournament. Poker was scheduled to debut at the end of June.
    
Four Goals
The law has been designed to satisfy four basic objectives: to guard against compulsive gambling and protect minors; to assure the integrity, reliability and transparency of gaming operators; to guard against fraudulent or criminal activities and prevent money laundering and the financing of terrorism; and to oversee the balanced and equitable development of various types of games to avoid the economic destabilization of activities dependant upon them.

Provisions to protect the player from harm due to compulsive gambling play a very prominent role in the legislation. Whole sections of the law are devoted to descriptions of measures to be taken by the operator, from the inclusion of warnings on the gaming site about the risks of compulsive gambling to the presence of mechanisms by which a player can request exclusion or voluntary limits on play. A detailed description of the content and display style of these warnings is included in an order from the minister of health.

Operators are not allowed to offer credit to players, nor list direct or indirect third-party sites from which credit can be sought.

To ensure that player protection is taken seriously, an operator must prepare and submit to Arjel an annual report describing actions undertaken to promote responsible gaming and combat compulsive gambling. Likewise, a report must also be submitted each year on actions taken to deter fraudulent or criminal activities, money laundering and the financing of terrorism.

When first granted a license, the operator has six months in which to provide Arjel with a certification as to the systems employed to identify, register and keep track of players and their accounts, monitor and record all gaming events, wagers and related data, and keep records of changes and maintenance of hardware, platforms and software employed in the operation of games. The exact nature of the information required and method of storage is specified in a decree from the Counsel of State. To perform the certification, the operator chooses an independent agent from a list approved by Arjel.   

To counter conflicts of interest, no one employed by or associated in any way with the online operator is allowed to participate in the gaming or wagering activity.

Licensed operators are allowed to advertise their products in the usual manner, but within specified parameters. Any commercial communication promoting gaming must include a message warning against compulsive gambling, as well as details on where to find information and assistance for related problems. Advertising via any medium intended for consumption by minors, or inside a venue in which material that appeals to minors is being shown or displayed, is prohibited.

There are stiff penalties for operators who do not adhere to the advertising regulations. Fines start at €100,000 for certain infractions of the law with regard to minors, and the court can assess a fine equal to four times the amount spent by the operator on the illegal promotional activity in question. Certain civic groups are also empowered to exercise these same measures on behalf of a plaintiff.

Tough Enforcement
As of the middle of June, 11 operators had received licenses to provide online betting or gaming to the French public. Arjel had received a total of 35 applications. However, estimates put the number of unlicensed—and therefore illegal—operators active in France at some 20,000. The new law provides serious penalties for those convicted of operating illegally.   

Any individual without a license who offers an online bet to a member of the public can be fined €90,000 and imprisoned for three years. If such an offer is made by an organized group, the punishment can reach €200,000 and seven years in prison. Moreover, the authorities may confiscate personal property if directly or indirectly involved in the commission of the offense, and close down the business for five years or more, including permanently.

One of the greatest advantages to being a licensed operator is having the right to advertise to the French public. An unlicensed operator who attempts to advertise could face the same penalties as a licensed operator found to be advertising to minors: €100,000 fine and potentially four times the cost of the promotion. But not just the advertising site risks severe punishment. The owner of the magazine or TV station or whatever method of distribution employed would also face the same harsh fines.

To combat illegal activity, authorized police and other agents are allowed to use pseudonyms while placing wagers or playing online games, in the course of gathering evidence. They are also allowed to obtain, maintain and transmit data on suspects relating to their investigations. Agents are not allowed to entice or encourage operators to break the law with regard to taking bets from minors.

Among the companies who received license in the first round of awards are two brands in which Austrian firm Bwin is involved. The companies are Bwin Entertainment Services, a wholly owned French subsidiary of Bwin operating at the site bwin.fr; and SAjOO, a joint venture with French media group Editions Philippe Amaury, operating at sajoo.fr.

