By Frank Legato   Fri, Jan 27, 2012

Over the coming year, AC Slots will be flooding the gaming machine sector with product that plays differently than anything out there. Many of the games will look different, as well.

But all of the product on “Axcess,” the new platform released this year by the Pleasantville, New Jersey-based company formerly known as AC Coin & Slot, will be based on a credo that operators have come to expect from the company: they will be games that make money for the casino.

Axcess is the platform on which AC Slots is building a new identity as a slot manufacturer—a process that began more than two years ago when the company announced the end of its previous arrangement with leading slot manufacturer International Game Technology.

That arrangement—an exclusive distributorship of IGT games in Atlantic City and the Caribbean, along with a partnership to place proprietary bonus games on IGT base games for lease—had defined the supplier for years. To a great degree, it also limited what could be done, creatively, by the game design team headed by Executive Vice President and General Manager Jerry Seelig. The former AC Coin produced bonus games exclusively for IGT’s S2000 stepper platform—as the title suggests, it is a 12-year-old platform—and only for games placed on a lease basis.

With IGT’s buyout of the distributorship, AC Slots was free to sell games totally developed in-house. It was also an opportunity for Seelig to begin creating games from the ground up. But first things first—the newly independent slot-maker needed a platform.

In the ensuing two years, efforts to find and perfect a new slot-machine platform concentrated on both hardware and software, with one overriding requirement: flexibility. What ended up as Axcess uses a collection of cabinets, the video version ergonomically styled with either dual 22-inch monitors or a 32-inch, portrait-style display; the stepper version like nothing that’s ever been seen before in the market. (More on that later.)

As for the game math used for the content, Jerry Seelig and brother Jason, the executive vice president of sales and marketing for the company, worked together to come up with a wish list for the engineers. Because both the brothers happen to be avid slot players themselves, they knew what they wanted their new slot games to do differently than other manufacturers.

“I don’t know how many nights Jason and I have spent playing slot machines in Las Vegas, but we do it constantly,” says Jerry Seelig. “When you get out there and spend hours playing, and you watch other people—and get a good feel for winning or losing with your own money—you understand what the player is looking for.

“There are a lot of features in these games that, frankly, are just better than what’s out there. And that just comes from hours and hours of playing.”

“One advantage that we have is that we don’t have to support a legacy brand,” adds Jason Seelig. “So, when we developed the platform, we were able to look at it from a true blank screen. A big part of what we did was to look at each product category and decide how we want to compete in that category.”

Player’s Design

Perhaps the most notable result of the Seelig brothers’ long hours of slot play is a basic difference in how the math is formulated for the average Axcess slot game compared to typical slots.

Jerry Seelig relates a recent experience of being in a bonus round on a video slot for several minutes. He counted the free spins—27. “At the end, the bonus was 350 credits,” he recalls. “The machine then celebrates the bonus win, and when I looked at it, I was celebrating $3.50. It was aggravating.”

These are the exact experiences he says the Axcess platform strives to avoid. “Celebrating a loss is something we made sure not to do,” says Jason Seelig. “If I bet $3 and I win $1.50, don’t put confetti on my game and celebrate for 20 seconds, because I just lost half my money.” The Axcess games amp the volume up according to the win—the bigger the win, the bigger the celebration.

He says the design of Axcess games began with making sure people will enjoy playing them, and that means assuring good wins in both the primary game and the bonus. One way this was done is through a novel principle in formulating the math of the games.

Where many video slots may have several possible bonus events, the payback percentage is typically divided between the base game and each bonus event. Jason Seelig offers the example of a standard game with an 88 percent return and several bonuses—or several progressive jackpots. “Typically, the base game may be 50 percent, then you’ll put 20 percent to the top award or bonus, 10 percent on the second, maybe 5 percent and 3 percent to each of the others,” he explains. “We’ll take that same type of game and run 68 percent on the base, and 20 percent to the event, regardless of what that event is.”

On an Axcess game with two bonus events, he says, that 20 percent switches along with the bonus—whether it’s a free spin or a picking event, in the above example, it will be afforded 20 percent of the total payback. “The overall percentage is not higher than the other manufacturers, but when you hit one of the events, you’re getting its entire payback percentage,” Jason Seelig explains, “so you don’t have one person out of 10 getting up and saying, ‘I love the game.’”

“When you get into the bonuses, you actually get bonuses,” says Jerry Seelig. “And the bonuses aren’t meek—they’re good-sized awards.”

