By Roger Gros   Tue, Jun 02, 2009

It’s probably the one thing on which Harrah’s Chairman and CEO Gary Loveman and Randall Fine, the president of the Fine Point Group, can agree.

“I’ve never been a great employee,” Fine says, as he explains the genesis of his company, which has quickly become one of the industry’s most aggressive consulting companies.

Fine’s departure from Harrah’s Entertainment wasn’t entirely without rancor, according to sources familiar with the situation. While he claims credit for directing the effort to expand and monetize the company’s Total Rewards program (cited in a patent application), Harrah’s executives insist it was a total team effort with no one (other than Loveman) deserving of the lion’s share of credit.

Whatever the share of the credit, it’s clear that Fine has a grasp of customer service and loyalty that few in the industry can match.

Starting from Scratch

After achieving an MBA at Harvard Business School, Fine created a company focused on developing loyalty programs for supermarkets. After seeing some parallels with the gaming industry, he was convinced by Loveman, one of his former Harvard professors, to take a position with Harrah’s, which was trying to upgrade its loyalty program.

He said Harrah’s had already begun compiling information given by its customers and that piqued his interest.

“I found the business to be incredibly data-rich,” he says. “And I’m a mathematician at heart, so the ability to create an improved value proposition based on that data was very compelling.

“They had done a good job with the database, but the actual card program was broken. And while you could earn a point at any of the Harrah’s casinos, you couldn’t necessarily use them at any other casino.”

Fine says there were three things he did when he came on that made a big difference in the success of the program.

“First, we made the program explainable,” he says. “We were able to tell customers that every $5 of coin-in got you a Reward Credit at every Harrah’s property in the United States. We created a seamless program.

“Second, we made the points transportable. It didn’t matter where you earned the points, you could go anywhere to redeem them. To create a transfer pricing structure that allowed for that to happen was an industry innovation.

“And the third thing was that we pioneered the use of external rewards. People thought we were crazy to put things like cars in our reward program. But it turned out that putting things in there that people could earn over a multitude of trips made them more loyal and got them to consolidate their play.”

Despite his Harvard MBA, Fine says the most instructional experience he had in the gaming industry was getting down with front-line employees.

“The most instructive week I had was when I worked in a Rewards Club booth in Laughlin,” he says. “I was told that I wouldn’t understand the business until I had a customer throw a card in my face.

“Unfortunately, I was pretty good at customer service, so I never had any cards thrown at me. What I learned was if I could not communicate within 30 seconds what the marketing program was, it didn’t matter. If I had to explain that earning a point was based on your length of play, your type of game, your level of play… customers don’t understand that.”

Clear communication, says Fine, is the key.

“Good loyalty programs have to be simple,” he says. “They have to put the customer in control. They have to be aspirational. They have to be transferable and they have to be flexible, because not all properties are the same.”

Broad-Based

After leaving Harrah’s, Fine joined Carl Icahn’s casino company, which operated four properties in Nevada and Atlantic City.

“This was a totally different experience,” he says. “This was a capital-constrained company. When I worked at Harrah’s, I was a corporate guy. With Icahn, I was essentially the vice president of marketing for four casinos. So I had to be involved with all of the details. It was fun for me to take that $300 million investment and turn it into $1.2 billion through both cost-cutting and marketing improvements.

“It allowed me to take all the theoretical things we experienced at Harrah’s and make them more tactical.”

It wasn’t long before Fine decided to strike out on his own and apply the principles he learned at Harvard and during his gaming career.

“I felt there was a lack of talent in the gaming industry to help people optimize their business,” he says. “So I decided to put together a group of people who actually want to be consultants and who have walked the walk. It started with just me, but four years later we have 15 folks, all of whom have five or more years of actual casino experience, have worked for great gaming companies and have a passion to help our clients.”

Fine won’t talk specifically about his clients—“Our job is to help our clients look good, not necessarily make us look good,” he says—but he gives some hints, such as running the marketing for one of the largest Las Vegas locals companies or a Native American casino in Connecticut.

“Those are very narrow universes,” he laughs.

Detroit Rotation

One client that he will discuss is Greektown Casino Hotel in Detroit. Fine Point won a public bidding process to operate the property while it is in bankruptcy, and Fine believes it is a true gauge of how far his company has come in four years.

“We always felt that after we did the consulting for a while, it would get to the point where we could prove ourselves at actually operating a property, and that’s what happened at Greektown,” he says.

What he found, however, was distressing, in a highly competitive market where Greektown held the lowest rung on the customers’ ladder.

“It’s always fun being on a winning team, and this was a team that was clearly dispirited. What was once a 29 percent market share was down to 22 percent. I don’t think people were poorly intentioned; I just don’t think they had any direction.”

At Greektown, Fine deployed two of his most powerful weapons—Chris Colwell, who was appointed COO, and Amanda Totaro, who was named vice president of marketing—and developed a plan with definitive goals.

“We made changes on the first day here,” he says. “We beat the plan by 30 percent in January, even with just two weeks. In February we beat it by 80 percent, over 100 percent in March and in April we’re just going to light it up.

“We instituted leadership, did some strategic cost-cutting, world-class marketing, which we’re known for… We really wanted to show what we could do.”

If imitation is the greatest form of flattery, Fine’s efforts were soon noticed by his competitors.

“I’m loathe to declare victory after 90 days, but on April 1, MGM Grand started a campaign that offered $10 in free slot play if you brought your Greektown card in,” Fine explains. “It wasn’t MotorCity or Caesars Windsor; they specifically mentioned Greektown. So the market leader targets little Greektown.”

Even though Greektown recently opened a first-class hotel, the original casino is still in place. With the three other properties in the market building brand new facilities or expanding existing ones, Fine says Greektown will always be challenged.

“When you compete on facilities, we’re at a disadvantage. Greektown is nice, but we’re clearly not as nice as MGM Grand,” he says. “That is a spectacular building. I think it’s too spectacular for the market, but that’s just my opinion. If we try to say ‘we’re nicer than you,’ we lose. But if we provide better service, better value and more ways to win, and work harder for your business, then we win—and we are winning.”

Fine says Greektown has picked up more than 300 basis points in the three months his company has been on the job.

“We didn’t come in here and fire 20 percent of the staff. That’s not what we were brought in to do. It was targeted. Things like purchasing and food costs. On the marketing side, we chose to do what our competitors have not. We chose to use our hotel as a vehicle to improve casino performance. MGM is $229 midweek, $299 weekends. MotorCity is about the same, I believe, and they don’t do any hotel offers. We’re different. If you’re a gambler, live a few hundred miles away and want a free room, you come right in. We’ll take care of you!”

Marketing Muscle

While Fine says he respects and admires many of the marketers in the industry for their creativity and effectiveness, he says there is something lacking in many corners of casino marketing departments.

“There’s not enough analytical horsepower in the industry,” he says. “There are not enough people who love math. We have a wealth of numbers and data unlike any other industry I’ve seen. We know where you live, how often you come, how much you play and much more. But if you don’t love math, there’s not much you can do with it.”

When hired to work on casino marketing, Fine first turns to the client’s database, he says.

“Most of our clients are not using their data in very sophisticated ways. The reason we can gain hundreds of basis points of market share in such a short time is that there is so much low-hanging fruit. I say that the fruit has fallen off the tree and is lying on the ground. You just have to pick it up and eat it.”

And it all boils down to the relationship a casino develops with its customers. Some old-line casino executives don’t believe in the importance of customer relationship marketing, but Fine swears it works.

“We believe in this stuff,” he says. “That’s why we’re able to do what we do. We have a cultural belief, which is important.”

It’s a new era, however, for the casino industry. The drying up of capital has all but ground the industry to a halt, and executives don’t know how to respond.

“The problem is that for 20 years, until two years ago, value was created by the deployment of capital,” Fine says. “All the value in the business was focused on building, adding, refurbishing and more. Everything was about capital, capital, capital. There was never enough emphasis on operating an existing asset. Capital was the answer to everything.

“Because of that, operators got lazy. Why be an effective marketer if you can get $20 million to build some fancy new club? And those capabilities were not developed as well as they should be. Now, the era of capital is over. That door has slammed shut violently. It’s time for marketing and operators to step up. Unfortunately, I don’t think a lot of people are trained or are capable of doing it.”

The result, says Fine, is a mishmash of programs that have little to do with attracting new customers and retaining existing ones.

“Some casinos are going crazy and spending money like drunken sailors,” he explains. “Others are cutting marketing budgets indiscriminately and driving customers out the door. They’re responding with clubs and not scalpels.”

Keeping Focus

All is not lost, however, if executives can focus on the business and not on the economic travails.

“Even if the business is down 10 percent, it means 90 percent of the business is still there! You can take enough share from your competitors to make an impact. That’s why we only work with one company in each jurisdiction. You can’t do what we do for everybody. Our goal is to get the other guy to close. It’s that simple.”

And yet it’s not. Fine says there is no “silver bullet” that can be loaded and shot at the market. Each casino is unique.

“We don’t have some formula in a box that we roll out for every client,” he says. “We use our analytical and strategic skills to come up with the right solution for each client. Each property is different. Greektown is the weakest bricks-and-mortar. If I was running the MGM Grand, which has the best bricks-and-mortar, I would be doing things differently.”

Going back to his original masterwork, Total Rewards, Fine says that concept worked for Harrah’s but probably won’t work for anyone else.

“I’ve done 12 programs since I did Total Rewards,” he says. “The other 12 don’t look anything like Total Rewards. That was right for Harrah’s but it’s not right for anyone else. We think about programs using the same methodology, but the answers aren’t the same.”

By Frank Legato   Tue, Jun 02, 2009

The competition in the East is definitely heating up.

The three racinos in Delaware are set to become full-blown casinos offering a full range of table games and sports betting, in addition to the slots they have offered since 1995.

After an extraordinary week that included an initial rejection of sports betting by the state House, marathon negotiations between Governor Jack Markell’s team and lawmakers in both the House and Senate, and remarkably quick votes in both chambers, the governor signed a bill into law May 14 that gives the state’s three racinos a competitive edge over casinos in both Pennsylvania and Atlantic City—although at a significant price, as the effective tax rate on slots will soar over 60 percent under the new law.

Delaware will be the only state besides Nevada with casinos containing sports books. The state was one of four—joined by Nevada, Montana and Oregon—grandfathered under a 1992 federal law banning sports wagering. Delaware qualified for exemption because of a brief, unsuccessful sports lottery run in the 1970s.

Racino officials say they can have sports books up and running in time for this year’s pro football season, and can have live poker, blackjack, craps and roulette up and running within six months.

The exact form sports betting will take will not be known until the governor and state lawmakers receive an advisory opinion from the state Supreme Court on what forms of wagering will pass both state and federal muster legally. However, the three racinos—Dover Downs, Delaware Park and Harrington Raceway—are planning for Vegas-style sports books, which are possible with relatively minor modifications and training of clerks at the tracks’ existing simulcast operations.

The Maryland Factor

Most observers expected sports betting to take hold in Delaware because of the economy and because of competition from Pennsylvania. However, few expected the expansion to include table games so quickly—until Maryland passed a law authorizing five casinos, including a large casino in Baltimore and two within a few miles of the Delaware border in two different areas.

“What pushed us over the edge (for expansion) was Maryland,” says Ed Sutor, CEO of the Dover Downs racino. “Seventy percent of our business comes from out of state, and 50 percent of our business comes from Maryland.”

Bill Fasy, CEO of the Delaware Park racino, says Markell would have pushed the expansion regardless of developments in Maryland. “The governor is just trying to make us competitive,” he says, “and I don’t think Maryland made a difference.”

The original bill in the Delaware Senate pushed by Markell called for two new casinos—one on the Wilmington waterfront; the other at a new racetrack near the beaches—and up to 10 new sports-betting outlets, as well as the table games. In exchange, Markell wanted to raise the state’s share of gaming revenues by 11 percent, from 37 percent to 48 percent. The original House bill included sports betting only, along with the 11 percent tax hike. It failed to reach a supermajority (required for a change to the state Constitution) by only two votes, mainly because of the 11 percent hike.

The compromise bill passed by the House lowered the hike to 6.5 percent, in exchange for the addition of table games. It passed the House easily, on a 30-4 vote. The Senate followed through quickly, stripping its bill of the new gaming venues and approving the House-passed version of sports betting, table games and the increase in the state’s share of gaming revenues.

Sutor says the “victory” of achieving both table games and sports betting is offset to a great degree by what he sees as an onerous tax. He says people should be reminded that the former 37 percent tax was effectively 55 percent when the 11 percent cut for horsemen and 7 percent for vendors are factored in. The new state cut pushes the effective gaming tax over 60 percent, which is one of the highest in the nation.

Until the new games are implemented, Sutor says the new tax is going to hurt. “We’re going to love having sports betting and table games, but we’re going to have big layoffs and cutbacks in the meantime,” he says. “The new tax is going to cut off our ability to do expansions. We had a $50 million, world-class sports book already designed. We had a new, $40 million parking garage already designed. We can’t do either—$90 million of our cap-ex just went out the window.”

Dover now plans to renovate an existing restaurant to create a sports-betting parlor, and to use existing simulcast facilities for wagering in the meantime.

At Delaware Park, the existing facility luckily lends itself to addition of sports betting, Fasy says. In addition to an expansive upstairs simulcast area, football wagers will be taken on fall Sundays—when there are no races—at all betting windows, including those outdoors.

However, the new tax rate has caused Delaware Park to scrap plans to add a hotel, at least for now. “We were ready to go to zoning to submit our plan for a 1,000-room hotel,” Fasy says. “It doesn’t make sense with the new tax rate. Until we see some growth in our market, we need 50 percent equity to get a loan, because we don’t have a stable tax environment. If you’re a lender, you’re going to say, ‘What if the tax goes up to 72 percent?’ Banks aren’t going to do it.”

Table Timeline

The timeline for the addition of table games depends largely on how quickly state regulations are set. The law mandates that the state controller general’s office, the Department of Finance and a representative of the racinos form a panel to draft and agree on table game regulations—and revenue split—within 75 days, after which the rules will be voted on by the General Assembly.

The racinos are partnering with Delaware Technical Community College to bring in dealing instructors from other states and create a dealer training program. If all goes as planned, the racinos hope to have table games go live before Christmas.

