By Frank Legato   Mon, Aug 02, 2010

"Resurgence” is a word that’s thrown around a lot in our business, sometimes recklessly. Some feel that’s exactly what’s happening in the table game sector of the industry. For others, the “resurgence” in table games can be pinpointed to new jurisdictions discovering freshly legalized blackjack and craps.

For operators and suppliers alike, though, something is happening in the pit. If table revenues are not up everywhere, there at least is a universally recognized opportunity to grow revenues, if the right emerging market segments are tapped.

For the most part, those segments are dominated by younger players and the always-reliable Asian customer. However, there also is a concerted effort among suppliers and many operators to add table game offerings that appeal to a broad spectrum of customers. Combined with the new jurisdictions, this has contributed to an attitude toward the pit that gives hope that the decades-old dominance of the slot machine on the casino floor could at least be starting to wane.

While significant table game revenue jumps have not yet happened for local-casino giant Station Casinos in Las Vegas, one of the operator’s table game executives says it may only be a matter of time. “Table games are making a comeback,” says Bart Pestrichello, vice president of casino operations at Station’s Red Rock Resort. “The challenge has been that the comeback has been overshadowed by a weak economy and an increase in supply.”

Melissa Price, vice president of gaming for Harrah’s Entertainment, says the world’s largest casino operator also has seen growth in table games—particularly poker. “Harrah’s continues to see growth in both live poker and poker-derivative table games,” Price says. “Our 41st annual World Series of Poker tournament just finished at the Rio in Las Vegas, and each year this tournament is bigger and more spectacular.”

One thing is certain: The table game death watch appears to be over, and the pit has come through in remarkable health. Ten years ago, idle dealers and surging slot play meant typical removal of tables to make more room for the electronic money-makers. As the pit sunk to 30 percent of gaming revenue or less in some markets, tables came to be viewed by many as an archaic offering better suited to a rapidly disappearing World War II-era customer than to anything resembling a game for the future.

That attitude has disappeared, as many younger players—drawn in first by the poker craze, and later by films such as 21 and by a variety of new specialty poker games—have shown a preference for the social interaction of the pit over the comparative solitude of slot play. More recently, new interest has been generated by a variety of side bets and slot-like progressive jackpots appearing on table games.

Youth Is Served
Price at Harrah’s says the poker growth definitely “has much to do with the younger demographic; poker is appealing to many,  but particularly to the 21-30-year-old age group.”

Pestrichello, as well, credits the overall health of the pit partially to the appeal of poker and poker-related specialty games like pai gow poker and Three Card Poker to a younger audience. “Having spent four years at the Hard Rock in Las Vegas before returning to Station Casinos, I learned that the younger demographic is definitely one of the reasons table games are making a mild comeback,” he says. “My experience has been that the younger demographic plays table games to have more interaction with other players, as men and women are interested in being social at the gaming tables to meet one another.”

This view has not been prevalent across the industry. Peter Klugsberger, executive director of table games at Ontario’s Great Blue Heron Casino, says that at least in his market, the youth factor is “more hype than reality.” “I cannot see that a younger demographic is replacing the droves of hard-core table game players who are slowly retiring from being our customers,” he says.

Dean Macomber, president of the industry consulting group Macomber International and a veteran of several top-level executive posts in casino operations, adds that those under age 30 and particularly under 25 have a “total gaming spend that is quite a bit less than the other demographic strata above them,” and a presence more felt in the clubs and hot bars than on the casino floor.

Still, while younger customers may not be “replacing” older table game players, many feel that 30-and-under players are definitely augmenting that tried-and-true baby-boomer group at the tables, and that many of the new table games and new side-bet versions of traditional games are drawing those players in, creating a profitable new market segment.  

“A younger demographic is definitely helpful for any resurgence of table games,” comments Roger Snow, executive vice president of table game supplier Shuffle Master, Inc. “From what I have seen, younger players like the aggressive betting action that is provided by table games and poker. Plus, younger players seem a bit more willing to try something new, like a table game on field trial.”

“Younger players who grew up in the personal computer age love the interaction with others on the table games, compared to the ‘man vs. machine, push the button and watch the video screen’ aspect of slot machines,” adds Robert Saucier, CEO of Galaxy Gaming, a company that produces progressive jackpot systems for table games and traditional games with new types of side bets. Saucier notes that the Hard Rock in Las Vegas—a casino designed for a young customer—tripled the number of table games on its casino floor during its first decade of operations. At Hard Rock, he says, “I personally witnessed table games filled to capacity while rows of slot machines remained vacant, even on the weekends.”

Even those who disagree with the concept that younger players like social interaction on table games concede that younger players have made their presence known.

“The younger generation grew up with an Xbox or PlayStation controller in their hand,” comments Earle Hall, president and CEO of DEQ Systems, Inc., a Canadian company that provides several side-bet systems for table games. “The ‘social interaction’ is very solitary when you’re a video game player. It is an artificial environment, or it is online against people you don’t know. When you sit down at blackjack or poker, the only social interaction consists of pointed comments between players. Not a lot of people are there for a friendly, beer-drinking event; they’re there to make money.”

Hall says it is this factor of table games, not the social factor, that has brought young players to the pit. “A lot of 25-year-olds are figuring out they can make extra cash on weekends playing poker,” he says. “Those same guys have been reading all the math books on 21, and these guys are actually outstanding players.”

Youth movement or not, expanding options for table game play, along with new jurisdictions, has been keeping both table game suppliers and casino managers busier than they ever were a decade ago.

Saucier says casino operators are beginning to realize that the pit is essential to the casino atmosphere. “Table games add life to the gaming floor,” he says, “and without them included in the mix, the ‘something is missing’ syndrome occurs. In my opinion, that is why we are seeing more jurisdictions adding table games. Without them, gaming establishments are often thought of merely as slot joints.”

New Games, New Business
In addition to new jurisdictions such as Florida, Pennsylvania, Delaware and West Virginia adding table games to formerly slot-only casinos, there is ample evidence that table game business is either healthy or growing in many established jurisdictions.

“The growth in poker is spurred more by people’s access to poker on the internet, and their interest in the strategies and social interactions of the game, than by expanded gaming in markets like Pennsylvania or Delaware,” says Price of Harrah’s.

“I think the table game resurgence began a few years ago, and if anything, it is accelerating,” says Shuffle Master’s Snow. “And this is the case in established markets as well as the new ones. Look at Macau and Singapore—they are two of the most lucrative casino markets in the world, and they subsist almost entirely on table-games revenue. In the U.S., Pennsylvania and Delaware just switched from slots-only casinos to full Las Vegas-style gambling. I think this all serves as evidence of the resurgence of table games.”

Snow adds that new jurisdictions have only been part of the story in the increased business. “Don’t get me wrong: Pennsylvania and Delaware were big scores for us,” he says, “and from the rumblings we hear from Massachusetts and other states, the stars may align once again. But from what I have seen in the established markets, table games are increasing in popularity.”

Officials of TCS John Huxley, one of the world’s leading table game suppliers, also say business has been brisk. “For the last three years, we have experienced growth year-on-year in volume of tables manufactured for all our trading areas,” says Roger Hawkins, Huxley’s CEO for the Americas. “With new states opening up in the U.S., we have seen significant growth, along with replacement tables into existing properties. Many of these include incremental tables to meet increasing player demand.”

One aspect of the business that has brought in new players and increased revenue for casinos is an increasing number of specialty games, side bets and slot-style progressives being added to traditional table games. Shuffle Master was a pioneer in this area with games like Three Card Poker, Four Card Poker, Let It Ride and Caribbean Stud, the latter of which the company purchased from the former Progressive Gaming International.

According to Snow, business for these games has never been better. “Through our first two fiscal quarters, we are on pace to set the single-year install record for proprietary table games,” he says. “Even if Singapore hadn’t opened, we would still have been on pace to do it. The big needle-movers for us this year have been progressive upgrades to games like Three Card Poker and Fortune Pai Gow, as well as premium games like Ultimate Texas Hold’em, Blackjack Switch and Mississippi Stud.”

According to Hawkins, who says TCS John Huxley is marketing several new table game enhancements—such as its new Double Action Roulette, which delivers two winning numbers on a single spin—one key to the success of new table enhancements is that they make the games more interactive.

“The introduction of new table games is being driven by the new, younger demographic visiting casinos, which is more technologically astute,” Hawkins says. “These new players, who are familiar with everyday devices such as the web, iPhones and video consoles, migrate much easier to new products, and demand something more interactive.”

Macomber agrees. “Any number of progressives, side-betting, and new games have been introduced on the table game side of our business,” he says. “The side bets extract more money from existing players while, perhaps, the new games might be attracting new players.”

There certainly is no shortage of ideas on the supplier side to support the need for new experiences at the tables. For instance, last month, Galaxy Gaming launched the Inter-Casino Jackpot Network, a wide-area progressive system designed to link tables at multiple sites to a single jackpot, triggered by a hand on one of the tables. “We combine the power of table games from multiple casinos into a common jackpot network, capable of producing and sustaining even larger, life-altering jackpots,” says Saucier.

Galaxy also has had much success with its Bonus Jackpot System, a flexible link that operators can use to link tables within one casino; and has been introducing a steady stream of new games, including Deuces Wild and Triple Attack Blackjack, versions of poker and blackjack that offer additional betting and side-bet opportunities. Later this year, the company will launch Kokomo Stud, another specialty poker game.

“What we have done is to give the player aggressive betting structures on the primary wager, and various proposition bets that range from high hit frequency/lower odds, with a low house edge; to low hit frequency/higher odds with a high house edge,” Saucier says. “This is an obvious trend, and I believe we are now at the genesis of a whole new breed of table games that will be based on this formula.

“We also determined the importance of having a low house edge on the primary game, with the ability to make it up with additional, higher-edge proposition wagers.”

Galaxy also is known for side bets like Lucky Ladies, which pays if the player’s dealt blackjack hand is a 20, from 4-1 for any 20 to 125-1 for matching Queens of Hearts in a multi-deck shoe—the “Lucky Ladies.”

DEQ also has several side-bet products, the latest being EZ Baccarat, a side bet that replaces the paying of commission on the banker’s hand. Called the Dragon 7 wager, it pays 40-1 on banker bets if the banker’s hand totals seven. Hall says it’s been successful at speeding up the play of baccarat and, thus, increasing the game’s earnings.

Part of the success of EZ Baccarat, Hall says, parallels an important factor in the burgeoning table game business—the cultural factor. He says casinos and suppliers are catering more to Asian players, and that is reflected in the new products. “I never thought I would ever, in my career, see a casino take a blackjack table off the floor and replace it with a baccarat table,” he says, “but I’ve seen that in Southern California, and in Atlantic City. So, there is a resurgence in tables that is culture-based, and the makeup of table games on the floor is shifting to reflect that demographic shift.”

Maximized Marketing
Whether promoting the pit to Asian customers or to a younger demographic, targeted marketing to the most valuable customers has been a key to success in the table game arena.

For Klugsberger at Great Blue Heron, that means identifying and catering to high-end Asian customers and to individuals who have shown their loyalty.

“Our table game business has flourished over the past few years, and I believe part of that success is to clearly understand who your paying customers are, and how to serve them better,” Klugsberger says. “We adapted our gaming mix and table setup to our most profitable segments, and reaped the rewards due to increases in frequency and betting behavior. I am a strong proponent of targeting your most valuable customers and working incredibly hard on improving their experience while they are in the casino.

“We put a lot of effort into developing training programs that focus on employee behavior that improves the customer experience. Most of our competitors cut their training expenditures as ‘non-essential;’ we felt we couldn’t afford not to do them.”

Employee training also has played a big part in the way Station Casinos, and Red Rock in particular, has catered to younger players in the pit. According to Pestrichello, dealers have been trained to mix more with the younger demographic. “With a younger player, it is very important for the dealer to have more interaction with players,” he says, “such as high-fives, knuckles, etc.”

In addition to interaction with customers, Pestrichello says marketing of the pit means making sure the games players want are available to them. “At Station Casinos, we provide more games of choice,” he says. “Blackjack is the game people come to Vegas to play; therefore, we offer more at lower limits. We strike a good balance of poker-related games, and we’ve learned that our games need to be more productive by keeping the players entertained as long as we can. This is also accomplished by providing great guest service.”

He adds that offering limits the players can afford has been important to maintaining and growing the table business. “On a Friday or Saturday night, it is OK to have slightly higher limits, but on weekdays, we make sure there are plenty of $5 and $10 games available.” Red Rock, he says, has even purchased software that aids pit supervisors in managing table limits, “assuring we are never priced too high or too low.”

Pricing strategies, targeted marketing, new games and multiplying side bets are all evidence that table games, while maybe never destined to regain the dominant position they once held on the casino floor, are alive and well—and in many places, growing.

They may not be your grandfather’s table games, but they very well could be your grandson’s.

By Roger Gros   Tue, Aug 03, 2010

The preeminent name in table game math is Stanley Ko. To have Ko run the numbers to determine the profitability of any table game is the imprimatur for table-game developers. But Ko has one warning for the independent table game inventor: “You have no chance if you don’t know someone.”

That sentiment is echoed by Derek Webb, maybe the most successful table game inventor, who developed Three Card Poker into one of the most popular games today on the casino floor.

“Unless you have $100,000 that you’re willing to invest and then forget about it, it’s almost impossible to get your game noticed and legal for anything less,” Webb says.

Webb’s game, modeled after the British card game brag, didn’t really burst onto the scene. He spent years pitching the game to casino operators, getting it approved by regulators and teaching it to potential players. Then, he had to endure lawsuits and other legal action in connection with the ownership and promotion of the game.

“Getting a casino executive to agree to test the game is only part of the challenge,” he says. “Most jurisdictions have different rules and regulations surrounding the introduction of a game. The compliance barrier is just one hurdle. Some regulators want to ensure that you have adequate insurance and a good credit rating, although you are not the one who will be offering the game. We agree to indemnify the casino from any legal proceedings, but sometimes that’s just not enough.”