Norbert Teufelberger, co-CEO of Bwin Interactive Entertainment, said of the development, “We are pleased that, following Italy, another country has followed the call for a clearly regulated and transparent market. The present law is a great first step. There are still a few more miles to go on the road toward establishing legal conditions that warrant fair competition in France. We will be working closely together with the French authorities in order to take these developments forward.”

Teufelberger’s enthusiasm for the French system is undoubtedly stronger now than it was in September 2006. It was then that he and Bwin co-CEO Manfred Bodner were arrested in Monaco, for taking bets from French residents.

Another outlaw-turned-legitimate-businessman is Petter Nylander, CEO of Unibet. Nylander was arrested by Dutch authorities on a French warrant, while waiting for a flight to the U.K. in October 2007. Unibet now has an agreement with French operator France Pari, which has a license for sports betting. France Pari is now providing its service to Unibet clients in France.

Unibet also has a signed agreement with Ongame to provide poker to the French market, and a letter of intent with Zeturf for horse racing. Both poker and French horse racing are expected to be available on Unibet.fr by the end of Q3 2010.  

Said Nylander in early June, “We are very happy to announce that, although we have not yet been granted a French license, we can still provide our customers with a sport betting product ahead of the upcoming World Cup in football.”

Arjel is required to perform a thorough review of the online gaming situation 18 months from the introduction of the law. With 20,000-plus unlicensed operators still active, it will be interesting to see if the French players gravitate to the legal operators or remain loyal to whoever has been serving their needs until now.

By Randall A. Fine   Tue, Jul 06, 2010

Let me get this out of the way up front: this article is self-serving. Many will read it and claim I only wrote it to help my firm as it continues to grow—and they would be correct (but I would note, how many people really write articles for gaming trade publications out of the kindness of their own hearts?). But that doesn’t mean that I am not absolutely, positively right.

Five years ago I founded the Fine Point Group with the goal of it becoming the preeminent independent organization focused on improving casino operations around the world. I felt that people—whether in casinos themselves, or in the investment community that puts its money to work there—needed a group they could call on for a unique and different perspective, and that we could fill that gap.

It has not been an easy road—it never is in entrepreneurship. In the first few years, with limited credibility and a great economy, it was easy for prospective clients to say they didn’t need our services. But as the economy went south two years ago, and having cobbled together a track record of helping optimize performance without capital expenditure, we began to experience explosive growth.

In late 2008, we won the largest commercial management contract of the year, at Detroit’s Greektown Casino, and after almost doubling EBITDA and increasing the value of the enterprise by more than $200 million, I expected to be able to sit back and watch the phone ring.

And then an interesting thing happened—I started to learn that we were competing for management contracts with the kind of companies we left to start FPG—companies like Harrah’s and Isle of Capri.

At first, we felt flattered. We have an immense level of respect for some of these companies, and wouldn’t have expected our young firm to be competing against them for anything. But after setting ego aside, we began scratching our heads as to why any independent casino owner would consider—even for a second—hiring one of these companies to manage their casino.

Why? It isn’t because these companies are necessarily “bad” (though it is my opinion that some are). Many of these are world-class companies worthy of our admiration. Rather, it is a mistake because hiring a company that owns its own casinos creates structural conflicts of interest between the independent casino developer (or tribe, as the case may be) and the manager. To illustrate these conflicts, imagine a new tribal casino in Oklahoma that is looking for outside management to help get the facility up and running. So what’s wrong with them hiring one of the big boys? We would submit four reasons:

Where does the “A-Team” get sent? To the property owned 100 percent by the “big boy” or to the one in Oklahoma where they get 2 percent of revenue and 5 percent of EBITDA? No rational casino operator is going to send its top talent into a property where they get a small share of the rewards when they can send them to one where they get all of the rewards.

Isle of Capri illustrated this in a most profound way when, the day after they landed their first external management contract, they announced they were hiring someone from outside their company to conduct their work there. So, after pitching their “Isle Style” capabilities, they sent someone who didn’t have one day of experience within their company to implement it at a new facility! Not surprisingly, for that among several reasons, the casino owner quickly backed out of the agreement.