That is, if they can afford it.

Sutor says operators are hopeful the panel will follow the lead of West Virginia, which implemented a lower tax rate—35 percent—for table games than it uses for slots because of the extra labor costs and surveillance requirements involved. If the panel applies the law’s new revenue tax to table games, Sutor says Dover Downs will not offer them. “If they take 60 percent on tables like they do on slots, and our payroll is over 40 percent, do you think I’m going to put table games in?” he says. “We hope that within 75 days, we’ll have a reasonable revenue-sharing agreement.”

Fasy, himself an Atlantic City table game veteran, wants an even lower tax. “I think a fair tax is 20 percent,” he says. “That’s what it is in most of the riverboat jurisdictions nationwide. I remember how hard it was to make money in Atlantic City with an 8 percent tax.”

Outside of the Supreme Court opinion, the only possible delay to offering sports betting by football season would be court action. Both the NFL and NCAA have threatened lawsuits to block the new sports betting, but Sutor predicts that any such lawsuits will fail—just as similar lawsuits against the sports lottery failed during the 1970s.

“The NFL sued back in the ’70s and lost,” says Sutor, who derides league officials for what he sees as a double standard. “We would not be surprised if the NFL files another suit, because they are very hypocritical. They testified before our legislature that fantasy sports—which they make a lot of money on—is not gambling. Their lawyers also represent baseball. Twenty-three Major League Baseball teams are on scratch-off lotteries throughout the country. Are lotteries gambling? How many NBA owners are also involved with casinos?”

Adds Fasy, “Why does the NFL allow its channels to go into the sports books in Las Vegas? Why are their lines in the paper every week? Because they know it pumps up the interest in their games.”

“When you get the facts out there,” says Sutor, “the NFL looks ridiculous.”

AC Impact

After the gaming expansion bill passed, some in the Atlantic City media sounded alarm bells of new, powerful competition from Delaware at a time the casinos there are struggling.

However, Sutor says Atlantic City is in little danger from direct competition. “We couldn’t compete in promotions with Atlantic City before; we won’t be able to compete now,” Sutor, a former Atlantic City casino executive, says. “People have overblown what impact Delaware will have on Atlantic City. If Atlantic City revenues go down after we introduce sports betting, it will have more to do with Bethlehem (Pennsylvania) and Aqueduct than with us. Sports betting doesn’t generate a lot of revenue. It’s more of a marketing advantage in bringing people to the property.”

Sutor does concede that the addition of table games is likely to pressure Pennsylvania—now with table games in bordering states West Virginia and Delaware—to approve table games more quickly than previously thought, which would indeed impact Atlantic City.

Atlantic City operators, though, can still count on the fact that New Jersey’s low tax rate allows much more reinvestment in destination amenities than is possible with the high tax rates endured by all of its nearby competition.

New Jersey lawmakers are pressing a federal lawsuit challenging the ban on sports wagering on the basis of states’ rights. After last month’s developments in Delaware, New Jersey state Senator Raymond Lesniak asked Governor Jon Corzine to put his weight behind the campaign for New Jersey sports betting.

By   Tue, Jun 02, 2009

By Rich Geller   Tue, Jun 02, 2009

Shortly after the start of the millennium, when casinos in many jurisdictions were closing their poker rooms, technology—in the form of online poker and television—brought the game back from near death. Suddenly, everyone wanted to play poker at the casino. For the operator, though, poker was still the same inefficient, low-earning game it always had been.

Since then, with the help of still more technology, the goal has been to improve the player experience and grow revenue.

Shuffle Up and Deal—Faster

Released commercially in 2002, Shuffle Master’s “Deck Mate” was the first product designed for single-deck shuffling that could also be mounted flush with the table surface. The device accomplished what pushy players at the poker table had been trying for years: it sped up the game. On average, use of the shuffler increases the number of hands played per hour by 25 percent. With the rake system in effect guaranteeing a modest win for the house every hand, that increase translates roughly to 25 percent more revenue from a given table.

According to Kirsten Clark, vice president of worldwide marketing at Shuffle Master, that fact has not been lost on operators. In the U.S., Clark estimates, the company has achieved a penetration rate of 90 percent of the poker market.

“The Deck Mate has become a standard feature in poker rooms,” says Clark. “There are very few places that don’t use them. To date we’ve shipped over 7,000 of them, which is a pretty remarkable figure. Not only in the U.S., but we’re also starting to get traction now as poker has become more popular in other countries.”

The procedure for the dealer is simple. The down time taken up by the manual shuffle is eliminated. So is a lot of the repetitive motion for the dealer.

As does any machine, the shuffler requires maintenance. How often and extensive the procedure depends on usage and the operating environment. Service schedules run from weekly to every few weeks.

“It really depends on a lot of variables,” says Clark. “How frequently the casino swaps out cards is one factor, because you get grease and dirt on the cards, and if they are very dirty the shuffler needs to be cleaned more frequently. The felt that the casino uses on the tables also has an impact—whether it is a synthetic or a wool felt, how much residue comes off the felt and ends up in the shuffler. All of that plays into how frequently they need to be serviced. It’s a pretty straightforward maintenance, blowing them out, cleaning the rollers and so on.”

Although the occasional  shuffler might go down during a game or tournament, in general, the machine does its job consistently.

“Because we’ve been in the business so long, we produce products that really perform,” says Clark. “They last and last and last, and can run for hours on end. That’s really the only way the casino would trust them.”

Shuffle Master has not announced the features that a next-generation Deck Mate might include, but it is likely that development will follow other shufflers and be designed to work even faster and incorporate additional security features like card recognition. At present, the device can discern whether or not there are indeed 52 cards in the deck being shuffled, but exactly which cards they are is another matter. When equipped with card recognition, the shuffler could be able to notify the dealer if a player has removed a card from the deck and replaced it with, say, a fifth Jack. The technology is already in use in the company’s i-Deal single-deck shuffler, which is used in specialty house games.

Your Seat Just Phoned

The attraction of poker in the casino is that it provides more than just the chance to win money. For many, the game also is a social experience, which puts it in a category with other commercial forms of leisure and entertainment. The similarity was noticed by Keith McNally, president of Ameranth-QueueOS Gaming, Inc.

McNally started Ameranth 10 years ago with a focus on providing wireless and internet systems for the hospitality industry—restaurants, hotels, casinos, cruise ships, theme parks and sports stadiums. Clients include Madison Square Garden and 24 other sports stadiums, and the Holiday Inn chain. Like many entrepreneurs, McNally enjoys the occasional poker game.

“I play poker at least once a year with the same group of best friends from Oak Park, Chicago,” says McNally. “I would occasionally go into poker rooms and see how ladies in tennis shoes keep track of wait lists and player tracking with grease pencils and boards, and I thought that I could adapt our technology, used to manage hostess stations in restaurants, for the poker market.”

The product that resulted was Ameranth’s Poker Room Manager, introduced five years ago. Two years later the company acquired one of its main competitors, QueueOS, and merged the products and deployments of the former rivals. Last October, the company received a comprehensive patent, titled “Casino Poker and Dealer Management System.”

The patent covers player seating, public displays, tournaments, player tracking when using either electronic or manual poker tables, dealer rotation, tracking, security, wireless and internet connections and many other key aspects of poker room operations.

The basic Poker Room Manager system has a touch-screen interface that allows the board person to assign games and open or close tables, manage wait lists and interest lists and track table transfers. Players can follow their progress toward getting a seat by watching large monitor screens visible from anywhere in the room, while dealers can check their own monitors for rotation information. The system generates real-time reports for use by management.

The system was developed with the help of management and staff at Oceans 11, a well-known card casino in Oceanside, California.

“It was a partnership in a handshake sense, in that I used to play at Oceans 11 Casino a couple of times a year,” says McNally. “I saw that they had no system, so I approached the manager, Bob Moyer, and asked him and his team to help us design our Poker Room Manager system. One of the strengths of our system is that it is the easiest system to learn, use and operate because its user interface was really co-designed with the help of actual operators.”

McNally’s goal was to develop a system that would be recognizable to anyone already working in a card room.

“It intuitively works the way you think it would,” says McNally, “rather than a system having been designed by some IT guy who doesn’t realize how poker rooms truly operate.”

There are six modules to the complete system, known collectively as the “21st Century Casino.”

“Site Manager” assists with room layout, live room status, daily summaries and reports history, and the management of other modules. “Communications” lets dealers message via wireless with cocktail servers and floor personnel, who in turn text waiting players via their own mobile phones when their seats are available. “Player Manager” adds a specific poker dimension to player tracking systems, and “Kiosk Manager” can streamline the signup or registration process by creating a self-service option for players. A self-explanatory “Tournament Manager” module handles all aspects of that essential poker format.

Ameranth has a strategic agreement with Shuffle Master, which serves as a main distributor for Ameranth systems. A system interface for use with Shuffle Master automatic shufflers has been developed, but the downturn in the economy has delayed deployment for now, according to McNally.

In general, the Ameranth system is designed to make the operation of the poker room more efficient without over-complicating the process for management, labor or customer.

“There are certain functions that are still best left to human decisions and human interactions,” says McNally. “Sometimes it’s more time-consuming to try to figure out how to automate every single process. We automate the manual things that are giant pains in the neck and that computers are good at, but we don’t automate every single thing.”

No More Misreads

One technological development is doing more than just speeding up the local hold’em game. The fully automated, electronic poker table is allowing card rooms to offer with confidence the most complex of poker variants, and new games-within-games as well.

PokerTek was the first company to commercially manufacture an electronic poker table and accompanying system for the casino and card room market. The tables are available in a standard 10-player version, named PokerPro, and a two-player format, known as Heads-Up Challenge.

The PokerPro table is part of a complete system that features cashless gaming, automatic player rewards and a variety of benefits to the operator, including lower labor costs.

For the player, the automated table makes it possible to enjoy more games with more security. Besides no-limit hold’em, the PokerPro table now deals seven-card stud, razz, Omaha and Omaha hi-lo, with betting formats of limit, no-limit, spread-limit or pot-limit. It takes an extremely competent human dealer to manage a live pot-limit, hi-lo game. The all-electronic table, by contrast, can handle the most difficult situation automatically and get it right every time.

“Our platform allows us to do things that are really not possible on a manual poker table,” says Tracy Egan, vice president of marketing and product management for PokerTek. “We are trying to do things that make the game more fun for players, because it is traditionally a slow game anyway, even though we have speeded it up by 50 percent. We still want to give players other things that they can do while playing.”

Those other things include more action from each hand, more hands per hour and more rewards for playing those hands.

Take “rabbit hunting,” for example—a quirk that can bog down the game for everyone else. Some players facing a big bet with more cards still to come will reluctantly fold but feel compelled to know if the card they needed would have appeared. These rabbit hunters will ask the dealer to deal the final card and then be either relieved or devastated. Meanwhile, everyone else at the table just wants to get on to the next hand. It is a feature not many live rooms provide or tolerate.

With technology, however, rabbit hunting has gone from royal pain to revenue gain for the house.

“Rabbit hunting is purely incremental revenue for the casino,” says Egan. “Whatever the casino wants to charge, whether it’s a dime or a quarter or a dollar, the player can choose to pay that and the player’s individual screen will reveal the card that would have come.”

The other players win by not having to wait. The casino wins twice, by getting paid for the hunt and by getting to the next raked hand faster.

Another new feature is the PokerPro Reward system. Operators can set parameters to offer special-rewards promotions.

“For example, say for every 1,000 hands a player plays, you’ll deposit a $10 credit into his account,” says Egan. “Or for every 50 flops a player sees, he gets a dollar in his promotional fund. All of that gets tracked automatically by the system, and what we can see is how long that player has been sitting there, and whether or not he has been sitting out. The promotion gets deposited into the player’s promotional fund account.”

When the player brings new money into a game, the system will always take from the promotional account first. Once the money from the promotional account is risked and won, it goes into the player’s cash account. This gets around a common glitch in poker reward programs in general.

“The problem with running promotions on site, on a cashless system, is that a lot of times you’re putting money into their accounts but there is no way to guarantee that they’ve sat down at the table and played with that money,” says Egan. “This system comps the players for playing, and also gives the operator the benefit of knowing how many people have reached that milestone. And the money is taken care of automatically.”

PokerTek also is rolling out some familiar live options like kill pots, chopping blinds and the ever-popular straddle. But the technology is allowing the next generation of electronic play to evolve beyond mere replication of a human-dealt game.

Shown at G2E last November was a concept called PokerPro Plus. This enables players effectively to play at more than one table at a time. Basically, 10 players from 10 different tables could agree to play a second, “virtual” game while playing “live” at separate tables, like players online sitting at multiple tables. Players get to play more poker and operators get to collect more rake. The option is in demo stage currently.

Another added feature would be separate fixed-odds bets based on the hand being played. For example, what are the odds the flop will contain a pair, or three cards of the same suit?

“The technology allows us to do that type of thing without slowing down the game, and that’s our objective,” says Egan. “To keep poker as the core but at the same time to give players another option.”

And give operators more ways to capitalize on their poker room investment.

By   Tue, Jun 02, 2009

On January 26, 2009, Chinese around the world bid farewell to the Year of the Rat and welcomed the new Year of the Ox. For the people, government and casino concessionaires of Macau, the Year of the Rat (2008) was a year of ups and downs.

For many, 2008 could be remembered as the year when the tide turned. It was a year to remember, when many mistakes were made and valuable lessons learned. There were moments for celebrations, especially at the beginning of the year. However, celebrations quickly turned to competition and casino profits dwindled. By the end of 2008, most people were deeply concerned with the impact of mainland China’s visa policies and the global economic crisis on Macau’s casino gaming industry.

The year 2008 started with SJM announcing the rebuilding of Macau’s landmark casino resort Hotel Lisboa, the oldest casino in Asia. It was a decision that reflected the intense competition that SJM was facing since the gaming industry liberalized in 2002—the slow reinvention that it badly needed to fend off the threat of the other casino concessionaires.

The beginning of 2008 saw a stream of good news spilled over from 2007—the spectacular rise in gross casino gaming revenue and visitor numbers from mainland China and the rest of the world (especially southeast Asia). In February, Ponte 16 opened on the Macau Peninsula. It was Macau’s 29th casino. At this time, a member of the Legislative Assembly predicted that Macau’s gaming revenue would exceed US$10 billion by the end of 2008, quite a safe bet considering the economic conditions in early 2008.

