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Missing in Action: 10 Trends for 2021

Why ‘trends’ are so hard to identify

Missing in Action: 10 Trends for 2021

In last year’s 10 Trends for 2020, nowhere did we mention Covid-19 or pandemic or casinos closed for months at a time. Obviously, we weren’t alone in missing that one, but in this year’s 10 Trends for 2021, Covid influences almost every trend. The impact that the pandemic has had on every industry has been astounding, but none as seriously as the casino and hospitality industries. And you’ll see that reflected in almost every trend for this year.

You’ll note that the biggest trend in the view of the GGB Editorial Advisory Board is cashless gaming and all its ramifications. Not only does a player not have to carry cash to and from the casino; not only does the casino get a super-accurate view of the players’ action so they can be comped correctly; not only is the transfer of funds more transparent and efficient, but cashless gaming can help identify problem gamblers in a more effective manner, demonstrating to the player and management that there could be some issues there. And of course, the cashless no-contact system is moving forward more quickly than expected as a result of Covid-19.

So to help prepare you for 2021, we’ll always have 2020 to remind us how bad it can actually be. Good luck in 2021 now that you are fully informed. Except for the next unexpected development!

1. Cashless: A Sudden Priority

Cashless casinos have been discussed for years and Covid-19 has injected urgency into the discussion.

A worldwide trend in the way we pay for everything from coffee to the gym to transportation has been clear: Cash is somewhat outdated, practically everywhere.

Except in the casinos, that is.

As consumers around the world switched to convenient payment methods that required nothing more than a tap of a smartphone, those in the casino universe continued to fork over cash for the vast majority of transactions. From $100 bills fanned out on the craps table to the parade of bills fed into bill acceptors—ultimately to be converted to hard currency when a ticket is redeemed—cash has remained king.

The role of cash has been the subject of industry trade-show panels for years, and the industry has been pushing to make cashless play available at least with the same ease as paying for your Starbucks coffee with your phone. The casino management systems of big slot suppliers and new systems from a variety of payment technology companies have made this possible, and available to casinos, for several years.

But this unprecedented year has had the effect of accelerating what had been a gradual move to cashless technology in the casino. The Covid-19 crisis has made people everywhere hesitant to handle cash, knowing how easily the virus spreads—and not knowing who has touched that banknote in one’s hand previously. In fact, the virus has made people hesitant to touch any surfaces where Covid-19 may rest.

Thus, cashless, contactless transactions are suddenly in demand.

“There is a hyper focus on this technology from customers, and has been for the past eight months,” notes Darren Simmons, executive vice president and fintech business leader for Everi Holdings. “Covid was the tipping point to operators, as they move from seeing the technology from a standpoint of a ‘nice to have’ to being a critical and essential part of their business operation.

“Covid has also caused regulators to rethink strategies of how this can be incorporated into their jurisdictions while still preserving security protocol, as well as responsible gaming.”

“With each passing month since the outbreak began, we’ve seen interest in a cashless wallet for casinos and related gaming gain momentum with resort operators and patrons alike, for its critical safety advantages,” says Omer Sattar, executive vice president and co-founder of Sightline Payments, which produces the omnichannel Play+ cashless funding system. “Today, the casino industry is still heavily cash-based and substantially underpenetrated by digital payment systems. We believe the majority of patrons are looking for the more modern payment options, as they are accustomed to using in their everyday lives.”

“For the gaming commissions in each state, cashless was on the back burner prior to the pandemic,” comments Anthony Rabito, president of FABICash, producer of the omnichannel FABICashless solution. “Now, everybody’s talking cashless.”

“It’s been overwhelming,” says Christopher Justice, president of Global Payments Gaming Solutions, of the spike in demand for cashless technology. Global Payments produces the VIP Mobility system, which Justice says can implement a cashless system as soon as regulations in a particular jurisdiction permit.

Getting it Done

The ways to achieve cashless, contact-free transactions on the casino floor are as varied as the vendors providing the technology, beginning with the large slot suppliers who have added cashless functionality to their product roadmaps.

One such company with an inherent advantage is Everi, which was a leader in payment processing technology as Global Cash Access before merging with the former Multimedia Games to become a prominent slot company.

“Our omnichannel solutions such as the CashClub Wallet provide low-cost, high-speed deployment and deliver ROI fast with less disruption, all while preserving patron choice (cash or digital),” says Simmons. “In a situation where so many operators would need to commit large capital investments, Everi can help our customers move toward digital and cashless solutions across their enterprise with greater speed and return on investment.

“Everi enables cashless play across a multitude of products (QuikTicket POS Debit, Ticket from Wallet, Chips from Debit, Chips from Wallet, gaming credit directly to the game meter), with support for game floor, retail, online, and bank-like services.”

Konami Gaming offers a cashless payment module as part of its popular Synkros casino management system, including a “cashless marker” system for table games completing a field test at the Ellis Island casino in Las Vegas, in partnership with technology vendor Marker Trax.

In addition to that partnership, Konami’s Synkros system includes the Money Klip cashless wagering gateway, which uses near-field communication technology to allow customers to load funds from their wallet account into a slot machine either through the player’s club card, or in a completely contact-free manner using the smartphone, which both engages the club card account and allows funds to be downloaded with a wave of the cellphone.

“Konami continues to actively enhance and innovate our cashless technology,” says Tom Soukup, senior vice president and chief systems product officer. “We began by successfully introducing cashless technology with cruise industry operators in the early 2010s, and we’ve continued to advance the technology from there—providing a robust integration layer for cashless transfers to payment processors, extending the technology to mobile and soon extending cashless wagering to table games.”

Other leading slot suppliers including IGT and Scientific Games have introduced cashless play modules to their casino management systems.