“Even if you don’t hit a bonus,” says Jason Seelig, “you’re playing a base game with a percentage that is way higher than other base games. People say players can’t tell the difference between a couple of percentage points, but we’re talking about 18 percent as the difference in the math. The base pay table on ours is going to be much, much looser than others. Every one of our new games follows this same philosophy, and it’s a big philosophical difference.”

 
Content, Content, Content

As this philosophy was being formulated, the search for a base platform was ongoing. “We pretty much scoured the globe,” recalls Jerry Seelig, “and met with probably 20 different companies to talk about what the options were. The idea was to always keep an open architecture.”

During the search, the Seeligs enlisted the help of customers—the operators—to make sure the end product would fit their particular needs. “We spent a lot of time with our key accounts,” Jason Seelig says. “We said, ‘Tell me three things you would never do on a slot machine. Tell me thee things our competitors do that you would like to change.’ Later, at the demos, some of our customers were saying, ‘Oh, someone finally made a game that doesn’t do this or that.’ Or something that does things never seen—like providing 27 different languages, or having variable reel speeds, so when the casino is busy, the reels can spin a second faster.

“When you’re talking about a five-second reel spin, and you’re spinning a second faster, you just made me 20 percent more money when my game’s 100 percent occupied.”

Ultimately, the new platform would open a world of new possibilities in game design. “The open architecture allows us to build games at a very fast pace,” Jerry Seelig says. “Because we have the open architecture, we’ll bring out an unheard-of number of games for a manufacturer. We’re going to bring out 50 games this year, all brand-new ideas.”

The first 30 or so will be what he calls “meat-and-potatoes kinds of products,” meaning, they will look like games with which the industry is accustomed—five reels, multiple paylines, free-spin and pick bonuses—but with the new approach to program math. Beyond that, another piece to the Axcess puzzle will be to utilize the open architecture to bring content to the market—and to the AC Slots math model—from a variety of outside sources in addition to the in-house design team.

In fact, this strategy was formulated while the search for a new platform was ongoing. Because the plan was for an open-architecture platform, the Seeligs knew they wanted to ramp up production and flood the market with new game content—more content than could be created in Pleasantville, New Jersey.

A Las Vegas content studio for AC Slots is headed by legendary artist and graphic designer Benny Sum, founder of Global Gaming Group. Two content studios were created in China, one on the mainland and one in Hong Kong. By the time the platform was complete, content for new games was pouring from all four studios.

But one other source of content was to be tapped, one that later turned a lot of heads in AC Slots’ private display room at the Global Gaming Expo—the internet. After its initial core of “meat-and-potatoes” games are released, the market will begin seeing slots applying the company’s math model to any number of video games that are popular right now on the internet.

The company has already licensed 106 internet games from a variety of companies—games that already garner millions of plays on line—for possible transformation into slot machines. Many don’t even look like a slot machine. Games with no reels, says Jason Seelig, could be used as base games, or bonus games, but they will be games that players around the world are already enjoying.

“In discussing the platform, this becomes very important,” he says. “What you are looking at today are games like everybody has. There are a couple of unique twists on the games and the graphics, but they’re all Class III slot machines. We see the future of this platform as going far beyond the standard Class III slot machine.

“Ultimately, where is the next great idea going to come from? It may be a unique reel spin, or a unique way of using a multiplier. One of the things we wanted to do was to find the content we felt was going to be the future of the industry. That’s why we used a Windows-based Flash platform, so the porting of these games to our platform is very quick. Some games we picked can literally be put on our platform in a matter of weeks. Which is going to be great? I don’t know. What I do know is that just about everybody else is doing the same old thing.”

“It was obvious to me that there are a lot more great ideas out there than are actually being brought to market,” adds Jerry Seelig. “With the closed architecture currently in place for other manufacturers, it can be very difficult to (tap those ideas). With our current strategy, we can use everybody’s great ideas. We may have four studios, but really, we’re also utilizing companies from all over the world that are producing games for the internet.”

When the Seelig brothers presented the ideas to their father, AC Slots founder and CEO Mac Seelig, he was impressed. “Some of the stuff Jerry and his team went out and found, patented stuff that’s on the internet, actually made me say ‘Wow!’ when they showed it to me,” Mac Seelig says. “It was so unique and so different, and when you add the right math model to that ‘wow’ factor, you’ve got something you’ve never seen.”

 
The Rollout

In addition to drawing content in from multiple sources to a platform on which games can be placed and switched out very quickly, a third prong to AC Slots’ new strategy is a very operator-friendly business model—namely, low cost.

In addition to the search for content, the Seeligs’ worldwide travels over the past two years included a quest for low-cost materials and production. The model for bringing in content from around the world means the company doesn’t have the R&D costs of the larger manufacturers, and the open architecture means titles can be switched out to new games in a matter of weeks.