There were also talks that Macau would surpass Hong Kong as the region’s top tourist spot by the end of the year. In January 2008, the total number of guest rooms available in Macau was around 16,000. By March, government figures showed that a total of 23 hotel projects (approximately 24,000 guest rooms) were under construction.

Hotel occupancy rate averaged around 70 percent to 80 percent during this period, according to local media. Gambling taxes accounted for around 70 percent of Macau’s tax revenues, and casinos employed around 44,000 people in 2007.

Mainland Crackdown

Casino security was once again under public scrutiny, despite claims by a government agency that Macau’s casinos were among the most secure in the world. Media cited an estimated US$2.5 billion per year lost in casino gaming revenue due to side-betting as a reason Macau needed more than just the most advanced security and surveillance equipment in the world.

This scam involves gamblers and junket representatives illegally agreeing to multiply the value of their table chips bet without the knowledge of the casinos (and hence, government). There was a sense that the anti-money laundering law was inadequately enforced in Macau’s casinos. Casinos were required to report any transactions that were above MOP 500,000 to the Gaming Inspection and Co-ordination Bureau. However, these transactions were normally filed under the names of the junket representatives and VIP promoters. The real identities of the actual gamblers were to remain unknown (or protected) due to the special VIP structure that Macau has adopted for decades.

The result was that VIP customers—many were mainland Chinese and would include corrupted officials or criminals—enjoyed the privacy that they wanted. In the eyes of the Chinese central government, this current VIP structure/system might be a major obstacle for the sustainable growth of Macau’s casino gaming industry.

 In February, Xinhua News Agency reported the result of a string of gambling crackdowns conducted in 2007 throughout mainland China. Police said they uncovered hundreds of thousands of gambling cases, busted tens of thousands gambling rings, and arrested more than a million Chinese gamblers.

To fight gambling, a special committee headed by the Ministry of Public Security was established. This was a warning sign for Macau and the unknown number of mainland Chinese officials who squandered away public money gambling in Macau’s casinos. There was speculation that the Chinese central government would turn its attention to Macau once the Olympic Games were over.

There was a real concern that the government would start to crack down on gambling-related organized crime and corruption (i.e., the embezzlement or mismanagement of public funds). It was believed that corruption had reached a new high and gambling was partly to be blamed. The Individual Visitor Scheme (IVS) that was implemented in 2003 has brought benefits to Macau, but also has encouraged more crime, corruption and other social ills within mainland China.

Media reports on crimes relating to excessive gambling in Macau by mainland Chinese have climbed significantly since the liberalization of casino gaming. Some observers suggest that the number of cases might have more than doubled. More seriously, the amount of money involved was staggering, and its impact on ordinary people widespread.

For example, the Shanghai Morning Post reported a former postal bureau director in Foushan (Guangdong) was caught defrauding some RMB 1.79 billion (US$ 238 million) from 352 accounts in the postal savings bank to pay back hundreds of millions that she lost in Macau’s casinos.

In another case, the former board chairman of the Gas Administration Corporation of Haikou (Hainan) embezzled more than RMB 10 million (US$ 1.5 million) of public money for gambling. Between 2001 and 2007, he made approximately 120 gambling trips to Macau and Hong Kong.

From a statement released by a former Chinese official who was tried for the embezzlement of public funds for the purpose of gambling overseas: “Gambling is the source of all evils. It ruins my family.” These high-profile gambling-related corruption cases by Chinese officials were a cause of concern for ordinary Chinese, and must have caught the eye of the Chinese central government. Enough is enough!

VIP Play

The overemphasis on VIP game play and promotion had a big role in the subsequent development of Macau’s casino industry in 2008. Crown Macau, which engaged the Hong Kong-listed VIP junket operator (also called consolidator or aggregator) Amax in late 2007, was branded as the “King of VIP” and the “busiest casino in the world” in terms of betting volume by March.

In February, Amax junkets generated about US $5.3 billion in rolling chip turnover for Crown Macau. As a result, Melco PBL’s total market share jumped from just 5.7 percent in November 2007 to over 18 percent in February 2008. Among the losers in this VIP commission war were SJM and Sands Macao.

As part of this business deal, Crown Macau offered 1.35 percent commission on chip sales to Amax. This was supposedly among the highest in the market, but it was suggested to be unsustainable, leading to little profit for any concessionaire.

Still, the first quarter of 2008 saw a 62 percent increase in gross casino gaming revenue over the same period a year earlier. In the first four months of 2008, visitors to Macau neared 10 million, up by more than 16 percent year-on-year. Mainland Chinese continued to arrive in Macau in waves, accounting for around 59 percent of this number.

The ills of an expanded VIP game play were clear to the Chinese central government. Macau’s casinos were supposedly (and secretly) frequented by an increasing number of suspected Chinese officials and managers of state-owned enterprises.

By April, some gaming executives and officials in the Macau government had expressed concern for the “unhealthy” growth of the VIP market segment. Commission had skyrocketed compared to a few years ago due to competition. Some junket operators were demanding the same kind of deal as Amax, or they would walk away to another casino operator.

To compete and boost volume, some concessionaires like Sands began to offer a higher commission rate to meet competition, and better access to credit to junket operators and representatives. New junket operators, as a result, started to give away easy credit to their players to entice them to play through them. These fresh battles between concessionaires for junket business resulted in lower profits for all. Only the junkets got to gain, and the balance of power had shifted.

Concessions Halt, Visa Crunch Begins

As competition continued to intensify in the VIP market segment, the Macau government announced it will stop granting new gaming concessions and approving land for new casino construction.

The move was seen by some analysts as a first step to slow down the explosive growth of Macau’s casino gaming industry, VIP in particular. The fact was the “unhealthy” growth of the VIP market segment had raised deep concern by the Macau and Chinese central governments. This was not sustainable. The explosive growth in VIP junket operations inevitably resulted in the export of social ills to mainland China.

These ills included gambling-related criminal activities like illegal loan sharks, embezzlement of public funds, money laundering and underground banking. Existing and new junket operations, riding a new wave of lucrative commission-based promotion, would actively promote and give out credit freely to mainland Chinese who were interested to gamble in Macau. Some of these “victims” would inevitably include high- to low-level state officials and managers in state-owned enterprises.

In May, top government officials sat with representatives from all concessionaires to discuss how to regulate Macau’s casino gaming industry. After months of cutthroat competition in the VIP market segment, enough was enough.

The Macau government must be feeling somewhat fearful of the implications that this might have on Macau’s future and the relationship between Macau and mainland China. Macau is supposed to become a multi-faceted entertainment city for families and businessmen, not a gambling-only city for hardcore gamblers. Some of the important issues put forward in this meeting included setting a maximum junket commission (at 1.25 percent of chip sales) and limiting the number of gaming tables for each concessionaire.

In the same month, authorities in Guangdong province announced the first of a series of visa restrictions on its residents who travel to Macau. Both individual and business travel permit applications were affected. These measures sent mini-shockwaves through Macau that further control would be following. By July, a final decision was already made to cap junket commission at 1.25 percent of chip sales and to cap the industry’s gaming table number at 4,000. However, many analysts thought that a cap was unlikely to be effective in curbing the junket war.

At the same time, the Macau government announced that mainland Chinese issued travel permits to Hong Kong would be unable to visit Macau using the same visa starting in September. The belt was tightening, but did it help kill the ills?

Economic Diversification?

By now, some observers suggested that Macau was too focused on gaming, and the role of Macau’s government in 2008 was to diversify the economy. Even before these calls for change, the Macau government was actively working to diversify its target markets beyond mainland China, and its economy, to include more non-gaming components.

What is more important at this stage is for Macau to build a stronger relationship with its neighboring Guangdong province—an important trading and gaming market for now. It would need to strengthen cooperation with neighboring Chinese cities to help them combat the ills.

By August, the government predicted a significant slowdown in next year’s gaming revenue. This was despite a 48 percent year-on-year increase in gross casino gaming revenue in the second quarter of 2008.

In October, the global credit crisis took a swipe at Macau. It was initially a crisis of confidence, and casino employees feared they would lose their jobs. Rumors were flying all over. Analysts started to predict a slowdown in spending among mainland Chinese and the availability of credit to gamblers. This might create an adverse effect on Macau’s casino gaming revenue.

In November, Sands Macao said it stopped all construction due to a lack of financing. Around 11,000 workers were asked to pack and go. The opening of Galaxy’s mega-resort was also postponed from 2009 to a later date. The third quarter of 2008 saw an increase of only 28 percent in year-on-year in gross casino gaming revenue.

By now, Macau’s gross casino gaming revenue had already exceeded its revenue for the entire year of 2007. However, Macau’s gross casino gaming revenue had been dropping from quarter to quarter in the entire year of 2008. The final quarter of 2008 saw a gross casino gaming revenue of just US$3 billion, compared to US$3.25 billion, US$3.61 billion and US$3.73 billion in Q3, Q2 and Q1 respectively.

Nevertheless, the 2008 Year of the Rat had been a good year for Macau’s dragon industry. Gross casino gaming revenue hit a total of approximately US$13.6 billion in 2008. Impressive, given that it was just US$3.6 billion (with 424 tables and 814 slots) in 2003.

Desmond Lam is a visiting senior research fellow at the School of Marketing/Ehrenberg-Bass Institute for Marketing Science, University of South Australia. He can be contacted at DesmondL@hotmail.com.

By GGB Staff   Tue, Jun 02, 2009

GGB: You three have been on Wall Street for many, many years. Why did you decide to leave Deutsche Bank and start up your own company?

Rich Moriarty: This is something we’ve talked about for over a year now. Luckily, Deutsche Bank brought the three of us together. Given the state of what’s happening on Wall Street and what’s going on in the gaming  industry, we felt like it was a terrific time for the three of us get together and go out on our own.

What was the impetus behind that? Did it help that gaming is not a darling on Wall Street anymore?

Bill Lerner: It’s true the sentiment on the gaming sector was quite negative and to some degree remains that way. Some of our competitors had been getting out of the business and continue to withdraw. We saw it as an opportunity to actually embrace the industry that we believe has long-term secular growth prospects while others were running the other way. To continue to be located here in Las Vegas is a real opportunity on which we want to continue to capitalize. Broadening our gaming research coverage to some names that are non-U.S. is a real opportunity for us.

Do you still have a relationship with Deutsche Bank or has that been severed completely?

RM: We do. We left on great terms. They certainly weren’t pleased with our departure; we essentially lifted out their equity gaming team, but certainly in this type of environment they understood. It was a terrific opportunity for us, so it goes to show you how good the leadership is at Deutsche Bank as well.

How about relationships with other investment banks? Are you allowed to do that at this point, or is there some sort of non-compete in place?

BL: No, no non-compete whatsoever. We will move forward and continue to work with many of the institutional investors that we’ve worked with over the years.

Deutsche Bank is a big player in the gaming business. Without the weight of that name behind you, do you expect to have the same kind of access and will you be able to gather the same kind of information you had in the past?

BL: That was something that we certainly contemplated when we were anticipating a departure from Deutsche Bank. There are certain resources that we’ve had the benefit of that we won’t have anymore. That’s something that we have contemplated, but the early indications so far have been very encouraging.

From an access perspective, I don’t envision any real issue. In fact, many of the folks in different aspects of the industry have been into us to talk about how we might be able to work together differently than in the past. Many institutional investors who are our clients have been very supportive of what it is we have in mind. We haven’t run into any issue. It’s a fair consideration, but so far, so good.

If a government came to you and asked how best to implement gaming, would you be able to tell them what the impact of a high tax rate is versus a low tax rate, that kind of thing?

Grant Govertsen: Absolutely, and we’ve been looking at that for years and years and years. As we model earnings for these various companies, we’re looking at several jurisdictions, some with onerous tax rates and some with much more favorable tax rates. I think we’ve got a pretty good handle on what the sweet spots can be.

There’s a suggestion that we’re going to see a lot of sales of individual properties from the big companies like Harrah’s, MGM, Las Vegas Sands, Station, etc. Do you believe that’s going to happen to any great extent, and what will be the trigger that really starts it?

BL: I think there’s going to be fragmentation to resolve balance sheet issues. I think that will result in a number of new gaming companies being formed, or will result in the rounding out of portfolios for existing gaming companies that have wanted access to certain geography that they haven’t had in the past.

There are a lot of folks who think they can essentially steal properties from some of these troubled gaming companies. But what I think is going to be challenging with that mindset is that it doesn’t resolve any leverage issues for any of these gaming companies to sell assets cheaply enough to be attractive for many of the folks who want to buy gaming assets.

Some of the gaming operators recognize that sometimes it makes sense to pay a premium for some transformational asset in their particular situation. I think that ultimately there’s a happy medium. I do think you’ll see deconsolidation in the Strip corridor. You may see an asset trade in Macau, and you might see a regional casino asset trade as well.

By GGB Staff   Tue, Jun 02, 2009

Slot supplier Multimedia Games announced that Randi Ingram has been named director of sales. The appointment is part of an effort by Multimedia to strengthen its sales force to expand its presence in traditional commercial casino and Native American markets.

Ingram will report directly to Multimedia Senior Vice President of Sales Mick Roemer.

Ingram has 18 years of gaming industry executive experience, including 12 years as a senior account executive at leading slot-maker International Game Technology, and three years as an executive at Harrah’s Entertainment responsible for slot procurement, management and development.

Ingram will initially lead Multimedia’s strategies to build market share at California Native American casinos. Ingram and Roemer will also serve as key conduits with industry input for Multimedia’s Class III development teams. In addition, she will be involved with the development and training of the company’s sales team.

By GGB Staff   Tue, Jun 02, 2009

Slot and system manufacturer Bally Technologies, Inc. announced it has named Mark J. Wiedemer director of systems sales.

Wiedemer was most recently director of systems sales for Konami Gaming. Previously, he was with Bally for seven years in international sales. During his previous run with Bally, Wiedemer helped to establish the company’s worldwide sales, distribution and operational network for its global systems and international Class III gaming devices.