The IGT Advantage casino management system offers the integrated Resort Wallet cashless suite, which includes technology effecting “carded” cashless play allowing funds deposited through the casino cashier or slot machine and accessed using the player’s club card; “cardless” cashless play, accessing a digital wallet via a mobile device; and, where regulations permit, a “full-service” option with an external funding gateway, which allows funds to be loaded directly from external bank accounts and credit cards. Any of the three options can be used across multiple properties in the same enterprise to fund slot play, table games or sports betting, and can be used at retail point-of-sale terminals.

“Our proprietary external payment gateway technology, IGTPay, is fully integrated into the IGT Advantage system for a truly turnkey, end-to-end solution, which is unique to the industry,” says Ryan Reddy, IGT’s vice president, VLT, systems and payment products. “Other gaming suppliers need to connect players’ cashless wagering accounts to third-party gateway technology in order to access external funds. However, our secure IGTPay funding gateway is tightly coupled with our systems solution, significantly streamlining cashless implementation and day-to-day operations.

“Our IGTPay external funding technology is now live in Sweden, and we’ve successfully operated an external payment gateway in digital gaming and iLottery markets since 2013, so it’s a tested and field-proven solution.”

Scientific Games also provides a comprehensive, turnkey cashless transaction solution, tied to its industry-leading casino management system.

“The SG Unified Wallet provides patrons a rich cashless experience, a single place to access gaming funds that can be used resort-wide across gaming and non-gaming outlets,” says Ted Keenan, vice president of product management for Scientific Games. “Patrons are more informed with real-time viewing of fund transfers and wagering activities displayed within their mobile app. The Unified Wallet solution offers a highly configurable back-end application to manage cashless operations.

“This solution was intentionally developed to enable easier integration with payment gateways and other solutions that need access to wallet funds.”

Slot suppliers are joined by a number of payment technology suppliers in pushing the cashless solutions that will come to the forefront in 2021.

Global Payments’ VIP Mobility product is designed for simplicity to the end user. It enables guests to create digital TITO tickets on their mobile device by scanning an existing voucher or using their VIP Preferred e-check account. Patrons then pair their mobile device to any slot or table game by scanning a QR code. They can reload from their phone and retrieve funds once they are finished playing. The entire experience is seamless for the customer.

“Part of what we wanted to do with VIP Mobility was to create an incredible customer experience, so that old, young, digital prodigies or not, folks could figure out how to use it,” says Justice. “The ability here is to have a single, casino-branded app that works throughout the resort—not only in gaming venues but non-gaming as well. Now, without talking to anybody, I can effectively download an application, register with nothing more than my phone number, and get started by uploading a TITO ticket like I would deposit a check into my bank account.”

Sightline’s Play+ serves as a funding source not only for casino slots, but for iGaming, mobile sports, tables games, sports betting, horse racing and lottery gaming—“all forms of entertainment that have experienced significant growth during the pandemic,” says Sattar. “Play+ is also a robust and innovative fintech platform that allows for transactions outside of gaming on point-of-sale and ATMs worldwide via the physical Discover prepaid card that each patron receives upon enrollment.

“Most importantly, Play+ allows for immediate cash-out functionality from the patron’s gaming/wagering account, whether physically present or on a sports/iGaming platform.”

The FABICashless product is another omnichannel solution that permits a fully cashless gaming experience directly at the game.

The FABICashless Mobile Wallet can be funded directly from the player’s bank account, or by a debit/credit/e-check transaction through the FABICash cash access platform.

The player will then transfer the funds onto their game of choice by entering a PIN, and move the winnings back to the wallet just as easily. When a jackpot hits, the attendant will process it electronically at the slot machine, using FABI Mobile Jackpot, which integrates seamlessly with the company’s cashless solutions.

FABICash also offers mobile PIN debit and mobile ACH, allowing customers to buy chips in seconds without leaving their seats—just swipe, dip, or tap, print a drop copy and done. Wi-Fi and LTE connectivity and a lithium-ion battery afford no-fail redundancy.

“We’re different than our competitors on cashless solutions,” says Rabito. “We have license agreements signed with most of the gaming platforms—not changing anything they do, just making it better—to allow more options to load their apps, or to cash out.

“For instance, when you go to the cage to do debit/credit or e-check, instead of cash, one of the options the cashier has is to load the FABI Wallet. From there, we interface with all the gaming (casino management systems) for slots and table games. We interface real-time with their app, give them numerous options, from doing credit/debit e-check at the cage to numerous options from their phone without going to the cage, to load the FABI Wallet.”

Cashless for Good?

While all the payment and slot systems technology suppliers are ready to address the new demand for cashless technology, Justice from Global Payments stresses that this does not mean cash will quickly disappear from the gaming floor. “What happens in the real world is very different than what happens in the gaming space,” he says, “because the rules and regulations for payments in the real world do not apply to gaming.”

He adds that even though cashless payment is widely available in the consumer space, it is not being used by everyone. “Apple Pay is in use at 15 percent of all retailers in the country,” Justice says. “So, cashless hasn’t even reached ubiquity in the real (non-casino) world. Apple and Google’s rules don’t allow funding for gaming. They don’t want to participate in this environment because they don’t want the liability, or whatever their reasons. So, I think it’s going to be difficult to get to a universal wallet, if you will.”

Still, the increase of cashless options on the casino floor, by all accounts, will outlive the pandemic to become a permanent part of the casino experience.

Everi’s Simmons says that while demand for cash is still strong in casinos, the Covid-19 crisis has given rise to stronger priorities. “The reality,” he says, “is that interest in cash has not really dimmed, but the interest in self-service experiences, avoidance of unnecessary face-to-face interactions, and a strong, ongoing interest in convenience, simplicity, and safety will keep demand in this aspect of our products very high.”

