It’s always a bit dangerous to predict the future, but when you’re simply following your expertise, it’s almost a given. Every December, GGB magazine brings together experts from the many and varied fields of gaming to identify the trends that deserve attention for the upcoming year. While the trends identified in this feature probably won’t qualify as jaw-droppers, the details offered by our expert writers should. From the casino floor to the high-roller suites, things are looking up. But to stay ahead of these trends you must understand them, and our writers will keep you up to date and informed. Prepare or be left behind!
1. High Stakes
The world’s largest slot-makers up the ante with high-denomination slots
For years, slot manufacturers such as IGT and the former Bally Technologies (now Scientific Games) have included a contingent of traditional reel-spinners among their new-game lineup every year, and invariably, executives have repeated the same comment:
The high-denomination space is underserved in today’s slot market.
The culprit, of course, has been the rise of the penny denomination, and the typically high operator slot holds that go along with it. And while pennies are still dominant, there has been a push-back, from players who are tired of pumping money into the penny games with little return, and who are ready to give up a higher initial wager in exchange for a higher return.
One look at this year’s lineup of games launched at the Global Gaming Expo confirms that suppliers are now attempting to capture that underserved high-denom market. And the trend is not restricted to IGT and Scientific Games, which both rode the initial popularity of higher-denomination, traditional slot machines to success in the 1990s. All of the smaller U.S. manufacturers, as well as slot-makers like Ainsworth, Novomatic and Merkur that are new to the North American market, are launching lines of games in higher denominations, with higher return-to-player percentages.
And while the trend to offer higher denominations certainly includes a return to the traditional three-reel steppers that originated the genre, it is by no means limited to that game style, as there is no shortage of five-reel, multi-line video slots now being offered in quarters, dollars and higher. Typically, suppliers lower the number of paylines from 30 or 40 to five or nine to make them more affordable on the main floor, but leave the higher payline counts in high-denomination games for the high-end rooms.
Evidence of a return to higher denominations abounded in the G2E displays this year of several major manufacturers, led by IGT and Scientific Games.
IGT reloaded its S3000 stepper category with higher-denomination traditional games, but also included high-denom games in its TRUE 3D group of slots offering 3-D video effects. Prominent among them is a TRUE 3D version of the classic reel-spinner Red, White & Blue, in single-line, three-line or five-line versions.
Scientific Games, meanwhile, is rounding out what is now called the 3RM line (for three-reel mechanical) with some of the most famous traditional Bally steppers in new, high-denomination releases. Among them are new versions of the classic Blazing 7s, Bonus Times, Black & White, Black & White 5X Pay, Double Jackpot Triple Blazing 7s and Quick Hit 5X 10X stepper slots. In the high-denomination wide-area progressive space, the company is launching Michael Jackson Legend and Cirque Kooza, both with progressive wheels on the Blade mechanical stepper, and Diamonds Are Forever in the new James Bond series.
But the two originators of high-denomination games are not the only ones on the big-bet bandwagon. Aristocrat, the manufacturer that defined the low-denomination, multi-line video slot, has launched its first stepper series, RELM, with a concentration of high-denomination games. The RELM series was created to capture some of the underserved traditional stepper market, and the higher denominations and higher-volatility math that go with it. In June, the company launched the series with eight inaugural games following the volatile math model of the traditional high-denomination steppers.
Aristocrat’s high-denomination offerings also are following a separate trend in the slot market—the giant-format game. At G2E, the company launched RELM XL, a giant-format stepper group utilizing a 43-inch monitor for bonus events. The first games are Britney One More Time, Buffalo Inferno and Buffalo Thundering 7s. Buffalo Inferno and Buffalo Thundering 7s employ high-denomination stepper math (dollar and up), with the Britney game a mid-denomination stepper (nickels through quarters in a buy-a-pay setup).
Newer entries to the U.S. slot market are following suit. At G2E, AGS launched several new high-denomination video slots for its ICON cabinet based on the math model of Colossal Diamonds, its giant-format dollar stepper slot on the Big Red cabinet, reporting high early returns on games like French Quarter 7s and Premier Diamonds.
Everi also is returning to high denominations in many of its game groups, beginning with a big hit in Casper the Friendly Ghost, which has spawned an entirely new game group in the high-denomination stepper category.
And Ainsworth, which is still growing in the U.S. market, has made high-denomination games a specialty this year, releasing many of its top-performing video slots in three-reel, five-line versions and dollar denominations.
There clearly is a growing number of players willing to pony up higher initial stakes in exchange for that traditional rush of volatile math and higher returns. And the major suppliers are happy to oblige.
—Frank Legato is the editor of GGB magazine and the recognized expert on the slot machine industry.
2. Nerds Need Not Apply
eSports has gone mainstream; casino applications are many and varied
ESports was included in the GGB trends for 2017 with a focus on how to make the concept work in a casino environment. What a long way we have come in just one year! Gambling operators around the world are now involved in eSports in some capacity.