What happens when you end up competing with the “big boy?” The Oklahoma tribal council could respond to this one quickly—none of the “big boys” operate in Oklahoma. But what happens when the “big boy” leverages the Oklahoma database to migrate players from Oklahoma to its other properties around the country (say, Las Vegas)?  Isn’t there an overwhelming incentive to move customers from a place where you get 5 percent of the revenue and 2 percent of the profits to somewhere where you can get it all?

This was the subject of a lawsuit in Las Vegas between Station Casinos and its joint-venture partner in Green Valley Ranch, the Greenspun family. The Greenspuns alleged that Station actively attempted to move players from their joint-venture facility to those it owned outright.

The suit was recently settled out of court. But while I don’t believe that Station engaged in that behavior, I certainly can understand why one would be worried about it.

Others ask this question about Aria (which is 50 percent owned by Dubai) versus the other MGM Mirage properties. Which begs the question: Why do these partnerships get started in the first place? Because, when times were great and the tide was rising everywhere, there was plenty of money to spread around. But now that markets are tighter, these properties start competing with each other, and these separations of interest begin to make themselves clear.

One size doesn’t fit all. The fact that someone is a great operator of casinos in a monopolistic or duopolistic Native American market, or a great operator of locals casinos in Las Vegas, etc., etc., doesn’t mean they will be a great operator of a casino in a very competitive Oklahoma tribal market. Many companies play out of one playbook, and that playbook very well may not work in your market. Just look at Harrah’s takeover of London Clubs—which I think even they admit has been an unmitigated disaster—for an extreme example.

You can put yourself right in the middle of a major “breach of fiduciary duties” lawsuit. Here’s one that our friends in Oklahoma wouldn’t consider for a minute, and why should they? It turns out that some of these larger “big boys,” working with some backers on Wall Street, concocted extremely complex debt structures. In real-people talk, it means that they got a first mortgage, and a second, and a third, and a 10th, etc.

In fact, some took it one step further, borrowing money from one group of people for some of their properties, and another group for others. Which means that—even without the Oklahoma property in the mix—many of these lenders may be angry that the “big boy” is preferring one set of properties over the one it lent money to.          

Throwing your property into the mix gives the “big boy” just one more group it has responsibilities to. And who do you think comes first—the banks they have borrowed hundreds of millions or billions from, or you?

In the end, working with a firm that doesn’t own other properties means that their highest priority is that of their clients. Because of that, firms like this don’t have the ability—or interest—in moving players from one property to the next, and certainly don’t have conflicting fiduciary duties to lenders.

That doesn’t mean that all management companies are equal—or even that the worst management company is better than the best “big boy.”  But I have probably made enough people angry with this article. I’ll leave my self-serving discussion of what makes the best management company for another day.

By Frank Fantini   Tue, Jul 06, 2010

The gaming industry’s recession appears to have ended.

That doesn’t mean boom times have returned, or will.

Nor does it mean we won’t experience the dreaded Double Dip.

But the evidence is mounting that growth is resuming—in business volumes, company investment and, we should soon see, in profitability.

Consider:

Consumer confidence, one of the best predictors of business for consumer discretionary companies, has been rising smartly.

Employment, though still lagging as is the case coming out of all recessions, is growing. Jobs are the other major economic statistic watched by casino companies.

Gaming revenue. April’s 2.6 percent rise in regional markets was the first since February 2008, as reported in the National Revenue Report published by Fantini Research.

And the growth has accelerated. Eighteen of 20 tracked companies and 30 of 33 tracked jurisdictions have shown improvement in year-over-year comparisons since 2010 started.

Stronger isn’t the same as strong, however. In April, half of jurisdictions and 18 of the 33 operators still had revenues below the previous year.

May showed a continuation of the stabilization of gaming revenues.

Suppliers. Early signs indicate that casinos are finally loosening their capital budgets to buy more gaming equipment.