“I have no doubt this trend will continue,” agrees Sattar at Sightline. “We’ve seen this trend towards cashless gaming and entertainment coming for the last several years, and interest seems to just keep increasing every quarter. Covid has added a lot of momentum to be sure, but it’s been coming for years. A more contactless and cashless gaming experience delivers the safety and security that casino guests are seeking.”

FABICash’s Rabito adds that a combination of cash payment and cashless options is likely to remain the reality for the short term.

“The older players in their 60s might be a little more resistant,” he notes. “They like to go into the casino with their cash; they like to put cash back in their wallet or purse after gambling. I don’t think in our lifetime the casino will ever be completely cashless. But the casinos are catering to the younger crowd, who are all wallet/app-savvy, and I don’t think (that demographic) will ever go back to cash.”

In the long term, the trend in the consumer market toward cashless transactions will mean players—particularly in that younger demographic—will come to expect the cashless option in casinos.

“I believe that once casino operators have experienced the efficiencies and the benefits of our digital wallet, and its seamless integration with the Digital Neighborhood of interconnected products, especially loyalty, they will continue to be interested in offering this cashless and contactless alternative to their patrons,” says Mike Rumbolz, CEO of Everi Holdings.

“I also think that it is unquestionable that once a patron has adopted a cashless alternative, they will not be interested in returning to an environment of handling banknotes and interactions with cage tellers. When patrons can see their points, offers and cash balances in one location and then use those cash balances throughout a casino resort or at the casino’s online sportsbook, iGaming or retail offerings, this frictionless method will become their preferred medium of value exchange.” —Frank Legato

2. Gaming in the Covid Era

Regional casinos show resilience but precarious days ahead

Now that four full months of commercial data have been released, it is a good time to take stock of how casinos have fared since reopening and what the results tell us about future trends. Some states opened in May, marking June as the first full month of operation. Several states opened during June, followed by a handful in July and one each in August and September.

In drive-in markets, bricks-and-mortar gaming revenue has recovered to levels well above capacity limits. For example, while 57 percent fewer VLTs are in operation in New York, revenue is down by only 12 percent (weekly October data). Broadly and with exceptions, region-wide gaming revenue at commercial casinos has recovered to between 80 percent and 95 percent of 2019 levels.

By contrast, the Las Vegas Strip has regained less than 60 percent of its 2019-level gaming revenue and only half the number of visitors.

We see four factors behind these results: federal relief spending, pent-up demand, limited options for entertainment, and concentration of higher-spending gamers (win per admission has increased by 30 percent-40 percent in states that track admissions). Some of Las Vegas’ pain could be a local casino’s gain.

The first two factors are expected to show diminishing effects going forward. Federal relief spending was equivalent to 13 percent of U.S. GDP, and the major consumer program—the boost to unemployment—ended July 31. Moreover, with the virus surging in all but 10 or so states, future gaming revenue trends could be less encouraging.

Going forward, absent future federal relief and improvement in virus trends, we expect gaming revenue in markets that remain open to drop by five to 10 percentage points over current levels, although individual properties in undersupplied areas would likely remain steady.

The Regionals Reopen

The major New England jurisdictions have generally been cautious in their reopening strategies: Rhode Island casinos initially had a reservation-only strategy, the Connecticut casinos have voluntarily kept

capacity limits in place, and Massachusetts had a relatively late and gradual reopening. However, the region had recovered to 85 percent of 2019 levels by September. The strong showing in Massachusetts is largely related to ramp-up at Encore, which first opened in late June 2019.

In the Mid-Atlantic region, Maryland has had the greatest success, with single-digit declines in July and August and a 1 percent increase in September. West Virginia started out relatively strong but faded as competitors in Maryland, Pennsylvania and Ohio reopened. With New York finally back online in mid-September, the region has recovered to 80 percent of 2019 levels.

Midwest results have been highly varied. Revenue in Ohio has increased, particularly near the Michigan border. While Detroit casinos remained closed, in July nearby Hollywood Casino in Toledo saw its revenue double. Illinois casinos are down by over 25 percent while their VGT competitors are up by over 20 percent. The year-over-year comparison for Illinois may be skewed to an unknown degree by the change in reporting: effective January 2020, free play is no longer taxed in Illinois.

Deadwood, South Dakota is another market that has experienced growth since reopening, while Colorado has seen declines typical of other regionals.

The picture in Louisiana is complicated by the multiple hurricanes that hit the state in August and September. However, Mississippi fared better in June and July as well, and enjoyed two months of growth.

Nevada
With consumers hesitant to travel by air, the Las Vegas Strip has been hit hard. With hotel discounting and a lack of convention business, non-gaming revenue on the Strip is likely even worse off than the 40 percent gaming revenue decline. Unfortunately, prospects for significant improvement lie beyond the horizon.

3. Still The One

Sports betting remains an opportunity for expansion in 2021

Since the repeal of the Professional and Amateur Sports Protection Act in May 2018, over half of the jurisdictions within the United States have legalized sports betting, and nearly 20 of these jurisdictions are conducting legal sports betting operations today.

Sports betting continues to grow with the emergence of new markets in states such as Tennessee (which launched at the beginning of November), as well as more established jurisdictions such as New Jersey (which is currently at a similar level to Nevada in terms of handle). All the while, new operators and brands are being introduced in the space, and new deals are being announced across the spectrum of sports among operators, teams, leagues, media and other stakeholders.

Sports betting was widely successful throughout the 2020 election with initiatives on the ballot in Maryland, Louisiana and South Dakota. Each of these three states saw overwhelming support in their passage, with voters firmly indicating their desire to establish a legal market for sports wagering. Nebraska additionally legalized sports betting through three separate initiatives that legalized “all games of chance,” receiving a similarly high level of support from the voters. Taking sports betting to the ballot has proven to be effective across the United States, provided that a proper education campaign is in place to illustrate the benefits of legalization.