The result is a unit price for Axcess games that is half the cost of many production games out there.

“We’re going to make a slot machine that makes more money than others, and we’re going to do it for less,” says Jason Seelig. “Our strategy is to be able to get product to market more quickly, to be able to get it to market cheaper, and to make it earn more than everyone else’s product.”

It is a formula that has resonated so far with operators. After a successful G2E show, notable early adopters of the platform include Paul Tjoumakaris, senior vice president of gaming operations for the Seminole Tribe of Florida; and Bob Sobczyk, vice president of slot operations for Ameristar Casinos.

Tjoumakaris ordered 134 units of the first three Axcess games for the Seminole casinos across Florida. Sobczyk is placing Axcess games in the new slot areas found in the front of all of Ameri-star’s properties, where games of only a few manufacturers at a time are sampled by eager players.

The initial rollout consists of three titles—“Inca Cash,” “Freak Show” and “Fish Party.” All are video slots which Jerry Seelig places in the “meat-and-potatoes” category, with frequent animated bonus sequences, great artwork—the Freak Show game, in particular, has intricate art recalling 19th century circus posters—and the novel math model that is designed to assure players have a good time while playing.

According to Tjoumakaris, all three models are “doing extremely well” on the floors of the Seminole properties. “We’re extremely happy,” he says. “The design is really good; they are doing over house average competing with the big manufacturers’ games.”

Tjoumakaris credits both the video format and the math for the popularity of the games. “The games are exciting,” he says. “Even in the idle mode, you have movement and animation. Customers seem to gravitate to the graphics. The bonuses are good—simple, and with good frequency.” On the program math, Tjoumakaris adds, “the frequency between the base and the bonus seems to be good for the player. I see staying power in them. I’m impressed with AC Slots’ first crack at a proprietary video format. They are no longer just a niche supplier; they compete with the mainstream manufacturers.”

Sobczyk says AC Slots “did a great job aesthetically,” which he says passes the first test. “The proof’s going to be in the math,” he says. “We’re a company all about testing.” He says the fact the games are succeeding with players in Florida and other early locations is an indication they’ll do well in Ameristar’s new-slot showcase, where games are rotated every 90 days, with good player reaction leading to increased orders for the main floor.

“Ameristar is anxious to begin testing the new AC Slot video product,” Sobczyk says. “If the revenue per box meets expectations, AC Slots will shake up the industry with its aggressive machine and conversion pricing model.”

Of course, the Seeligs have been doing research of their own, playing their own games with their own money, and watching how the players around them react, to see if and how the games need to be improved. “When we’re on the floor, we watch player behavior,” says Jason Seelig. “We know that $20 in six minutes is average. When I sit at one of my banks and play one of our games, and when I sit at a competitor’s game, the first thing I do is look at my watch. And I watch the people who sat down around me. Are they playing $20 for six minutes? Then, it’s an average game. If we’re all sitting there for 20 minutes and have only put in $40 or $50, it’s a pretty good game.”

In the case of Axcess, he says, the players are all sitting there for three times the average game for that $20 bill. At Seminole, he says, one revealing fact has been that players are sitting at each of the games in a three-game bank—even the middle one. “An incredible amount of time, that center game was being played.”

Another thing Jason Seelig says has been very pleasing is that players appreciate all the special features of the platform, including some that are not even advertised—like the fact that players can stop the reel-spinning on each reel by touching the screen. “Players discovered that on their own,” he says. “I sat down next to a lady who was running both hands across the screen on every spin. I asked her what she was doing, and she said, ‘You can touch it for luck! I think I’m winning more because I’m touching it!’”

Mac Seelig has been in Florida watching players as well. “On our games, people stayed and stayed and stayed,” he says. “I watched the competitors’ games, and they sat down for two or three minutes and left. It’s interesting to see Jerry’s design theory working live, and to watch the players. I’d say, ‘What do you think?’ They’d say ‘Wow! This is so different!’ or ‘Wow! This is fun!’ This is in the middle of games from all the big guys.”

Another revealing fact, says Mac Seelig, is that players are moving from one AC Slots game to another of the same title. “People were moving from one Fish Party game to another Fish Party game. I sat and watched this for two nights.”

Sean Evans, the veteran sales and marketing executive who helped Aristocrat break into the U.S., is helping spread the word about the Axcess games as AC Slots’ vice president of sales. “People are excited to see something new,” Evans says. “This is an industry that hasn’t had a lot of new companies coming in. We’re not a new company, but where we’re going is totally new.”