The initial signs were anecdotal, but now numbers are starting to back them up.

Todd Eilers of Roth Capital recently calculated an inferred demand of 19,300 slot machines in North America in the first quarter, numbers beyond his expectations.

Further, those long-awaited new jurisdictions are finally coming on stream.

Bally announced orders for 3,600 machines and IGT 3,000 in the new Italian VLT market that will total more than 56,000. The first machines ship later this year, and BYI, IGT and other suppliers promise more to come.

Illinois is getting closer to starting up its VLT program, and while market estimates have been scaled back from upwards of 50,000 to 25,000, the games are coming.

And table game supplier Shuffle Master has got to be delighted that Delaware, Pennsylvania and West Virginia will be adding 700 games this summer while still keeping some of their e-tables.
 

Earnings leverage. Every casino operator and supplier has been promising that all the spending cuts put them in position to dramatically grow profits come the recovery.

Isle of Capri gave us a sense of that in the company’s fourth-quarter earnings just released.

Analyst consensus was that Isle would lose 8 cents a share. One figured a loss of 24 cents. No one calculated a profit greater than a penny a share.

ISLE surprised them all, earning 15 cents a share—and 20 cents operating profit. And that before the economic recovery takes hold and raises revenues.

Balance sheets. One of the scariest parts of the double-whammy of recession and financial crisis was the risk of bankruptcy of America’s bluest-chip casino companies that had built mountains of debt.

Now, the debt crises are behind; big companies like Las Vegas Sands and MGM Mirage have worked through them.

Mid-size operators like Ameristar have begun reducing debt while Pinnacle has scaled back development to investor-reassuring levels.

Others, like Herbst and Tropicana Las Vegas, have come out on the other side debt-free. More will. And virtually every company has restructured its debt in some fashion.

Suppliers, who didn’t have multibillion-dollar mega-resorts to run up debt, are especially strong.

Bally can pay off its debt with just a partial commitment of its annual cash flow. Shuffle Master nearly so.

Others, like WMS and Gaming Partners International, are net positive in cash on the books.

And TransAct Technologies hasn’t a penny of debt while it enjoys $10.7 million in cash and is generating $6 million in cash flow and growing.

No wonder TACT announced a share repurchase plan that could buy in 14 percent of its shares if the stock price stays put, which it probably won’t.

And, while the focus of the Asian gaming boom is on casino giants such as Las Vegas Sands and Wynn, suppliers can play there, too.

One reason is that, while Asia is table game-focused, it is big enough to account for a lot of slot machines as it develops.

For example, Susan Macke of IGT recently noted that the number of slots in Macau has grown 420 percent since 2005.

And if casinos spread as many predict—through Japan, the Philippines, Korea, South Vietnam, Thailand, India—the total number of slot machines will be huge.

However, if the focus is table games, one supplier that surely stands to benefit is Shuffle Master, the biggest table game player in the world, yet still small enough that relatively modest revenue growth moves the needle.

That point was illustrated in Shuffle Master’s second quarter, when earnings blew past analyst estimates based in part on orders from the new Singapore. And there are more orders to come from Singapore, Shuffle Master said.

So, in the mine field of the rocky and uneven economic recovery, there may still be opportunities for the careful investor.

By Frank Fahrenkopf   Tue, Jul 06, 2010

While for many, the rising temperatures signal a time of relaxation, we in the gaming industry are working especially hard to make the most of the summer season.

For although we made significant strides along the road to recovery during the first half of the year, we still have far to go. Though overall national commercial casino revenues were fairly flat during the first two quarters of 2010, a close inspection of individual gaming markets reveals some positive signs.

Gaming in Pennsylvania remains a bright spot for our industry, repeatedly cataloging record-breaking revenues. With the addition of table games, the state’s casinos are ever more likely to continue outperforming last year’s impressive totals.

Gaming in Colorado also has experienced recent growth. Commercial casino revenues have spiked nearly 10 percent when compared to the same period last year. And casinos in Michigan, Missouri and South Dakota have seen modest gains as well.