The greatest challenge facing the legal market continues to be its ability to compete with the vast illegal and offshore wagering market that offers competitive odds and convenient payment methods to players. Furthermore, many players are familiar with the technological interface of a black-market mobile wagering operation, and converting these players to comparable mobile options in the legal market will take time.

The best defense against illegal wagering is a competitive market in a strict regulatory environment that enables suitable operators to offer attractive promotions and mobile applications to maximize player engagement.

Over the last several months, jurisdictions that offer legal iGaming have also seen significant growth in revenue, with many brick-and-mortar facilities closed or limited in capacity due to the pandemic. iGaming can complement land-based casinos, and the tax revenues have provided a supplement to state budgets as brick-and-mortar revenues continue to rebound.

However, the case for iGaming is met with greater opposition than sports betting, which is more commonly viewed as mainstream. Additionally, interpretations of the Wire Act are in play with iGaming, sports betting, state lotteries, and other forms of gaming. Legislators, regulators, operators and the general public still need education on the benefits of iGaming and the hurdles that are involved in the process before it sees the same expansion as sports betting across the United States.

Going into 2021, multiple states will either continue the discussions that started prior to the lockdown this past spring, or launch new efforts for those states that may be just beginning to have the conversation. These discussions will be amplified as numerous states face unplanned budget deficits resulting from the pandemic.

The key to the emergence of sports betting in any jurisdiction will be to create a competitive market that allows quality operators to bring the highest level of investment while maximizing the revenue opportunity to the state with low tax rates that foster these developments. Responsible gaming measures are also key in these discussions to direct a portion of tax revenues to resources, education, and research into the market.

The following list includes other key items that should be monitored regarding sports betting in 2021:

  • Significant resources will be spent on player acquisition and first-to-market access as new states enter the legal sports betting arena. Operators will continue to be challenged to generate the levels of revenue that can justify ambitious marketing habits to capture and sustain market share.
  • Tribal gaming jurisdictions will look to introduce sports betting. Michigan provided a solid example of a state where commercial and tribal gaming can coexist while keeping the existing tribal gaming compacts intact to allow gaming expansion.
  • Product offerings will evolve as players demand further engagement, including players in illegal and offshore markets. This will also include the incorporation of live streaming into sports betting applications that will be a critical component of future engagement, along with robust in-game wagering options. All of this must be supported by fast and reliable data feeds.
  • Sports teams will seek additional revenue streams from the very activity that had been fought by the leagues for years. This may include direct gaming licenses, sportsbooks within stadiums, and data agreements to gain revenue share while likely avoiding licensure requirements from gaming regulators. However, these groups are chasing pennies while stepping over dollars that could be earned through sponsorships and fan engagement.
  • Mergers and acquisitions will accelerate throughout the marketplace, with the Caesars/William Hill agreement likely to be one of several landmark deals that occur in 2021.

Sports betting has still only just kicked off in the United States. It remains an area of growth for operators to capture revenue that has been lurking in the shadows for years. Sports betting provides an avenue to attract new gamers who may not be viewed as a traditional casino customer, as well as other non-gaming customers seeking further engagement in sports.

With the proper education efforts in place, the opportunity remains strong to establish a strict and competitive market that enables well-established bookmakers to compete with the illegal market throughout the United States. —Jack Gallaway is an associate with Global Market Advisors (GMA).

4. Looping In Latin America

Opportunity abounds in 2021 for LatAm, but uncertainty remains

The gaming market throughout Latin America continues to emerge. While gaming has been a strong form of entertainment, Latin America can be a mystery to some that have not followed it as closely. Like Asia, it remains one of the great opportunities for expansion in the industry on a wide scale, from sports betting to further development of brick-and-mortar facilities from Mexico to Brazil to Uruguay.

Many of these governments at all levels continue to face challenges as they had relied on gaming as a source of tax revenue prior to the Covid-19 pandemic as revenue is still rebounding. This has further put burdens on governments, as those employed in gaming have also struggled in 2020 with facilities operating under limited function post-shutdown and in some cases will remain closed until the end of 2020.

As in other parts of the world, issues of taxation and regulation are the dominant factors that come into the success of the market. These are two of the questions that any operator is concerned about as they enter a market, as well as continue to operate in a jurisdiction. Major changes and disruptions in a market can force individuals to alter their business activities or not consider a market if it becomes too challenging. A key example of this was at the end of 2020 when Jalisco, Mexico imposed a 10 percent tax on player winnings in addition to the existing casino tax.

The unbanked community also raises challenges that will continue into 2021. While these individuals are not typically dissuaded from finding ways to gamble, this does create additional challenges for operators and regulators as they seek to provide sound financial policy to ensure that games are fairly regulated and implement anti-money laundering measures. Payment systems and cashless technologies remain a strong opportunity in the LatAm market as operators continue to unravel the unbanked community’s access to gaming.

Brazil tends to get the most attention because of its long-rumored movement to allow integrated resorts. However, the movement at the end of 2020 was largely focused on the lottery. Scientific Games and IGT teamed up to jointly run the national instant lottery from LOTEX and were granted a concession in October 2019.

Earlier this year, the two companies issued a statement that they were no longer pursuing the agreement due to the failure to execute an agreement with CAIXA, the largest lottery network. This was in addition to the ruling by the Supreme Court of Brazil stating that the federal government’s monopoly on the lottery was unconstitutional. This allowed the 26 states in Brazil to consider their own individual lotteries, adding further layers to an already complicated playing field. Sports betting, which is currently undergoing the regulatory phase, and the continued discussions over IRs will be key in the future of gaming in Brazil in 2021.

Uruguay launched another process for integrating a casino into a five-star hotel on the Rocha coast. This is the second integrated resort development in the country that announced a project in Punta del Este that was spearheaded by Giuseppe Cipriani. Uruguay, unlike some other markets in the region, provides a tremendous amount of stability and a positive regulatory environment. Additionally, there is a tremendous amount of wealth that exists in the region to help supply the local market. Uruguay can continue to grow as a destination within South America if it provides the right tools for operators leading into 2021.