In the U.S. alone, MGM Resorts International partnered with Allied Esports to open a dedicated Esports Arena (early 2018) and Caesars Entertainment Studios launched with Sidekick Productions, vowing to include eSports production in their lineup. Downtown Grand has diversified significantly since their feature in last year’s write-up, expanding their lounge and launching an eSports boot-camp training facility. Casino resorts across the country have hosted eSports competitions, such as Tropicana Atlantic City’s Royal Flush Smash Tournament and Talking Stick Resort’s Esports Arizona event.
The growth is global: this fall, World Poker Tour teamed with ELC Gaming to hold the first joint poker and eSports event at Holland Casino, while Galaxy Entertainment hosted the 2017 China E-Sports Carnival at Broadway Macau.
Online wagering on eSports has also grown substantially, with average eSports betting year-on-year growth of about 50 percent, and much higher for online books with larger market share. The past two years have seen eSports betting overtake rugby and golf handle, and eSports now appear as a primary feature on many online betting websites. Pinnacle employs an eSports trading team that rivals that of soccer, in terms of size.
It is also important to remember that eSports exists as its own vertical outside the scope of the casino industry. The industry can capitalize on the growing trends in this parallel sector. In particular, eSports has seen a vast increase in sponsorship and marketing from non-endemic brands, such as big investment from sports franchises around the world. While the eSports community has not always been particularly welcoming of sin industries—ESL famously blocked Team YP from competition in 2016, because their primary sponsor is YouPorn—many gambling-focused businesses have made inroads. Unikrn, for example, is a major sponsor of the eSports organization Berlin International Gaming.
Sponsorship ability, however, is highly dependent on the game publisher’s and/or event organizer’s preferences. In March, game developer Psyonix issued a public statement disapproving of gambling on its game, Rocket League. In August, Betway was dropped as the main sponsor of eSports organization Ninjas in Pyjamas (NiP) to fall in line with the Riot Games League of Legends Championship Series (LCS) rules forbidding the display of gambling product logos. Betway continues to sponsor individual NiP Counter Strike: Global Offensive players.
In the coming year, the convergence of eSports and gambling suggests several continuing and new trends:
- Use of cryptocurrency and blockchain technology already exists for both eSports and gambling, but the transformative potential and rapid adoption of these frameworks mean novel approaches to operations and regulation are on the horizon.
- Increased eSports community awareness and action in the gambling world, both positive and negative: Last year’s skins betting scandals pulled us into the first melee, and we now see skins included as a regulated virtual currency under some gambling licenses. The current debate surrounds the classification of loot boxes, which the Entertainment Software Rating Board (ESRB) recently announced it does not consider gambling. Given the debate that rages on, ESRB is not likely to be the final word on the matter.
- As the continued growth of eSports into the mainstream puts more pressure on game integrity issues, gaming, gambling and sports regulators from around the world watch with heightened interest.
- New games are consistently released, and newcomers can overtake old favorites with sudden, explosive popularity. Player Unknown’s Battlegrounds (PUBG) is one such example, ending League of Legends’ 31-month streak as the most streamed game in August. And this happened while PUBG was still in a beta/early access phase. Traders may struggle to keep up with new releases like these. Blizzard Entertainment’s Overwatch, meanwhile, has been out for about a year and a half, and its Overwatch League will host its first professional games in 2018, to the great anticipation of both the gaming and betting communities.
Finally, we all should recognize by now that eSports is no longer a niche market of nerds in their mothers’ basements, nor is it solely a millennial phenomenon. The population includes all ages, genders and demographic backgrounds. It even includes female university professors in their early 30s, who like to watch and play a little Hearthstone with their morning coffee.
—Brett Abarbanel is director of research for the International Gaming Institute at the University of Nevada, Las Vegas. She can be reached at [email protected].
3. One Industry, Two Systems?
AGA will continue to recruit tribal members and pursue tribal casino alliances
When Geoff Freeman took the leadership role at the American Gaming Association, he changed the organization’s orientation toward tribal government gaming. Previously, the AGA focused on drawing distinctions between the commercial casino industry and other gambling industry segments, including convenience gambling, state-run lotteries and tribal government gaming.
Redirecting from this position in 2017, the AGA released a national impact study of tribal gaming, and now actively recruits tribally owned gaming companies and tribal governments to join the organization.
In 2018, the AGA’s recruiting of tribal members and promotion of tribal gaming as “part of the casino industry” has the potential to confuse the public and policymakers about the distinct differences between the commercial casino model and the tribal government gaming model in the United States. It also has the potential to drive a wedge between tribes who do not agree on how (or whether) to engage with the AGA. In particular, the AGA’s collapsing of tribal and commercial gaming into “casino gaming partners” has raised concerns by some tribes that the AGA is leveraging tribal gaming’s strong economic development successes at the regional level (such as New York or Connecticut) in order to open new markets for commercial casinos, which ultimately compete with these existing tribal properties.