Roger Snow, executive vice president of Shuffle Master, Inc., the market leader in table game development in the industry, says his company is often approached by table game inventors. Often, however, it’s like searching for a needle in a haystack.

“We treat every game submission from a third party as if it were a combination of a bomb threat and a blind date,” Snow says. “We take them seriously and we hope for the best. Of course, most of the time it turns out to be a false alarm and it goes nowhere. Look, there’s a bit of art and science in this field.”

Snow says Shuffle Master has specific parameters when it considers these games.

“We look for games that, first and foremost, are fun to play. Is it relatively easy to understand and does it have any interesting nuances? We tend to market games that are derivatives of blackjack or poker. We have dabbled a few times outside those realms, and it never amounted to anything. Players seem to like blackjack- and poker-based games, so that’s what we like to see from outsiders.”

Webb agrees that unless the game is a derivative of an existing game, it has virtually no chance.

“It’s like shelf space in a supermarket,” he explains. “Why would an operator take an existing game that is performing well off the floor in favor of a new game with questionable profitability? And it doesn’t just have to do better than an existing game, it has to do better than other novelty games as well.”

Webb says getting a test in a major market is a milestone, but not the holy grail for inventors.

“Three Card Poker failed in its first few tests, in New Jersey and Nevada,” he says. “It wasn’t until we did the test in Mississippi that it really took off and began to be noticed by other operators.”

Snow says it’s not necessary for an inventor to have anything more than a simple idea for a game for Shuffle Master to be interested.

“Sometimes the germ of an idea is enough for us to make a deal,” he says. “That way, I can sit down with the developer, the way I guess a record producer would sit down with a singer, and try to make something that has commercial appeal. However, it’s likely that we would offer more money for a completed game than for one that is just a loose concept.”

Webb says that rarely are inventors satisfied with deals to lease their games to any table game company.

“First of all,” he says, “they often have a greatly inflated idea of what their game is worth. Then they are often dissatisfied with the efforts put in by the company to market the game, forgetting the company has many other games it’s pitching. Then, if they’ve failed to patent the game adequately, they may get into a legal battle with the company.”

Snow says there are definite advantages to working with Shuffle Master.

“The most obvious advantage we have is in the area of sales,” he says. “We have salespeople all around the world with contacts at every casino. It’s relatively easy for us to call up a casino and say we’re coming over to show a new game. It’s not quite that easy for someone working on his own to do that. But we can also present the game in the best light possible. We have graphic artists on staff who design logos and layouts. We have player instruction cards that are high quality. We have done so many games over the years that we know, from a presentation standpoint, what works and what doesn’t.”

The biggest problem, according to both Snow and Webb, is that there is not a hunger for new table games from casino operators.

“In the 10 years I have been at Shuffle Master,” Snow says, “not once did a casino manager call me and say, ‘Hey, do you guys have any new games? I’m dying to put something new on my floor.’

“Look at history. Many of the most successful games in our industry met resistance from the beginning. And I don’t blame these casino guys. New games are 99 percent likely to fail; why take a chance and be first?”

Webb says the only secret is hard work.

“If you’re lucky enough to get your game on the floor,” he says, “you have to dedicate a lot of time to dealer training and customer training, which is often dealer training too, because you can tell the player what the payoff is and give those kinds of hints to inexperienced dealers of your game.”

But even if the game gets on the floor, it has to stay on the floor, says Snow.

“If your game does not outperform the lowest-earning game on the floor, you are toast,” he says. “Your game has to earn its keep, and to do that, it has to build a strong and dedicated following. Keep in mind that you don’t have much time. Most casinos will give a new game 30 or 60 days to prove itself. It’s like QVC or the Home Shopping Network—if your product isn’t an immediate success, you won’t be around too long.”

By Alex Calderone, Terence M. Dunleavy and Randall A. Fine   Mon, Aug 02, 2010

No one ever thought the gaming industry would run into trouble. The restrictions on commercial licenses to a dozen states and the limitations in many others to tribal lands led to almost 100 years of consistent revenue growth, in good times or bad. It seemed as though the demand for gaming would forever outstrip supply, and whenever anyone believes that the good times can never come to an end, unexpected challenges can ensue.

This unbridled optimism about gaming’s future led to unprecedented levels of debt being raised in both commercial and tribal gaming. Yet as the recession hit the industry and for the first time ever revenues failed to meet expectations, lenders and casino owners were forced to work, either collaboratively or legally, to restructure and resolve financial issues. As these issues make their way to Indian Country, it has become clear that, as in many aspects of casino operations, the methods used by commercial casinos are different than those for tribal casinos.

In this article, three disparate experts—a financial consultant who specializes in casino restructurings, a gaming operator who has improved the operating performance of dozens of distressed properties, and an attorney who specializes in tribal gaming law—have come together to lay out a comprehensive guide to what makes tribal restructurings different, and a game plan for how to proceed.

The Courts Are Not the Answer
Absent compliance with tribal and federal regulatory procedures at the “front end” of the transaction, creditors of troubled tribal casinos and other tribal entities may lack the ability to work out the loan or investment at the “back end” of the transaction. For the same reason, it is unclear how, if at all, non-tribal (i.e., federal and state) laws apply to tribal entities.

This leaves creditors of troubled tribal casinos in uncharted territory, with limited recourse, and may affect the ability of tribal entities to secure financing for future projects.

In a typical commercial transaction, secured creditors of a defaulting or troubled entity may seek recourse in a number of ways, including foreclosure on the defaulting entity’s assets which are subject to such creditor’s security interests; or placing the defaulting entity into a receivership or bankruptcy.

The sovereign status of tribal nations and their lands limits the ability of non-tribal creditors to recover from troubled tribal casinos. As a sovereign nation, a tribal entity (including tribal casinos) may only be sued where Congress has authorized the suit or such tribal entity has waived its immunity.

There also exists much uncertainty as to how, if at all, federal bankruptcy laws apply to tribal entities. No tribal entity has tested the application of federal bankruptcy laws. However, many legal experts believe that tribal entities, as sovereign nations, would likely be precluded from seeking relief under the federal bankruptcy laws.

Tribal land and the tribal businesses conducted on them, including tribal casinos, may not be sold, taxed or encumbered. Indeed, federal and tribal regulations require that tribal entities retain the sole proprietary interest in the tribal casino. As a result, tribal casinos cannot agree to a debt-for-equity swap, and cannot raise cash by selling off tribal land or assets to repay creditors. For the same reason, creditors are prohibited from taking over casino operations or foreclosing on tribal land or tribal assets.

The recourse available to creditors of troubled tribal casinos is also limited by provisions of the Indian Gaming Regulatory Act. For example, creditors of troubled tribal casinos are prohibited from retaining all distributions from tribal casino operations upon a default because the IGRA requires that at least a portion of the cash flow from gaming operations be used to support tribal government operations.

Similarly, creditors of troubled tribal casinos must be cautious in taking any actions which may amount to “management” of such casinos, even if such actions are permitted by agreement of parties, unless such agreement has been approved by the chairman of the National Indian Gaming Commission.

Creditors seeking to “manage” operations of a tribal casino, upon default or otherwise, may ultimately find themselves with no remedies if their agreements with the tribe are subsequently determined to be unapproved management contracts.

The difficulties and limitations encountered by lenders and other creditors of troubled tribal casinos are highlighted by the United States District Court for the Western District of Wisconsin’s recent opinion in Wells Fargo Bank, N.A. v. Lake of the Torches Economic Development Corporation.

In January 2008, the casino issued $50 million in bonds and entered into a trust indenture with its lenders. While the documents were submitted to the NIGC for approval prior to their execution, the casino’s counsel issued a letter opining that such documents were neither a “management contract” nor an agreement that is a “collateral agreement” to a management contract. The security provided for the bonds included, among other things, all of the casino’s interest in the “gross revenues” of the property, its equipment, and a variety of other items.

In November 2009, the lenders received a request for money that they considered suspicious, and after allegedly failing to receive a substantive response to its request, the lender said that the principal and interest of the bonds were immediately due. Thereafter, the lender filed a lawsuit and sought the appointment of a receiver.

The District Court denied the motion to appoint a receiver and dismissed the lawsuit on the grounds that the trust indenture was a “management contract” which lacked the required approval of the NICG chairman. The District Court based its determination on regulations which state a “necessary condition for a management contract is that it grant to a party other than the tribe some authority with regard to a gaming operation.”

The District Court determined the trust indenture was a management contract based on provisions that included restrictions on the property’s ability to spend capital, the forced hiring of a “management consultant” if results did not meet expectations, the inability of the tribe to fire senior executives without lender approval, and several other issues.

Additionally, the District Court determined that it lacked jurisdiction over the casino because, in the absence of a clear waiver, the lawsuit was barred by the tribe’s sovereign immunity. While the trust indenture contained a provision whereby the corporation expressly waived its sovereign immunity with respect to suits to enforce the corporation’s obligations, the District Court found that “even if the waiver provision could be saved, the remainder of the trust indenture is void, so there would be no remaining obligations to enforce under the contract.”

The lenders filed a motion to amend and alter the District Court’s order or, in the alternative, for leave to file an amended complaint. The court rejected the lenders’ arguments that the main purpose of the trust indenture was to obtain repayment of the bonds, not the management of the tribal casino. The District Court concluded that even if the objectionable management provisions could be removed, the remainder of the trust indenture would be null and void because the entire document constituted an unapproved management contract, leaving nothing to enforce. On April 25, Wells Fargo filed notice that it would appeal the court’s decision.

While it is unclear whether other courts will adopt the District Court’s analysis and position or whether it is was unique to that situation, Lake of the Torches presents several issues non-tribal entities should consider prior to entering into financing agreements with tribes and tribal entities.

The threshold lesson is the importance of obtaining pre-approval of the NIGC chairman with respect to any agreements containing provisions which may be potentially construed as providing non-tribal entities with the ability to manage all or a part of tribal gaming operations. In those circumstances in which NIGC approval of financing agreements prior to execution is not possible, it is important to review such agreements to ensure that relevant provisions, including default provisions, do not provide non-tribal entities with the ability to control or manage any aspect of casino operations.

Collaboration Is The Only Path
In the absence of the traditional Chapter 11 path of restructuring—or at least the threat of it leveraged by either side to bring about change—what restructuring options remain for tribes and their lenders?

Some traditional options remain, such as waivers or amendments to existing loan documents (typically in exchange for hefty fees) and debt exchange offers, which enable a company to refinance existing debt on a non-cash basis by offering bondholders the opportunity to exchange existing bonds for newly issued debt. Others don’t, even were both parties willing—because federal and tribal regulations require that tribal entities retain the sole proprietary interest in the tribal casino, solutions such as the sale of existing equity interests to new, well-capitalized operators, or the exchange of debt for equity, are not feasible options for tribal issuers and their creditors.

So what does this mean for distressed tribal gaming enterprises and their creditors who wish to undertake successful financial restructurings and preserve their respective interests and claims?

The answer is simple—a willingness of both parties to align many conflicting and often competing interests and cooperate with one another is paramount to successfully effecting the turnaround. It should be noted that this is in contrast to many commercial casino workout situations, where secured creditors with superior lien rights have the ability to control the restructuring process and may therefore be less inclined to cooperate with existing equity holders that are in violation of important credit agreement covenants.

Improved Results Help Everyone
As the lynchpin of that collaboration, both parties should do everything in their power to quickly and forcefully improve the cash-generating position of the facility. The more cash the facility can generate, the greater the recovery can be for those that have lent money and ultimately the more available to the tribe and its tribal members for socially important purposes.

This accelerated process improvement is most effective when led by someone on the outside, unencumbered by the biases that have come through historical decision-making. In other words, “he who dug the hole can’t fill it back up.” In an ideal world, these individuals or firms would be independent of both the tribe and the lenders, with a simple charter to maximize the profitability of the facility in order to maximize the value of the enterprise.

This adviser—unlike the legal or financial—stays out of the restructuring negotiations, indifferent to the concessions and gains made by financiers and the tribe. It is imperative, as discussed in the first section of this article, that the retention of this adviser, consultant or manager be appropriately vetted and approved through the NIGC.

The adviser needs to scientifically and forensically break the business into its two component parts—cost to operate and revenue generation—and systematically restructure both. On the cost side, many gaming operations were designed around business volume projections that have evaporated during this recession—some were not realistic even in the absence of a downturn. The operations adviser needs to be able to renegotiate purchasing contracts, change product and service offerings, and right-size staffing levels to be more appropriate for the existing economic conditions. With that “fresh eyes” approach, the adviser is almost guaranteed to find extensive opportunity.

But in many cases, no matter how much costs are diminished, revenues must be increased for the facility to return to or improve its profitability. In these instances, the adviser must provide world-class database marketing, promotions analysis, players card re-launch, slot floor analysis and brand marketing to increase the throughput of the facility.

On average, each million dollars of incremental cash flow allows a facility to support $6 million to $8 million in debt, so these improvements can add up quickly.

Restructure for Success
The limitation on legal options and restriction on restructuring tools, coupled with the potential for improvement via turnaround operations, makes it clear there is really only one viable path which leads toward the successful restructuring of a tribal gaming enterprise—keeping the property operating while collaboratively restructuring or reorganizing the existing debt obligations and working vigorously to restore profitability and enhance operating cash flows.

During this process, creditors may insist on bringing in new outside management consultants to help drive increases in profitability, but tribal interests are likely to be aligned when this happens, since the casino is often a primary cash-flow generator for the tribe, providing significant funding for governmental services and in some cases, distributions to tribal members.

The most successful restructuring processes are those which are begun when initial warning signs of financial distress first surface. To this point, both lenders and tribal gaming operators should consider engaging experienced, competent financial, operational and legal professionals early on in the process so that the underlying issues causing financial distress can be identified and addressed immediately, and a clear path to viability can be established.

While engaging outside professionals creates additional expense for all stakeholders, measures can be taken to hold professionals to reasonable budgets, and in some circumstances, “pay for performance” or “success fee” contracts can be implemented to ensure that professional compensation is commensurate with the property’s financial performance.