“We are pleased to welcome Mark back to Bally,” said Derik Mooberry, Bally’s vice president of system sales-western North America. “Mark is a dynamic and proven senior sales executive whose extensive background in gaming will be a strong asset as we continue to grow our industry-leading systems business.”

“This is an exciting time to be returning to Bally Technologies, as the company outpaces the competition in all areas of systems and networked-gaming technology,” Wiedemer said. “I’m looking forward to working with Bally’s outstanding sales and management team once again as we continue to demonstrate our unsurpassed global leadership and innovation in the systems technology arena.”

By GGB Staff   Tue, Jun 02, 2009

MTR Gaming Group recently announced the selection of Robert Norton as the company’s new chief operating officer. Norton will fill the position before June 8.

Norton joins MTR from Isle of Capri Casinos, Inc. He was corporate vice president of business strategy in St. Louis, Missouri prior to being appointed COO of MTR Gaming. He has been with Isle of Capri since 2004.

“We are pleased to welcome Robert to the MTR team,” said MTR Gaming President and CEO Robert Griffin. “As COO of MTR Gaming Group, Inc., Robert’s responsibilities will include improving the operating performance at our properties, principally by overseeing the implementation of new gaming product and establishing operating standards. We are confident that Mr. Norton will be a valuable asset to MTR.”

By GGB Staff   Tue, Jun 02, 2009

Within one week of each other, two gaming pioneers who influenced the industry in different ways died.

Claudine Williams, the first woman to own a casino in Nevada, died in May at the age of 88. Williams was one of the most honored women in Nevada gaming. Along with her late husband, Shelby Williams, Claudine Williams owned and operated the Strip’s Silver Slipper casino and later the Holiday Casino, across from Caesars Palace, which was later bought by Harrah’s, but still operated by Williams. She served as chairwoman of the property until the late 1990s.

Williams was a mentor to several generations of gaming executives, including Harrah’s Phil Satre, and has been named to several “halls of fame” include Nevada’s and the American Gaming Association’s.

Satre remembered the time he spent with her while he was president of Harrah’s.

“Claudine represented someone who was always open to new ideas and did not fear change,” he said. “She spanned an era of enormous change in the industry—and had a front-row seat—and was able to see change as a positive.  She was one of the authentic forces in the industry in the 20th century.”

AGA President and CEO Frank J. Fahrenkopf, Jr. paid tribute to Williams.

“Claudine was a dear friend of mine,” said Fahrenkopf, “and her passing is a real loss particularly for Las Vegas and the state of Nevada, but also for the entire gaming industry. She was a true pioneer who brought firsthand knowledge and common sense to the industry. Throughout her career and life, she was a pillar of integrity, and she will be sorely, sorely missed.”

And John Connelly, a riverboat gaming trailblazer, passed in his native Pittsburgh at the age of 83. Connelly started the Gateway Clipper Fleet of day-excursion boats in Pittsburgh in 1958 and expanded to St. Louis with the Admiral. In 1992, he bought the President Casino Broadwater Resort in Biloxi, Mississippi.

When riverboat gaming was approved in Missouri, Connelly converted the vessel in 1994 to a riverboat casino, one of the first in the nation, and founded President Casinos, one of the first enormously popular riverboat companies.

By GGB Staff   Tue, Jun 02, 2009

Slot and system manufacturer Bally Technologies, Inc. announced a new contract to provide a comprehensive slot accounting, player tracking and marketing system solution for the opening of the new Sheraton Puerto Rico Convention Center Hotel & Casino this November in San Juan.

Bally was selected after an extensive bid and evaluation process to provide a complete solution for the new casino’s high-speed Ethernet-based, server-assisted casino floor. The solution includes the new Microsoft Windows Version 11.0 of its slot accounting and player-tracking system; 465 iVIEW displays; a full suite of marketing, promotions and customer-relationship solutions including Bally Power Bonusing; Bally’s award-winning Business Intelligence Solutions; the TableView real-time table rating and player-tracking system; and the new Download Configuration Manager, a server application that allows casino operators to view, examine, and manage their floor configuration from a central location.

“We considered a number of factors when selecting our systems partner, and we ultimately chose Bally because of their outstanding reputation for customer support and their broad portfolio of marketing and promotions solutions,” said Robin Powell, principal of Talisman Group, the consulting firm developing and executing the concept and installation of the casino for Interlink Group, the managing partner at the Sheraton Puerto Rico Convention Center Hotel & Casino.

“As a new casino competing in a well-established and sophisticated gaming market, it is important that we have an arsenal of powerful, player-centric marketing tools to attract, reward and retain players, and Bally’s solutions are absolutely the most exciting and comprehensive,” Powell said. “Bally’s longstanding commitment to systems is unmatched in the gaming industry.”

In a separate announcement, Bally officials said they have secured a contract to provide a comprehensive slot accounting, player tracking and marketing system solution for the opening of the Lodge at Deadwood in Deadwood, South Dakota,  in November.

Another complete Ethernet-based system, Bally’s solution for the Lodge at Deadwood will use a package of software and hardware very similar to that being used in Puerto Rico.

“Bally Technologies is an absolute standout when it comes to customer service and support,” said Ryan Wordeman, president of Deadwood Resorts LLC. “That commitment to customers, combined with Bally’s extensive bonusing package so that we can keep our players excited and offer them many different ways to win, made choosing Bally an easy decision for us.”

By GGB Staff   Tue, Jun 02, 2009

Slot manufacturer AC Coin & Slot announced the introduction of 12 new slot products for its popular Mega Bonus game library.

The new games, featuring community play and the manufacturer’s signature bonus events, represent a surge in the company’s game production, which already stands at 60 percent more games released in 2009 than in all of 2008.

Among the highlights in the latest group of releases are “Super Big Game Show Bonus,” a three-station community game setup with a 41-inch bonus screen; “Slingo Mystery Bonus,” a stand-alone 50-line game based on the popular internet bingo-style game;  and “Wild Native Spirit,” the newest addition to the “Big Roller Community Series,” featuring six games surrounding a giant scroll-style bonus event.    

“Today’s slot players demand enormous value for every entertainment dollar spent,” said Jerry Seelig, executive vice president and general manager of AC Coin & Slot. “Each of our new bonusing games was developed to exceed player expectation by delivering an incredibly high level of entertainment value.

“These slot products continue our forward momentum in creating must-play games that drive traffic to casino gaming floors. Our exciting array of new leased games utilizes the most competitive pay tables to continually attract new customers and evolve the player experience.”

By GGB Staff   Tue, Jun 02, 2009

Gaming Support USA, Inc. has received approval as a gaming supplier by the Alcohol and Gaming Commission of Ontario, Canada.

Ontario is the largest gaming market in Canada, recording both the highest casino and slot revenues of any Canadian province during fiscal 2007-08.

“Obtaining this approval for Ontario is an important milestone for our team,” said Don Baugh, CEO of Gaming Support USA.

“We have worked hard to build a quality customer base across America for our range of revenue-enhancing products. This approval will allow Gaming Support to begin supplying Canadian operators with the world-class solutions we have delivered to the American, Asian and European markets, including our industry-leading digital signage and bonusing technologies.”

By GGB Staff   Tue, Jun 02, 2009

Table-game system supplier DEQ Systems Corporation announced that its “EZ Baccarat” system, a no-commission baccarat game with a side bet, has been approved for release in Macau.

EZ Baccarat, which has been spreading rapidly in California’s Indian casinos, accelerates baccarat speed by eliminating the commission. The winning hand bank commission is replaced by “barring” one specific winning bank hand and/or reducing the banked winning wagers. The EZ Baccarat method, carrying the trademark “Dragon 7,” bars a three-card total of seven. Players can also make a side wager as to the occurrence of the Dragon 7.

The game already has an order for four tables at Wynn Macau, which is the casino that requested its approval.

“We have been working a long while for this significant approval, and it has certainly been worth it,” said Earle G. Hall, president and CEO of DEQ. “Macau has by far the largest concentration of baccarat tables in the world, and this approval is a great start to our Asian commercialization strategy for this revenue-generating product.”

By GGB Staff   Tue, Jun 02, 2009

Slot and system manufacturer Bally Technologies announced it has leased a 41,000-square-foot building in south Reno, Nevada, to expand its office there.

The announcement, two weeks after the company laid off 15 Reno employees, says the additional space will accommodate future expansion and help consolidate existing research and development, customer service and other operations.

“We have had a presence in Reno for more than 20 years and have had very positive experiences with the community and the Reno employee base,” said Gary Kapral, senior vice president of human resources for Bally.

By GGB Staff   Tue, Jun 02, 2009

Table game supplier TCS John Huxley has introduced a new roulette table game. Called NX2, the product offers a new approach to roulette “neighbor betting.”

NX2 uses a specially designed layout allowing one chip to cover three numbers that are next to each other on the wheel, with odds of 11-1. The new approach does not affect the probability of winning or losing, or house edge percentages. It also speeds up the game, according to the company, because players are able to place lower-stake neighbor bets without the dealer’s assistance.

NX2’s first installation was completed at London’s Paddington Casino, on two of the casino’s busiest roulette tables. According to Casino Director Gary Andrews, the faster play and increased neighbor bets increased the hold of the tables.

“In their first two months these tables had an above-average hold with dramatically increased spin rates—something, I believe, will continue,” Andrews said. “Players are attracted to NX2 as a faster game. They are able to place their own neighbor bets for lower stakes and can easily bet on sections of the wheel. I believe that NX2 Roulette will replace the old racetrack-based layouts and become the first choice on roulette tables across the world.”

By GGB Staff   Tue, Jun 02, 2009

The Gaming Standards Association has released clarifications to its groundbreaking G2S (for game-to-system) protocol standard.

G2S is the computer protocol designed to eventually let gaming machines from any manufacturer communicate with any other manufacturer’s system.

GSA’s G2S Committee has released the “G2S Message Protocol v2.0.1.” The package includes the protocol, errata, schema files and an important clarification document that fine-tunes many points of the G2S protocol. The document is available for free and can be immediately downloaded from the GSA’s website, www.gamingstandards.com.

“The G2S protocol was a huge leap forward for the industry,” said GSA Technical Director Marc McDermott. “Like with any new technology, as you start to use it, you come across details and minor issues that need clarification. This document helps to answer questions about the protocol and provides manufacturers even more information, so that we as an industry can enhance the interoperability of our products, making operators’ dreams of plug-and-play a reality.”

The document, like the protocol itself, was developed by GSA’s G2S Committee. The committee is comprised of a wide range of representatives from the global gaming industry.

By GGB Staff   Tue, Jun 02, 2009

A federal district court has issued summary judgment rulings dismissing most of the patent infringement claims filed by International Game Technology against rival Bally Technologies, although the judge did validate two claims in the lawsuit.

IGT’s suit against Bally claimed that Bally’s Power Promotions, Power Bank and Power Winners online slot system software, which adds player rewards through the SDS/CMP online accounting and player tracking system, infringed on several IGT patents. The judge’s ruling rejects those claims.

The court, though, also found that Bally’s ACSC Power Winners and ACSC Power Rewards products do infringe two of the patents IGT asserted in the lawsuit.

“For the two products partially in question, the company has undertaken technical changes to ensure non-infringement,” said Ramesh Srinivasan, executive vice president of Bally Systems. “The revenues derived from these products to date are immaterial to Bally’s financial position.”

In the litigation, IGT originally claimed Bally’s products infringed some 200 patent claims, but following patent re-examination proceedings and case-related actions, all but eight of the claims were withdrawn.

IGT officials are pleased with the split decision. “We are pleased that the court has affirmed the validity of our patents and their infringement,” said IGT CEO Patti Hart in a statement. “We believe strongly in the United States patent system and the need to protect our intellectual property and respect the valid intellectual property rights of others.”

By GGB Staff   Tue, Jun 02, 2009

Aristocrat’s newest video slot product, Jaws, made its premiere at Sycuan Casino last month. Sycuan Band of the Kumeyaay Nation Tribal Chairman Daniel J. Tucker led the ribbon-cutting, with five of Sycuan’s best players jumping in to be the first to play.

Based on the Academy Award-winning film franchise, Jaws features a total sensory experience, including incredible video graphics, state-of-the-art sound, and even a “shark tooth” spin button.

Familiar theme music leads the player into a variety of movie-themed bonus events.

The game also is a Hyperlink progressive, with four jackpot levels within a random progressive bonus event.

An electro-mechanical buoy topper lights up and sounds off a bell during game play, and shark “gills” cover the speakers.

Jaws is driven by Aristocrat’s Gen7 platform, resulting in state-of-the-art video and sound quality. Encasing the game is the award-winning Viridian cabinet, complete with blue water bubble trim and edge lighting that turns red when players enter the bonus.

By GGB Staff   Tue, Jun 02, 2009

The National Center for Responsible Gaming last month announced the creation of the nation’s first NCRG Centers of Excellence in Gambling Research at Yale University and the University of Minnesota.

The Centers of Excellence will employ a long-term, institutional approach to conducting innovative and multi-disciplinary research and education programs about gambling disorders. The research grants for the Centers of Excellence were awarded and will be managed by the Institute for Research on Gambling Disorders, an independent program of the NCRG formerly known as the Institute for Research on Pathological Gambling and Related Disorders.

“In 1996, the NCRG launched the first competitive grants program in the U.S. to fund research into gambling disorders, so the creation of the new Centers of Excellence is consistent with the organization’s pioneering legacy of supporting the highest-quality research in this field,” said Glenn Christenson, chairman of the NCRG. “This marks a true evolution in our approach to funding research, one we are confident will contribute to seminal findings on gambling disorders in the years ahead.”

To date, the NCRG has supported research on gambling disorders primarily through a long-term grant to the Division on Addictions at Cambridge Health Alliance totaling more than $7 million since 1996, and through smaller, project-based grants to researchers around the world. These projects will continue to receive funding from the NCRG.

The creation of the Centers of Excellence marks an expanded commitment by the NCRG and the institute to advance research on gambling disorders by increasing the number of institutions that receive significant, multi-year grants and promoting sustained and collaborative research on gambling disorders.

The Centers of Excellence were chosen by an independent panel of peer reviewers. Each center will receive a three-year grant for a total of $402,500 to perform the proposed research. The multi-disciplinary research program at each Center of Excellence will focus on basic questions about gambling addiction, and will be directed by a principal investigator who is a recognized expert in the field of gambling disorders.