The AGA’s embrace of tribal gaming is a departure from the mission of its founders, and it appears this trend of expanding its own mission beyond commercial casino matters will continue. When the AGA was formed in 1995, the first board was focused on defeating a proposed federal tax on commercial casino gambling and on influencing the federal legislation that would ultimately create the National Gambling Impact Study Commission (NGISC). When the NGISC released its final report, the founding president of the AGA, Frank Fahrenkopf, commented, “While this report is not without its faults, it definitely draws a favorable distinction between commercial casinos and other segments of the gaming industry.”
The distinctions between commercial casinos, tribal gaming facilities and other gambling industry segments are meaningful. The gambling industry is not easily categorized. Legalized gambling in the United States consists of a range of diverse activities including state-run lotteries, riverboat casinos, parimutuel horse and dog racing, tribal government gaming, commercial casino gaming, internet gaming and sports betting, among others.
Each product is specifically marketed to particular market segments and defined and regulated in specific ways. While gambling opponents collapse these differences when they claim that gambling is a vice, there are very few similarities between the legal gambling products, the use of their revenue streams or their impacts on consumers or communities.
The NGISC Final Report (with input from the AGA) acknowledged and highlighted these differences when it stated:
…the gambling industry is far from monolithic. Instead, it is composed of relatively discrete segments…that can, in turn, be divided or aggregated into a variety of other groupings… each segment of the gambling industry ‘has its own distinct set of issues, communities of interests, and balance sheets of assets and liabilities’…
In California, tribal governments will continue to focus on the unique history, regulation, attributes and impacts of tribal gaming as opposed to commercial casino gaming in order to pre-empt any attempts by commercial casinos to enter the state. The history of tribal gaming is rooted in self-reliance, economic development and nation-building, not casinos.
Tribal governments own and co-regulate their own properties, which must be located on tribal lands. Tribal government gaming revenues are invested in tribal social programs and in recovery from a long history of failed federal programs. These stories are a critical feature of markets like California, and these stories will continue to be told by tribes, by regional tribal associations and by NIGA.
While the AGA and the tribal government gaming industry have some issues in common, the trend of collapsing the two distinct industries appears to help the commercial casino industry while it has the potential to erase the unique story of tribal innovation that created what is now the $30 billion tribal government gaming industry. As one tribal representative noted, “When we lose our sovereignty story, we lose.”
In spite of these critical differences, the trend of the AGA including tribal gaming in their messaging will continue and intensify, because telling tribal gaming stories reveals the best of casino gaming. Freeman’s statements continue to be forward-looking, and there is little reason to believe that their position will change: “As tribal and commercial operators continue to work together, our industry will continue to grow in the years to come.”
—Katherine Spilde is an associate professor and executive director of the Sycuan Gaming Institute at San Diego State University. She can be reached at [email protected].e
4. The Benefit of Niche Gaming
Developing strategies to attract small but influential groups to your casino
Today’s casinos face myriad challenges: a vast and competitive market, the rising costs of slot products and technology, and the industry’s uncertainty about millennial gamblers.
Many in the industry are working to combat these challenges with fancy marketing campaigns and guest-service initiatives to wrest players from local competitors. They’re integrating newfangled technologies to optimize cap-ex spending, and experimenting with social- and skill-based gaming to modernize their operations. When executed properly at the right property and targeted to the right players, these initiatives can help operators reap dividends in the short term. For sustained benefit, however, consider a niche gaming strategy that operators can use to enhance their gaming operations and drive new revenue in the long term.
Before we start, let’s define niche games as games that are extremely appealing to a small, yet highly loyal subset of players. In this sense, niche gaming is not new, and it occurs naturally when players gravitate toward the games they prefer. Developing a niche gaming strategy simply means that the casino explores its player database to identify its most valuable niche players as well as the types of niche games they prefer and that drive incremental revenue.
Niche games are not popular. They’re not played by hundreds of players and don’t top the win-per-unit list each month. Niche games appeal to very specific groups of players and are effective at driving those players to visit your property.
In the last two years at VizExplorer, we’ve supported more than 70 casinos with between 300 and 4,000 slot games each. Across properties of all sizes, niche gaming is thriving, but in some cases, operators are unaware of its existence or impact.
Let’s start with the most obvious and universally accepted forms of niche gaming: video poker, electronic table games (ETGs) and high-limit rooms.
Each gaming experience appeals to specific players who seek a certain experience. With video poker games, the average diehard player plays no other games and typically goes paytable shopping to find the best machine.
ETGs have similarly loyal players, with the average game getting 60-80 percent of its win from players who exclusively play ETGs.
The appeal of high-limit rooms stems from how they are built. Operators place a mix of expensive games into a room designed to deliver optimal guest service (think dedicated cashier or bar service). Over time, both the amenities and the games become even more niche as operators work to customize their high-limit rooms to meet the exacting demands of their high-end clientele.