Evans says the next releases on the Axcess platform will be more video slots, such as “Karate Pig,” with its unique—and funny—three-level bonus round featuring a Samurai pig. Shortly after that, the same game will appear on the company’s new stepper application of Axcess.

Karate Pig will be the first release on that stepper format. Called “5X5 Mechanical,” it is a stepper game that is configured like a video slot, with five reels and five rows of symbols on each reel, and multiple paylines. “The options you have with hit frequency on these games is a frequency never before available in the reel-spinning market,” says Jerry Seelig.

The 5X5 accomplishes its pay window with novel, oblong reels, moving on strips that almost resemble conveyor belts. A 22-inch video screen in the top box hosts the bonus rounds, and a second touch-screen monitor underneath the reels allows the same interactivity in bonus rounds on the reel-spinning version as the video version, using the same program math.

 
Tried and True

In addition to enabling unique new video slots, the Axcess platform will enhance what AC Slots has always done best—the mechanical bonus game. Starting with the long-popular “Bankroll” series of mechanical bonus top boxes, the company plans to launch Axcess games in each of its popular legacy bonus groups, from “Empire” to “Slotto.”

“If you look at the industry over the past two decades, we’ve been able to dominate the top-box technology business,” says Mac Seelig, “so it’s great to now be able to have the bottom box feed the top box, with value you couldn’t do before. Jerry and his team now have all the freedom to create a much better top-box technology. Because of Axcess, he’s going to have the ability to make games that are twice as good as he has ever made, since he’ll have control of the base.”

Jerry Seelig agrees. “It was a lot harder to make top boxes on a 10-year-old platform, and try to figure out how to bring people to that machine, than it is to do this,” he says. “This is a lot easier, and it’s a lot more fun.”

Besides the mastery of top boxes, the other thing that won’t change for AC Slots is the company’s legendary dedication to service. It’s one reason seasoned slot executives like Tjoumakaris are willing to order hundreds of units of a game that has yet to be tested on the floor.

Jason Seelig illustrates this with a story from Iowa involving the first delivery of Axcess games on Christmas Eve. “We had a truck break down going to Iowa on our first install, 200 miles from the casino,” he recalls. “The executive had to have the games in by the end of the year. We put a tech on an airplane, rented him a truck, and he drove eight hours to pick the games up so the guy could get his games when he needed them. Do you think that’s normal for a manufacturer in this industry, during Christmas week? I love it, because that’s a customer for life.”

“Every customer has each of our home phone numbers and each of our cell numbers,” says Mac Seelig. “We’re a family who loves the business we’re in. It’s actually a passion.”

Besides dedication to the customer, operators know one other thing about AC Slots from working with the Seeligs over three-plus decades: “Every customer we’ve ever dealt with knows that we make games that make money,” says Jerry Seelig. “The one thing we haven’t done is made bad games. What we don’t want to do is make a game that will make a ton of money for 90 days, and then have the customer call us up and say, ‘What do I do with this machine now?’ I want to make a game that sits on the floor for six, nine, 12 months or more, making money.”

Adds Jason Seelig, “We’re not worrying about our internet strategy, our iPhone apps strategy, our player tracking strategy. We’re worrying about the floor. When a customer buys your product, all the added-value features are great, but at the end of the day, there’s only one bucket they look at. And believe it or not, even if you have no special features, if you have the most money in the bucket at the end of the day, you have the best product.

“We’re only concerned about making our customers more money—for less money.”

By Roger Gros   Fri, Jan 27, 2012

In a groundbreaking ruling—a true Christmas present to the online gaming industry—the United States Department of Justice in late December released a set of documents concerning the status of the sale of lottery tickets which was interpreted by many observers as a green light to nearly all online wagering.

The letters were in response to challenges from the attorneys general of New York and Illinois to the position that the 1961 Wire Act prohibits selling lottery tickets online. It was a long-held federal position that since the Wire Act prohibited the transmission of all gambling activity and information via telephone lines, it also applied to the internet. The DOJ’s new letters, though, cited only one form of online gaming as definitely illegal: online sports betting.

While the ruling does not mention online poker or online gaming specifically, it does say that the Wire Act applies only to sports betting, allowing legal experts to interpret the ruling intrinsically as saying that online poker and gaming are legal.

As recently as 2007, the DOJ issued a statement backing up its long-held position that the Wire Act prohibited gambling of any kind over telephone lines or the worldwide web.

“The Department of Justice’s view is and has been for some time that all forms of internet gambling, including sports wagering, casino games and card games, are illegal under federal law,” then-U.S. Attorney Catherine Hanaway told Congress. “While many of the federal statutes do not use the term ‘internet gambling,’ we believe that the statutory language is sufficient to cover it.