Led by Dr. Marc Potenza, the Center at Yale University will examine the various factors that influence treatment of gambling disorders. The investigators will conduct a placebo-controlled, randomized clinical trial to investigate whether the drug naltrexone will be effective in a “real-world” clinical setting.

The Center at the University of Minnesota, under the leadership of Dr. Jon Grant, will develop a model of impulsivity that will enable the identification of young adults at risk for developing pathological gambling. Understanding who is susceptible and why will help lead to effective interventions for prevention and treatment. In addition, both centers will conduct innovative, science-based public education programs.

By Caitlin McGarry   Tue, Jun 02, 2009

Utilizing six touch-screen player stations embedded in a standard-size blackjack table, the i-Table combines an intuitive electronic betting interface with a live dealer who deals the selected game from the appropriate Shuffle Master utility product (e.g., i-Shoe intelligent card-reading shoe for games like blackjack and baccarat, or the i-Deal specialty shuffler that includes card recognition).

By automating the betting process, the i-Table increases live table game security, accuracy and speed, resulting in an estimated 30 percent increase in hands per hour while eliminating errors, according to a company spokeswoman. There also are multiple side bets available, as well as real-time prop bets. No check changing is required.

Shuffle Master says the i-Table’s security is unmatched, providing reduced chip theft, eliminating rail theft, reducing card manipulation and preventing dealers and players from colluding to cheat the system. The i-Table also strives to cut operating costs. The company said use of its product requires less pit supervision, dealer training and chip handling, and also necessitates less use of pit clerks and fewer fills and automatic refill notifications.

Further, its integrated card and bet recognition functionality instantaneously records a variety of crucial table game data points, including actual win/loss and handle per player, while providing accurate player ratings and skill analysis.

Finally, the i-Table platform provides casinos with game versatility: its integrated software and hardware configuration makes it easy to switch between popular shoe-dealt games like blackjack and baccarat and specialty games like Three Card Poker and Ultimate Texas Hold’em as player demand dictates.

For more information about the i-Table, contact Shuffle Master at 1-702-897-7150 or www.shufflemaster.com.

By Caitlin McGarry   Tue, Jun 02, 2009

This summer, the Blue Yonder Gaming Corporation will launch its flagship networked gaming product, the NGAGE Platform. Blue Yonder’s networked gaming system aims to provide gaming manufacturers a seamless transition from stand-alone machines to networked gaming.

Historically, server-based (or networked) gaming has been difficult for gaming manufacturers to develop. The team at Blue Yonder Gaming has developed a new software solution to handle the technology infrastructure of networked gaming, allowing manufacturers to focus on gaming content.

The NGAGE Platform has been developed from the ground up, using modern programming methodologies to ensure cross-platform support for both Microsoft Windows and Linux. NGAGE is engineered to be fully interoperable with all other systems that use industry-standard protocols, including SAS 6.02 and G2S, and industry-standard peripherals from JCM, MEI, FutureLogic, TransAct and Cashcode.

“The NGAGE Platform is designed to integrate seamlessly with existing content,” said Blue Yonder Gaming CEO Peter Shoebridge. “Our platform provides a practical way for content developers and gaming manufacturers to transition to a networked-gaming environment. We offer a cost-effective, low-risk system with a dedicated team of engineers to assist with development and integration. Simply put, we built it so you don’t have to.”

Phase one of the platform, to be released this summer, features downloadable on-demand content; central administration and configuration; extendable meter support; full play history (including screenshots); support for wireless gaming and administration devices; high-performance distributed and replicated memory object caching system; open client architecture to allow easy integration with existing content; compatibility with .NET applications; Adobe Flash, Java and C++ based technologies; and support for Microsoft SQL Server and PostgreSQL database back-ends. Scalability and performance have been engineered into the platform from the beginning.

Phase two will include a multi-player gaming infrastructure, a full accounting system and other new features.

For more information on the Blue Yonder Gaming Platform, e-mail info@blueyondergaming.com or call 1-866-299-9107.

By Frank Legato   Tue, Jun 02, 2009

This new MegaJackpots wide-area progressive comes with an optional progressive controller that can link up to 20 games for a community-play bonus round.

The base game for Pony Express is a 25-line video slot with a 125-credit maximum bet. It features IGT’s “Easy Bet” wagering, which ensures that all players wager at least enough to cover all the paylines. The primary game features wild symbols and scatter-pays, all carrying the Old West theme. It is set up for three-machine banks, with an overhead LCD bonus display.

The common bonus is a group play feature—there is a window in which several players can enter the bonus at once. It is a random trigger. When it happens, one player is awarded a primary Pony Express Bonus and selected additional players get a secondary “Bonus Ride.” The player awarded the main bonus is shown a game screen with two levels of panels, and is prompted to select one upper panel and one lower panel.

Each panel reveals a credit value, an “Extra Life” symbol, a “Stopper” or “Win All.” The latter reveals all eight panels and awards the accumulated amount.

The player selects panels, accumulating the bonus award, until all eight panels on the upper screen are revealed or until the “Stopper” appears, ending the bonus. If all eight panels are selected, the player selects one of three golden doors to reveal a final, extra credit amount.

Players selected for the Bonus Ride are shown eight “destinations” and pick one to reveal a credit value, and a second to reveal additional credits or a bonus multiplier.

Manufacturer: International Game Technology

Platform: AVP

Format: Five-reel, 25-line video slot

Denomination: .01 (recommended)

Max Bet: 125

Top Award: 100,000 credits

Hit Frequency: Approximately 50%

Theoretical Hold: 6.5%—14.1%

By Frank Legato   Tue, Jun 02, 2009

Aristocrat has covered the gamut of game styles over the years, and has created its share of new styles. Interestingly enough, this is the manufacturer’s first multi-game unit.

Created for the advanced Gen7 video platform and the slot-maker’s new cabinets—the network-ready Gen7, Mav500, MavSlim and Crown Slant—Player’s World By Demand places four popular Aristocrat base games in a multi-denominational package. For the first group of games to be offered in the new format, Aristocrat departs from longstanding practice by offering the player-selectable betting units in high denominations—quarters, 50 cents and dollars—and low-payline formats.

The first suite of games:

“Big Red”—a five-line video slot with a free-game bonus event. The free games are triggered by wild-symbol wins. When one or more kangaroo symbols substitutes in a win, five free games are awarded. A tree symbol in the free games repeats the triggering combination.

“Super Bucks IV”—a three-line video that allows the player to choose from three free game features, according to volatility. Scattered badge symbols during the free spins trigger additional free games.

“Fa Fa Fa”—a five-line video with a bonus feature that awards 10 free spins. A wild symbol is added with each successive free spin to the middle three reels, and the three wilds remain in place for the last five free games.

“Black Panther”—a straight five-line video in which the black panther symbol is wild.

Manufacturer: Aristocrat Technologies

Platform: Gen7

Format: Five-reel, multi-line, multi-game video slot

Denomination: Multi-denomination—.25, .50, 1.00

Max Bet: Configurable

Top Award: Various

Hit Frequency: Approximately 33%

Theoretical Hold: Various

By Frank Legato   Tue, Jun 02, 2009

With this offering, Konami gathers all of its best game styles and gives operators the opportunity to offer them in a community-play package.

The community play part is a horse race, in which all players at a bank can participate for one of four progressive jackpot levels. New Konami games in the K2V 2.0 video platform or two different stepper game platforms can be linked in this setup to a four-level mystery progressive.

The mystery bonus is triggered by coin-in levels, and players qualify to participate according to their wagering levels. The more the bet on the triggering spin, the more horses are allotted the player for the bonus race—a good design for promoting high average wagers.

Progressive reset levels are configurable by the operator, but typical levels would reset at $5-$10 for the “Mini” jackpot, $50-$100 for the “Major,” $100-$200 for the “Mega,” and $1,000-$1,500 for the “Maxi.”

Each base game retains its own bonus features and play style. Supported game series include five-reel, multi-line video slots; the “KonXion,” “ScatteReels” and “Xtra-Reward” scatter-pay video slots; Advantage-Plus five-reel stepper games; and “27 Ways” scatter-pay steppers.

When the bonus is triggered, an overhead LCD video display features the “Running of the Roses” horse race, and eligible players (players who were making wagers on the game when the mystery trigger enacted) are each allotted horses. The race plays out on the big screen, and one player is awarded one of the four progressive jackpots.

All players are awarded consolation bonus  prizes.

In all, this setup gives the operator a chance to pick the highest-earning Konami games on the floor and place them in a configuration that promotes high average bets and creates excitement on the floor.

Manufacturer: Konami Gaming

Platform: K2V 2.0, Advantage Stepper

Format: Five-reel, multi-line or scatter-pay video slot; five-line or scatter-pay stepper

Denomination: .01, .05

Max Bet: Configurable

Top Award: Progressive; $1,000-$1,500 reset

Hit Frequency: Various

Theoretical Hold: Various

By Frank Legato   Tue, Jun 02, 2009

Oh, those wacky millionaires.

Normally, when a millionaire loses a bunch of money in a casino, he just gets more. I even stood in line at a redemption booth once when a rich guy was cashing out a few yards away in a VIP area, and the guy seemed proud of losing.

He stands there and cashes in about 20 grand in chips, and, looking at my face—I had the same expression you get at the dentist after the Novocain sets in—he says, “Don’t worry, I lost a lot more.”

Here, I was happy I still had $80 worth of chips to cash in—hey, it’s almost a hundred!—and Diamond Jim seems to be flaunting the fact that he had gambled more in a few hours than I will pay for my house over 30 years.

He didn’t walk away with cash, though. All that dough was applied to his credit account. These guys can gamble on six-figure and seven-figure credit lines, which are what keep the high-roller world spinning.

Of course, sometimes those credit lines get them in trouble. Take the case of Terry Watanabe.

Mr. Watanabe is a millionaire from Omaha, Nebraska. He made his millions in his family import business. He lost a lot of it at Caesars Palace and the Rio in Las Vegas.

In 2007, it says here, Terry lost around $112 million at those two casinos, and paid all of it back, except $14.7 million. For that debt, prosecutors say he had a simple solution—he wrote them a check. It bounced. So the casinos are coming after him in criminal court.

Man. A $14.7 million bounced check. I hate when that happens.

However, dear readers, that, alone, is not why Terry’s story has made it into my magnificent monthly marathon of mirth. His defense scheme is murky. At most. (OK, I’ll stop.)

Attorneys for Mr. Watanabe (the name is Cherokee for “Man Of Many Flaming Dollars”) say they have witnesses lined up who will testify that the casinos plied him with alcohol and prescription drugs that made him goofy. He was so hopped up on booze and pills, they say, he didn’t know what he was doing.

He was in a “constant state of intoxication,” the defense team says.

It is the latest court case that involves a player blaming a casino for his own behavior. Granted, it’s usually someone suing a casino for not recognizing that he’s drunk, or a crazed addict, or that he’s losing, by God, so the casino shouldn’t take his money. But it’s the same concept—just with the big bounced check added in for entertainment.

You know, I’ve gambled in casinos for more than two decades, and I’ve never been offered a Quaalude. Not once. I’ve never seen a casino host handing out Vicodin or Oxy. “Here, Mr. Smythe-Smythe. Wash that ‘lude down with this fine Scotch before your next hand. It’s our lucky Scotch!”

I’m having trouble believing that this actually happened.

I can believe that the guy imbibed like the town drunk while he played, but I don’t believe the drug story—and whatever his state, it was his own responsibility.

Maybe it’s just my frame of reference. In 20 years, I can think of two times when I kept playing when I was too sloshed to be playing—you know, when the conversation with the server becomes like this:

“Another cocktail, Mr. Legato?”

“Aaarrumaglockenfrah.”    

The first time, I was in a poker room with my friends, so someone else was making my bets for me as I sat there on the brink of consciousness. I ended up with about half the money I sat down with, so I apparently did win a couple of hands, even though I was like a mannequin at the poker table.

The other time, I hit a royal flush for $1,000, and started ordering the booze. I ended up stopping at a blackjack table on my way back to my room, and that’s all I remember. The next day, I woke up in my hotel room and realized I had won $500 at the blackjack table, apparently while unconscious.

It’s not something I recommend, especially if it’s millions you are wagering instead of $10 chips.  But even if I had lost, I would not have blamed the casino.

I wonder if I’d feel differently if it was $100 million, and I was playing on credit.

We’ll never know, because even if I could, I wouldn’t play on credit. When my money’s gone, I do the right thing. I slouch back to my hotel room sifting through the lint in my pocket, like some pathetic hobo.

Of course, that’s after I get my drugs from the casino host.

By Frank Fahrenkopf   Tue, Jun 02, 2009

As you read this column, let’s hope this “Great Recession,” as it is being called by some, will be coming to an end and a recovery will have begun. As it is being written, there is no way to know how soon that happy occurrence will take place. But as difficult as it is to believe right now that this too shall pass, when we look back, we may see a proverbial silver lining in the clouds of the economic turmoil of the last two years.

First, the impact of the economy on the gaming industry and the accompanying risk to gaming communities and states has made the value of the industry crystal clear to all but the most biased of elected officials.

Nothing makes one appreciate jobs, economic development and tax revenues quite as much as the specter of losing them. As we reported in our recently released “2009 State of the States” report, while the industry held its own last year (revenues dropped a little less than 5 percent in the U.S.), it is clear the recession is taking a deeper toll this year. Still, 10 states—including Kentucky, Ohio, New Hampshire, Massachusetts, Texas and Georgia—are currently considering legalizing or expanding gaming. That is pretty strong testimony to an understanding of the contribution gaming can make.

Second, the gaming industry has solidified its place within the travel and tourism industry by working hand-in-glove with our colleagues in the industry to deal with the devastating impact of a panic-driven drop in business meetings and convention travel. These efforts have made a real impact, as members of Congress have all but silenced the rhetoric against meetings and event travel to destinations like Las Vegas.

And, finally, the industry has responded to the crisis by developing better ways to operate. It has been forced to be even more sensitive to the needs of its patrons and more creative to meet those needs in more efficient and cost-effective ways.

The industry is adapting to this tough economic climate through innovation and a commitment to providing value to its customers.