Finally, a warning—while it is always tempting to bake optimism into any turnaround plan, any restructured debt obligations should be based on realistic projections of the cash flows the asset can generate. Otherwise, the gaming operation may find itself in another workout situation a few years down the road.

By Patrick Roberts   Mon, Aug 02, 2010

In anti-gaming circles, slot machines are often called the “crack cocaine of gambling.” Opponents often cite the captivating features that slots seem to have on players, claiming this “hypnotic state” removes personal responsibility.     
 

What gaming critics fail to understand, however, is that the machines are just that, machines. They are designed to provide entertainment, thrills and value for the players’ gambling investment.

A report issued by the American Gaming Association in conjunction with Responsible Gaming Week in early August demonstrates that machines are simply inanimate objects that are given power far beyond their limited ability to entertain.

The AGA report, “Demystifying Slot Machines and Their Impact in the United States,” was written by David Stewart of Ropes & Gray, with contributions from Kevin Mullally, general counsel and director of government relations for Gaming Laboratories International, and Spectrum Gaming Group’s Michael Pollock. The report lays out the facts about slot machines, from the numbers in the individual states to the revenue they earn.

It reviews the development of slots from three-reel mechanical devices to the multi-line, multi-screen wonders of technology that today fill the casino floor. The AGA report breaks down where the more than 800,000 slots and VLTs scattered across America are located, how they are operated and tested, and who benefits from the revenue derived from the devices.

In a no-nonsense approach, the AGA report breaks down the inner workings of a slot machine—exactly what occurs when the player pushes the button to activate the device. The report explains what and how determinations are made when the computer progression is triggered, and what makes the player a winner.

The average cost of a machine (more than $10,000 apiece) is outlined, along with an explanation of the new technology available today to gaming operators, from themes and concepts to ticket-in/ticket-out (TITO) to players club cards (loyalty programs).

Perhaps the most startling revelation in the report is the fact that, despite the growth in the number of machines over the past decade, the increase in machine spending has been virtually flat. When adjusted for inflation, slot spend per average player only increased a few percentage points between 1992 and 2009. The percentage of Americans who claim to have visited a casino each year between 1993 and 2009 fluctuated only slightly between 25 percent and 35 percent during the period.

The report also delves into the business strategies used when operating slot machines. Operators can choose from many kinds of machines with many kinds of software programs that allow players to win less frequent, higher jackpots (high volatility); or more frequent, smaller jackpots (low volatility). While the low-volatility machines allow the customer to play longer at the individual games, a high-volatility game is generally more entertaining, with dramatic sounds and graphics, and gives players something to enjoy between the less-frequent jackpots.

The structure of machine betting is also explained in the context of business decisions. Should the machine allow different denominations? Should it offer “bonus rounds” where the player can win additional spins or more credits? Should the player be encouraged to bet more credits per line? How many reels and lines should the machine contain?

By laying out these factors, the report explains how and why a casino operator or a lottery provider makes these decisions, and takes away the mystery that often surrounds slot machines.

Regulations play a big role in the report. Players who often fear that a casino operator can simply “flick a switch” to make customers lose can be assured that regulations in this regard prevent that from happening.

The report’s author also cites chapter and verse from regulatory schemes in various jurisdictions to demonstrate that all machines are required to undergo testing in order to assure that they comply with strict standards.

The report also addresses the “near miss” deception, in which a player is given the impression that he just missed winning a jackpot by one reel stop, which in theory encourages him to try again. Most regulatory agencies strictly control that function by stipulating how many times a symbol can appear above or below the payline in the reel map of any game program.

Maybe the most important and timely section of the AGA report addresses the social impact of slot machines, long the inanimate whipping boy for the anti-gaming crusaders.

After first outlining the benefits of casino gaming—jobs, tax revenues, infrastructure improvements and first-class entertainment facilities—the report delves into some of the nebulous objections of critics.

While the American Psychiatric Society recognizes pathological gambling as a medical condition, there are no studies that definitively link slot machines with the disorder. While some cite anecdotal evidence in their arguments, a full-fledged study has never made the connection.

More convincingly, however, charting the growth of slot machines and the instances of pathological gambling over the years demonstrates quite clearly that there is no link between an increase in gaming machines and an increase in the number of pathological gamblers, despite claims by one Australian researcher that more machines simply provide “more holes” into which the problem gambler can fall.

In new gaming jurisdictions, however, researchers have found a slight increase in problem gambling initially, but after a few years and more familiarity, the levels return to the pre-casino rates.

And the “comorbidity”rates—that is, people diagnosed with pathological gambling often have other mental health and behavioral problems—are a factor that makes treating the pathological gambling on its own very difficult. Alcohol and tobacco abuse, as well as drug addictions, are often serious problems that need to be considered along with the gambling problems. And other mental health issues are present more times than not in those afflicted with pathological gambling.

A landmark lawsuit in Quebec pitted some problem gamblers against the government’s gaming provider Loto Quebec. The suit alleged that the electronic gaming machines were the cause of the gambling problems endured by the plaintiffs. While the case was settled out of court for less than 10 percent of the initial claim, the plaintiffs affirmed that the machines were not the cause of their afflictions.

And attempts by some provinces in Canada and Australian states to “slow down” the players who enjoy slot machines have not borne much fruit. Whether it’s establishing maximum betting limits, installing a “time out” feature on the machines, restricting the time on machine, or flashing anti-gambling messages on the machines, players quickly learn to deploy strategies that defeat these efforts or turn to the illegal gaming machine market, which contains none of the protections installed by legal establishments.

So the bottom line, according to the AGA report, is that efforts to protect the 1 percent to 2 percent of the people who may have a problem with gambling are not fair to the vast majority of slot machine patrons who enjoy the activity with little or no negative consequences.

By demonstrating that there is no sleight of hand or trickery involved in the slot machine business, the AGA report has effectively removed much of the criticism from the arsenal of the anti-gaming elite. To quote from the report’s penultimate paragraph:

“Slot machines bring fun and excitement to a large number of Americans every day. They are designed to entertain and are regulated and tested throughout their lifespan to ensure fairness for players. These machines also have been the engine behind the growth of an industry that contributes jobs, economic development and substantial tax dollars to gaming states and communities. And, while there are those who cannot gamble responsibly, scientific evidence suggests no special link between slot machines and pathological gambling.”

By Rich Geller   Mon, Aug 02, 2010

The Australian government’s report on gambling is out, and that’s not good news for the country’s massive club industry.

The 2010 Productivity Commission Inquiry Report is a huge, two-volume, 1,110-page report on gambling created by the Australian government’s all too aptly/ironically named Productivity Commission. The finished version was released to the public at the end of June. The work, which began in November 2008 and was completed in February, is an update on the original 1999 report on gambling.

The sheer amount of information presented is as comprehensive as one might expect. However, the Australian clubs industry, which is the nation’s largest operator of electronic gaming machines—“pokies” to Australians, “slots” to others—disputes the accuracy of many of the facts and figures cited by the commission. It is perhaps no surprise to learn that the impact of the majority of the report’s recommended changes would be felt most by the clubs.

In its information-gathering phase, the commission received a total of 421 public submissions, plus a number of confidential submissions containing either personal experiences or material considered commercially sensitive. A broad range of individuals, organizations and companies contributed their input, which enabled commission members to get an idea of the key issues involved.

Following release of a draft report in October 2009, public hearings to discuss the work-in-progress were held in cities around the country. Even the government’s Youth Forum website hosted a “gambling ideas board” which resulted in its own report being submitted to the Commission.

Gaming is big in Australia. For fiscal year 2008-09, revenue from gaming was over A$19 billion—US$16.5 billion at today’s exchange rates. There were 13 full casinos, 5,700 clubs, pubs and hotels with electronic gaming machines, 4,500 betting points and 4,700 lottery outlets.

Electronic gaming machines—EGMs—produce the largest share of gaming revenue.  A total of 198,300 EGMs were in operation in 2009, almost half of them in the state of New South Wales. Casino slots contributed about A$1.4 billion in revenue, but EGMs in non-casino venues accounted for A$10.5 billion. Average revenue produced per machine overall was A$59,700.   

Gambling is regulated per state, and state taxes from all gambling totalled A$5 billion in 2008-09. That was an average of 10 percent of all state tax revenue collected in the period. In Victoria, gambling provided 13 percent of all tax collected. In Western Australia, which has only 1,750 EGMs, gambling taxes were only 4 percent of the total tax revenue collected. It is the states’ dependence on gambling that makes the issue so difficult, in light of the issue of problem gambling—which is the primary focus of the report.

The commission report claims that the risks associated with playing EGMs are higher than with other forms of gambling. EGMs account for 62 percent of the total gaming expenditure in Australia, compared with 15 percent for sports and horse-race wagering and 7 percent for table games. The risks are said to increase significantly with the frequency of play, and the commission estimates that 15 percent of those who play EGMs at least weekly are problem gamblers. Another 15 percent of EGM players are classified as being at “moderate risk.”

The report blames EGMs for 75 percent to 80 percent of all problem gamblers and says that the machines pose “significant problems” for consumers in general, partly because they are so accessible. Those playing at least once a week are estimated to spend on average between A$7,000 and A$8,000 per year. So-called “conditioning effects” that encourage the player to continue with a session are created by the random and intermittent payouts and rapid repetition of games.

Additionally, the true price of playing EGMs is said to be not evident, and the fact that machines do not issue receipts adds to the tendency for players to underestimate their spend. As a case in point, when the Australian Bureau of Statistics asked people to estimate their EGM losses, the total added up to about 3 percent of the actual amount.

Subjective Perception
In fact, it is just this kind of subjective perception, combined with a wide variety of methodologies in use, that leads ClubsAustralia CEO Anthony Ball to question the commission’s findings.

“The report definitely overplays the prevalence rates of problem gambling,” says Ball, who heads the industry association. “In particular, the commission’s finding that around 40 percent of gaming machine revenue comes from problem gamblers just does not add up. The report unfortunately relied on gamblers’ recollection of spend, analyzed a limited number of problem gamblers and applied Victorian state data nationally, which completely undermined its findings on problem gambling.”

To determine who is and isn’t a problem gambler, the commission reports that most modern surveys employ the Canadian Problem Gambling Index, which assesses risks based on the frequency and breadth of the problems experienced by gamblers. The respondents are asked to rate the frequency with which they experienced nine specific behaviors or attitudes in the course of the past year.

But such a method begs the question: If gamblers can only recall losing 3 percent of the money they actually lost, something easily quantifiable, how confident can a researcher be when it comes to responses to questions like “Have you bet more than you could really afford to lose?” or “Has gambling caused you any health problems, including stress or anxiety?”

In any event, the commission’s report presents a number of detailed recommendations, particularly for “harm minimization measures” specifically for the EGM sector. The report is realistic in its suggestions, pointing out that while some measures lend themselves to easy implementation at relatively low cost, others will require cooperation and coordination among jurisdictions and a lengthy timeline due to costs and technological considerations.

The upgrading of communications protocols is one area that will require more time. At present in Australia, there are six different protocols in operation. Over the next six years, the report recommends, each jurisdiction should upgrade its monitoring systems to implement two-way communications capacity. The report lays out a 10-year timeline for full changeover to the new technology.

Another area of concern is easy access to cash inside the gaming venue. The report admits that causality is hard to prove, but claims that problem gamblers use ATMs and other immediate cash devices far more than recreational players, and even says that problem gamblers would prefer to see ATMs banned from the location. At least, the report says, cash withdrawals at such dispensers should be limited to A$250.

One of the key recommendations for harm minimization is to give players the ability to “pre-commit” to an amount they are willing to spend or the duration of a gaming session. During one trial in South Australia, 2 percent of a venue’s loyalty card holders participated, making extensive use of pre-commitment options such as time and spend.

Although not a full pre-commitment system, spending by patrons with a sufficiently long history of playing showed a 25 percent reduction in daily turnover from the three months before the trial to the period after. The six highest spenders in the pre-trial period, who accounted for 40 percent of total turnover among the 94 people in the sample, spent 50 percent less during the trial.

One of the more extreme recommendations from the commission is to limit the size of the stake to A$1 per game, and the amount that can be loaded into a machine to A$20. The report states that “the maximum bet needs to be low enough to constrain the spend rate of problem gamblers, but not so low as to adversely affect recreational gamblers.” If an EGM returns 90 percent, given a game cycle of 5.5 seconds, the report concludes that reducing the maximum stake from A$10 to A$1 will lower the cost per hour of play from A$654 to A$65. Ball is less sanguine about this recommendation.

“Our research indicates that if these suggested changes were to take effect, we would see a 30 percent downturn in revenue for clubs, which would devastate the clubs industry, as clubs would not have the revenue to build upon and maintain our impressive membership levels,” he says. “In New South Wales, our biggest state, such a decline would see the loss of 11,500 jobs and A$2 billion in revenue per year in the short term. It is debatable as to how much casinos would gain if the club gaming model was impacted by government legislation, but clearly, people could turn to other entertainment options in the absence of a strong club industry.”

The government has already come out against the report’s recommendation to liberalize the online gaming industry. However, that point of view was announced before the new prime minister, Julia Gillard, replaced party cohort Kevin Rudd in late June.

From the clubs industry viewpoint, the ascent of Gillard is seen as a plus. Says Ball, “The new prime minister, unlike the previous one, has visited many clubs and has regularly expressed her strong support for the role clubs play within the community. She has given no indication that she would seek to politicize the issue of problem gambling.”

With a new parliamentary election scheduled for August 21, Gillard’s Labour Party is expected to hold onto the government, something that seemed out of the question until she was named to replace the unpopular Rudd. Ball does not think she will be hurt by her supposed friendliness toward clubs, but is not overly concerned whichever way things turn out.

“I am of the belief problem gambling will not be an issue at the upcoming election,” says Ball. “Traditionally, Australian elections are contested on issues like education, health and the economy. Given the support for clubs from both major political parties, we also do not anticipate any change in the current policy towards club gaming at the national level.”