The success of these niche gaming styles prompts the question: Why haven’t casinos put more effort into identifying additional niche gaming opportunities? The answer is simple: lack of time and resource constraints.
The three niches we describe above are fairly high-level, and while niches by definition, they represent a huge chunk of casino wins. Going deeper to identify smaller niches requires analysis of player-level data matched to game performance and to player loyalty metrics. For the average casino, this level of analysis isn’t feasible because they lack the staff with the right skills or the time. However, as competition increases, it’s becoming more necessary to explore these opportunities to gain an advantage.
Let’s review a real-world example of the potential value of doing that deep-dive analysis. A casino in the Midwest has a direct competitor one hour away. The competitor is about 30 minutes closer to the population center from which both casinos pull. The competitor is also newer, and populated its gaming floor with brand-new games for its opening, meaning it didn’t have some of the classic themes in classic boxes.
The older casino ran analysis to understand the players who drove the extra 30 minutes past the new competitor to play, and found that by a margin of 3-to-1, those players were playing the older classic games. Financially speaking, these classic games are just under house average as a group, but these loyal players were making up almost 60 percent of those games’ value.
Current industry trends would indicate the need to consolidate older cabinets and encourage these players to try newer boxes. The property took a different approach and moved those boxes into a classic section to provide a space especially for these loyal players. As a group, those players were worth the effort to protect the classic games from potential removal as well as to re-bank them into a small niche.
Most slot operators will agree that every casino’s players are different, and that what works at one casino won’t necessarily work at the other. This can benefit individual casinos that have slot operators willing to do the work to understand players and find the niche games to drive incremental revenue. The Midwest casino example makes it clear how identifying and supporting niche gaming can be a highly effective and profitable way for properties to cater to player desires and keep players from defecting to competitor properties.
—Based in Las Vegas, Jordan Whitten is director of industry specialists for VizExplorer. In this position, he serves as the advanced trainer and subject matter expert for the company’s slot floor optimization solution floorViz. Prior to VizExplorer, Jordan spent three years in the slot operations departments at various casinos in Colorado, Nevada and Mississippi, where he developed his interest and expertise in slot analytics, location optimization and strategic game mix decision-making.
5. Luxury Redefined
Stripped down is out, high quality is in for hotel room transformations
The industry is constantly evolving—transforming itself as the market pivots and demographics change. Increasingly, savvy guests are demanding a heightened sense of luxury in their experiences, and this is driving a new shift from what’s traditionally been thought of as “luxurious.” Four Seasons Hotels and Resorts calls it “deconstructing the formalities of luxury,” and Ian Schrager’s new hotel concept, Public, promises “luxury for all.” Understanding how the new notion of luxury can be implemented on a project starts with a change in design perspective.
Luxury redefined connotes a lifestyle that is less formal and noticeably less stuffy. This new standard of luxury is focused on what guests really want and value, but it doesn’t mean “stripped down.” Thoughtful design, attention to detail and visual sophistication are the drivers of today’s luxury. It’s less about flashy opulence and more about the way a space makes the guest feel and interact. Authentic and accessible design features are smart design touches that make the experience simpler and less complicated.
For example, resort guest rooms are moving away from the sameness of a brand-standard type of approach and more toward the creation of a unique, well-curated room experience that feels “special” to the guest. Emily Marshall, head of interior design at HBG Design, says her gaming resort projects nationwide are trending toward a greater mix in room designs.
“We’re creating style variety through multiple room packages at the same property,” says Marshall. “Designing three or four distinct variations in carpet design, light fixtures, fabrics and furnishings gives guests an experience that differs each time they visit a property—so they never feel like they’re staying in the same place twice. The challenge for designers is to work with manufacturers to explore distinctive design elements without incurring more cost to create unique guest experiences within a large-scale property.”
Today’s guests are well-versed in matters of style and design; they travel more frequently and crave immersion in the locality of place. “Modeling environments that are part of the fabric of a culture or a community has never been more relevant to design than it is right now,” says Nathan Peak, design leader for HBG Design. “We find design inspiration from authentic yet unexpected sources, emphasizing details of a culture or elements of the locality of a project.
“When you can express those details in subtle, sophisticated moves that aren’t immediately obvious, you give guests the opportunity to discover those details on their own, adding to their experience.”
Elevating convenience and efficiency in guest rooms also adds to the expression of luxury. Integrated lighting in the bathroom; motion sensor lights built into the nightstand that work as a night light; wireless Bluetooth speakers built into rooms all represent heightened attention to smart details. “We’re reimagining all the essentials in the guest room to give guests what they want and value in their experience,” says Marshall.
Original art continues to be an important touch of luxury, and while Wynn Resorts set the standard for art collection, casino resort owners are increasingly using art as an opportunity to tie their facility to local context and culture. For example, Choctaw Casino Resort in Durant, Oklahoma features one of the most impressive collections of Native American art in the industry. The collection creates an important connection to Choctaw culture and is a differentiator in quality and luxury that clearly sets it apart. “The art becomes a focal point—something special that elevates the space,” comments Marshall.