News from the remaining commercial gaming jurisdictions is mixed. Each has experienced its fair share of ups and downs, though some have witnessed more severe fluctuations than others.

For example, New Jersey—the gaming state most hard-hit during the recession due to increased regional competition—endured a difficult first quarter. Monthly revenue fluctuations suggest that the full recovery of New Jersey’s casinos is still many months away, and Pennsylvania’s gain from new table games will put further pressure on Atlantic City to innovate and find creative new ways to keep customers coming to the shore.

Gaming revenues in Nevada have been similarly volatile. Though the state enjoyed a prosperous first quarter, revenues have since marginally declined. However, the situation is far more complex than revenue totals indicate; other numbers tell a different—and more favorable—story.

In Las Vegas, many industry insiders contend that growing numbers of conventioneers are accelerating the city’s recovery. For example, MGM Mirage recently reported that it had booked 865,000 hotel rooms for next year—a company record. And convention attendance in Las Vegas grew 2.9 percent in April (according to the most recent figures available at press time) to nearly half a million business travelers.

Also encouraging, Las Vegas tourism has been on the rise for eight consecutive months. And a recent report from the U.S. Travel Association suggests that this spike in visitors may be part of a national trend. The organization recently said it expects a 2.3 percent increase in vacation travel this year compared to 2009. Though tourists still are not spending as freely as they once did, their renewed interest in travel is a harbinger of better days ahead—both for Las Vegas and for other tourist destinations across the country.

Paulson & Co.’s recent investment in several gaming companies also is a strong show of confidence for the future. Wall Street, it seems, is anticipating that our industry will soon be back on track.

All of this news reinforces several important lessons. First, as evidenced by increasing volumes of convention attendees visiting Las Vegas, non-gaming amenities are essential to our industry’s success. Casinos must continue offering diverse entertainment options beyond gaming.

Of course, whether our industry can afford to provide these amenities is significantly influenced by the operating environments in which we find ourselves. Establishing stable, reasonable tax rates is key to governments realizing the full revenue potential of our industry. In today’s economic environment, more than ever, significant capital investment cannot occur where prohibitive tax rates are present. Those states such as Massachusetts that once again are looking at the potential expansion of gaming must understand this reality.

The games, though, remain the cornerstone of our industry. Thankfully, though gaming equipment sales were slow during the first half of 2010, there is evidence that many casinos are preparing to renew their floors. Gaming analysts who attended recent trade shows left the events feeling optimistic that casinos in many jurisdictions are ready to purchase new games and update their slot machine offerings.

The recession has taught all of us in the gaming industry how to work more efficiently—to do more with less, so to speak. Without a doubt this lesson has come at a cost, but the attention paid to cutting costs, streamlining operations and simply spending smarter will serve our industry well as we progress down this road to recovery.

Looking ahead, I am hopeful that industry-wide recovery will continue—albiet slowly—in the months to come.

Recent news from two emerging gaming states, Ohio and Maryland, holds promise. In early June, legislative leaders in Ohio established regulations that will govern the state’s casinos. And a Maryland board recently approved a purchase of more than 1,000 slot machines for its first casino, which is scheduled to open as early as September.

There are challenges ahead as well. Currently, the problem weighing heaviest on the minds of industry representatives is the oil spill in the Gulf of Mexico, which has taken a heavy toll on coastal states already experiencing economic turmoil.

While our industry’s chief concern is the well-being of our employees and their families, we also fear that the crisis will impact tourism and gaming in the region. According to a recent survey, 60 percent of hotels in the region have reported a rise in group and meeting cancellations due to the oil spill. The AGA is continuing to monitor this situation to protect the interests of our companies affected by this disaster.

Without question, our industry’s travels along the road to recovery have been—and will continue to be—somewhat difficult. But we already have made significant progress and, along the way, learned invaluable lessons. Though the road ahead is long and uneven, I am confident that our industry is well-positioned to address whatever obstacles—and opportunities—may come its way.