For example:

• Equipment manufacturers are developing new and exciting gaming experiences that meet the demands of increasingly frugal customers.

• The industry is working to re-establish itself as a source of good-quality entertainment at a fraction of the cost of other recreational activities.

• Casino hotels have lowered room rates to levels not seen in more than a decade.

The key is sharing what we are learning from this experience, and one of our most important roles at the American Gaming Association is to facilitate such sharing. To help increase understanding of how the industry is dealing with the ongoing economic challenges, our conference program at Global Gaming Expo last November focused on coping with and overcoming these difficult times, topics we will continue to examine during G2E Asia 2009, scheduled for June 2-4 in Macau.

Just as is the case in the U.S., these are challenging times for the Asian gaming industry, and gaming companies are being forced to rethink their strategies, adjust their balance sheets and reprioritize goals.

In Macau, for example, the lack of liquidity in the financial markets has put many building projects in the region on hold, and continued travel restrictions have limited visitation. As a result, the second half of 2008 saw the number of visitors to the peninsula decline sharply. Gaming revenues for the period totaled $6.26 billion, down 15 percent from the $7.34 billion in revenues earned during the first half of the year. The resulting unemployment has strained an already-challenged infrastructure.

While a revenue increase of 8.1 percent for the first quarter of 2009 is a sign that Macau’s gaming industry may already be rebounding, revenues were still down 13 percent from the first quarter a year earlier, when the casinos posted a record $3.7 billion in revenue.

This year’s G2E Asia will provide industry leaders with a unique opportunity to share their experiences and discuss strategies for moving through these times and into a better and more prosperous future. It also will provide the opportunity to hear from some of the leading figures in Asian gaming, including a panel of gaming analysts that will explore the future financial outlook for Asian gaming.

Arguably, the most important conference sessions will be held on the final day of G2E Asia, as they will focus exclusively on how manufacturers, developers and casino operators can navigate the economic storm. Sessions led by scholars and experts will closely examine how gaming facilities can cut costs without sacrificing their commitment to customer service, how developers can identify and capitalize on creative financing solutions, and how companies can use intelligent strategic marketing to continue building their customer base even in difficult times. These are issues we all can identify with in today’s environment.

G2E Asia will help demonstrate that—at their core—the U.S. and Asian gaming industries remain strong. Every day, across the globe, casinos continue to generate revenue. Though the recession has changed the economic landscape, gaming continues to capture the imagination of millions of casino patrons each week.

The gaming industry is no stranger to adversity. By demonstrating resiliency and ingenuity—just as we have done in the past—we can weather yet another storm. And by using forums such as G2E and G2E Asia, we can learn from this difficult situation and move forward with the knowledge that we are better for it.

By Frank Fantini   Tue, Jun 02, 2009

It has been a while since fundamentals were the major theme in investment discussions involving casinos.

For a long time, worries about debt covenants going toxic and driving companies into bankruptcies or fire sales to maintain balance sheets have driven investors.

Many investors fled stocks for the relative safety, and suddenly very-high yield and potential returns, of bonds. The way to own a casino, it seemed, was to own its bonds, because, sooner or later, bondholders would become the stockholders.

And that will almost surely be the case at several companies—perhaps some with marquee names.

Before balance sheet hysteria, investors were driven giddy by dreams of grandiose, multibillion-dollar meta resorts with financing provided by a world awash in liquidity, which itself was largely supported by the gold rush-like boom in Las Vegas real estate values and other assets.

And before that, there were the story stocks—riverboats dotting the American landscape and turning entrepreneurial enterprises into public companies, inventions like automated shufflers and slot management systems leading to more efficient and profitable operations.

Many a fortune was made in the early 1990s when riverboat stocks rocketed skyward. And many were lost when they crashed to Earth, before some—Argosy, for example—rose again to reward investors.

Now, with the nation’s banking crisis apparently behind, the casino industry’s own balance sheet issues clarified, reality having set in on starry-eyed developers, and the halcyon days of a young industry behind, it may be time to return to fundamentals.

Those fundamentals might not seem so exciting as investors settle for more realistic valuations, bankers and investors finance less grand projects that actually pencil out on more than dreams, and the North American gaming industry grows more slowly.

But the new, more sober era will still present opportunity to true investors, people buying a piece of a company that they’ve studied and understand, not a trade-based hype and hope.

We’re already seeing a turn in that regard, as evidenced by first-quarter earnings conference calls where discussion turned more to items like cost controls and business volumes.

The most popular measure of an investment’s fundamentals has been price-to-earnings, and for good reason. It’s a simple term to understand and, ultimately, stock prices are driven by earnings.

But PE has not been the favored measure for gaming companies. Debt-to-EBITDA or enterprise value-to-EBITDA have been the favorites. One reason is that cash flow is a more reliable indicator of earnings power less susceptible to accounting manipulation.

And it is the measure lenders and buyers use when valuing companies.

There is another measure, however, that has been almost discarded but may deserve something of a comeback—price-to-book value, with book value meaning the value of a company’s assets.

This measure has long seemed archaic in an age where we have fewer factories and more service companies, where software can generate far more money than its tangible constituents can possibly be worth.

 An example in a casino industry context are slot machines and participation leases.

Casinos hate participation leases. Why give $20,000 a year or more to slot machine companies as a revenue share for a box that can be bought for $12,000 or $14,000 and manufactured for a lot less, casinos have asked.

But the value, slot companies argue, is far greater than $12,000 or $14,000 if the machine can generate tens of thousands of dollars a year more than a bought machine, and do it year after year.

The value slot machine companies have arrived at in most cases is 20 percent of revenue—a bargain for both them and casinos, they say.

Thus the debate.

But casinos have more of the classic tangible value that makes price-to-book useful. They are brick-and-mortar structures. They occupy real estate in places where, generally, market value can be reliably gauged. They are populated with things—slot machines, furniture, video displays, computers, kitchen ovens—with tangible value. And they have a history of being able to crank out so many dollars of profit or cash flow per square foot, per gaming position, related to the value of those surrounding tangible items.

So, when companies as solid as Pinnacle and Boyd sell for book value or less, they may deserve a closer look.

And everyone knows the financial issues at MGM Mirage, but when the owner of such high-quality properties sells at 0.8 times book, it could give some assurance to investors, and certainly to bondholders.

And what about MTR Gaming, with solid, earning properties at Mountaineer Park and Presque Isle selling at less than 0.2 times book?

Of course, price-to-book is not a basis upon which to make an investment. But for casino companies, it might be a good measure to use in the screening process.

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

By GGB Staff   Tue, Jun 02, 2009

New Hampshire’s labor unions are putting their weight behind efforts to expand gaming in the Granite State—something that they say could pump $200 million into the state’s budget, which is looking at big deficits in the next two years. They want to allow Millennium Gaming to spend $450 million to upgrade Rockingham Park in Salem. The labor-backed Fix It Now New Hampshire Coalition unveiled the proposal last month at a press conference.

By GGB Staff   Tue, Jun 02, 2009

Last month, the South Carolina Senate Judiciary Committee voted to approve an amendment to state law, which currently bans “any game with cards or dice.” Some senators have spoken in favor of social gambling such as low-stakes poker or bridge, saying current laws make people who play such games criminals.

By GGB Staff   Tue, Jun 02, 2009

A new €80 million shopping center project near the city of Osijek, Croatia will feature a casino and movie theater in its entertainment mix. The center will have 79,000 square meters of commercial space and 1,600 parking spaces. The project developer is Osijek-based Amplitudo. The company announced it will commence construction soon. 

By GGB Staff   Tue, Jun 02, 2009

The mayor of Montevideo, Uruguay has signed the hotly contested concession of the Carrasco Hotel Casino to the Codere Group, which won the tender process by beating out three other bidders. The matter now goes to the Department Council, which may take a month to study it. Runner-up Hyatt-Liberman claims that, among other things, the city of Montevideo would be losing $903,000 a month for 30 years by going with Codere-Sofitel. However, the National Audit Court, which received the case, chose to send it back to the mayor without comment. The court may comment in the future.

By GGB Staff   Tue, Jun 02, 2009

Pinnacle Entertainment’s chairman and CEO, Daniel Lee, recently told investors that the company may have to close Reno, Nevada’s Boomtown Casino and Hotel if revenues do not increase. “I don’t want to close it,” Lee said. “It’s a nice hotel there; two-thirds of the rooms have been recently refurbished and look pretty nice. We are right off Interstate 80, right at the state line. It’s not logical to me that this thing should lose money before capital costs.” General Manager David Williams said there are no immediate plans to close the property. According to the Reno Gazette Journal, Lee told Williams he needs to increase revenue at the property to prevent closure.

By GGB Staff   Tue, Jun 02, 2009

Las Vegas Sands CEO Sheldon Adelson was paid $1.28 million last year, which is a more than a 50 percent drop from his 2007 compensation. That year, he earned $3.1 million. Though Adelson’s salary has remained stagnant at $1 million, his cash bonus was eliminated last year. In 2007, he received a bonus of $1.9 million. Adelson has not received stock or options in the past two years. In fact, he and his family have invested over $1 billion in the company in the last year. He owns 30.1 percent of the company, whose stock fell 94 percent since 2007.

By GGB Staff   Tue, Jun 02, 2009

The supervisory board of Slovenia casino group HIT met last month to talk about the year so far, and the upcoming choosing of a new general manager for the concern. The supervisors have interviewed five candidates so far. The front-runners are thought to be Dusan Mes and Andrej Sluga, according to news source finance.si.

By GGB Staff   Tue, Jun 02, 2009

Pennsylvania lawmakers held hearings last month on a bill backed by Governor Ed Rendell to legalize video poker in bars across the state. The state House Gaming Oversight Committee held hearings in Westmoreland County, in the western part of the state, on legislation that would allow establishments with state liquor licenses, such as bars, taverns, restaurants and clubs, to have up to five machines each, with revenues dedicated to tuition assistance for students of state colleges and universities.

By GGB Staff   Tue, Jun 02, 2009

Nevada Gold & Casinos, Inc. has finished the process of acquiring three casinos in Washington state—the Crazy Moose Casino in Pasco, Coyote Bob’s Roadhouse Casino in Kennewick, and the Crazy Moose Casino in Mountlake Terrace.

By GGB Staff   Tue, Jun 02, 2009

Casinos in Las Vegas recently released reports indicating that the number of full-time employees at each property has dropped, while part-time numbers have increased. MGM Mirage saw its full-time staff drop from 54,700 workers in 2007 to 46,000 in 2008. Its number of part-time employees rose from 12,700 in 2007 to 15,000 in 2008. The reports seem to show that properties are reducing hours rather than laying off employees, thus the shift from full-time workers to part-time employees.

By GGB Staff   Tue, Jun 02, 2009

Pittsburgh’s Rivers Casino took delivery on the first of its planned 3,000 slot machines last month. The casino, on the north shore of the Ohio River near Pittsburgh’s sports stadiums, will open in August.

By GGB Staff   Tue, Jun 02, 2009

Slot manufacturer International Game Technology reported that the initial buyers of $725 million in convertible notes due in 2014 have fully exercised their option to buy up to an additional $125 million in notes. The private offering, including the overallotment sales, brought in $850 million. Part of the approximately $822 million in net proceeds will cover the convertible note hedge and warrant transactions related to the offering.

By GGB Staff   Tue, Jun 02, 2009

The company that operates all casino and slot machine gaming in Finland plans to launch a national online gaming service sometime next year. The announcement follows the completion of the latest report in the reform process of the Finnish Lotteries Act, according to Finnish news service Helsingen Sanomat.

    Currently, Finland has three distinct monopoly operators. RAY provides casino and slot machine gaming. Veikkaus handles lottery and Fintoto deals with betting on horse racing. Veikkaus currently offers some tote games, but will no longer be allowed to when new rules take effect.

The online service from RAY will hold a monopoly license. Veikkaus and Fintoto already provide their online products under similar terms.

According to Janne Perakyla, director of gaming operations at RAY, there are at present 200,000 Finns participating in online gaming. He predicts RAY will be able to capture between 25 percent and 50 percent of that market.

Although gaming should be ready to start by 2010, some proposed amendments dealing with the prevention of compulsive gambling, if passed, would not take effect until 2012.

The latest report stipulates that RAY will have to check the age and identity of every player against the national population register, to ensure players are over 18 and to prevent gambling using credit. Players also will have access to independent gaming management tools. Limits on the amount players may bet will be set by Finnish authorities.

By GGB Staff   Tue, Jun 02, 2009

A new study suggests that online gamblers tend to be moderate and rational. They spend more time and money wagering when they are winning, and less time and less money when they are losing.

The study was conducted by a partnership between Bwin Interactive Entertainment and the Division on Addictions of the Cambridge Health Alliance, a teaching affiliate of Harvard Medical School.

“In this research we provide additional evidence in support of our previous research showing that most subscribers who gamble on the internet do so moderately,” said Howard Shaffer, associate professor at Harvard Medical School and director for the Cambridge Health Alliance’s Division on Addictions. “In fact, correlation analyses indicated that as percent lost increased, duration, total gambling sessions and total amount wagered all decreased, suggesting that individuals moderated their behavior based on their wins and their losses, exhibiting ‘rational’ betting behavior.”

The study also identified the average age of online gamblers at 28 and noted that almost 95 percent are male.

By GGB Staff   Tue, Jun 02, 2009

A number of bills introduced last month would roll back the prohibition of online gambling in the U.S. and create a system to regulate and tax the industry.

If successfully enacted, one company estimates that the U.S. could generate up to $48 billion a year by taxing online operators.

Rep. Jim McDermott of Washington introduced legislation that would tax online casinos; Rep. Barney Frank introduced legislation that would repeal the Unlawful Internet Gambling Enforcement Act of 2006.

This is the second year that legislation was introduced to repeal the UIGEA. Lawmakers say the current system is faulty because it places undue burdens on the banking industry and it fails to protect consumers because it forces online operators “underground.”

There is debate about whether the change in administrations will have any impact on the success of the legislation this year.

Frank’s legislation would require companies to apply for a license before offering gaming services in the U.S. Companies would be held to the same standards as an individual seeking a gaming license in Nevada.