By GGB Staff   Mon, Aug 02, 2010

Slot manufacturer and operator American Gaming Systems has appointed former Alliance Gaming CEO Robert L. Miodunski its chairman, as well as interim president and CEO.

Miodunski led Alliance—the current Bally Technologies—as its Bally slot and system brand was rejuvenated by through acquisition of the former Sierra Design Group and development of what is now the Alpha Elite platform. He left Bally after accounting problems had led to incorrect reporting of earnings results, but is widely recognized for guiding the world’s oldest slot manufacturer through one of the most remarkable turnarounds in corporate history.

Miodunski reportedly was lured out of retirement by San Francisco-based Alpine Investors, which has stated its intent to make AGS a more influential player in the gaming equipment market.

The manufacturer’s current portfolio of products includes Class III and Class II slots, Class III and Class II server-based gaming and wide-area progressives, most with an emphasis on locals play. AGS is a leader in the Class II space, providing video machines to tribal markets.

“Alpine has decided to put strong financial backing behind and specific emphasis on its investment in AGS,” said Graham Weaver, president of Alpine Investors, “and Bob Miodunski delivers the credibility, the leadership and the motivation we need to take AGS to another level.”

“The opportunity to take a profitable and growing technology company and push it into the mainstream of gaming suppliers was simply too good to pass up,” said Miodunski, who has focused on real estate development since departing from the gaming industry in 2004.

By GGB Staff   Mon, Aug 02, 2010

Representatives from across the gaming industry hit the links to support research on gambling disorders and responsible gaming education at the recent 12th annual AGEM/AGA Golf Classic presented by JCM Global. The event, sponsored by the Association of Gaming Equipment Manufacturers and the American Gaming Association, raised $100,000 for the National Center for Responsible Gaming, the only national non-profit organization dedicated to funding research on gambling disorders and increasing awareness about responsible gaming.

“For nearly 15 years, the NCRG has been funding independent research in the field of gambling disorders and advancing public awareness about responsible gaming. We are grateful for the industry’s lasting commitment to addressing these critical issues and thankful for the ongoing generous support of the Golf Classic’s hosts, sponsors and participants to help continue our work in this field,” said Glenn Christenson, chairman of the NCRG.

Including the funds raised this year, the event has raised nearly $850,000 for the NCRG in its 12-year history. Organizers soon will launch a new “Drive for $1 Million” campaign with the goal of bringing the overall fund-raising total for the tournament to $1 million.

“The industry has a strong reputation for rallying around the NCRG and supporting the important work that it carries out,” said Frank J. Fahrenkopf, Jr., president and CEO of the American Gaming Association. “We have a lot of exciting things planned as part of the ‘Drive for $1 Million,’ effort, and I’m confident that the industry will come through as it always has in its support of this event.”

By Caitlin McGarry   Mon, Aug 02, 2010

Product: CashCode One
Manufacturer: Crane Payment Solutions

Canadian-based Crane Payment Solutions manufactures the CashCode brand of high-security banknote validators, including the widely acclaimed CashCode One model for the gaming, AWP and VLT markets. 

The CashCode One is a unique validator that can handle any currency, protocol and voltage, all encompassed in one unit. Unique to CashCode are the sophisticated sensors and algorithms combined with true self-centering guides. These intelligent sensors detect banknote densities, the legitimacy of security threads, verification of polymer and paper currency and any applicable watermarks inherent to a banknote’s paper design. The self-centering guides align banknotes perfectly even when inserted at an angle, to assure the notes are ready for optimum validation.

Upgrades are easy with the BlueChip smart-stick flash memory. CashCode One does not require any manual calibrating or tuning after updates are done; these are completed automatically upon reset. As casinos continue to move toward server-based gaming, automatic, simplistic upgrade paths will be essential for optimizing operational efficiency.

CashCode One is a product family with several product extensions, such as the oneCheck, oneTrack and the 2500 Note Cashbox.

Introduced at G2E last year, the oneCheck cash management solution provides several performance reports that can be utilized daily. No other system can print on-the-spot performance and firmware statistics for both the printer and validator. The oneCheck allows operators to check cashbox contents on the casino floor with no additional security, and can assist in reducing player dispute times from days to just minutes. This can be very efficient when regulators show up unannounced to check the firmware versions in the slot machines.

The oneTrack RFID solution is designed to eliminate identification issues and make reconciliations quick, simple and accurate. The database is web-based, so it is accessible from anywhere there is internet—which is convenient if owners want to check revenue of several properties even if they are not in the same city.

The 2500 Note Cashbox is designed for high-volume deposit, payment and change machines. This latest product extension provides multiple cashbox capacity alternatives, further enhancing the flexibility of the CashCode One.

For more information about CashCode and Crane Payment Solutions, visit www.craneps.com.

By Frank Legato   Mon, Aug 02, 2010

Manufacturer: Bally Technologies
Platform: Alpha Elite; V32
Format: Five-reel, 50-line video slot
Denominations: .01 through 25.00
Max Bet: 250
Top Award: 25,000 times line bet
Hit Frequency: 82.73%
Theoretical Hold: 4.03%—11.95%

Bally’s latest entry on the popular V32  cabinet—the 32-inch, vertical-monitor format first appearing on video roulette and later on the hit “Fireball”—carries a campy, retro-science fiction theme.

Bally employs a unique reel configuration on the 50-line video slot—five rows of symbols across the five reels, going beyond the standard three-by-five and even the rare four-by-five configurations of current games. The 50-line setup allows for low volatility and a very high hit frequency (nearly 83 percent).

The new game also employs an innovative game-play feature—spins can be initiated by swiping a finger across the touch-screen, instead of hitting the spin button. This causes a small rocket ship to appear which flips the individual reel spots—which spin independently in the direction the player swipes.

The game is available in all denominations but is recommended for a penny or 2-cent setup. The rocket-ship view screen symbol is wild, substituting for all but bonus-trigger symbols.

There are two separate bonus events, called “Rocket Rescue Bonus” and “What Does This Do?”

The Rocket Rescue bonus is triggered by “Rocket Pack” symbols scattered on the middle reels. A “holding cell” containing eight prisoners appears on the screen. The object is to release at least five of the prisoners by touching the doors to the cell. Cash flies into each door on the screen after it is touched, revealing a credit award.

One prisoner door has an extra bonus attached that will trigger a third screen, revealing three “Treasure Pods” which hide additional awards. The bonus ends when five prisoners are freed.

“What Does This Do?” is a comical take on a novice (the player) trying to operate a spaceship. An asteroid is sailing through space toward the rocket ship, and the player has to touch controls to activate five weapons to destroy it. Each weapon blast registers a bonus award. If the asteroid still has “energy” after five weapon zaps, a character called “Fang the Ferocious” is sent toward the asteroid in a “Space Yacht” to finish it off—and to reveal a multiplier amount for the bonus award.

By GGB Staff   Mon, Aug 02, 2010

Financial troubles continue for Connecticut’s Mashantucket Pequot tribe, owner of the Foxwoods Resort Casino, as the casino missed a deadline last month to repay a $700 million line of credit.

The line of credit, from a lender group headed by Bank of America Corporation and its Merrill Lynch & Company subsidiary, was most recently used to complete work on the MGM Grand at Foxwoods annex, which opened in May 2008. It is part of around $2 billion in total debt that the tribe is attempting to restructure.

“The tribal council remains committed to reaching a consensual agreement with its lenders,” tribal spokesman William Satti told the Norwich Bulletin.

There was no formal annnouncement as of press time that another deadline extension is being approved by the bank consortium. University of Massachusetts gaming analyst Clyde Barrow told the Bulletin the tribe may have to shut down large portions of the Foxwoods complex to pay down some of the debt.

Meanwhile, members of the tribe have learned that their monthly share of Foxwoods Resort Casino revenue will be eliminated at the end of 2010.

In a July 1 letter to members cited by the New London Day, the Mashantucket Pequot Tribal Council cited “the financial challenges the tribe has been facing over the past few years” in announcing that “incentive distributions will cease as of December 31.”

Representatives of the tribe told the Day that the final six months of payments are not guaranteed, and depend on the outcome of attempts by the tribe and its lenders to restructure the debt.

For some members, the per-capita payment is their only source of support. In the past, payments have ranged from $90,000 to $120,000 a year on average, a tribal source said last year.

In a letter to tribal members, councilors wrote, “We are personally aware of the confusion, disappointment and frustration that tribal members are experiencing as a result of this change. We will need to stay connected and help each other through the changes that lie ahead.”

The incentive distributions, also known as per-capita or “per cap” payments, are dispensed to members “to help advance their personal health, safety and welfare.” Under the plan, up to 30 percent of Foxwoods’ net gaming revenues can go to tribal members.

The tribe has been negotiating since late last year with the banking syndicate. The so-called “revolver” loan was due in its entirety last month, but the lenders, led by Bank of America/Merrill Lynch, are expected to give the tribe more time to pay.

The tribe’s senior lender, Kien Huat of Malaysia, which helped to bankroll the casino’s original construction, agreed last October to defer action against the tribe for defaulting on its loan. The forbearance agreement has been extended three times since then.

Under the tribe’s revenue-distribution system, all net revenue from Foxwoods (after operating expenses and payments to the state) goes to the tribe’s creditors. The remainder trickles down to tribal government and the per-capita payments.

In its July 1 letter, the council informed members that it will introduce a “Self-Reliance Initiatives Program” with workshops for tribal members and their spouses.

By GGB Staff   Mon, Aug 02, 2010

The author of the bill that would legalize bingo in Brazil is still confident the measure will be discussed and approved by legislators this year, after the current election cycle is up on October 3.

Rep. Regis de Oliveira said discussion and a vote on the bill will most likely be delayed until after elections, owing to pressure from political parties DEM and PSDB. However, according to news sources BNL Magocom and Yogonet, the measure does have the support of the Commission of Constitution, Justice and Citizenship.

The language of the bill reads that bingo halls will pay federal and state taxes amounting to 17 percent of revenues, with 15 percent going to health, 1 percent to culture and 1 percent to investment in sports. Bingo halls also will pay a monthly fee of about $10,940 as part of their obligation to be connected to the central monitoring system, controlled by the tax authorities.

Oliveira predicts the new sector could generate 250,000 jobs.

Opposition to the bill is coming from the author of a very different proposal, one that would ban bingo. Rep. Antonio Carlos Mendes Thame wants more debate on a matter he says is the cause of social problems.

By GGB Staff   Mon, Aug 02, 2010

The recent opening of Marina Bay Sands, the Las Vegas Sands project in Singapore, has revived interest in Japanese gaming. It seems that the country’s legislators want to bring casinos to Japan for the same reason: to generate new tourism. The success of the Singapore casinos has heightened interest in gaming both inside and outside of Japan.

Sources tell Global Gaming Business that members of Japan’s legislature, the Diet, are working on a casino bill that could be ready by the fall, with passage likely in the spring of 2011. The law would need to repeal the current ban on gambling in Japan—even though there are several ways for Japanese to place wagers on horse racing, bicycle racing, motorcycle racing, motorboat racing and also the Toto and Takarakuji lotteries, all of which are operated, exclusively, by public agencies.

And of course, the country’s wildly popular pachinko industry is just a thinly veiled gambling opportunity. Hundreds of thousands of these pinball-style games are located throughout Japan, along with the electronic cousins, pachislots. Players win tokens at the games, and then travel a very short distance to “redemption centers” where they are rewarded with cash and prizes.

The same concept of separating the payout from the game was suggested for casinos, but was shot down by the courts and the National Police. So it’s obvious a legislative road must be traveled.

Shozo Azuma, a pro-gaming lawmaker with the ruling Democratic Party of Japan (DPJ), says there is too much money at stake not to consider gaming.

“For this country to develop energetically in the future, I think the casino industry has potential worth exploring,” he says.

With the ascension of the DPJ to power, a coalition of legislators from that party and the former ruling party, the Liberal Democratic Party (LDP), is the only answer to the passage of a casino law.

“Political parties can’t sponsor this kind of bill, because there will always be division within their own ranks,” said Toru Mihara, a professor at Osaka University of Commerce. “But because we have been through this once when the LDP was in power, and now we’re doing it with the DPJ in power, the chances of a Diet member-sponsored bill being passed are high.”

Mihara, who is advising the government on the bill, says a two-casino plan is currently being considered, with the possibility of more casinos being added later.

In addition to Las Vegas Sands, there is expected to be a land rush when the RFPs are issued. Wynn Resorts is expected to partner with its largest shareholder and Japanese pachinko mogul Kazuo Okada, the owner of Aruze Gaming.

Maruhan Corporation, the nation’s largest operator of pachinko parlors, also is expected to be a bidder. The company is a partner in Macau’s Ponte 16 casino. Konami, the Japanese-owned slot manufacturer, also is expected to be interested. And of course, a wide array of American companies, from Harrah’s Entertainment to Penn National Gaming, are expected to put in bids.

But that might be putting the cart before the horse. There are still some formidable opposition groups lined up against casinos. The Japanese Communist Party has long opposed any gaming. And for strange bedfellows, the New Komeito party, which is backed by a popular Buddhist group, could also oppose any gaming legalization.

Mihara says the key is to dedicate any casino taxes to a popular cause, such as the struggling national pension system, the nenkin, as well as assuring that problem gamblers could find help if necessary.

By GGB Staff   Mon, Aug 02, 2010

Genting Malaysia Berhad has announced it will acquire the U.K. casino operations currently held by fellow Genting Group company Genting Singapore PLC.

The casino brands in question include Crockfords, Maxims, Mint, Colony Club, Palm Beach and Circus. In all, under the umbrella of Genting U.K., the deal involves 44 casinos and the rights to certain trademarks.

The deal, for £340 million in cash, is in line with Genting Malaysia’s strategy to grow its core businesses of leisure, hospitality and entertainment internationally.

In a press release, Lee Choong Yan, president and COO of Genting Malaysia, said, “With our proven track record and decades of experience, we have the expertise to unlock the potential of Genting U.K. and grow the U.K. business.’’