—Dike Bacon is principal and development leader at HBG Design, a Top 10 architecture and interior design firm in the national hospitality/entertainment industry. With 37 years direct industry experience, Bacon works closely with the firm’s gaming clients to strategize and transform business opportunities into long-term successful investments.
6. Connectivity and Parity
Creating continuity by designing games that cross platforms
The gaming industry constantly adapts to meet the needs and wants of consumers, and those adaptations must meet the standards set forth by constantly changing technology. Throughout the ever-shifting landscape, though, content remains the best way to engage players. In the B2B social casino space, one key emerging trend is content parity with the casino floor. As 2018 approaches, suppliers should be prepared to provide world-class content in line with land-based offerings, and operators should look to promote games and themes that are available on multiple channels, all of which can engage players, enhance loyalty and drive revenue.
Content parity with the casino floor makes an undeniable positive impact on player engagement and adds incremental revenue opportunities by way of brand recognition. Successful social casinos allow players to explore many titles from the libraries of the developer’s land-based and real-money gaming businesses. When a player sees, plays or prefers a specific theme on property, they may also enjoy playing that theme in the digital space. We see this with many of our brands within SG Universe that are also popular on the casino floor. Brands like Zeus and Spartacus perform well across multiple channels. Simply put, players seem to enjoy finding their favorite games in multiple places. The exploration opportunities that B2B social casinos provide are unparalleled.
Unique to the digital realm and prominent in the B2B social casino world is the sheer accessibility of an entire library of games. With a few simple swipes, players can access and play hundreds of games. When paired with a collection of content also available on casino floors, the social casino becomes a treasure trove to the player for exploration of familiar and new content; players are encouraged to explore the library and try new games without any extra effort.
Games aside, B2B social casinos are already beginning to reflect the casino floors in other ways. Portrait-mode gaming, an innovation now available to the real-money space in legal jurisdictions, will start to make its way to the B2B social space in the coming months. Portrait mode makes it easier to play games online for smartphone players and better reflects the land-based experience by making full use of a device’s screen space. The vertical orientation allows for dynamic portrait animations, new art and sound opportunities, and a more immersive playing experience that recreates the larger-than-life feel of many slot cabinets.
Additionally, as the world of technology becomes more connected than ever, we’ll begin to see enhanced connections between players, their devices and land-based properties. Players can already access their loyalty account information, book hotel rooms, make restaurants reservations and much more using just their device. This connectivity will improve as customers learn to expect more from the technology that enables these functions.
Portfolio parity and technological innovations in the B2B social casino world will continue to bring digital gaming to the forefront of the gaming landscape. As operators adopt an omni-channel approach that involves expanding online libraries and continual innovation, B2B social casinos will gradually be acknowledged as a must-have rather than an enticing extra. As this happens, players will reap the benefits of enhanced features and functionality, better connectivity with the property, and, of course, more engaging games.
—As SG Interactive’s vice president and chief product officer, B2B, Tom Wood leads global product strategy, technology, compliance, delivery and roadmaps for the remote game server (RGS) and SG Universe business lines. He manages a worldwide team of product managers, game development squads and technology specialists who are driven to meet or exceed market and customer expectations.
7. Multi-State iGaming Agreements
As iGaming spreads across the country, cooperation between the legalized states will become crucial
Internet poker players in New Jersey, Delaware and Nevada will soon be able to compete against one another pursuant to the Multi-State Internet Gaming Agreement (MSIGA), which New Jersey joined on October 13. Under MSIGA, mutually licensed operators may allow internet poker players in Nevada, Delaware and New Jersey to play together at the same virtual table.
Nevada and Delaware initially entered into MSIGA on February 25, 2014, allowing operators licensed in both states to pool players located in Nevada and Delaware on their respective platforms, with the goal of increasing liquidity, and ultimately, internet gaming revenues. The addition of New Jersey to MSIGA should significantly increase the number of internet gaming participants, which in theory will enhance the variety and quality of internet gaming offerings, attract new consumers, provide more opportunities for internet gaming participants and operators, and increase net state revenues.
As internet poker is the only form of internet gaming universally permitted in all three states, MSIGA is currently limited to internet poker. While Nevada only offers internet poker, Delaware and New Jersey offer a variety of internet games in addition to poker. MSIGA expressly provides for and envisions the expansion of internet gaming offerings subject to the agreement, such as internet slot machines and table games. If MSIGA is expanded to include other games, operators will be able to offer such games to players in other member states that authorize those games, and may allow players from different states to play together.
Member states may amend the agreement if two-thirds of the members agree to the amendment. Thus, New Jersey and Delaware have the option to amend MSIGA to include other internet games.