“As we have stated on previous occasions, the department interprets existing federal statutes, including 18 U.S.C. Sections 1084, 1952, and 1955, as pertaining to and prohibiting internet gambling.”

But last month, that all changed.

“The Department’s Office of Legal Counsel has analyzed the scope of the Wire Act, 18 U.S.C.  Section 1084, and concluded that it is limited only to sports betting,” Deputy Attorney General James Cole wrote in a letter to the two states.

The memo continued, “Reading ‘on any sporting event or contest’ to modify ‘the transmission of bets or wagers’ produces the more logical result. The text could be read to forbid the interstate or foreign transmission of bets and wagers of all kinds, including non-sports bets and wagers, while forbidding the transmission of information to assist only sports-related bets and wagers. But it is difficult to discern why Congress, having forbidden the transmission of all kinds of bets or wagers, would have wanted to prohibit only the transmission of information assisting in bets or wagers concerning sports.”

Online Wired

David Schwartz, the director of gaming research at UNLV, wrote a book about the Wire Act in 2006, Cutting the Wire: Gambling Prohibition and the Internet. He says the Justice Department has been misinterpreting the legislation for many years.

“There has never been any clause in the law that applied to online gaming or even betting over phone lines on anything but sports,” he says. “It was intended to address problems with organized crime and its control over sports betting in the U.S. Ultimately, it was not successful, and resulted in the RICO laws of 1968.”

Schwartz believes this ruling opens up the possibilities for both intrastate and interstate online gaming.

“Now there is nothing to stop states from cooperating with each other and setting up a network,” he says. “If they don’t want to go to the expense of setting up a regulatory system, they could just defer to a state like Nevada, which will have all the regulations and oversight in place.”

The American Gaming Association, which has been lobbying for the legalization of online poker at the federal level, hailed the ruling and urged Congress to act.

“The Department of Justice’s interpretation regarding the scope of the federal Wire Act validates the urgent need for federal legislation to curb what will now be a proliferation of domestic and foreign, unlicensed and unregulated gaming websites without consistent regulatory standards and safeguards against fraud, underage gambling and money laundering,” the AGA statement said.

The Poker Players Alliance, which represents online poker players in the U.S., also applauded the DOJ.

“This is a much-needed clarification of an antiquated and often confusing law,” said John Pappas, PPA’s executive director. “For years, legal scholars and even the courts have debated whether the Wire Act applies to non-sporting activity. Today’s announcement validates the fact that internet poker does not violate this law. The PPA commends Assistant Attorney General Seitz for recognizing this. However, this ruling makes it even more important that Congress act now to clarify federal law, and to create a licensing and regulation regime for internet poker, coupled with clear laws and strong enforcement against other forms of gambling deemed to be illegal.” 

The AGA statement said federal legislation would be able to protect any state that didn’t want to get into the business as well as any person who could be harmed.

“Federal legislation that protects states’ rights can establish uniform safeguards to protect U.S. consumers, keep children from gambling on the internet, and provide the tools law enforcement needs to shut down illegal internet gambling operators,” the statement said. “Federal guidelines also would prevent fraud and money laundering, address problem gambling and ensure players aren’t being cheated. These federally mandated protections are vital no matter the interpretation of the Wire Act, and they must be enacted in order to avoid a patchwork quilt of state and tribal rules and regulations that would prove confusing for customers and difficult for law enforcement to manage.”

 
Real Ramifications

So it would appear that the race is on, and the first to open an online casino will have a huge advantage. Not so fast, say some experts.

“Whether intended or not, the DOJ memorandum presents dramatic opportunities for the internet gaming industry in the United States and finally (albeit belatedly) presents the opportunity for the world’s largest potential internet gaming market to start catching up with an internet gaming industry that is already far down the road in Canada and many parts of Europe,” wrote Robert W. Stocker II, a Michigan attorney with Dickinson Wright, in a newsletter post about the decision.

I. Nelson Rose, a gaming law professor at the University of California’s Whittier Law School, says the ruling is a smack at online gaming proponents in Congress.

“The reality is that congressional advocates, like Barney Frank and Joe Barton, have had some of the wind knocked out of their sails,” Rose wrote on his Gambling and Law website. “Since states are now clearly free to legalize intrastate online poker, and perhaps even interstate, there is not much reason to even bother with a federal law. Only the major operators, like Caesars Entertainment, need a federal law, because they don’t want to be competing with politically connected local gaming companies for a limited number of licenses in 50 states.”