Genting Malaysia currently operates the Genting Highlands Resort. Genting Singapore will continue to operate Resorts World Sentosa.

The acquisition is subject to regulatory approvals from Bank Negara Malaysia and the British Gambling Commission, as well as approval from the company’s non-interested shareholders at an extraordinary general meeting to be convened.

By GGB Staff   Mon, Aug 02, 2010

When it comes to the Aqueduct racino project, in the pipeline for almost a decade, there’s never been a shortage of surprises. The latest came last month when the New York State Lottery Division announced it was tossing out two of three bids to build and run a slot parlor at the historic Queens racetrack. The sole contender now is Malaysian casino company Genting, which owns properties in Singapore and the U.K., recently invested in MGM Mirage in Las Vegas and has invested in Monticello Raceway in New York.

Lottery officials said the disqualified bidders—Pennsylvania-based Penn National and a partnership of urban developer SL Green and Hard Rock—“did not conform with the requirements of the competition.”

Neither Penn National nor SL Green submitted signed memoranda of understanding, lottery officials disclosed, but instead offered altered versions of the MOU that included more favorable terms for the bidders. The announcement listed 19 “non-responsive” points on the SL Green proposal, and eight on Penn National’s. The Albany Times-Union reported that, among other things, SL Green sought to sidestep the $300 million non-refundable licensing fee, payable on selection of a winner.

Even if Genting is not confirmed, the two failed bidders, each of which has vied for the slot rights at Aqueduct in the past, will not be eligible to re-bid. However, two other companies—Delaware North and Empire City—would be able to compete for the franchise if Genting is not chosen. Both companies were involved in the latest bidding process, but did not submit formal offers last month.

While Genting’s proposal “appears to conform with all the requirements of the bid submission process,” its selection to build and run the 4,500-VLT racino is far from assured.

A gaming analyst recently told the Malaysia Star that the move was a risky one for Genting, with a level of investment that might not justify the return.

“We understand the project involves billions of dollars,” said the unnamed analyst. “Genting NY’s chance of winning is at best hopeful.”

This is New York’s fourth attempt since 2001 to select a gambling operator for Aqueduct. Last year, Governor David Paterson picked Delaware North to run the racino, but the company failed to raise a then-$370 million upfront-fee. In June 2009, the governor picked Aqueduct Entertainment Group. That deal collapsed amid charges of bid rigging.

By GGB Staff   Tue, Aug 03, 2010

Greenwood Racing Inc. has named gaming veteran Leonard DeAngelo its new president and CEO. DeAngelo will be the top executive of Greenwood’s central asset, the Parx Casino and Philadelphia Park Racetrack in Bensalem, Pennsylvania.

DeAngelo replaces former CEO Bill Hogwood, who has been named deputy chairman by company Chairman Bob Green. Hogwood will remain active in the development end of the racino’s operations. DeAngelo was most recently senior vice president of operations for Las Vegas Sands Corp. in Macau. Prior to that, he was executive vice president of operations for Penn National Gaming, and served as president of the Atlantic City Hilton and Sands Atlantic City.

“I am delighted to welcome Len DeAngelo as our new CEO and president,” Hogwood said. “The addition of Len to our team gives us great confidence in the company’s current operations and our potential for future growth.”

By GGB Staff   Mon, Aug 02, 2010

Table-game supplier TCS John Huxley announced that it has completed two major orders of gaming equipment and accessories.

In Singapore, the company completed an installation at Genting International’s Resorts World Sentosa casino, including more than 100 Novo Unity II TouchBet roulette terminals.

The Novo Unity product, produced by Novomatic’s Austrian Gaming Industries subsidiary and distributed by Huxley, links up to 250 electronic player-wagering stations to a live roulette game, permitting players to use a touch-screen wagering interface to bet on a game beamed to the terminal via video.

Genting chose the roulette system for the Resorts World property following the success of one of the world’s largest installations of Novo Unity at the operator’s Malaysian property.

For its newly opened table games offering, Delaware Park of Wilmington, Delaware, has added 42 tables from TCS John Huxley. The mix of tables features roulette, blackjack, baccarat, craps and a number of specialty and proprietary games.

By Caitlin McGarry   Mon, Aug 02, 2010

Product: Pro Series cabinets and Alpha 2 platform
Manufacturer: Bally Technologies

Bally Technologies is rolling out its Pro Series upright and slant cabinets, complete with the new Alpha 2 platform. The new cabinets and platform will begin rolling out this month at select test sites around the country, and will comprise the bulk of Bally’s display at G2E in November.

The Pro Series is Bally’s first cabinet upgrade since its Elite Series was released eight years ago. Dan Savage, vice president of marketing for Bally, compares the Pro Series to a new car model complete with enticing bells and whistles guaranteed to attract players.

“The most compelling thing, in my opinion, about the Pro Series cabinet is the way you can interact with the game,” Savage says.

The new Pro Series cabinets include high-definition sound packages designed specifically for casino environments; new lighting and jumbo candles that help players celebrate wins; four display monitors; Bally’s touch-screen iDeck; doors that open vertically to improve serviceability; and, of course, the Alpha 2 platform.

Like technology giant Apple, Bally is striving to create state-of-the-art products, and Savage says the company emphasizes content as well as form. Bally has tasked its game developers to begin designing new games for the advanced Alpha 2 platform, which has more memory than the Elite Series and high-definition video technology that allows for 3D graphics, animation and streaming video on the Pro Series cabinet’s four monitors.

“It gives us a whole new canvas or platform for our game developers to make more compelling games,” Savage says. “We handcuffed our game developers to some extent where they could only make games as good as they could before they ran out of memory.” 

The Pro Series cabinets are being released with 12 banks of games—36 specific titles—to begin with, and can be ordered with OLED decks or Bally’s new configurable iDeck, which was inspired by Apple’s iTouch. Savage says Bally is tasking developers to incorporate the iDeck’s technology into bonus rounds.

“It allows our game developers to utilize deeper, richer play experiences by tying the bonus into the base game and the iDeck,” Savage says. “When you add the light configurations, the jumbo candle and the custom sound package, it’s a much better play experience than we’ve ever had in the marketplace, and we think it’s the best platform for games going forward.”

For more information about the Pro Series cabinets and Alpha 2 platform, visit www.ballytech.com/ProSeries.

By Frank Legato   Mon, Aug 02, 2010

Manufacturer: International Game Technology
Platform: AVP
Format: Three-reel, multi-line video slot
Denominations: Operator-configurable
Max Bet: Operator-configurable
Top Award: Progressive; $10,000 reset
Hit Frequency: Approximately 25%-30%
Theoretical Hold: 2%—10.01%

This is a stylish new version of IGT’s legacy Diamond Jackpots game, employing a unique reel configuration and the AVP video format, configured as a stepper game with the MLD (multi-layer display) technology, which replicates spinning reels using layered video screens.

According to the company, the MLD configuration is meant to allow for easy integration of what is basically a stepper game into the server-based “sbX” system. The base game displays a three-reel configuration using a “3x4x3” setup—three rows of symbols in the outer reels flanking a four-symbol center reel. The program is operator-configurable in several payline formats within this reel setup—operators can configure that game as a three-line, six-line, 18-line or 30-line slot.

The game is designed for what IGT calls “mid-denominational” play. Denomination is operator-configurable, with quarter and dollar denominations recommended.

The slot features a tall top-box tower with seven jackpots displayed—the top three are progressive, with the top prize a multi-site MegaJackpots progressive. When three bonus symbols land, the reels transform into a configuration in which the player spins bonus reels to collect diamonds for a “Diamond Vault.” The bonus jackpot is determined by how many diamonds are collected.

The non-progressive jackpot levels are named for various cuts of diamonds: the “Heart” level for 15 times the total bet; “Pear” for 20 times the bet; “Marquee” for 30 times the bet;  and “Princess” for 50 times the bet. The progressive levels include “Emerald,” resetting at $2,500; “Oval” starting at $10,000; and the top “Brilliant,” hit by a line combination, and also resetting at $10,000.

By GGB Staff   Mon, Aug 02, 2010

The U.S. Supreme Court case Carcieri v. Salazar, which blocked off-reservation land claims by tribes recognized after 1934, offended many in Indian Country. They rushed to Congress to seek legislation that would reverse the decision, and were assured that it would be handled. But a year later nothing has been accomplished and nothing is on the horizon.

“I know that they want something done in this Congress,” said Matthew Thomas, chief sachem of the Narragansett tribe. “But when it’s going to happen is anyone’s guess.”

The “Carcieri fix” would reverse the decision that Narragansetts were not eligible for special federal trust status for a parcel of land they own in Rhode Island because they were not a federally recognized tribe in 1934, when Congress passed the Indian regulatory law encompassing the modern land-trust system.

An informal “Carcieri summit” was held in Washington, D.C. Senator Byron Dorgan (D-North Dakota), chairman of the Senate Indian Affairs Committee, told the group that legislation is ready but no floor action is scheduled in either the Senate or the House.

Leaders of 17 tribal organizations presented Dorgan with a letter warning that if the Carcieri decision “is not addressed immediately, there will be irrevocable damage done to tribal sovereignty, tribal culture and the federal trust responsibility.”

Dorgan said the Supreme Court decision “unfairly created two classes of Indian tribes, those who can take land into trust and those who cannot.”

Rhode Island officials and local representatives oppose the “fix,” which “will allow the Narragansetts to take any land in the state that they or their chosen financial partner wants to buy” and establish enterprises outside the reach of local zoning rules, taxes and other regulations, Joseph S. Larisa Jr., the assistant solicitor who represented Charlestown in the Carcieri case, said.

Many senators have also come out in opposition to the measure, including both Rhode Island senators, Jack Reed and Sheldon Whitehouse.

Reed said the bill would have better prospects “if there were a way to take gambling off the table,” but conceded that supporters of tribal sovereignty would likely not want to limit development on what they would consider Indian land.

By GGB Staff   Mon, Aug 02, 2010

Israeli Tourism Minister Stas Meseznikov is planning to set up a public committee to study the development of a casino resort and conference center for the Red Sea city of Eilat.

According to the Jerusalem Post, Amnon Liberman, spokesman for the tourism minister, said, “The idea is that the casino or casinos won’t stand alone, but will be developed in tandem with a major convention center to be built in the city. The minister believes that the combination will attract large numbers of people who don’t customarily see Eilat as a viable destination.”

Last year, Eilat Mayor Meir Yitzhak Halevi presented a strategic economic vision of the city to Meseznikov. Included were casinos, convention centers, a new boardwalk, retail development, marinas and luxury hotels.

Liberman said the committee will be headed by a retired judge and will look into all aspects of the development, especially legal aspects. When finished, a report will be issued.

Eli Gonen, president of the Israel Hotel Association, said, “I congratulate the minister on his proposal, which I think will do a great deal of good for the city, which is currently facing stiff competition from its neighbors in Egypt and Jordan. However, I urge the minister not to go down the path of a public committee.”

Gonen was himself director-general of the tourism ministry in the late 1990s. At the time, he established a similar committee, which reportedly conducted the background work necessary to introduce casinos.

“If done correctly, there is no limit to the number of tourists that casinos and conference halls can draw,” said Gonen. “If the state figures out how to tax the owners correctly, it can also mean a great contribution to the budget, which can then go to aid citizen welfare.”

Ami Etgar, director-general of the Incoming Tour Operators Association, wants casinos so tourism officials can re-brand Eilat and compete with Aqaba, a Red Sea resort city in Jordan.

“We need to find a way to fill the 11,000 hotel rooms in the city,” said Etgar. He does not want to see Eilat become a gambling center, but believes a measured approach to casinos is one way to promote the economy of the city and the nation.

By GGB Staff   Mon, Aug 02, 2010

The Indian state of Gujarat has removed all references to casino development that appeared in a recently released official document intended as a roadmap to the future.

The document, “Blueprint for Infrastructure  in Gujarat 2020 (BIG),” lays out 11 key strategies for the state that will guide infrastructure development of some $250 billion. Among the 11 strategies is the goal of making Gujarat a global tourist destination.

The plan originally included a few lines relating to a proposed “Exotic Zone” in the desert that would feature activities “akin to Las Vegas facilitating all types of gambling or entertainment.”

However, after news of the casino plan hit the media, the government “asked” officials of the Gujarat Infrastructure Development Board to white-out the casino zone information in each of the hundreds of copies of the plan that had already been printed. The reason given, reported Times of India, was that the plan “did not go well” with existing state law, which bans gambling and open bars.

By GGB Staff   Mon, Aug 02, 2010

The Bulgarian State Commission on Gambling wants stricter regulations for the nation’s gaming operators.

News source Dnevnik reports that the head of the SCG, Kaloyan Krastev, said that a proposed ban on casinos in hotels and near schools is intended to consolidate the market. Krastev said the same goal inspired the requirement that slot arcades have a minimum of 15 gaming positions in towns with populations of 50,000 and under, 30 positions in towns of 50,000-100,000, and 50 positions in major cities.

At the first public meeting of the SCG, Krastev said that the new requirements would force smaller, shadowy gambling locations to clean up their act.

However, some from the operating side of the industry protested, saying that size should not be a reason for driving someone out of business. The same result could be achieved, they argued, through the introduction of investment and solvency requirements. They dismissed the proposed changes as illogical, as operators currently are required to prove the origin of their funding.

The new law could leave Sofia with only one casino, opponents warned.

By GGB Staff   Mon, Aug 02, 2010

Local investors in the troubled Foxwoods Philadelphia waterfront casino project could have a new savior in the world’s largest casino operator.

Harrah’s Entertainment last month partially confirmed a report by the Philadelphia Inquirer, quoting unnamed sources, that the operator is in talks with local members of the partnership that owns the Foxwoods project to take over as a 33 percent investor in the South Philadelphia casino, in addition to contracting to develop and manage the property.