Further, MSIGA allows operators to offer internet progressive systems and progressive jackpots that are funded by both internet and land-based patrons located within the three states, provided it is permissible under each respective state’s law. For example, a progressive player in New Jersey could contribute to and play for the same jackpot as an individual playing at a land-based casino in Delaware. Operators must submit internal controls for such systems and jackpots to each state in which they will be offered, and obtain approval for the same.
The state in which each player is located will receive the revenue or tax attributed to that player, regardless of the location of the operator. MSIGA includes provisions for determining the amount to be paid by an operator to each state, including for calculating the portion of the rake or tournament fees attributed to a respective player. The amounts will be distributed to each state on a monthly basis. This structure will also apply if MSIGA internet gaming offerings are expanded.
MSIGA is comprised of a representative of each member state, to facilitate, oversee and govern MSIGA and the internet gaming offerings provided pursuant to MSIGA. Each member state must also designate a law enforcement representative to collectively address appropriate matters that may arise under MSIGA.
MSIGA also provides for the addition of other states. To join the agreement, a prospective state must demonstrate that its operators, internet gaming system and regulatory structure meet a set of minimum standards. For example, each prospective state must demonstrate that its process of issuing internet gaming operator licenses promotes public confidence and trust in the internet gaming industry and that its operators meet certain standards of suitability. In addition, each prospective state must show that its operators have a demonstrated technical capability of verifying the age, identiity and physical location of players, and that out-of-state persons are excluded. Each prospective state must also exhibit that its operators have appropriate consumer protections and safeguards concerning responsible gambling in place.
Pennsylvania could be the next state to join MSIGA. On October 30, Pennsylvania became the fourth state to pass legislation authorizing internet gambling, including poker and other internet games. The new legislation authorizes Pennsylvania to negotiate and enter into reciprocal internet gaming agreements with other states. The legislation also permits multi-state agreements with other states concerning the operation of multi-state wide-area progressive slot machines systems.
—Nicholas Casiello, Jr. is chair of the Gaming Practice Group and CJ Fisher and Lea Giosa are associates in the group of Fox Rothschild LLP, an Am Law 100 law firm. Their practice focuses on all aspects of gaming law, including gaming regulatory compliance, investigations and licensing. They may be reached at 609-348-4515 or [email protected], [email protected] or [email protected].
8. The Case of Japan
The dilemma and way forward for Asian integrated resorts
The Asian casino gaming market has undergone huge changes in the last decade. The growing interest among various Asian jurisdictions like Taiwan, South Korea and Japan to legalize or expand the availability of casino gaming, within the context of an integrated resort setting, has stirred up heated debate within some Asian societies.
Everyone believes that the way forward is to, essentially, package the “gaming deal” into a multifaceted complex that includes entertainment facilities, hotel, MICE, retail and restaurants. The deal is then aggressively sold to stakeholders, who are increasingly skeptical about the benefits of such a resort and why there is a need for a casino in it. The resulting deal, although disguised as an integrated resort (IR), is nevertheless a “gaming deal”—the casino plays a pivotal role in maintaining the business financial equation. It is perhaps more accurate to call such a facility an integrated resort.
In any case, the Asian public remains skeptical of the motives of their politicians, governments and IR operators.
As the Asian casino gaming market expands, scattering into cities throughout emerging and developed Asian economies alike, it becomes increasingly difficult to differentiate one gaming offering from another. The cultural uniqueness of each market then plays a critical role in making the difference.
Asians are culturally different from the Westerners. Historically, one thing that Asian countries value highly is keeping their social fabrics intact.
The development of the IR has given rise to new model of casino gaming, providing new strategic development that was otherwise impossible in the past. The combination of various elements in an IR is expected to lead to greater synergy than when each operates on stand-alone.
With Macau leading the pack, Singapore, South Korea, Malaysia, Philippines, Vietnam and now Japan are chasing after the Holy Grail of Asian gaming—an exceptional IR with synergized activities that result in positive economic impact but minimal negative societal consequences. However, there is no foolproof way to keep social harm at bay. One cannot expect zero harm from gambling consumption, much like alcohol consumption; rather, one should make harm minimization a long-term goal. Everyone can be a winner in this market; a stakeholder approached is needed, with a stronger inclination to protecting social norms and orders.
Many business executives still do not understand this. While gaming operators unveil all sorts of creative ideas for their proposed new resorts, the public remains critical of their core business model—one based on the support of an active casino operations located within their neighborhood.
There are some real issues to ask and tackle. For example, why is a bet on lottery socially acceptable but not a bet on the baccarat table? Why do Asians object to casino gaming but are more receptive to lottery and/or sports gaming? What are the roots of all these objections? Is it a matter of public misconception or a lack of trust in the local government and/or IR operators?
In December 2016, the long-delayed Japanese Casino Law (Japanese Casino Implementation Act) was passed. This worries many Japanese, in particular, about the possibility of more organized crime and problem gambling.