Gaming continues to evolve in countries such as Argentina, which is debating how to regulate online gaming that is already operational in some provinces. Recent changes to the regulatory structure in Colombia, which oversees the lottery and gaming concessionaires, allowed expansion to facilitate sales at the territorial level. Mexico, Peru, Chile and others provide strong markets where opportunities may arise in 2021. Sports betting, online gaming, brick and mortar, lottery, and local games of skill or chance provide opportunities for existing operators to rebound in 2021 from the Great Shutdown, as well as allow other new market entrants to look to new revenue sources in expanding markets.

While the opportunity for gaming expansion remains strong, Latin America continues to show some signs of uncertainty as it looks to expand. As operators, both local and global, look for additional revenue sources to grow their business, Latin America can provide a solid opportunity provided that the right market is created that allows strict regulation in a competitive market. —Brendan D. Bussmann is a partner and director of government affairs with Global Market Advisors (GMA).

5. Getting to Zoom

Conferences and trade shows are changed forever in the wake of the pandemic

In January of this year, I decided to back off something that I had been dedicated to doing my entire career: elevating the educational opportunities for mid- and upper-level managers so that the quality of their performances would be improved and their path to success made easier.

As one of the founders the Southern Gaming Summit and the American Gaming Summit in the mid-1990s, to launching shows on the racino business and casino design, to 17 years as a consultant to G2E, I was always trying to improve the way we educated our attendees. And the results were palpable. There was great feedback because the content was strong and the results were quantifiable.

I wanted to take it higher after leaving G2E, so we began the Gaming & Hospitality Education Series that was held through the cooperation of William F. Harrah College of Hospitality at the University of Nevada, Las Vegas. Our idea was to combine live attendance with virtual learning so people from all over the world could join the discussion. But after a couple of years, I realized it just wasn’t cutting it. Yes, the quality of the speakers and the presentations was excellent. The support from the industry was extraordinary. The feedback was good. But something was missing, and I couldn’t put my finger on it. So we decided to end it. Now to be honest, there were some other reasons to make that decision, both organizationally and financially, but I just knew it wasn’t working the way I had envisioned.

Two months later, the pandemic hit, and I was very glad I had ended our series, but almost immediately realized that there was a need to address the crisis. So by the end of March, we had partnered with The Innovation Group and Regulatory Management Consultants from Michigan and conducted a six-part series—all virtual, of course—on how the industry was grappling with the various elements of the shutdown. It was early in the pandemic and attendance was amazing.

Thankfully, neither GGB, The Innovation Group nor RMC depend on conferences and/or trade shows as our main source of income, so we could offer the sessions free of charge. We also didn’t accept sponsorships so the presentations would be fair and balanced.

Given this background and my experience with all-virtual conferences—both as a speaker and attendee—here are a few suggestions on how to make it better.

  1. Have an overall emcee for the program. At one conference, I was asked to kick it off with a one-on-one interview with an important executive. But no one was there to welcome attendees, introduce me or explain what the conference was all about. An emcee is crucial to keep the audience engaged, explain what’s coming up next, and generally to keep it all together.
  2. While I understand that recording the sessions beforehand makes it easier to control and present quality content, it also strips it of the immediacy, and also the human errors that make a seminar enjoyable. So keep it live if possible.
  3. Make it very interactive. We all know the “chat box” by now. Have the moderator monitor the chat box and ask a relevant question from the online audience at any time during the session. At “live” seminars we all know the experience of the moderator asking for questions at the end of the session and no one raising their hand. They’re usually looking forward to the networking session, lunch or even a bathroom break. Not so online. There are lots of relevant questions that can be posed at any time, keeping the audience engaged.
  4. Don’t charge too much. In my experience US$100 is the tipping point. The expectation that you’ll be able to get even a fraction of what you would in person is irrational. You’re not giving them the live experience and they won’t pay for it. Also consider your sponsors. They’re paying for butts in the seats, so a high fee is not going to help that, no matter how good your content is. Better yet, make it free and your sponsors will be very happy with the response.
  5. Be prepared. At “live” conferences, preparation is always hit or miss. Sometimes your panelists will be very engaged, other times, not so much. In a virtual session, it’s crucial everyone know their roles and how they’re going to deliver them. An excellent moderator is also a must.

Unfortunately, I have no suggestions for the trade show component. Trying to reimagine an immersive experience on the internet is almost impossible. Maybe if we all were wearing those virtual reality goggles it might come close, but that’s another technology that hasn’t reached its peak performance yet. For slot makers, if you can’t see and touch the games; if you can’t get the total experience of sitting in the seat, pushing the buttons, hearing the sounds—and often feeling the vibrations from the seat or seeing the 3D imaging—it’s just not the same.

For systems providers and other products, it might be easier to demonstrate online, but there’s also the visceral in-person atmosphere, surrounded on all sides by the chaos of a trade show floor. Nothing online can reproduce that. And product demonstrations are just glorified commercials, so unless you’re in the market for that specific product, it’s a waste of time and money.

So, what’s the future for conferences and trade shows? Those companies that are totally dependent upon them undoubtedly have a better handle on this than me, but the questions that plagued me when we shut down our Gaming & Hospitality Education Series remain. When you’re limited to virtual conferences, you miss that networking function. And the trade show online still has miles to go before there’s even light at the end of the tunnel.

We recently conducted a survey on our GGB News website, and more than half the respondents said that the virtual element is going to be a part of any meeting or conference going forward, so we’d better figure it out fast. Vaccine or not, this is going to have to occur sooner rather than later because the “new normal” for this type of endeavor just isn’t working. —Roger Gros

6. A Rising Sun?

Will 2021 finally be the year of Japan’s IRs?