Harrah’s Entertainment sold the 16-acre riverfront parcel for the project to local partners including Comcast-Spectacor Chairman Ed Snider and the family trusts of lawyer Lewis Katz and developer Ron Rubin in 2005. The parcel had been purchased by the former Caesars Entertainment before its merger with Harrah’s, but Harrah’s sold it because its local partners in the Harrah’s Chester project, six miles south of Philadelphia, objected to the local competition.

Since Harrah’s has bought out its local partners in the Chester project, a Philadelphia sister property makes more sense. The operator could use it to create a local synergy and cross-marketing between Philadelphia, Chester and the three properties the operator owns in Atlantic City.

Harrah’s holds a promissory note from the local Foxwoods partners for $67.3 million, due in 2015, on the land purchase.

A statement from Harrah’s said the company is not at liberty to discuss the substance of the talks, but that “over the years we have had numerous discussions around different deal structures involving the note and other roles.” The operator did not elaborate.

By GGB Staff   Tue, Aug 03, 2010

Table game supplier Shuffle Master, Inc. announced the promotion of David Lopez from executive vice president to chief operating officer and corporate officer. Lopez, a 12-year Shuffle Master executive, will be responsible for the company’s operational leadership, with all sales, marketing, R&D and operations executives and heads of the company’s foreign subsidiaries reporting directly to him. Shuffle Master also announced the promotion of Finance VP Kim Vukanovich to senior vice president of operations. Vukanovich, who joined the company in 2006, served as CFO of Shuffle Master Australasia in 2007 and 2008. In her new position, she is responsible for all service, IT and human resources functions.
 

“Shuffle Master is fortunate to have two individuals of David’s and Kim’s caliber to step into the COO and SVP positions and work as a team,” said Shuffle Master CEO Phillip C. Peckman. “Both individuals have significant experience and wellestablished track records, and we are confident that their leadership will continue to successfully move Shuffle Master forward in the future.”

By GGB Staff   Mon, Aug 02, 2010

Slovenia’s Elektroncek d.o.o., owner of the longsuccessful Interblock line of automated table games, has installed the latest electro-mechanical roulette game in its Euroblock brand in Jamaica’s newest casino.

The company installed the Euroblock Star (EBS) electro-mechanical roulette game in the Acropolis Gaming & Entertainment Centre, soon to open in Portmore, St. Catherine, Jamaica. The Acropolis is the newest location of operator Supreme Ventures.

The Euroblock Star Roulette was developed by Elektroncek as the second generation of its roulette offerings, with built-in innovations resulting from market research. “EBS is particularly popular in the European arcade market,” said Klemen Sitar, Elektroncek regional sales manager. “It incorporates all modern gaming and security solutions.”

By GGB Staff   Mon, Aug 02, 2010

Manufacturer: Aristocrat Technologies
Platform: GEN7
Format: Five-reel, 25-line video slot
Denominations: .01, .02
Max Bet: 350
Top Award: Progressive; $2,500 or $3,000 reset
Hit Frequency: Approximately 50%
Theoretical Hold: 4.18%—11.02%

With this game, Aristocrat introduces a sleek, new cabinet, called “VERVEhd.” The cabinet features 21.5-inch monitors, panoramic digital audio, interactive LCD buttons, an ergonomic design and a very artsy look. Aristocrat acknowledges this last fact by inaugurating the cabinet with a game based on the art world.

Godard’s Rockin’ Olives features the work of world-famous Las Vegas-based artist Michael Godard—also known as the “Rock Star of the Art World.” Godard, known for whimsical works in which fruit, plants and inanimate objects are personified as cartoon-like characters, has done many works involving casino gambling—he is, by all accounts, an avid gambler—but the most famous characters in his paintings are olive characters.

Godard, who hand-painted every image used as artwork in this game, used his famous olive characters as the theme for the slot. The game itself is a five-reel, 25-line video slot designed for penny and 2-cent denominations. The minimum bet to activate all the game’s features is 25 credits plus a 10-credit ante wager. The olive, of course, is wild.

The game features four progressive jackpots—three minor prizes exclusive to each machine plus a grand-prize progressive shared by the entire bank. When flaming dice appear on the first, third and fifth reels with a wager of at least 70 credits, the dice roll to award one of the lower three progressives. The top progressive—resetting at $1,500 on the penny version of the game and $3,000 on the 2-cent version—is won by lining up five olives on an active payline with the maximum wager (175 credits).

There is a sixth video reel that is activated by any symbol appearing on both reels one and five with a lightning symbol. When that happens, the sixth reel spins to one of four bonus features:

“Rock Show” displays speakers, which the player touches to reveal a credit award up to 500. “Risky Rhythms” displays a drum-playing olive character, who does a solo to reveal a credit amount—players can take the amount or risk it for a higher (or lower) award. “Guitar Battle” features two olives going head-to-head with battling guitar solos until a bonus of up to 400 credits appears. “World Tour” awards 15 free games.

By GGB Staff   Mon, Aug 02, 2010

On June 30, just over four months after Chile experienced a deadly 8.8-magnitude earthquake, the Casino Monticello at San Francisco de Mostazal reopened with more than 3,500 guests in attendance.

“I never expected so many people to turn out; the numbers are spectacular,” said George  Garcelon, general manager of Casino Monticello and World of Entertainment.

According to Chilean news source El Tipógrafo, Garcelon also emphasized that the VIP lounge had been completely renovated, with gaming tables and other innovations.

Before reopening, Casino Monticello repaired all damage and added another 50 slots, bringing the total number of gaming machines to 1,560. A spokesman for the casino estimates it will take three or four months to make up the losses suffered during the four months of inactivity.

While the Monticello was closed, many players reportedly shifted their play to the nearby Enjoy property, Casino Vina del Mar. According to one report at website dominicanosdespierten.com, Vina del Mar recorded an increase in visitors of 40 percent in the month of April. The Enjoy casino was said to be developing a strategy to retain as many of these players as possible.

In any case, Casino Monticello seems poised for a comeback. The hotel had reservations for all 150 rooms for the weekend following the reopening.

By GGB Staff   Mon, Aug 02, 2010

The government of Nepal is preparing to issue new procedures for casinos. Although no details on the procedures are available, the move is aimed at improving the general quality of service and lowering the number of complaints received from casino visitors.

Nepal news source Republica reports that police have been tracking unscrupulous activities in casinos, but are limited by the current Gambling Act merely to keeping Nepalese citizens out of the venues.

Laxman Bhattarai, spokesman for Nepal’s tourism and civil aviation ministry, said they receive complaints regularly about practices inside the casinos.

“We have realized the necessity of close monitoring, and this is why the ministry is planning to introduce a set of regulations.”

There are 10 casinos operating in Kathmandu and Pokhara. Each casino pays the government a fee of 20 million rupees—about $265,000. A decline in Indian tourists has local operators lobbying to amend the law that bars Nepalese citizens from gambling in their casinos. One operator told Republica that 80 percent of his revenue now comes from Nepalese players.

By GGB Staff   Mon, Aug 02, 2010

The government of Ukraine is said to be looking at a number of ways to reintroduce casino gaming to the society.

According to Interfax-Ukraine, one proposed bill not yet introduced would call for a two-tiered system, depending on whether or not a jurisdiction is classified as a resort. In either case, casinos would only be allowed in hotels. The difference is that resort areas would permit placement of casinos in hotels with classification of less than five stars.

Ukraine Deputy Prime Minister for Euro 2012 Borys Kolesnikov, in an interview with local news outlet Dzerkalo Tyzhnia, said the bill calls for licenses to valid for seven years. A license would cost the equivalent of about $5 million, payable in quarterly installments, in advance.

Latin news source Yogonet reports that Lyubov Loginova, who chairs the board of directors of gaming supplier and operator Alsart Group, attended the recent Moscow gaming expo as a member of a Ukrainian delegation that included several government officials involved with the development of gaming. Alsart has been quick to re-engage with Ukraine following last year’s complete shutdown of the market there.

“There are about 30 variants of the new gambling law now being considered by Ukrainian lawmakers, from the rational to the completely absurd,” said Loginova. “What will be the final version of the gambling laws of Ukraine, time will tell. One thing is certain: In this month or in autumn 2010 it will be adopted.”

By GGB Staff   Mon, Aug 02, 2010

Riviera Holding Corp. and its subsidiaries, Riviera Operating Corp. and Riviera Black Hawk Inc., filed for bankruptcy last month with support from its bondholders. The company owns the Riviera Hotel and Casino in Las Vegas and the Riviera Black Hawk in Colorado. Both casinos are expected to operate as usual throughout the reorganization process.

In light of falling revenues and $247.7 million in debt, Riviera attorneys claimed the company’s debt obligations are worth more than its assets.

“Debtors were faced with declining hotel and casino revenues based on reduced consumer spending, a tightening credit market, and an overall weakening economy,” the company said in its bankruptcy filing.

Riviera reportedly has a restructuring agreement in place with 75 percent of its creditors.

“By agreeing with our secured lenders in advance, we will be able to proceed with an expeditious restructuring through bankruptcy which will provide us with a viable capital structure, as well as additional financing,” Riviera Holdings general counsel Tullio Marchionne said in a statement.

Starwood Capital Group, headed by former Caesars World executive Barry Sternlicht, is one of Riviera’s creditors, and may plan to take over the Las Vegas and Colorado resorts.

According to attorney Gerald Gordon, who is representing Riviera Holdings in the bankruptcy case, Starwood Capital and other investors plan to exchange their debt for a controlling equity stake in the company. The investors also plan to provide up to $30 million in financing. All but $50 million of Riviera’s debt will be wiped away as part of the deal.

Last month’s bankruptcy filing is the third of its kind for the Riviera Hotel and Casino.

By GGB Staff   Tue, Aug 03, 2010

Slot manufacturer International Game Technology announced that Rich Schneider, senior vice president of network systems, will leave effective immediately to seek an opportunity outside the company. A search for his replacement is under way. Schneider joined IGT In 2003 when the company acquired Acres Gaming, where he served as president and chief operating officer and in other management positions from 1997 to 2003.

“Rich Schneider has accomplished a great deal over the past seven years since joining IGT, the most recent example being the flawless execution of IGT’s sbX at Aria at CityCenter in Las Vegas,” said Eric Tom, IGT’s chief operating officer. “Additionally, Rich has brought tremendous stability to the IGT Advantage casino management system in its current versions. In the past year, IGT has aggressively upgraded 65 percent of its Advantage customer base to its updated, market-leading platform version. International adoption of sbX continues as well, with more than 13 installs worldwide and more on the way. We thank Rich for his many contributions to the company and to our customers.”

IGT also announced that Chris Satchell, chief technology officer, has expanded his responsibilities to include the leadership of research and development for the company. He will now serve as CTO and executive vice president of research and development, overseeing all R&D efforts.

By Frank Legato   Mon, Aug 02, 2010

Manufacturer: WMS Gaming
Platform: CPU-NXT2
Format: Five-reel, 20-line or 40-line video slot
Denominations: .01—100.00
Max Bet: 100
Top Award: 50,000
Hit Frequency: 36.43%, 59.44%
Theoretical Hold: 4%—13%

This is WMS Gaming’s take on the classic TV game show Press Your Luck, a license the slot-maker acquired after rights expired for its former owner, Shuffle Master.

The slot has a tall top box that is a replica of the board used on the game show, with award levels ranging from 25 credits all the way up to 4,000 credits surrounding a vertical video screen.

The base game is either a 20-line or 40-line video slot. The manufacturer makes it available in any denomination, but recommends a penny or 2-cent setup. When bonus symbols appear on the first, third and fifth reels, the player either receives a straight credit award or one of two bonus events:

The free-spin bonus carries unique aspects drawn from the TV game show. For instance, the “Whammy”—the devilish character that ends award rounds for contestants on the TV show, is a wild symbol in the free spins, appearing on the second or fourth reels. Once they appear, they stay in position for subsequent free spins—unless they randomly “backfire,” which removes a previously collected Whammy.

The free-spin round continues until four Whammy symbols are collected.

In the “Big Board Bonus,” a player is awarded from one to three turns. The video screen displays 30 “hot spots,” from which the player selects. The spots reveal either accumulating credit amounts, additional turns, multiplier numbers, or a Whammy. Players select until a Whammy is revealed, which starts the bonus awards flashing around the Big Board. A stop button appears on the video screen, and the player hits it to stop the flashing on an award. The player receives that bonus, plus any accumulated awards, and multiplied by any multiplier numbers gathered during the first phase of the bonus. If the player has been awarded more than one turn on the Big Board, it all starts over again after that.

(More information is available at the WMS Twitter URL, Twitter.com/WMSGamingNews.)

By GGB Staff   Mon, Aug 02, 2010

Spain is currently working on a draft bill to regulate online gaming, but it may not be ready for passage until sometime in 2011.

That is the latest word on the subject from Juan A. Gallardo, commercial director of Spanish lottery operator Loterías y Apuestas del Estado, or LAE. Gallardo also advised operators
of online gaming to wait until there is a law in place, to be in compliance.

Information source Spanish Gaming News reports Gallardo as saying that the coming regulations will contain measures on protection of minors, illegal gambling and the distribution of tax revenue among the various autonomous regions.

Because online gaming operators do not currently pay tax, Gallardo was unable to estimate the amount of revenue that might flow to the government from the sector.

By GGB Staff   Mon, Aug 02, 2010

Table-game supplier DEQ Systems announced that it has installed 33 of its G3 table-game bonus systems on Singapore Stud specialty poker tables at Singapore’s new Marina Bay Sands property, and on several different poker games at California’s Barona Resort & Casino.

G3 adds a side bet to specialty poker games that contains elements of slot machines—players are paid according to a scale on certain hands, and mystery jackpots are awarded to random players at the table. There are slot-like multiple-credit bet options for players, and side bets can be made on either the player’s hand or dealer’s hand in banked games. Two separate jackpots were created for the Marina Bay Sands tables.

Meanwhile, at San Diego’s Barona casino, the G3 system has been added to Shuffle Master specialty poker games including Let It Ride, Caribbean Stud, Mississippi Stud, Three Card Poker and Four Card Poker, with a “Magic Progressive” jackpot incrementing from a link among all the games.