Let’s face it: Japan has never been a gambling-free society; there is a long history of gaming in horse races and lottery. What’s wrong is the public’s perception that gaming is related to organized crime groups. To be fair, the Japanese government has been very active in controlling and breaking up organized crime groups.
The other negative perception that the public has about casinos is problem gambling. The Japanese government fully understands this concern. Indeed, the Japanese public would be very thankful and relieved if its government would finally do something to deal with problem gambling as part of the casino legalization process, because that would encompass all other forms of gambling, particularly pachinko.
Every year, the Japanese pachinko industry makes huge amount of money. However, pachinko has never been categorized as “gambling” in the eye of the Japanese law, even though many Japanese see it otherwise; the Japanese government has refused to recognize pachinko as a form of gambling.
The idea of an IR is partly misunderstood by the Japanese public because they believed that pachinko has been used as a camouflage for gambling, and so may the establishment of IRs.
As the Japanese population questions its politicians for the logic of legalizing casinos on its own soil, many plans are now in discussion to heavily regulate the Japanese casino gaming industry even before it begins. This is much like the process that Singapore underwent during its own casino gaming legalization about a decade ago. It is an essential course of action to identify and meet the needs of all stakeholders.
Although a heavily regulated IR will limit operators’ revenue and profit, it is meant to satisfy the population and key stakeholders as well as safeguard everybody’s interests. Bear in mind that Asians have a highly collectivistic mindset, where “we” is so much more important than “I.” Potential operators, in this sensitive circumstance, must be prepared to take it or leave it. It is, and will be, their choice to make.
—Desmond Lam is a professor in international integrated resort management at the University of Macau. He can be contacted at [email protected]. Yuko Matsumoto is a senior instructor in management at the University of Macau. She can be contacted at [email protected].
9. Evaluating Success
Skill-based gaming in three acts and contexts
In order for a skill-based game—or any other game for that matter—to be a success, the game has to do at least one of three things:
1. Broaden a given casino’s audience. By appealing to gamblers a casino might not otherwise reach, whether it be younger gamblers (e.g. millennials), higher-stakes gamblers or any other demographic.
2. Give the casino a game portfolio advantage. If a casino can offer a desirable game or a value proposition (e.g., 3:2 blackjack, 10X odds on craps, lower table minimums, etc.) that other casinos aren’t, that casino may have a game portfolio advantage that may win customers from the competition.
3. Generate a sufficient amount of gaming revenue. The game must either make more money than the alternative (i.e., produce incremental revenue gains), or at least generate a minimal amount of gaming revenue combined with enough value from either of the first two items to justify the cost of leasing the game.
And with regard to skill-based gaming, 2017 was about addressing the first two items by answering one bottom-line question: “Is there a market for something different?”
The initial rollout of next-generation skill-based games began with GameCo’s single-player, house-banked “Video Game Gambling Machines” (VGMs) in Atlantic City in November 2016, followed by games on Gamblit’s Model G multi-player platform in Las Vegas in March 2017. And then in October, Gamblit’s TriStation platform—a multi-game, single-player, house-banked platform—made its debut at Planet Hollywood, the Venetian and MGM Grand in Las Vegas.
This first year of next-generation skill-based gaming has been a feeling-out period probably best described as trial-by-fire, as this first wave of games went to market despite facing a laundry list of challenges inherent to trying to gamblify non-gambling games, chiefly:
- Game speed or lack thereof
- High stakes and high house edges/rake
- Issues with regard to wagering structure
- Learning curves
The picture you get is that what these companies are attempting to do is quite difficult. But you also realize that this is just the beginning.
We’ve already seen refinements being made. At G2E in October, GameCo unleashed Terminator 2, a premium-branded, direct upgrade and replacement for Danger Arena, the first VGM to hit the market.
Meanwhile, Gamblit revealed Deal or No Deal Poker Special, which is Gamblit Poker (which went live in March) but with an added Deal or No Deal twist; the twist adds a split decision, which allows for a wider range of payouts (both bigger and smaller), and should help to better hide the size of the rake.
The bigger challenge will be solving the game speed issue in the way that makes sense.
And so in a sense, skill-based gaming is a tale of three stages—three acts, and three contexts. 2017 was about proving out the platforms, testing out the waters and seeing what the audience is for these machines regardless of financial performance, which was always going to underwhelm given the aforementioned challenges.
But if skill-based games are to work into the future, 2018 will be about two things:
1. Casino operators and skill-based game developers properly identifying the current games as small-stakes arcade games. This means being realistic about what we’re looking at, and finding a way to offer the games at reasonable stakes in an effort to give the games and platforms a chance to build a player base.
2. Solving the game speed issue while utilizing wagering structures that make sense. This will be the key to turning these platforms into proper gambling machines—efficient revenue-generators with realistically scalable stakes.
The latter will be the ultimate trick.
Now for the three contexts:
1. Platforms (2017). Game performance aside, the most important thing to be proven out is the potential efficacy of these platforms. Can these machines broaden the appeal of the casino floor and provide a casino with a game portfolio advantage?