The decision was roundly criticized by the usual anti-gaming voices in Congress. Some have speculated that the decision will spur new legislation designed to clarify that online gaming is indeed illegal. Rep. Frank Wolf (R-Virginia) is likely to take that stance. In a letter to Senator Jon Kyl (R-Arizona), the Justice Department responded to an earlier communication requesting that it clarify what is considered illegal. The anti-gaming Kyl is unlikely to appreciate the DOJ’s stance.

Greg Gemignani, an attorney with Lionel Sawyer & Collins in Las Vegas, recommends caution.

“You need to take a step back and look at this in context,” he told the Las Vegas Review Journal and Reuters. “This is not a green light to fire up the online poker servers by any means. This is just an opinion of the Department of Justice and only reflects what the Obama administration would bring charges on. Future Departments of Justice could interpret the Wire Act differently.”

While she doesn’t think a future DOJ ruling would reverse the one issued last month, Linda Shorey, a partner at K&L Gates LLP in Harrisburg, Pennsylvania, says a court case could trump everything.

“Under the U.S. Constitution, only the courts have the authority to determine whether the Wire Act applies to poker wagers,” she said. “The Department of Justice memo is not binding on the courts.”

 
Federal Focus

With online gaming legalization likely to proceed at the state levels, some are pressing for federal legislation to move forward.

“If there is not a federal bill then you will see individual states each passing unique sets of rules,” Caesars Entertainment Chairman Gary Loveman told Reuters. “It’s obviously a far less rational way to proceed and it runs the risk of not addressing the illegal operators in any way.”

Nevada Senator and Majority Leader Harry Reid remains committed to passing federal legislation to allow online poker. But political pressures have intervened and are expected to increase in this, a presidential election year. Some harbor expectations that Reid will try to attach an online poker provision to the next attempt in February to extend the payroll tax cuts, but since he avoided that strategy back in August when President Barack Obama agreed to a compromise to raise the national debt ceiling, it would be a stretch to place all your eggs in that basket.

Congressman Barney Frank (D-Massachusetts) says he feels vindicated that the Justice Department affirmed his long-held opinion, but holds out little hope for the bill he introduced earlier in the session. He now believes that state-by-state legalization will proceed, which he considers better than nothing.

The American Gaming Association is going to continue lobbying for a federal bill legalizing online poker. Even before the DOJ decision, the AGA was characterizing the bill as a “law enforcement” measure that would protect American consumers from unscrupulous fly-by-night operators and deliver them into the security of recognized casino brands online. That message hasn’t changed. The only thing that has changed is the urgency the association is citing now. Frank Fahrenkopf, AGA president and CEO, says the new DOJ position makes it questionable how the federal government can stop the operation of illegal online gaming sites. A federal bill is needed, he says, to clarify what is legal and what is not.

“I think that this ruling creates more confusion than clarity in the internet gambling debate,” Fahrenkopf told the National Journal.

Congressman Joe Barton (R-Texas) submitted a bill to legalize online poker last year, but saw it go nowhere when hearings on the bill late last year only determined that more hearings were needed. Barton says he’s not giving up.

“If Congress doesn’t act soon we could end up with fractured rules and regulations that vary state to state, leaving more opportunity for fraud and fewer safeguards for players,” Barton said. “I plan to keep moving forward with my efforts to move H.R. 2366 through the committee process, and I am confident it will be passed by the House and Senate—hopefully in this session.”

Reid, meanwhile, is reported to be meeting with Kyl in an effort to reach a compromise that would result in a bill that could pass the Senate, at least.

 
State Stories

Nevada has already legalized online poker and created regulations to oversee online operations. Last month’s DOJ ruling fulfilled the last requirement of the bill setting up online gaming sites—the opinion of the federal government that it is not illegal. The Nevada Gaming Control Board has drawn up the regulations and has begun accepting applications to operate online poker sites and the sell technology to operators.

Governor Brian Sandoval signed the bill last summer legalizing intrastate online casinos with the stipulation that the DOJ rule on its legality. On December 22, the Nevada Gaming Commission adopted regulations for the new internet poker industry. Commissioners say they will iron out internal control standards before considering applications for licensing. And the DOJ decision—released the following day—seems to permit a launch at any time.

Meanwhile, the slot manufacturing sector is lining up to participate in the new business with web poker content. Aristocrat Technologies recently became the latest supplier to apply for a license to participate, joining six other firms—International Game Technology, Bally Technologies, Cantor Gaming, 888 Holdings, Shuffle Master and South Point Poker.

South Point Casino is the only entity to apply for an operator’s license, while the other companies will be on the technology end and have to do business with an existing brick-and-mortar casino.