Operators would be required to establish controls to prevent underage gambling and to block access to residents in states with prohibitions on online gaming, as well as all the internal controls necessary to operate a land-based casino enterprise.

And, to appease sports leagues, the legislation allows for a prohibition on online sports betting. The National Football League in particular was instrumental in getting the UIGEA passed, and remains vocal in its opposition to any change in online gambling in the U.S.

Joining the NFL in its opposition to any change in the UIGEA is Focus on the Family, a “faith-based” organization led by James Dobson, a member of the National Gambling Impact Study Commission, a federal board that looked into gaming in the late 1990s.

Supporters praise Frank for his continued effort to open the U.S. to online gambling. Poker players, like those represented by the Poker Players Alliance, lauded the legislation.

“Online poker is a legal, thriving industry, and poker players deserve the consumer protections and the freedom to play that are provided for in this legislation,” said PPA Chairman and former Senator Al D’Amato. “We are grateful for Chairman Frank’s leadership and will be activating our grassroots army made up of over 1 million members to help him drive legislation.”

Frank, who chairs the House Financial Services Committee, said he plans to push the legislation through his committee before the summer break in August.

Some supporters have suggested that online gambling might be a way to improve the country’s overall financial health.

“This is a thriving industry,” said Jan Jones, vice president of Harrah’s Entertainment. “They can put in a regulatory structure and they can tax it.”

By GGB Staff   Tue, Jun 02, 2009

An executive of the Princess Group of Companies disclosed last month that Buddys Princess International Hotel in Georgetown will be the site of the first casino in Guyana.

Oguz Tayanac, Princess Group operations manager, told the Kaieteur News Agency that the government has already granted the hotel management a casino license, and that construction has begun. The casino will be open within four months.

“We are working on making Guyana a tourist destination,” Tayanac told the news agency. “We are doing some renovations on the hotel and hopefully we will be bringing tourists to Guyana.”

In addition to the new casino, the hotel will unveil new resort amenities, room upgrades and an entertainment center within six months. Princess, which recently bought the hotel for $15 million, reportedly plans to spend $10 million more to upgrade it to five-star status.

By GGB Staff   Tue, Jun 02, 2009

The refurbished Casino Fantastic has opened in Panama, in the town of La Chorrera. The casino is one of 11 operating under the Fantastic brand, which is owned by the Spain-based international gaming group Cirsa.

The casino combines both modern and elegant styles and features 250 gaming positions. The number of positions before the renovation was 90.

The casino also features a restaurant and bar, plus a stage area.

A grand reopening celebration on April 22 featured national celebrities and musical performances.

By GGB Staff   Tue, Jun 02, 2009

A deal between MGM Mirage Hospitality and RMAL Hospitality—the hotel and restaurant arm of Abu Dhabi-based Al Fahim Group—will bring the Bellagio, MGM Grand and Skylofts hotels to Dubai Pearl.

“We feel that the model we are creating has a perfect fit for Dubai, and we feel that the timing for the launch of those brands is right as well,” said RMAL Hospitality CEO Anthony Liddiard. “We actually started pouring the concrete on May 15 and these hotels will come to fruition around 2013, and we feel by then that we will be on the back of the recession and on the upward curve.”

By GGB Staff   Tue, Jun 02, 2009

Legislators from the seven communities in danger of losing their casinos after 2015 have written the president of Chile demanding the casino law passed in 2005 be modified.

According to the 2005 legislation, only casinos opened with licenses approved at that time would be allowed to operate past 2015. Communities such as Viña del Mar, which has had a casino for over 70 years under special decree from the government, would be left without a casino—and the tax revenue it generates.

According to Yogonet, Representative Francisco Chahuán said, “This absolutely discriminatory situation has to be repaired, which passed unnoticed in the creation of the casino law—from 2005—and  says that the current local casino tenders will just last until December 31, 2015, which is also applied to the councils of Arica, Iquique, Coquimbo, Pucón, Puerto Varas and Puerto Natales.”

Chahuán said that if the law is modified, a new bidding process will start to allocate new licenses to the affected councils.

By GGB Staff   Tue, Jun 02, 2009

Budget considerations by Victoria’s Brumby administration have brought a new deal for Melbourne’s Crown Casino.

Looking for more revenue over the next four years, the state government has raised the tax rate on the casino’s pokies (slot machines) by 10 percent, while at the same time allowing the casino to increase its table games from 300 to 500 and double its poker tables from 50 to 100.

The pokie tax increases 1.7 percent each year for six years beginning this year, resulting in a total tax increase of 10.3 percent by 2015. The full tax will be 32.57 percent at that time. The change will bring more than A$60 million to the government over the next four years and add more than 300 jobs at Crown.

The agreement also permits automated table games to be installed, cancels the Health Benefit Levy—currently $4,333 per electronic machine per year—on July 1, 2012, and guarantees that the government will seek no more tax increases before June 30, 2022 at the earliest.

Victoria Gaming Minister Tony Robinson says the tax increase brings Crown into line with taxes paid by other poker operators in the state (although Crown is Victoria’s only casino). He also said the addition of tables would enable Crown to remain competitive with other Australian casinos.

As result, Crown Melbourne CEO David Courtney announced a $46 million upgrade to the casino floor. Crown Executive Chairman James Packer issued a statement that said the agreement will “assist us to maintain the Crown Entertainment Complex as one of the world’s great casinos.”

“These new arrangements now allow us to expand and improve the gaming floor in line with recent and future expansions to Crown’s hotels, restaurants, retail and car parking,” Packer said.

An Australian analyst praised the deal.

“The tax increase underscores the regulatory risk inherent within the sector, particularly in a mature market and when budget deficits are widening,” said Jenny Owen, an analyst at Citigroup Inc. “Crown has achieved a better outcome on tax increases than its local competitor Tabcorp, which recently saw taxes rise at Queensland casinos with no net offset to grow revenue.”

Queensland last year raised the tax rate on slot machines at Tabcorp’s Brisbane and Gold Coast casinos to 30 percent from 20 percent, with the increase taking effect on July 1. At its Townsville property, the rate doubled to 20 percent.

By GGB Staff   Tue, Jun 02, 2009

In an effort to determine how many gambling dollars were being lost to Macau, the Hong Kong Jockey Club last year commissioned a study by the Spectrum Gaming Group. Obtained by the South China Morning Post, the study revealed that VIPs from Hong Kong lost more than $1.5 billion annually (HK$13.5 billion) at Macau’s private VIP rooms in 2007.

Disturbingly, the report links the VIP rooms to increased gambling addiction and the growth of organized crime, called “triads” in China.

“At the minimum there is a relationship between the junkets and triads related to moving money and the collection of gaming debts,” the report says.

“The lack of an effective legal process for recovering gaming debt in China has led to an extrajudicial system where debt is collected via intimidation, threats, disruption of business, kidnapping of family members and other strong-arm tactics,” the report continues. “Because the court system in China cannot be used to resolve gaming-debt issues, as is the case in almost all other jurisdictions, the collection of gaming debt is left to the junket operator to resolve.”

Gambling debts are legally enforceable, however, in Hong Kong.

The report blamed inadequate regulation in Macau, where 151 firms and individuals are registered as official junket reps, when there are more than 10,000 people estimated to be involved.

Spectrum refused to confirm that it had undertaken the study and the Jockey Club would only say that a report had been commissioned but did not confirm that the Morning Post’s reports were accurate.

The Jockey Club has steadily been losing business in its racing and lottery operations, and the outlook isn’t good, according to the report.

By GGB Staff   Tue, Jun 02, 2009

Frustrated by an increasingly intractable state government, the casino operators in Goa, India, have formed a trade association to speak with one voice in opposition to government plans.

The most onerous plan was just revealed last month. The Goa government now wants the floating casinos to move from the Mandovi River, where they have been operating, to Aguada Bay, a body of water “known for choppy seas and unstable navigation conditions,” according to the Association of Offshore Casino Operators, the new trade association formed by the operators.

Srinivas Nair of AOCO has complained that the cabinet-level decision, expected to be enforced by the captain of ports, was “ill-conceived.” The association has appealed the decision to the Bombay High Court.

The change of venue is just the latest in harassment of the Goa casino industry, which currently consists of six boats, with another to open shortly.

John Snowball, who operates one of the largest casinos in Goa, the Maharaja, serves as spokesman for the AOCO. He said the main reason for the group’s formation was informational.

“Our association will aim to educate people and the government about the casino industry. We deal a lot with the government. There is little point in going ahead individually. A united move is needed. We need to go ahead with a single voice,” Snowball said.

By GGB Staff   Tue, Jun 02, 2009

As it prepares for the opening of its newest casino resort, City of Dreams, in the Cotai region of Macau, Melco Crown announced last week that its first property will be re-themed as Altira Macau. The brand will become a company staple and enable the company to choose from two solid brands.

The company said the decision will strengthen the company, and the re-branding to Altira Macau is the final step in the strategic repositioning of the property that began in August 2007.

At the same time, the Crown Macau will become a part of City of Dreams, which also contains a Hard Rock Hotel and a Grand Hyatt.

In the company’s view, Altira focuses on Asian rolling-chip customers and provides a unique and dedicated gaming environment to this discriminating group of players.

Lawrence Ho, the company’s co-chairman and CEO, stated, “We are excited to add Altira to our stable of brands, and hope to leverage this brand throughout Asia, as attractive opportunities arise. In our portfolio approach to development, Altira Macau provides a unique and distinctly Asian-oriented proposition to the dedicated rolling-chip customer in Macau.”

By transferring the Crown brand to City of Dreams, Ho is confident that it will become the company flagship.

“City of Dreams, our integrated urban entertainment resort, remains on track to open in early June,” he says. “City of Dreams will focus primarily on the emerging premium mass and overnight-stay guest, and I am confident that it will raise the bar in Macau for this segment of the market. With its market-segment focus, as well as world-class restaurants and retail, City of Dreams will be an excellent representation of the standards of luxury and service for which the Crown brand is famous.”

Meanwhile, Melco Crown announced it is launching an offering of 15 million American depositary shares, which each represent one ordinary share of the company. The offering also includes about 56.3 million additional ordinary shares.

By GGB Staff   Tue, Jun 02, 2009

A new lottery law was approved in China last month, and the issuance of a third lottery license was granted.

With a government increasingly seeking revenue, the possibility of increasing the size of the Chinese lottery even further is being considered.

Currently, a limited lottery grosses about $10 billion, but some experts believe that by entering areas currently controlled by illegal betting, a Chinese lottery could become the largest in the world at $150 billion. In comparison, the U.S. lotteries gross about $50 billion, Italian lotteries $14 billion, Spanish lotteries $13 billion and the U.K. less than $10 billion.

It is estimated that as much as $32 billion is spent on illegal lotteries throughout the country.

Gary Newman, chairman and chief executive officer of Global Lottery Corporation, based in Las Vegas, one of the world’s leading lottery technology providers, said a new license in China has been the major rumor in the world’s lottery industry.

“It will be dramatic. Rumors are all out there to lottery service providers that a third license has been issued and it is a national license,” he said.

Heilongjiang Welfare Lottery Center has authorized VODone Limited to introduce a lottery betting service for mobile end users in China.

Heilongjiang Welfare Lottery Center is the first batch of agencies to receive permission from the Ministry of Finance and the Ministry of Civil Affairs of the People’s Republic of China to introduce a mobile lottery service. Heilongjiang is ranked top 10 among national Welfare Lottery sales.

In cooperation with Heilongjiang Welfare Lottery Center and Chinasatcom, VODone is currently the only company in China offering mobile lottery services.

VODone has also opened the cai.vodone.com portal “Lottery Lifestyle,” which broadcasts lottery-related news and information supplied by the Ministry of Civil Affairs of the People’s Republic of China and is co-managed by China Association of Social Workers and China Philanthropy Times. VODone and the newspaper will together launch the “Expert Lottery Comments” channel, providing exclusive lottery news.

VODone also plans to launch the “Constant Lottery” live webcast, which will feature live draws every 10 minutes.

By GGB Staff   Mon, Jun 01, 2009

As many as 4,000 additional workers could lose their jobs in Macau as Las Vegas Sands Corp. readies more layoffs in response to the debut of City of Dreams, directly across from the company’s flagship, the Venetian, according the Michael Leven, the company’s new chief operating officer.

The company has already slashed more than 2,000 jobs from the peak of 20,000 positions last year, as it halted construction on its $12 billion Cotai Strip project.

Leven says most of the layoffs will center on foreign workers, and a base allotment of 13,000-14,000 workers is the company’s target.

“Macanese workers will be not affected that much; it will affect the expatriate population more so,” Leven said. “Some of those people are transferred to Singapore, some are no longer required, and some are redundant.”

First quarter results in Macau showed continued weakness in the market, and the opening of Melco Crown’s $2 billion City of Dreams, slated for June 1, will further dilute the market.

Gabriel Chan, a Hong Kong-based analyst at Credit Suisse Group AG, says the long-term future looks bright in Macau, but in the short term, companies must prepare for increased competition.

“We are more positive about growth in Macau,” he said, “but given there is more competition in Cotai, if the top line is not growing, you will have to cut costs.”

Meanwhile, the Wall Street Journal reported that the company has hired Goldman Sachs to create an initial public offering for the Macau properties. The move comes after failed attempts to sell parts of all of the Las Vegas Sands casino properties in Macau, according to the Journal.

Morgan Stanley gaming analyst Joe Greff, however, reported a sale of some or all of the company’s Asian properties is a possibility.

With a debt load of $10 billion, LV Sands needs to begin to prepare for the next maturity payment, not due until 2011. Greff said he was convinced during a lunch with Chairman Sheldon Adelson recently that “an asset monetization event in Asia is imminent.” Adelson had indicated that he had four potential partners, and talks were ongoing.

It had previously been reported that LV Sands was shopping for equity investors as well as selling such “non-core assets” as the shopping malls on Cotai Strip, condos in the Four Seasons hotel and the two remaining sites, which include the Shangri-La and St. Regis hotels, apartments, a casino and mall, on its Cotai land in Macau.

Adelson said that he’s also considering another bond sale, as the value of LVS bonds increased in mid-May.

Greff said one thing that probably will not happen (and Adelson agrees) is a sale or leaseback of Sands Macao, the company’s first Asian project.