By GGB Staff   Tue, Jul 06, 2010

In April, just as he was about to wrap up the last piece of the financing puzzle for the Revel casino resort in Atlantic City, Kevin DeSanctis’ legs were cut out from under him. His partner, investment bank Morgan Stanley, took that moment to announce it would sell its investment in Revel at a “significant” loss. Since the financing was contingent upon a Morgan Stanley role, the deal collapsed and it was back to square one for Revel CEO DeSanctis. Since then, Revel has released a redevelopment plan for the South Inlet neighborhood where it is located and DeSanctis is now putting together a team that wants to buy the Morgan Stanley piece of the project so his quest for the final financing can go forward. He spoke with Global Gaming Business Publisher Roger Gros and Editor Frank Legato at his offices in Atlantic City in June. To hear a podcast of the full interview, go to www.ggbnews.com and click on the GGB Podcast button.

GGB: Let’s get the tough questions out of the way at the start. What is the status of the remaining
financing for Revel?

DeSanctis: We had been working with the Export-Import Bank of China to secure the financing to complete the project. When Morgan Stanley elected to sell their interest in the project, that changed the dynamic completely. We had been working with all the parties for about a year to get that transaction completed but with Morgan Stanley’s decision to move out, that piece is now on hold.

Did it surprise you when Morgan Stanley announced that it was pulling out of Revel?

Morgan Stanley obviously is a huge business and we were a very small part of their operation. On a long-term basis, Morgan Stanley always wanted to have a passive interest in our property and in the past few years, they’ve helped a great deal in keeping this project moving. I think they felt, however, this was the appropriate time to exit their investment.

Exactly how is the sale going to proceed? Will Morgan Stanley take bids? How long will they
wait until they sell?

It’s a process, and we’re working with them to make sure that process moves very smoothly. I would expect in the next several weeks to be in a position to talk much more broadly about it. At the end of it, my intention is to find a way to purchase Morgan Stanley’s equity, with some partners, to arrange for the final financing and to get this project open.

We reported that you were visited by Steve Wynn a couple of months ago. Some people thought he’d take over the Morgan Stanley investment and finish the project. What happened at that meeting?

There isn’t really much to talk about. I received a call informing me that he was in town and wanted to stop by and say hello. We spent around 20 minutes, maybe a half hour, together. It was largely a social visit. We spent a few minutes talking about Revel. He was interested in the top of our building and he explained what he did to the top of his building.

You’ve been participating in the meetings that Atlantic City Mayor Lorenzo Langford has been hosting to fix the problems in AC to revive tourism and gaming. Are they doing any good?

I think a lot of progress has been made. Unfortunately, we’re all part of the “Pepsi generation” and want instant gratification. But it’s taken a long time to get to this point and I think it’s going to take a little while to get to where we should be. But in terms of the communication, the willingness and the desire to change things? I think that’s all present and I have zero complaints. Everyone who I’ve been working with wants to see things improve.

But there’s a reality to it and it’s not all going to happen at once. And it’s going to need two things that people don’t always think about. First is a belief that things can indeed change and get better. And in an economic environment like we’re in now that’s very difficult. It’s so easy to be down on Atlantic City.

Second is the capital. And the capital doesn’t come without the first thing happening. Capital has to be invested in this town. I constantly hear, “You can’t invest in Atlantic City now. Wait and see.” I don’t even understand that. Wait and see if what is going to happen? Because if you don’t invest, I can guarantee that nothing is going to get better. But if you think you have a good reason to invest like we do, then you’d better invest now because this is the right time to invest, in terms of getting encouragement, cooperation, permitting… now is the right time if you want to develop something.

   
The discussion of slots at racetracks is continuing if not even increasing. What would this do to your financing efforts?