By GGB Staff   Mon, Aug 02, 2010

Slot manufacturer Bally Technologies announced several major developments in the past month. In the state of Washington, the company completed a major upgrade of its products in the central- determinant video lottery market.

Bally is providing Washington casinos with games featuring the new Pro Series cabinet, the Alpha Elite V32 video format, the Digital Tower Series of games, and “Reel Image,” the video format that uses layered LCD monitors to replicate reel-spinning slots—a format Bally officials say was developed specifically for the Washington market.

In Florida, Bally announced that it has gone live with the first installation of its new “Bally TV” in-room television service at the Miccosukee Resort & Gaming in suburban Miami.

Bally TV enables casinos to deliver customized marketing messages, crosspromote casino and resort amenities and events, and provide access and interface to player’s club account information and features, all on in-room televisions. Guests also are offered customer- service options not formerly on in-room TV systems.

The system is a collaboration between Bally and InfoValue, a pioneer in the area of internet-protocol television, or IPTV. The two companies worked together to create a customized solution that integrates with hotel/resort systems and Bally Systems solutions, including Bally’s CoolSign award-winning media-management technology, which gives operators the ability to send targeted marketing messages customized with the individual guest’s name directly to the Bally TV displays via Bally TV’s IPTV Ethernet connection.

Bally TV offers personalized guest services ranging from high-quality HDTV video-ondemand to network-based personal video recording and time-shifted television.

By GGB Staff   Mon, Aug 02, 2010

Slot manufacturer International Game Technology has completed an installation of its M-P Series game Roulette Evolution at Grand Casino Basel in Switzerland. The installation includes 28 player stations connected to an automated roulette wheel.
 

The Roulette Evolution product places digital cameras on fully automated, electro-mechanical roulette wheels, and links the video of the roulette games to slant-top player stations, each with a 23- inch wide-screen LCD monitor. Players can choose from several wheels and wager using the touchscreen display on the player station. A 53-inch, high-definition central display dominates the play area.

“Since opening our casino, the majority of our machines have always been from IGT,” said Marcel Wenger, casino vice director at Grand Casino Basel. “IGT’s games have proven to be consistent top performers and are always liked by our players. And when we chose to replace our old automated roulette units, we immediately trusted IGT and its Roulette Evolution game—and we are thrilled with this decision.”

“The results are great, the design is fantastic, and the machines have been accepted by our customers,” added Eugenio di Palma, the casino’s slot manager. “Players enjoy choosing their denominations and bets at will.”

By GGB Staff   Mon, Aug 02, 2010

Reports from stock analysts show that Konami Gaming, the U.S. subsidiary of Japanese video game conglomerate Konami Corporation, has gained on its competitors in market share over the past year.

“Several years ago, Konami was virtually non-existent in the North American market,” Roth Capital Partners analyst Todd Eilers told the Yogonet news service. “They’ve been one of the few companies to penetrate the oligopoly of the large gaming suppliers.

“The real story is that a lot of investors don’t even know about Konami, and that it is a meaningful player in the slot market.” Roth projects that Konami’s 2010 slot sales will top 71,000 units for revenues of around $1.1 billion.

Much of the manufacturer’s recent success has been attributed to increasing collaboration between the engineers of the Japanese parent company, which produces such famous home video games as the Metal Gear series, and the slot designers based in Las Vegas.

The company has had much success with its latest series of slots, called “K2V,” and the new “Podium” cabinet. Another closely watched product has been “Advantage Revolution,” a novel hybrid game cabinet that has a revolving main display that shifts between reels, video and a bonus mechanism.

“They’ve been able to leverage their engineering talent from Japan really well to incorporate unique aspects in their games that the other suppliers don’t have,” Eilers said.

Added Goldman Sachs analyst Steven Kent in an investor note, “We have heard Konami described by its competitors as a ‘niche’ player but, given the multi-year improving trends, this seems less and less likely. We fear that the major slot players are not paying enough respect to this smaller player and that the big four—IGT, WMS, Bally, and Aristocrat—may soon become the big five.”

By Frank Fantini   Tue, Aug 03, 2010

During these dog days of summer, it’s worth taking some time out to think longer-term about where the gaming industry is headed.

Here are several potential trends:

International giants emerge. The Chinese Communist government probably didn’t intend it, but it helped usher in the era of giant international casino operators by opening Macau to competition.
 

That allowed Las Vegas Sands, Wynn and MGM Mirage to open their mega-resort concepts outside the United States, and, no doubt, helped inspire Singapore that even greater resorts could be its engine of tourism development.
 

The early results in Singapore are lending credence to Sheldon Adelson’s oft-stated belief that Asia can support a half-dozen or so casino capitals on the scale of Macau and Las Vegas. Now, other Asian countries are expected to follow Singapore’s lead.

While a number of casino operators will play in that space, including perhaps some not even in existence, we think there are three emerging giants among today’s public companies—Las Vegas Sands, Wynn and Genting.

Slots are proliferating, and so are the competitors.

A few years ago, there were basically four Class III slot machine companies competing in North America—IGT, with 70 percent of the market; with Bally, Aristocrat and WMS splitting what remained.

Today, IGT has come back to the pack with share ranging from 30 percent to 50 percent in new casinos. And the competition is getting more intense. Consider: Konami has become a major player. Aruze promises to be. Multimedia Games, Cadillac Jack and other Class II slot-makers are entering Class III. Ainsworth is expanding. Lottery companies are competing in the space. Game-maker Incredible Technologies is entering the industry. Privately held American Gaming Systems has hired former Bally CEO Bob Miodunski as it intends to become aggressive.

That’s a lot of competition, and some of those companies aren’t going to be around a half-dozen years from now.

Meanwhile, the market is growing. Mark Strawn of Morgan Stanley calculates 36,400 more slot machines over the next couple of years from approved projects, and 200,000 more machines depending on new jurisdictions coming online.

That number could be greater if other states follow Illinois’ example and allow slots at all liquor-licensed establishments. Already, there are proposals to do just that in Arizona, Ohio and Pennsylvania.

But the really big growth could be overseas. Italy is opening a 57,000-machine VLT market. Mexico might have 50,000 Class III machines. Some observers believe Brazil will be a 100,000-machine market growing to more than 250,000. And all of those Asian casinos will need slot machines.

Technology is changing every aspect of a casino.

Systems aren’t merely for player tracking and back-office accounting anymore. And tables aren’t just 19th century felt games.

Today, systems promise to integrate gaming positions with every aspect of the resort, to become promotional engines, to provide sophisticated business data.

Technology is bringing live dealers to the internet and mobile betting to the casino floor.

Table games are in the early stages of a revolution that brings bonusing, side bets and electronics to traditional games, and entirely new games to the table pits.

The internet and bricks-and-mortar casinos will integrate, much as the World Series of Poker has revealed that potential, and as companies such as Harrah’s move into the space.

Inevitably, internet gaming will be legal in the U.S., whether on a state-by-state basis or nationally. A reasonable bet: It will start with poker.

One of the hallmarks of today’s non-gambling electronic gaming is peer-to-peer games evolving and pools of multiple players. And those players play differently. They want to be interactive and in charge. Gambling games will evolve in that direction.

That opens unimaginable opportunities, once regulators become comfortable with the concept.

The question we always must address in this space is the investing implications.

It’s hard to pick winners and losers, or even to identify which technologies or trends will play out.

But one good suggestion is to follow where the money goes. Enormous sums will flow through
gaming companies.

Consider: The most successful casino in U.S. history, Bellagio, enjoyed peak cash flow of under $500 million. There are a lot of observers who think that Las Vegas Sands’ new Singapore casino alone will do more than $1 billion a year.

Now, multiply that by all the potential resorts Sheldon Adelson envisions in an increasingly affluent Asia of billions of people.

If states throughout the United States follow the Illinois VLT model, the base of slot machines could grow many hundreds of thousands beyond today’s projected 1 million. Interestingly, much of the revenue pouring through the slots would not be new, merely legalized by replacing the gray machines found in bars and fraternal organizations throughout the country.

The legalization of internet wagering would obviously open huge revenue possibilities, both online and in driving business to brick-and-mortar casinos through incentives and loyalty programs.

And, though legalizing sports betting in the United States might be a longshot, it has the potential to capture tens of billions of dollars now being wagered illegally.

The future is a big and unknown place about which entire books are written.

Suffice it here to say that it has extraordinary potential for a prosperous tomorrow.

By Frank Legato   Mon, Aug 02, 2010

As senior vice president of GTECH Gaming Solutions, Gerhard Burda brings his experience as CEO of the former Atronic Group to the combined slot-manufacturing operations of GTECH under current owner Lottomatica. Burda was with Atronic from the early 1990s, when the Austrian manufacturer was acquired by Germany's Gauselmann Group and built into one of the premier slot suppliers in the industry. Burda talked with Global Gaming Business Editor Frank Legato about how the merger of Atronic with Canada's Spielo Group under the GTECH umbrella has resulted in a new technological force in the industry.


GLOBAL GAMING BUSINESS: Have the efforts to merge the former software and hardware platforms of Atronic and Spielo been completed?
BURDA: Basically, we have been focusing on integrating the operating systems and other components of the platforms between Atronic and Spielo, and have also focused on having the same part strategy for the different cabinets between Atronic and Spielo for the past 18 months, and I can say this has been completed successfully.

Are you going forward with the e-motion platform for some or most of Atronic slots, at least in some markets? To what extent will this platform survive?

E-motion is a cabinet; obviously we have our own electronic platform in there. We will continue our highly successful linked gaming product on the e-motion cabinet with the heritage platform for the next couple of years. At the same time, we also will roll out our joint platform that has been developed by Spielo and Atronic, and we have a specific market rollout that will become more visible when we go into the upcoming exhibitions, G2E in Las Vegas and London in January.

Will both Spielo and Atronic each survive as brands under the combined company?
We are working on a brand positioning strategy for the gaming solutions group, within the Lottomatica/GTECH environment. For the time being, we have two very strong brands—obviously, Spielo, distributed in the government-sponsored space, and Atronic in the commercial gaming space. And are definitely trying to maintain the strength of both brands, while we are obviously aware that some sort of umbrella brand would definitely support the identity of the division within the North America group of companies. So, again, work in progress. As time comes, we will definitely update you.

How have the strengths of the former Spielo and Atronic companies merged under Lottomatica?
As I’ve said before, what we have done is we’ve created a very strong gaming platform for both companies within the division, called sensys EP, and this platform will span from a VLT application through a North American commercial gaming application, through international markets and Asia, and we will basically have the opportunity to forward our gaming content developed, decentralized, around the world easily onto this new platform.  Then, we have the benefit of the strong gaming platform, and where we have made great progress is in game design and development. Both companies obviously benefit from the experience of the other in their respective markets.

There has been a lot of crossover already, has there not?
Exactly. Spielo products have definitely been and will be visible in the North American market, but what will become more evident is that both companies are handing games back and forth between the markets.
Your company has indicated that the Prodigi Vu cabinet and sensys platform will be your primary technology for games going forward.

Prodigi Vu and the sensys EP platform will be the platforms for the North American commercial market for years to come. We have other cabinets for other market segments, like the government-sponsored VLT and the international market, but for the North American markets, this will be the mother of all cabinets used.

What are the strongest features of this technology? How does it improve on former Spielo and Atronic technologies?
It’s basically the 16-to-10 display technology, for sure, but there are lots of innovations coming, like the electronic, programmable button panel, like the remote button, like improved Dolby surround-sound. There is a lot that sensys EP platform can support, and sensys EP is also able to support the G2S protocol, which was first implemented in the VLT space, and where Spielo has also basically developed its own extensions to the G2S protocol to make it applicable to the distributed markets.

What do you feel are your strongest games slated for launch this year?
I’m particularly excited about the Deal Or No Deal community game that is going to be launched for the North American commercial markets at G2E. We also have a new slant-top product we will launch this fall, and obviously, all the group games that have been developed worldwide that can now be easily transported onto the new platform will be shown at G2E in the fall.

But outside the North American market, our main focus at the moment is on the Italian VLT project. As you may have heard, legislation is ongoing in Italy to allow a huge number of VLTs into the market, and due to very specific requirements for the VLTs, a lot of our game designers have been focused on this market, which is also the home market of our mother company, Lottomatica. At the moment, we are ready as far as this market is concerned.

What are the biggest challenges and opportunities facing your newly merged company for this year and the next few years?
I think in the United States, you see the market recovery coming; you see a couple of very positive things happening, with the economy, with the labor market, etc. In Europe, it’s a little more difficult, because we have turmoil with the euro and Greece, and nations with deficits. Most important is that the consumer gains confidence into the development of the economy again. And, I think that the U.S. has progressed further there than Europe, so we’re obviously hoping that the commercial segment in the United States will soon start the drive.

By Sudhir Kale   Mon, Aug 02, 2010

The news of Bill Velardo’s sudden death, which I heard about from a client, was quite unnerving. Bill’s former employer, Mohegan Sun, was one of my biggest clients a few years ago. I did not know Bill very well—he headed the Mohegan Tribal Authority, and we met only a few times during my consultancy with the company. What I do remember is his generosity in making his own office available to me when I first went to Mohegan Sun on their CRM consulting project.

Since most casino operators always have a consultant or two on the property, I offer my impressions on how (not) to treat your consultant. Bear in mind that I am not referring to consultants from large management, accounting or IT companies. They work on a different, mostly template-based model. I am talking about independent consultants such as myself, who are mostly on client premises from the conception of a project to its very conclusion.

Creating an Image
Consultants usually work across several levels within the casino organization. Since my consulting deals with customer relationship management, customer service and marketing issues, I interact at all service levels, from the dealer and the pit boss to the CEO/CIO. Under such a scenario, the prescience of my observations and recommendations invariably depends on the buy-in, inputs and cooperation I receive from client employees at every level.