2. Arcade machines (present). As currently constructed, the proper context for the skill-based games we’ve seen thus far are as small-stakes arcade machines on the casino floor. These games are not necessarily well-equipped at present to function as high-stakes gambling machines.
3. Gambling machines (future). As skill-based gaming developers start to figure how they want to approach wagering, skill-based games will evolve from mere video game machines with a wagering component, and we will instead see new gambling-based games utilizing new technologies. Games that start with gambling will be far more efficient at generating gaming revenue; these games will have practical game speeds, which will allow practical stakes and house edges. These games will also have the ability to scale stakes and produce higher-stakes play.
—Jeff Hwang is a game developer and president of High Variance Games LLC. He is also the all-time best-selling author of Omaha poker books. Follow Hwang on Twitter, @RivalSchoolX.
10. Culture Change
How can casinos prevent terrorist incidents from occurring?
When a tragedy like October 1 strikes, we generally take away one or two valuable lessons. 9/11, Columbine, Virginia Tech, Fort Hood and Pulse all brought important vulnerabilities to light, and even spawned new technology and techniques for prevention and response. These enhancements tend to counter one threat, but we are starting to realize that we cannot anticipate the imagination or ingenuity of someone who is bent on doing harm. This will require a comprehensive change to the security culture.
The “See Something, Say Something” campaign was a great slogan with good intentions, but was too generalized and vague. Security experts have taken this slogan and built training programs and technology around it to make a security culture change. This new culture where persons have some responsibility for their own safety is the trend for 2018 and beyond.
Behavioral recognition is already being practiced discreetly at concert venues, amusement parks and many other resorts. Awareness campaigns, job descriptions, in-service training and on-boarding enhanced with these techniques will shift the culture from uninvolved victims to interactive groups of people sharing responsibility for their own safety.
The most common inquiries we have received since October 1 are technology-based: Metal detectors? Lethal weapons? Tactical response teams? Counter snipers? One reporter even asked if we would be installing bulletproof glass on the exterior windows of the hotel. Certainly these and other technologies will become more advanced and play a larger role in the protection of soft targets (except the glass—not sure where that idea came from). However, the common denominators of all bad acts are that they are committed by humans, and those humans give warnings, no matter how imperceptible they may seem.
This “human” technology is turning into an industry and a science as we speak. Behavioral recognition, security awareness and social engineering are some of the skills being taught and applied throughout the security industry (and the hospitality industry). These fields of expertise, rather than being vague and ambiguous like the See Something campaign, are detailed, advanced, and targeted to certain employee and even visitor groups.
Here are some current examples where security uses active and passive behavioral recognition to counter potential threats:
- A popular amusement park observes persons entering the venue and refers those with certain behaviors to uniformed police officers. Guests are further examined by plain-clothes security once inside the gates.
- A large mall in the Midwest uses a recognition process to scrutinize its patrons upon entry.
- Many retail chains post persons at the door to greet incoming patrons.
- One casino creates “choke points” to observe guests and their behaviors on video.
- Many corporations train their employees to recognize the pre-violence indicators associated with workplace violence.
In coming years, we will take this training to the next level. What exactly this new culture will look like in the gaming industry will be defined by all of us. But consider these facts that are affecting the future of security for us:
- Most of our new employees attend an orientation that includes a 10-minute video on security awareness. No one remembers anything they were presented in new-hire orientation except where the dining room is and when do they get their first check.
- Those tasked with “security” at a resort make up less than 5 percent of the workforce. Imagine multiplying those eyes and ears by 20.
- Your valet, bell and housekeeping staff “touch” every guest every day. This group of employees knows your guests better than anyone, but what is their mechanism for transferring that intelligence to someone who can do something with it? Does their training include “what to look for?”
- Cruise ships require all passengers to participate in evacuation drills on every embarkation. Each crew member has a dual assignment during an emergency. Could hotel/casino employees have dual roles? Especially in an emergency?
- We still discourage employees from carrying and using their phones on the job, even though it is arguably their best tool for safety. How about managing the use instead of prohibiting it?
- When confronted with a life-threatening situation, most people will revert to their instincts. A lack of training or practice means most people will freeze while their brain processes a plan.
- Many of us put up a poster that says something like “See Something Say Something.” What does that mean? Did we tell our employees? What do we do with the information?
It is not technology alone that is going to save us from ourselves, but it is our fellow humans. While we will always rely on, and be expected to embrace, new technologies, it is the science of social engineering that will be trending for us in the years to come. Changing the culture requires education, buy-in, management support, guest interaction, and 100 percent dedication by the company.
—Darrell Clifton, CPP, CSP has been managing security operations in the gaming and hospitality industry for over 25 years. While currently managing three properties for Eldorado Resorts in Reno, Nevada, he also consults, trains and advises security operations throughout North America. He is the author of Hospitality Security.