Without a comprehensive thought process and thoughtful discussion with all the parties involved, I think it would create a stability issue in New Jersey, and that’s my major concern. New Jersey has enjoyed stability for a very long time, and that’s the key to the success of the gaming industry in the state. Everybody on Wall Street likes one thing: certainty. They just want to know what the rules are going to be. On a long-term basis, we need to have a discussion between the state, the city, the industry and all interested parties on what the overall model is going to be in the future. I’m always disappointed when it only comes up during budget season because you can almost guarantee the wrong decisions will be made. Right now, I haven’t heard a solution that makes me believe there’s something out there that works for everybody.

By Roger Gros   Tue, Jul 06, 2010

Every time I go to Macau, there’s something there that amazes me and it ends up skewing my view of Asian gaming once again.

Last month, I traveled to the Chinese SAR for G2E Asia, one of the most exciting trade shows in the casino industry. I meet many interesting people for the first time and renew acquaintances with some of the “expats” who are running the hotels in Macau.

On this trip, the atmosphere was totally different from last year’s G2E Asia, when operators were concerned about a months-long downturn that had impacted revenues through the first half of 2009. Just as the show wrapped up last year, however, things began to turn around, and the town is on a winning streak not seen since the early days of Atlantic City.

Since last June, monthly revenue increases have averaged well over 50 percent, and for May and June of this year, revenues have nearly doubled over 2009. And as China begins to consider cutting loose the reminibi (the Chinese monetary unit) from its traditional ties to the U.S. dollar, the attraction (and profitability) of the Macau casinos could increase even more. So it’s no wonder that the U.S. operators there—Las Vegas Sands, MGM Resorts and Wynn Resorts—are very happy to have the coveted licenses. Harrah’s Entertainment, meanwhile, is like a kid at the candy store window, looking in at what could have been.    

But there were some disturbing elements of my trip this time. Each time I’m there, I’m reminded of the proliferation of prostitution. And since prostitution is legal in Macau (making your living from prostitution is not legal, making me wonder how they walk that fine line), I don’t have a problem with it. Clearly, anyone who has perused a “menu” of options available at any of the spas in Macau knows that sex is a commodity available to all.

What concerns me, however, is the open solicitation going on directly on the casino floor. Males walking through the casinos were offered various services whether they wanted them or not. I was even approached on the elevator up to my room.

While I was in Macau, I had a few discussions with Asians and expats about my reaction. Most of them told me that I was being too critical—that there was a demand for prostitution and the girls in the casino were just filling that demand. I was told that Western culture isn’t Asian culture, and that I was too uptight about it. I should be more understanding, and live and let live.

OK, maybe I was too sensitive. After all, with all the fuss about the supposed organized-crime connections to the VIP operators, perhaps I was eyeing the Macau casinos with too discriminating an eye. After all, I’m from New Jersey, where gaming is squeaky clean and hookers are never allowed on the casino floor (and if you believe that, I’ve got a bridge in Brooklyn I can sell you).

When I got back to Vegas, I was talking to one of my old-timer friends (I’ve got more and more of them as I become an old-timer myself). He explained that the connection of gaming with sex no doubt goes back millennia, but certainly to the early days of Las Vegas. The Strip in those days was a hotbed of gambling and sex, he says (like it’s not today with “gentlemen’s clubs” lining all roads leading to the Strip). Any gambler only needed to stroll into the lounge to have his choice of girls, he told me.

Maybe I want the girls in Macau to be a little more subtle. Maybe I want to see the Macau police roust a few of them to keep my Western sensibilities intact.

But then when I blogged about this on our LinkedIn website, I was informed that Singapore has specific regulations banning solicitation from the casino floors and holding the casino operator responsible for any lapse in oversight. And since Singapore is about to become the gold standard in Asian government oversight, maybe I’m right when this sort of thing surprises me in Macau. Maybe Macau is the exception and not the rule. Maybe regulators in Macau are going to have to take a greater role in their oversight of what goes on directly on the casino floor (and off it as pertains to the VIP operators). 

But maybe not. Perhaps Macau will always be different and will always be sort of the “Wild West” of Asian gaming. I know that the operators hope it won’t change anytime soon—especially if that means a change in the SAR’s explosive growth.