In New Jersey, Senator Raymond Lesniak (D-Union) sponsored a bill to allow Atlantic City casinos to accept online wagering on games such as poker, blackjack and baccarat, restricted to residents of the state age 21 or older. Governor Chris Christie vetoed a similar bill last year, but the new measure has been reworked to address his concerns.

“We could be the Silicon Valley of internet gaming and it could mean billions of dollars in revenue for Atlantic City, and thousands of jobs,” said Lesniak.

It is a position Christie now seems to support, though the governor is taking a more cautious approach. Lesniak originally pushed to have the bill fast-tracked to be voted on in early January, the last day of the legislative session. But that effort was delayed as all factors in clearing the way for online gaming are being addressed. The bill is now expected to reach the governor’s desk when the legislature reconvenes in April.

“I think we should be an epicenter for that business, but I want to do it right,” Christie said. “I do not want to rush and get legislation that either doesn’t pass state constitutional muster, or creates other problems for us.”

If the bill were to pass, it would allow the state Casino Control Commission to issue licenses to casinos to operate computer servers based in Atlantic City. Gamblers would have to set up online wagering accounts with the casinos. Computer software would then determine if the player was a New Jersey resident, whether the game was being played in New Jersey and if the player was at least 21.

Only card and slot games currently offered in Atlantic City casinos would be featured. Bars, restaurants and similar places would be prohibited from advertising that they offered online gambling, a concession to Christie to keep it in Atlantic City. Lesniak said the new bill contains safeguards to address the governor’s concerns, including fines of $1,000 per player per day for running an illegal internet betting parlor, and $10,000 for advertising illicit operations.

The measure still includes a provision giving a portion of the revenue to the state’s horse racing industry, a subsidy that Christie opposes. The casinos once had to pay $30 million a year to the tracks in return for keeping slot machines out of the tracks. Lesniak said he would be willing to drop that provision if it were the only obstacle to passage.

Although Nevada and New Jersey by themselves might not contain the critical mass to make online poker sites successful, some experts believe the DOJ ruling also permits interstate online gaming, in addition to intrastate. Nevada and New Jersey could join with other states to create a pool of online gamblers within the legal jurisdictions to bring a critical mass of players to the table. With a population of only 7 million, Nevada would be hamstrung, but in combination with other states, it could become a powerhouse.

The ruling will not in any way affect cases brought by the DOJ last year charging various online poker and online sports betting sites with bank and wire fraud and money laundering under terms of 2006’s Unlawful Internet Gambling Enforcement Act (UIGEA), but, tellingly, not with any violation of the Wire Act. The ruling will not hamper the prosecutions already under way—or future prosecutions, said the DOJ.

“In states that ban various forms of gambling—including internet poker—the department will be able to investigate and prosecute those gambling businesses under the Unlawful Internet Gambling Enforcement Act and other sections of the criminal code,” said Justice Department spokeswoman Alisa Finelli.

On the other side of the coin, Utah could be the first state to actually “opt out” of online gaming. Utah state Rep. Stephen Sandstrom has introduced a bill to make it illegal to gamble online within the state.

“We want to keep Utah free from the negative impacts of legalized gambling,” said Sandstrom. “Without courageous leadership to block internet gambling, Utah could once again be forced to allow Indian casinos.”

He attacked the DOJ decision as being politically inspired, demonstrating why Congress may want to keep hands-off on the issue.

“The U.S. Department of Justice’s conveniently issued legal opinion is a desperate attempt to try and fix today’s recessive economy,” he charged. “It’s clear that President Obama’s fiscal policies have been a complete failure. This latest move by the DOJ will only serve to harm all Americans economically and socially in the long run.”

One state that may not take the plunge was actually a trailblazer, North Dakota. State Rep. Jim Kasper, a Fargo Republican, recently said he does not plan to revive the internet poker licensing bill he sponsored in the 2005 legislature. Kasper, who is running for re-election in the fall, said he is “just worried about getting endorsed and getting re-elected. I am not talking about promoting internet poker and I have not made any decision to do anything at all.”

Kasper’s bill barely passed the House, and then was overwhelmingly defeated in the Senate. At the time, the Justice Department stated in a letter to North Dakota Attorney General Wayne Stenehjem that federal law barred internet gambling, including casino-style gambling.

 
Taking a Chance on the Lottery

Let’s not forget that the decision didn’t really cover online poker or gaming. It was a memorandum issued at the request of the attorneys general of New York and Illinois for a legal opinion about online sales of lottery tickets.

“All state lotteries are looking at how we can expand our base and sell tickets,” said Andi Brancato, a spokeswoman for the Michigan Lottery.

But this could become about much more than tickets for lotteries.