Like the rest of the world, the development of integrated resorts in Japan has been significantly stalled because of the Covid-19 pandemic. Japan is just beginning to reemerge as it is now starting to allow foreigners back into the country. While many speculated that 2020 would be a robust year for the integrated resorts, it looks like Covid, like the rest of the world, will push IRs back into 2021 as things finally start to move down the road.

New Japanese Prime Minister Yoshihide Suga, like his predecessor Shinzo Abe, supports IRs, but there are other factors in play for 2021

Earlier this year, Japan transitioned from Prime Minister Shinzo Abe stepping down for health reasons to the current Prime Minister Yoshihide Suga. Suga, who was Abe’s top lieutenant, has been a strong proponent of the integrated resorts initiative. His ascendancy was the ideal outcome in terms of the succession from Abe. Suga will not be a caretaker prime minister and wants to leave his own stamp over the next year coming into a fresh election next September.

The development of IRs received a boost in October when Suga provided an update on the timeline to shift the receipt of proposals at the national level, moving from January through July 2021, back to October 2021 through April 2022. While some may view this as a delay, it was inevitable because of the challenges experienced around the globe with the Great Shutdown that prevented local prefectures from also putting forward their local time frame. The timeline is still rather tight, especially as the world continues to grapple with the pandemic. Because of the slow opening of borders, it may not be surprising to see another small shift to accommodate the continued challenges.

At the same time as the shift in the timeline, the government also released its latest draft of the Basic Policy with a 30-day period for public comments that ended at the beginning of November 2020. While the changes were mostly minor and address some of the recent challenges with Covid-19, operators were looking for further definitions on important topics including taxes, license term, and spatial considerations as a reaction to the pandemic.

These were not addressed in the most recent version of the Basic Policy and are issues that still need to be resolved, or else some operators may vacate their existing development plans just as Las Vegas Sands had previously done in May 2020. The Basic Policy still needs to be solidified in a cabinet decision that will happen in either late 2020 or early in 2021.

One of the many questions that have come out of the Great Shutdown are the spatial requirements for the IR. This includes the 3 percent of gaming space to the amount of required space for MICE.

Both of these come under the challenges post-shutdown as what happens if the gaming, which serves as the economic engine, is limited even further should a pandemic rise again, but also the vast amount of space required for MICE and other non-gaming amenities. Observers need to monitor if changes may occur in the makeup of IRs but will continue to be dominated by non-gaming.

As one looks ahead to 2021, there are still many issues facing potential operators that will submit RFPs to local prefectures. The first of these is that the local prefectures must spell out their own policy once the national Basic Policy has been set, as well as laying out their timeline for the selection process. Potential IR locations including Yokohama, Osaka, Wakayama and Nagasaki will begin these operator selection efforts and become the main focus in 2021. For those prefectures that are still interested in the selection of a partner for one of up to three licenses that may be issued in Japan, timing is getting short on launching a process to select an operator and meet the current deadline of April 2022.

There are many issues that still need to be worked out in 2021 as interested parties observe what happens next in the process that has been over 20 years in the making. This includes the challenges that exist on the geopolitical landscape in Asia and throughout the world. Prime Minister Suga is trying to navigate those waters with his neighbor to the west in China, as well as Japan’s relationship with the United States. There are other issues that need to be sorted in order to continue building the attractiveness of the market and keep strong operators interested, as well as provide some assurances that the market will remain stable. This includes building the relationship between operators, the Ministry of Land Infrastructure Transport & Tourism, and the regulatory body in the Casino Regulatory Commission. The further promotion of IRs and the positive impact that they can have in terms of additional entertainment, investment, job growth and tourism growth remain an opportunity for the industry and its partners to seize as the industry continues its development in 2021.

The first IRs are more than six years away from opening in Japan. There is a considerable amount of work to be accomplished in 2021 to make this a reality. However, the focus on the process will come from Suga to continue the efforts so that as Japan rebounds, and it has some additional opportunities to drive tourism beyond the Tokyo Olympics that are expected now to take place in 2021. The opportunity remains strong for IRs in Japan, but 2021 will be a key year in determining significant parameters to the future success of the market.
—Ayako Nakayama is the representative director of the Japan IR Association, and Brendan D. Bussmann is a partner and director of government affairs with Global Market Advisors (GMA).

7. People Get Ready

The coming boom in online gaming

A prevalent theme across worldwide markets is an increase in online gaming activity, and a natural question is whether we expect a lasting impact of this online growth on bricks-and-mortar gaming.

Public markets certainly seem to believe in iGaming stocks. As evidenced in the top chart, the iGaming sector index has handily outperformed all other gaming indices this year. While stock trends do not always reflect market realities, investment decisions are typically grounded in market research, and The Innovation Group has received requests for such information and market research from a handful of investment banks and private wealth managers to this end.

In addition to stock trends, The Innovation Group is following online gaming revenue trends, comparing online revenue production in pre-Covid months, during brick-and- mortar closures, and within the (recent) reopening period. Academic research from Europe, Canada and the United States examining online gambling behavior changes due to Covid-19 shows a notable increase in iGaming since the onset of the pandemic and through subsequent casino closures. In some cases, up to two-thirds of the current online player base never played online before the pandemic.

While we have not yet ascertained the “staying power” of these new online gamers, early data out of the U.S. does not indicate a mass exodus of new online gamers following casino reopenings. As the charts for New Jersey and Pennsylvania at right illustrate, there was a rapid increase in iGaming activity at the onset of Covid-19 and a greater increase as casinos closed. Despite a minor decrease in online play when casinos reopened, iGaming revenues seem to have stabilized at a run rate consistent with the highest levels achieved thus far.