We all know that given the current turbulent environment, employees at all levels are very busy. The time they make available for the consultant very much depends on how the consultant is positioned within the company by the project sponsor.

If you want to maximize your return on the fees you paid the consultant for his or her expertise, you have to ensure that you portray your consultant within your organization as an indispensable expert whom you have been lucky to hire. Position your consultants as superstars, and you will find your staff wanting to cooperate in earnest with the “outsider.”

According VIP treatment to your consultant also boosts the consultant’s morale. Buttress the expert’s ego a bit, and you will find that he or she is often the last one to leave their office when almost everyone within the company has already called it a day. Treat the consultant like a demigod and they will often produce miraculous results.

Here are seven specifics of consultant etiquette you might want to ensure.

1. Circulate a favorably worded bio of the consultant to relevant employees before the consultant arrives on premises. If the consultant has a half-decent website, provide your employees with a link.
2. If the consultant happens to be from out of town, make sure you have a limousine waiting when he or she lands in your town. Most consultants demand business-class or first-class airfare, so the limo is a very small marginal cost.
3. If your consultant is lodging at your property, provide him or her with superior accommodation. It costs little to your property, but buys a lot of goodwill.
4. Provide your consultant with the best office space available. If an office facility befitting the consultant’s stature is not immediately available, do some short-term juggling. Many employees within your company will assess the worth of a consultant based on the symbols of power that you as the sponsor bestow upon the consultant.
5. Never challenge the consultant’s competence or modus operandi in a meeting attended by your subordinates. You as the sponsor have hired the outside individual for a specific reason: to get a job done for which in-house expertise is lacking. Demeaning your consultant in front of your subordinates is a sure-fire death knell to any possibility of cooperation with this outsider. If you have differences of opinion on issues or processes, express them behind closed doors one-on-one with the consultant.
6. Be tough on deliverables but soft on negotiations. Remember, a couple of years from now, no one, not even you, will recall how much a consultant charged your company. But if the consultant fails, and you happen to be the fall guy, the experience will be irrevocably etched in your psyche. Quibbling on small amounts or expenses only demonstrates your pettiness.
7. Personally make time for the consultant. People around you don’t just take their cues from your words; they watch your behavior more closely than you think. Their attention to the consultant will be partly determined by how much time you personally devote both to the consultant and to the specific assignment at hand.

My Inspiration
After having acted in the consulting space for years, why do I suddenly write about this? There are two reasons. The first is Bill’s tragic demise, which brought to surface the memory of his generosity. The second reason was an experience I had consulting not too long ago. I was made to sit in a cubicle with entry-level managers less than half my age throughout this assignment spanning several weeks. The sponsor would call a meeting of all stakeholders for this project, ask me to chair, and then interrupt me every step of the way. Worst of all, I was treated more like an employee than an invited expert hired to accomplish a task no one within the organization was capable of undertaking. Needless to say, my morale in the course of this assignment was a bit below par. This recent experience elevated my regard for Bill even more.

Rest in peace, Bill. You will always remain in my thoughts, and no doubt in the memories of countless others.

By Frank Legato   Mon, Aug 02, 2010

You know, if you would have told me 30 years ago that there would be casino owners in the year 2010 who give more than 60 percent of the money they make to the state in taxes, I never would have believed you.

Well, if you would have told me that 30 years ago, you probably would have gotten a blank stare, because I hadn’t started writing about casinos yet, and I knew absolutely nothing about the industry.

However, if you would have told me, say, 26 years ago that there would be casino owners in 2010 who give six or even seven of every $10 to state government, I would have told you to wear a hat out in the desert next time. The only entity of official authority that had ever taken that much of a casino’s money was the mob. And I don’t even think those guys took that much.

Developers going into new gaming states, though, think nothing of handing over most of the money they make to the state, for the privilege of operating their businesses. It’s like a fruit-cart pusher having to pay protection money to the neighborhood boss, except the casinos don’t get protected from anything. Well, except a healthy profit margin.

I’m kidding, you state governments out there. You’re the best, really. You crazy guys.

It was in this newfound spirit of public-private cooperation—call it “Let’s Legalize Casinos and Suck the Life’s Blood Out of Anyone Who Wants to Open One”—that the state of Maryland accepted bids last year for newly legalized slot casinos to be put in five locations around the state.

Now, mind you, the call for bids went out in the middle of the recession, before we began to enjoy the prosperity in which we bask today. (Yes, I’m being a wise guy.) But still, the response to the bid request was, shall we say, less than enthusiastic.

OK, there were more volunteers to test the first electric chair.

For the first time anyone could remember, there were more available casino licenses in a new jurisdiction than there were developers who wanted one. Even now, a year and a half later, out of five licenses, only two are hanging in actual, under-construction buildings. One other one has been tied up in the courts, and two casino licenses are, well, vacancies.

Maryland officials seemed baffled at this development. “Why, we’re offering the right to pay us millions of dollars up front in the hope of getting a license, and then the right to guide guests to slot machines that we own. Not only that, they get to keep three of every $10 they take in. What do these people want??”

That’s right, the state of Maryland will own all slot machines that operate in the casinos. A state agency just bought a bunch for the Penn National casino opening next month in  Perryville, along with a five-year maintenance contract. Some state officials wanted to lease the machines—you know, in case maybe a few of the games quit making money before five years pass—but others shot that idea down. “That would just make too much sense,” one official said.

The state is trying hard to fill one of its casino-license vacancies, the one at Rocky Gap State Park. Here’s a license that will give some lucky developer a crack at buying a time-worn, money-losing hotel lodge from the state, along with the chance to give Maryland most of his money.

Oh, but Maryland is sweetening the pot for Rocky Gap. The legislature passed a bill to create more favorable rules for the Rocky Gap license, in the hopes of luring more suitors. (It’s officially titled the “For The Love Of God Take This Casino Act of 2010.”) To help you pay for the lodge, they’ll lower the state skim—I mean, tax. Whoever gets the Rocky Gap license will only have to pay 65.5 percent of casino revenues to Maryland, instead of the 67 percent everyone else pays.

Such a deal. I don’t know about you, but I’ve got goosebumps.

The lucky winner of the Rocky Gap license gets to keep a little more than a third of what he makes, instead of a little less than a third. But the really remarkable part? Someone is actually going to think this is a good deal, and someone is going to snatch up that license.

Just like a fruit vendor would pay the neighborhood boss. It’s an offer he can’t refuse.

By Frank Fahrenkopf   Mon, Aug 02, 2010

One of the first documents we produced when we opened the doors of the American Gaming Association was called “Myths and Facts about the Gaming Industry.” It was a fairly lengthy document.
 

Our industry was experiencing its first significant national expansion, and critics were accusing casinos of every ill imaginable. They claimed, with no evidence, that the gaming industry was still “mobbed up,” responsible for crime waves, individual bankruptcy, business failures, divorce, child abuse, alcoholism and the general decline of communities wherever a casino opened. One critic even claimed that the opening of a casino in his Colorado town resulted in a 50 percent decline in the town’s mule population. (He may have had a point—a tourist driving his car to a casino hit and killed one of the two mules in town.)

There are many reasons most of the claims made in 1995 are only faint whispers today. The biggest reason, of course, is that the dire predictions of those days have proven untrue in community after community that has welcomed casino gaming. A contributing factor, however, was a decision made by the leaders of the nation’s gaming industry to embrace transparency. When the industry created the AGA, I was directed to use the resources of our association to bring the industry’s message to audiences in Washington and across the nation. Underlying that mission was a commitment to openness.

In pursuit of that commitment to openness, we commissioned a number of studies by the top consulting firms in the country to develop concrete numbers on the economic impact of the industry. We also engaged the media and began compiling statistics and other information on the gaming industry that we made available to the public.

Our commitment to openness proved beneficial in 1997 when opponents of gaming succeeded in passing a law creating the National Gambling Impact Study Commission. Gaming opponents were euphoric, expecting a friendly commission that would prove their case. We knew that as long as the study was fairly conducted, the industry had nothing to fear. That turned out to be the case, and in June 1999, the NGISC issued its report, which we use to this day to dispel some of the old myths that refuse to lie quietly in their graves.

I am reminded of this history because gaming expansion is beginning to resurrect many of the old charges against our industry and even generate some new ones. As these new charges come, it is important that we maintain our policy of openness. The newest approach by gaming opponents is to claim that the elements that make slots attractive to casino patrons are also addicting more people.

I suspect critics are targeting slot machines because they have become so popular, and because the myths surrounding the machines provide good fodder for their claims. Critics accuse the industry of duping patrons by rigging the machines and of perpetuating myths such as:

• There are hot and cold slot machines.
• The more often you see the winning symbols, the closer you are to winning (or the opposite: the house puts the winning symbols up more often so you will lose more money).
• There are “systems” that will lead to winning.

Slot players do enjoy sharing their theories about winning, but the real reason they come to our casinos is the anticipation and excitement of the outcome of a random event.

And, if slots are so addictive, how do critics explain this indisputable fact: There are hundreds of thousands more slot machines in the United States today than 35 years ago when slots were legal only in Nevada; yet, it is settled science that prevalence rates of pathological and problem gambling have remained virtually unchanged during this time. If more slots increased gambling disorders, wouldn’t prevalence rates have increased substantially?

So, there is no evidence to support claims of slots increasing problem gambling. As for industry perpetuation of the myths? We’ve learned over the last 15 years how difficult it is to dispel myths, but we have tried and continue to try.

Five years ago, as part of the industry-approved AGA Code of Conduct, we printed and widely distributed a brochure that detailed the odds of winning on slot machines, as well as all other casino games. That brochure is available electronically on the AGA website.

This month we released a white paper that provides great detail on every aspect of the slot machine (see story, page 22). It includes details about the evolution of slots from the one-armed bandit of the last century to the multi-line electronic machines of today. It covers how the machines are designed and how they work, including what leads to a winning spin. It also details how the games are tested and regulated, and discusses the impact slot machines have had on the gaming industry and the social impact slots have had in our communities.

Each year we select a focus for an industry-wide effort to raise responsible gaming awareness, and this year the slot machine will be the focus of Responsible Gaming Education Week. The centerpiece of the week’s activities is a fun, colorful brochure that dispels the myths about slots by describing how machines work and summarizes key points of the white paper for employees and patrons. Both resources are available on the AGA website at www.americangaming.org.

Understanding how casino games work is an important part of responsible gaming, and being open about the inner workings of slot machines is in keeping with the industry’s ongoing commitment to transparency.

By Roger Gros   Mon, Aug 02, 2010

As I write this column, the House and the Senate in Massachusetts are grappling with different casino bills passed by each chamber. The main difference between the two is that the House bill legalizes racinos at existing tracks and the Senate measure does not. While the governor, Deval Patrick, is threatening to scrap the whole process, it’s more likely they’ll reach some kind of accord because there is a desperate need for the kind of revenue that casinos will produce (surprise, right?).

From across the state line, the two tribal casinos in Connecticut are watching with trepidation. Well, maybe not the Mohegan Sun as much, because that group has a proposal to build one of the Massachusetts casinos in the western part of the state, which would ease the impact, but not completely negate it. But casinos in the Bay State are bound to hit the Connecticut casinos even harder than the downturn they’ve already experienced, mostly due to the bad economy.

In Atlantic City, the same bad economy combined with increased regional competition from Delaware, Pennsylvania and New York has several of the city’s 11 casinos teetering on the brink of insolvency and a 12th casino standing half-completed because investment necessary to complete it isn’t available. One respected casino executive, who once worked in Atlantic City, told me last year that perhaps the “right size” for Atlantic City is around six casinos.

The recent introduction of table games into the Delaware and Pennsylvania markets will further accelerate that decline, and the six-casinos prediction may come to pass sooner rather than later.

Las Vegas isn’t immune to this phenomenon either. Again, a combination of the economy and huge new tribal casinos in Southern California have impacted visitation to the world’s gambling capital. And in a ripple effect, the “locals” casino market in Las Vegas has been devastated as well, by high unemployment and less disposable income for customers who didn’t lose their jobs.

The opening of the Cosmopolitan in December on the Las Vegas Strip will add another 3,000 rooms to an inventory that is already stressed. Who would have thought that accommodations at MGM’s sprawling CityCenter, once slated to be offered at about $300 a night, would be going for as little as $129?

So, what can be done about these situations? Should the casino owners in these jurisdictions have been able to see the future and realize that competition was coming? Would that have meant they would have built smaller, or in the Las Vegas and Atlantic City examples, fewer properties?

Well, some of this has already happened. The Revel project in Atlantic City and the Fontainebleau in Las Vegas stand as testaments to a reality that falls short of expectations. Other multibillion-dollar projects in both markets have been canceled. A huge expansion project at Mohegan Sun has been delayed, probably forever.

While “right-sizing” a casino or a destination is probably the answer, it’s going to be painful. People will lose their jobs, local economies will suffer and the image of the destination will be tarnished.

Back in Massachusetts, dreams of billion-dollar entry fees have been slashed. Part of the negotiations in the legislature has to be a consideration of the structure of entry fees, tax rates and goals. Although most jurisdictions opt for the highest payments from casino owners, the legislature should consider the example of Singapore, where a reasonable tax rate has resulted in two signature properties with more jobs, infrastructure improvements and increased tourism, producing results for everyone, not just the state. 

Looking internationally again, Macau seems to have realized that unlimited casinos can have a negative impact. The new chief executive, Fernando Chui, has decreed that only the approved casino developments can go forward, as long as they do so in a timely manner.

This is a wise choice, because if Asian casino developers look into the crystal ball, there seems to be a proliferation of casino resorts just over the horizon in that region. What happens to the existing Macau casinos if Taiwan, Japan, South Korea, Thailand and others do enter the industry? The decision to “right-size” the Macau casino industry now rather than later will pay dividends and prevent pain in the future.

As the industry reaches saturation levels in many regions around the world, it’s going to be easier to decide upon the size and scope of a jurisdiction or a casino development. But in the meantime, the existing casino operators need to be aware of the dangers of growing too fast and too big.