By GGB Staff   Mon, Jun 01, 2009

MGM Mirage and Dubai World last month announced an agreement with lenders that immediately freed up the $1.8 billion needed to finish construction of CityCenter.

“We are pleased that MGM Mirage and Dubai World, with the strong support of CityCenter’s lenders, have agreed to a comprehensive plan for the financing and completion of CityCenter,” the companies said in a joint press release. “CityCenter is now fully funded and on track to open in December 2009.”

The agreement allows MGM Mirage and Dubai World to fund the remaining equity contributions to the project with letters of credit. It also will result in Dubai World dropping its lawsuit against MGM Mirage.

The deal requires MGM Mirage to assume full responsibility to pay for any cost overruns. The company had to pay lenders $100 million in return for waivers necessary to finalize the deal. It also establishes a higher interest rate—two percentage points higher than the original agreement—on the $1.8 billion loan.

“This is the best possible outcome that we could have envisioned,” MGM Mirage CEO Jim Murren told Bloomberg News. He said the announcement helps protect the company from having to unload any of its properties to fund the project. “If anyone thought they were going to get a bargain-basement special deal, today’s announcement will disappoint them.”

Casino mogul Steve Wynn had expressed interested in buying some MGM properties if he thought the price was right.

In addition to dropping its lawsuit against MGM Mirage, Dubai World has agreed to repay the company $135 million for equity payments made on its behalf over the past month. MGM Mirage made payments of $70 million and $35 million on behalf of its investment partner while the two sides were dealing with the lawsuit. Those payments were necessary to keep construction moving forward on the project.

Dubai World was concerned that MGM Mirage might have to file for bankruptcy, and that such a filing would trip default covenants in its CityCenter financing.

“This agreement provides a stable financial framework,” said Chris O’Donnell, Dubai World’s director for the CityCenter venture.

Key terms of the CityCenter agreement:

• MGM Mirage is responsible for completion costs should

condominium sale proceeds be less than $243 million or should completion costs exceed $8.5 billion

• MGM Mirage’s obligations as they pertain to cost overruns are supported by Circus Circus and adjacent land holdings

• Dubai World is required to fully fund its originally promised contributions but is relieved of all completion guarantees

• The CityCenter credit facility was amended to fully mature on June 30, 2012

• Covenants have been relaxed to allow more flexibility for the first 18 months of operation

By GGB Staff   Mon, Jun 01, 2009

In yet another twist in the Fontainebleau construction saga, the owners of the in-progress resort have amended the $3 billion lawsuit filed against its creditors, accusing lender Deutsche Bank of sabotaging Fontainebleau in order to make its own new resort, the Cosmopolitan, more successful.

In the filing, Fontainebleau Las Vegas accused Deutsche Bank of “seeking to destroy the Fontainebleau in order to minimize the competition” against the Cosmopolitan, which is scheduled to open in 2010.

The lawsuit also alleges that Deutsche Bank had persuaded Fontainebleau’s other lenders to pull the rest of the resort’s funding, and is undermining Fontainebleau Las Vegas’ attempts to negotiate with its other lenders.

The Fontainebleau is struggling to convince its lenders to release funding to finish the project. Eleven banks, including Deutsche Bank, collectively pulled $770 million in financing. Deutsche Bank alone pulled $80 million. Workers have been laid off and construction largely halted until negotiations are completed.

By GGB Staff   Mon, Jun 01, 2009

The Florida legislature last month reached a convoluted agreement with the Seminole tribe and the state racetracks that gives benefits to each in exchange for a large payment from the tribe.

The two houses of the legislature had wildly diverse bills that greatly expanded gaming (Senate) or dramatically shrank it (House). The final agreement lands somewhere in the middle, and like all good compromises, probably pleases no one.

After 11th-hour budget wars and threats from Governor Charlie Crist to kill some budget items, the bickering legislative bodies each got some of what they wanted, as did major stakeholders including the Seminole tribe, South Florida’s parimutuels and racetracks around the state.

Some of the details:

• The Seminole Hard Rock Casinos in Hollywood and Tampa keep their card games and Class III slot machines.

• The tribe can offer no-limit poker at all of its seven casinos, but the banked card games of blackjack, baccarat and chemin de fer can only be offered at its facilities in Broward and Hillsborough counties.

• The tribe will make an annual $150 million payment to the state for 15 years. Payments can be reduced if the state authorizes the same card games and Class III games, and the tribe’s net win drops below $1.37 billion.

• The state’s other racetracks may also offer no-limit poker, but are banned from offering VLTs  without the approval of the state legislature and local referendums.

• The tax rate for parimutuels in Miami-Dade and Broward counties will drop from 50 percent to 35 percent.

• Hialeah Racetrack in Miami will reopen with no-limit poker and quarter horse racing. Slot machines will be permitted in two years.

• The minimum gambling age at Florida racinos/casinos is set at 21.

By GGB Staff   Mon, Jun 01, 2009

Legislators in Sullivan County, New York, voted unanimously last month to approve a mitigation agreement with the Seneca Indians, a crucial first step as the tribe works to build a casino in the town of Bridgeville.

The agreement calls for the tribe to pay the county $15.5 million each year during the two-year construction phase and $20 million for the four years after the hotel has been completed and gaming is available. The deal, which compensates for the impact on the community of a major resort, also makes provisions for additional revenues based on the success of the casino.

The agreement comes as the Senecas face declining second-quarter profits at their western New York casinos.

The sluggish economy has not dampened enthusiasm for the Sullivan County project, but a thumbs-up from the county is just the first hurdle for the Senecas, who would partner in the venture with casino operator Rotate Black Inc.

The plan now goes for approval to the Department of the Interior, which has not yet showed its hand on the controversial issue of off-reservation tribal casinos.

Former Interior Secretary Dirk Kempthorne firmly opposed the concept, and declined to approve St. Regis Mohawk and Stockbridge-Munsee proposals for casinos in the county. Though current Interior Secretary Ken Salazar and his boss, President Barack Obama, have not yet expressed opposition or support when it comes to off-reservation gaming halls, Democrats at the state and national level are lining up to back the tribes.

By GGB Staff   Mon, Jun 01, 2009

A bill to ban smoking at Connecticut’s two tribal casinos went down to defeat last month as an influential legislative committee failed to take critical votes on the measure.

Artful inaction on the part of the Finance Committee means the proposal is “technically dead,” though proponents of the measure will continue to fight until the legislative session adjourns June 3.

The threat of a smoking ban at the Mohegan Sun and Foxwoods casinos, owned by sovereign tribes that are not subject to government interference, had the irate Mohegans promising to withhold millions in slot revenue from the state.

Governor M. Jodi Rell was on the Indians’ side. She has signed agreements with the Mashantucket Pequots and the Mohegans to enact voluntary, partial smoking bans at their casinos and enhance ventilation systems.

But anti-smoking activists including labor leaders said they will not be deterred by the seeming failure of the bill.

“We’re not going to quit until we get this bill,” said dealer Jack Edwards, who works at Foxwoods. “We have to get the casinos to go smoke-free. Our lives depend on it.”

The tribes, of course, were pleased by the outcome.

“Through action today, the lawmakers have demonstrated a respect for the government-to-government relationship that has existed between the Mohegan Tribe and the state of Connecticut for generations. We commit to honor that relationship and to continue to work on issues of mutual concern,” Mohegan Tribal Chairman Bruce “Two Dogs” Bozsum said in a statement.

By GGB Staff   Mon, Jun 01, 2009

February’s U.S. Supreme Court Carcieri decision that says that tribes recognized after 1934 can’t put land into federal trust has opened up a can of worms that most gaming tribes would like to close. Tribes are urging Congress to “fix” the decision. However, many of the states that have gaming tribes are not at all unhappy with the decision. Seventeen state attorneys general recently asked Congress to act slowly, and to include them in its deliberations.

They recently sent a letter to the Senate Committee on Indian Affairs and the House Resources Committee.

“The undersigned believe it would not be in the best interests of all stakeholders, both Indian and non-Indian, to rush a legislative fix and to ignore legitimate state and local interests,” they wrote.

Congress could easily amend the 1934 Indian Reorganization Act by changing just a few words that would bring it into line with 75 years of actions that have been taken by the Department of the Interior.

The Carcieri ruling applied to 31 acres owned by the Narragansett Indian Tribe of Rhode Island, but Indians fear, and some states hope, that it applies to a lot more than that.

By GGB Staff   Mon, Jun 01, 2009

For years, the relationship between the National Indian Gaming Association and the National Indian Gaming Commission has been strained. Efforts by the NIGC to establish strict Class II/Class III divisions, regulations about off-reservation gaming and other issues have riled NIGA members.

And now that the man who appointed NIGC Chairman Phil Hogen, former President George Bush, is out of office, NIGA has had enough.

In a resolution passed at the recent annual trade show and conference produced by NIGA, the organization demands the resignation of Hogen.

“We had to fight tooth and nail to defend aggressive positions against our tribal sovereignty, a lack of consultation and things of that nature,” NIGA Chairman Ernie Stevens Jr. said. “In my personal opinion, his era is over. It’s time to move on.”

The most controversial action during Hogen’s tenure was an attempt to draw a “bright line” between Class II and Class III gaming. The chairman was vigorously attacked by tribes as the commission conducted a nationwide tour soliciting comments. Hogen said he was merely trying to make a compromise to what would have been even more harsh regulations imposed by the Department of Justice, even though tribes were generally successful in challenging those regulations in courts.

Eventually, Hogen gave up, but NIGA’s problems didn’t end there. The organization has long challenged the NIGC’s role in oversight of Class III gaming. NIGA claims the NIGC charter gives it responsibility only over Class II gaming. Efforts to establish minimum internal control standards (MICS) might infer such authority, says the NIGC.

By Roger Gros   Mon, Jun 01, 2009

Wow, this has been some tough period. Battered and bruised, the gaming industry seemed to be, at times, almost ready to collapse.

Las Vegas and Atlantic City were hammered with increased competition and the reluctance of their customers to travel, for business or pleasure. Macau had been growing at an incredible pace, but about mid-year in 2008, things took a turn for the worse when the Chinese government issued visa restrictions on its most important customers, visitors from the mainland.

The industry in the U.K. was continuing to labor under the neglect and restrictions imposed by the Labour party (pun intended). And Australia and New Zealand were struggling to respond to smoking bans and efforts to minimize problem gambling that greatly impacted the non-problem gambler.

So things could hardly get much worse. And maybe that’s the first sign that we’re at the bottom. So let’s consider: If that’s true, what will be the consequences for the industry?

Last month’s release by the American Gaming Association of its annual “State of the States” report shows exactly where the damage has been done. We reviewed some of this in the first part of this column. And even with the loss of business in many sectors of the gaming industry, there still is a lot of business intact.

And it is that intact business that will be the core of any future growth. It is business we must protect and value above all others.

The recovery of the gaming industry will depend on growth, but that growth cannot happen if we disregard the business that has stuck with us through the tough times. Competition is fierce, as usual, in the jurisdictions, so if you have steady business that has not deserted you during these difficult times, it’s important that you demonstrate to those customers that you appreciate them and their loyalty. Because you can bet your competition is going to give them many reasons to visit them and experience what they have to offer.

In many ways, this heated competition will be good for the industry. For far too long, casino marketers have employed a “follow the leader” mentality that had them replicating successful promotions staged by competitors. Today, creativity is at a premium, and casinos that are first with a promotion, event or program will be front and center in the minds of your loyal customers and those who you want to attract.

There’s been a lot of talk about new ownership in the gaming industry as well. Although we’ve yet to see the dominos begin to fall, analysts are telling us that some of the troubled gaming giants will begin to sell assets as a way to pay down debt and/or concentrate on their core business. New owners could be wealthy individuals, investment banks or groups of investors.

This will cause some consternation in the regulatory community, but adaptations will be made and the sales/transfers will be completed. New management will emerge and innovative marketing and operational systems will be put in place.

This “new blood” will be good for the industry. It will open up job opportunities across the sector and a premium will be placed on experience, motivation and “thinking outside the box.”

Some sectors of the industry will continue to lag long after the recovery begins. Design and construction will have to wait until full-scale lending, a valuation model and a modicum of confidence in the gaming industry return to the financial community.

And we may never again see the “meta resorts” that characterized the last five years of casino expansion. But shrewd operators will understand that the concept of renovation, capital reinvestment and forward-looking planning will never go out of style.

Along with those concepts will come the cutting-edge technology that is being crafted as the manufacturers wait for the recovery to begin. And as that recovery lengthens and confidence returns, that technology could clearly accelerate the good times.

So while we cling to the phrase “it’s always darkest before the dawn,” we can embrace the night, because we know for sure that the bright rays of the sun will once again penetrate our gloom and bring a new day for the gaming industry.

By Frank Legato   Tue, Jul 07, 2009

With this new series of Top Dollar games, IGT reprises the most popular game in the history of its U.K.-based Barcrest subsidiary.
   

The game, a three-reel, five-line stepper base with an arcade-style, mechanical bonus game in the top box, introduced Barcrest to this country, and has gone through several incarnations over the years. This version is on the manufacturer’s new S-AVP platform, which is the powerful Advanced Video Platform operating system adapted to steppers.
   

In the classic Top Dollar game, three bonus symbols on the payline trigger flashing lights behind the light-box display in the top box. The new S-AVP versions replace the light box with a huge LCD video display, surrounded by a color-sequencing LED light ring that choreographs the display. Also, IGT has added an integrated small LCD screen for promotional messages.
   

Other than that, the four S-AVP versions of Top Dollar provide the same game players have loved for years, with the notable exception of five paylines instead of one. When the bonus is triggered, the stacks of bills displayed on the top box illuminate in sequence, until stopping on one stack for a bonus ranging from 5 credits to 1,000 credits.
   

The initial themes being released include Top Dollar Deluxe, Top Dollar Sizzling 7, Double Top Dollar and Hot Top Dollar. All are available in single or multiple-denomination setups, with theoretical holds and top jackpots varying by game.

Manufacturer: International Game Technology
Platform: S-AVP
Format: Three-reel, five-line stepper slot
Denomination: .01, .02. .05, .10, .25, 1.00
Max Bet: 5
Top Award: Various
Hit Frequency: Various
Theoretical Hold: Various