It remains to be seen if these new online gamers will remain long-term and whether there is a substitution factor where online gaming revenue replaces traditional casino revenue. While bricks-and-mortar casino revenue continues to lag, this could still be tied substantially to capacity restrictions and health concerns related to Covid-19. Given these two uncertainties, we reserve judgment on whether there will ultimately be a larger base of combined gaming activity, and how the share of online versus bricks-and-mortar revenue will evolve. —Brian Wyman, Ph.D. is senior vice president, operations and data analytics for The Innovation Group.

8. Tribal Challenges

Beyond sports betting, which is on the minds of every tribal gaming official, other things are taking precedence

There are two definitions of a trend, one indicating a general direction in which something is developing or changing (“an upward trend”) and the second referencing a fashion or moment in time (“the latest trend in modern art”). Looking ahead during a global pandemic to predict the 2021 trends in the tribal government gaming industry requires addressing trends in both senses of the word.

Of course, tribal government gaming is not a single industry but rather an umbrella term for the vast diversity of tribal nation (re)building efforts that rely on operating gaming facilities across the United States. Starting in March 2020, tribal leaders had to manage at least two crises at once: protecting the health and safety of their citizens, employees and guests while simultaneously maintaining a fully functioning government without their main revenue source.

The total shutdown of over 470 tribal gaming facilities, which represent tribes’ most critical economic lifeline, has devastated tribal economies and communities. One trend that is a sure bet is that tribal leaders and communities will continue to double down on their public health commitment by investing heavily in health and safety protocols for tribal community operations and businesses, including gaming facilities.

Focus on Health and Safety as a Tribal Gaming Brand Promise

It has become clear that the pandemic has accelerated many changes in society, and Indian Country is no different. Regardless of the size or features of a particular operation, tribal government gaming in most regions can still be described as a “locals market” since tribal operators are embedded in the community through shared geography as well as strong employee and guest relationships.

Often the largest employer and social hub in the region, tribal properties cultivated safety and security as a de facto brand even before the pandemic. This emphasis on hosting guests to Indian Country has intensified, and these strong relationships between the tribe, the employees and the guests have become even more important during the social distancing era. This trend of building strong community and business relationships based on trust, safety and public health will continue into 2021 and beyond.

Repurposing Casino Spaces and Embracing the Outdoors

While the pandemic has intensified certain historic trends, current social distancing requirements are also creating a new fashion in Indian Country: a new embrace of open spaces both inside casinos and in nature. The 2020 trend of repurposing indoor casino spaces (including moving smoking sections and games outdoors) will extend to tribal gaming facilities, taking a back seat to tribal recreation campaigns featuring health and wellness based on recreation on tribal lands.

The pent-up demand for access to open spaces is encouraging tribes to embrace geo-tourism and recreation activities that include the outdoors. Indian Country has abundant natural beauty, and tribal communities are generous hosts even beyond gaming.

In 2021, tribal communities will extend access to their natural spaces for visitors who in the past may have visited the tribal casino or event center but are now seeking longer visits that may include the entire family or even remote work stays. Tribal campgrounds, RV parks, canyons and lakes will be made available in ways that integrate tribal gaming with cultural tourism and recreation.

This integration highlights the unique purpose and location of tribal gaming while highlighting the benefits of being together at a time when we are supposed to be far apart. By welcoming visitors safely and extending the invitation beyond the casino offering, tribal communities in 2021 can ensure this trend becomes the new fashion.
—Dr. Kate Spilde is a professor at San Diego State University and endowed chair for the Sycuan Institute on Tribal Gaming.

9. That’s Entertainment

Shows return to Las Vegas, but when will they be back in force?

Caesars has broken the ice.

Entertainment returned on the Las Vegas Strip in late October, perhaps launching an industry breakthrough in this important gaming sector.

“There is a tremendous amount of importance for the return of live entertainment, not just in Las Vegas, but throughout our entire industry, and we are pleased that Caesars is displaying leadership,” says Jason Gastwirth, president of entertainment for Caesars Entertainment Corporation. “It is impressive to see everyone collaborating. We are excited to be bringing it back at this level.”

As Caesars Entertainment will follow applicable guidelines set forth by health and government authorities and implement the company’s enhanced health and safety protocols, guests can expect verbal health screenings, non-contact temperature checks, modified seating for social distancing, mandatory masks for guests and staff, limited capacity and more.

Starting in late October, Caesars opened up four shows: X Country at Harrah’s; Absinthe at Caesars Palace; Piff the Magic Dragon at Flamingo; and Tape Face at Harrah’s.

Guests can also look forward to enjoying complimentary live musicians across the city in many Caesars Entertainment lounge/bar offerings.

“Everyone has shown a great level of patience,” Gastwirth adds. “They understand how important it is that we have to start somewhere and hopefully grow our audience levels over time.

“We have been working closely with artists and show producers who understand this. As we get into 2021, we will hope to get where we want to be. Our entertainment business was at an all-time high prior to the pandemic.”

Gastwirth says certain things will remain in place moving forward. The use of technology, especially involving mobile ticket and ordering, will be significant aspects of the new era.

A few days after the Caesars announcement, MGM Resorts revealed it would reopen seven shows in early November, including David Copperfield, Carrot Top and Brad Garrett’s Comedy Club.

“After eight months, it’s time to bring entertainment back to the Entertainment Capital of the World,” George Kliavkoff, MGM Resorts’ president of entertainment and sports, said in a release. “While there is still a long road in our city’s recovery, the reintroduction of these shows is an important first step. November 6 is going to feel very special as we welcome back team members and guests and bring the curtains up for that first time.”

On the other side of the country, casino entertainment legend Tom Cantone, president of sports and entertainment for Mohegan Gaming & Entertainment (MGE), wondered how entertainment would return and knew he had to be proactive, and that it could begin with sports.

“I sat in my office surrounded by 8 million square feet of darkness, thinking of ways to stay relevant during this unprecedented time,” Cantone says of those early days in March.

One of the sports that didn’t depend heavily on fans in attendance was mixed martial arts (MMA). The UFC has actually taken over a manmade island off Abu Dhabi to stage its televised events. Cantone had a similar idea and contacted Viacom, which televised the fights of the MMA organization Bellator.

Cantone proposed that Bellator use the resort’s arena to broadcast events for the company’s sports brands. The result was a residency partnership with Showtime Championship Boxing and Bellator MMA, with fights broadcast live on Showtime and the Paramount Network. Bellator kicked off the residency on July 24, and Showtime launched August 1 with a bout between Angelo Leo and Tramaine Williams for the Junior Featherweight World Championship.

And in October, Cantone announced a series of partnerships that will created a “bubble” at Mohegan Sun and host early-season tournaments with as many as 30 colleges participating. They will be broadcast live from the Connecticut property beginning November 25 through December 5.

Because of the boxing and MMA events, Mohegan Sun had already developed protocols for coronavirus testing, cleaning and managing sports during the pandemic. It also has its own medical staff and facilities to treat and isolate anyone who may be infected.

“We’re just following the playbook we’ve already established and has been working brilliantly,” Cantone says. “We will just continue to do what we’ve been doing with our doctors and protocols. So far, it’s worked flawlessly.”

Cantone was pleased to be able to get at least some of his team back to work, when sports and entertainment before live audiences is still not possible.

“It’s an incredible endorsement for our team,” he says. “We found a way to beat the pandemic.

“For us, it’s about leadership to show how a venue can reinvent itself even in a pandemic environment.” —Dave Bontempo and Bill Sokolic

10. The Battle Heats Up

Lottery is increasingly invading gaming’s space, and the results could be ugly

It’s always been an uneasy relationship between the casino industry and lotteries in the United States. In most gaming states, except for Nevada and Mississippi, lotteries already existed when gaming was legalized. In some instances, lotteries campaigned against the legalization of casinos, concerned they would impact their sales. Conversely, Nevada and Mississippi gaming had successfully lobbied against lotteries until last year, when lottery tickets finally went on sale in Mississippi. And it was only legalized for physical ticket sales; online sales are prohibited under the statute.

Nevada has thus far been able to keep lottery proponents at bay, although during the recent pandemic, there was talk of reviving a lottery legalization push for a state that desperately needs revenue after three months of no gaming taxes.

It only makes sense for lotteries to sell their tickets online. When the Justice Department ruled in 2011 that the Wire Act only applied to sports betting across state lines and not online gaming of other sorts, including casino games and poker, lotteries were also exempted. Being publicly owned and therefore very risk averse, few lotteries took advantage of the opportunity.

Today there are still only a handful of the 48 lottery states and jurisdictions where lottery tickets are sold online. As of late 2019, only 10 states permitted online ticket sales and/or online instant games: Georgia, Illinois, Kentucky, Illinois, North Carolina, Michigan, New Hampshire, Rhode Island, Virginia and Pennsylvania.

It’s that last state, however, Pennsylvania, that has caused more agita for the online gaming industry, and more are likely to join that parade as it becomes clear how much the lottery is earning.

In early 2018, Pennsylvania launched its “iLottery” with games that mimic online slot games. Casinos in the state that pay a $10 million licensing fee to participate in online gaming, plus a hefty 54 percent tax on gross gaming revenue earned from those games, were outraged. Seven of the state casinos formed a coalition to get the iLottery declared illegal.

A spokesman for the group outlined their objections.

“The actions of the Pennsylvania Lottery are illegal,” he said. “To make matters even worse, the agency is promoting casino-style gambling to teenagers. Pennsylvania casinos must follow very stringent regulations on underage gaming or face millions of dollars in fines. Meanwhile, the lottery is openly violating the law and marketing these games to anyone as young as 18. Not to mention, any loss in casino revenue will hurt Pennsylvania’s tax collection for property tax relief and local improvement projects funded by gaming tax dollars.”

The coalition pointed out that several of the slot games were the same names or themes as games found on the floors of state casinos and online gaming sites.

A year later, a state court ruled against the casinos, refusing to issue an injunction to halt the games. The suit is ongoing.

In the meantime, other states have taken notice. Several have launched iLottery systems similar to Pennsylvania, and after a slow start, online state lotteries threaten to catch up to and even surpass online casinos. The example of New Jersey, where online gaming tax revenues continued to roll in after all land-based gaming was shut down, apparently has resonated with lotteries, which aren’t taxed and keep all the revenue.

Should this alarm commercial gaming companies, and even tribal gaming entities that may someday get into online gaming? Of course it should. First, lotteries are basically unregulated. Yes, there’s oversight from the state because they are publicly owned, but what state official would turn down extra revenue, even if it is ill-gotten?

And lotteries have notoriously low payback percentages to players, mostly less than 50 percent of the money played on the lotteries. Does this apply to online iLottery games as well? Hard to tell, because most states don’t report a win or payback percentage. Should they truly only pay back in the 50 percent or even as much as 70 percent, it is still far less than casinos are required to return to their players. So, iLottery players will soon be turned off by this lower payback and be resistant to play any kind of online slot game.

And let’s not even begin to talk about lottery-operated online sportsbooks! The DC Lottery admits to keeping a much larger percentage of the bets than commercial online sportsbooks. And the Tennessee Lottery penciled in a requirement to hold 10 percent of the money wagered, more than twice what an online commercial sportsbook would hold. These situations continue to encourage betting on illegal offshore sites, which have none of the regulatory or ethical restrictions that commercial sportsbooks are required to obey.

So the skirmish with the lotteries threatens to erupt into an all-out war, or even worse, a surrender to the lotteries and the loss of the golden opportunity to create a vibrant and transparent online gaming market. —Patrick Roberts

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