Rose, speaking with the Los Angeles Times, said the DOJ reading of the Wire Act could lead to quick adoption of online games by several state lotteries. “It undoes the single obstacle that was preventing the states from authorizing all forms of internet gambling,” Rose said. “I think we’re going to see an explosion in the next couple of years.”

Since lotteries are a major source of revenue for states, they could be some of the first organizations to experiment with online gaming. California, New York, Massachusetts and many other states are examining the DOJ decision to determine if it will allow them into the game immediately.

The AGA’s Fahrenkopf is aware of this possibility.

“It’s now clear that not only can lotteries sell tickets online, but also games that look like slot machines and poker,” Fahrenkopf told Bloomberg. “That’s where they want to go.”

Other interpretations of the ruling also focus on the possibility that wide-area linked progressive slot machines could be legal across state lines, creating jackpots of up to $100 million or more. Those systems are currently limited to single jurisdictions. Under the new ruling, slot manufacturers could potentially set up these WAP systems that would link multiple casinos in multiple jurisdictions. Or a large casino company such as Caesars or MGM could link slots at all their properties, creating one large jackpot.

Tribal Trouble?

For Native Americans, the DOJ decision just added to the dilemma tribes already faced when considering the legalization of online gaming. The diversity of opinions on the wagering method is vast in Indian Country, and there were no fewer differences when considering the options now available.

Some tribal officials believe nothing has changed. Joe Valandra, a member of the Sicangu Lakota tribe, and owner and president of VAdvisors, told Indian Country Today that there was always the assumption that intrastate online gaming was legal.

“I don’t think (the opinion) is a big deal for the tribes because there’s only one state that has enabling legislation and that’s Nevada,” he says. “Other states have talked about it, but haven’t passed anything. It has to go through a whole legislative cycle before any state besides Nevada will be able to offer intrastate online poker. It’s something I’m sure the tribes in general are looking at but I don’t think it has any particularly negative implication in and of itself.”

Valandra believes, nonetheless, that the decision is going to create an urgency for the tribes that will force them to come to an agreement on the role of Native Americans in online gaming. It will become obvious to tribes currently opposed to all online gaming that it’s a losing battle, Valandra believes.

One of the states likely to consider online gaming in the next legislative session is California, where the division of opinion in Indian Country is most on display. Last year, a group of tribes joined with the card rooms in the state to form the California Online Poker Association, and supported a bill that would have legalized online poker in the state. Other tribes were dead-set against it, and a standoff resulted in no action. Since then, the association launched CalShark.com, an online free-play poker room. And the Barona Band of Mission Indians—always an innovator—started its own online card room.

One of the sponsors of the California bills, state Senator Rod Wright, says there are talks under way to consolidate the bills, bringing all the diverse elements in the state together, including card rooms and gaming tribes. The key element is that any bill will be limited to online poker, which has much less impact on land-based casinos than full online gaming.

Tribes have stubbornly resisted the suggestion of a state or federal tax on any revenues they may obtain via online gaming, citing tribal sovereignty, but some believe that position will begin to erode and the intrastate operations will get off the ground.

“They are going to be left behind if they don’t compromise on this point,” one source told Global Gaming Business. “When they realize that states legalizing online gaming can join together with other states in the same situation, they’ll realize commercial ventures will be the only way they can participate. There are plenty of precedents, such as the Mohegan tribe’s commercial casino in Pennsylvania, so it’s not something they’ve never done before.”

By Gus Fritschie   Fri, Jan 27, 2012

With the dawn of a new year, we are in for some major changes in the gaming landscape. Recently, the Nevada Gaming Commission approved regulations for intrastate online poker. Currently, the ability to play is limited to Nevada residents only due to the restrictions implemented by the U.S. Department of Justice.

Additionally, the same DOJ that seized the domain names of sites such as Full Tilt Poker, Poker Stars and Ultimate Bet/Absolute Poker (UB/AP) last spring recently released a document stating that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.” This opens the door for more states to enact regulations like those in Nevada. Of course, because of Nevada’s rich gaming history, the state’s regulators are positioning themselves to be leaders when it comes to online licensing and regulation.

As a poker player, I could not be happier that regulation is on its way, and that I will be soon able to play online poker from the comfort of my home. However, as an information security professional, I would be lying if I said I was not somewhat concerned. The majority of online poker players are familiar with security issues that have plagued the industry in the past, such as the cheating scandal at UB/AP and the Secure Sockets Layer encryption problems that UB/AP and the Cake Network faced.

It was hard to ignore these problems with the amount of coverage they received from the poker media and poker forums. Players were worried about these problems, and rightfully so. However, it is my opinion that these are not the only security issues about which players need to be concerned. There are many other basic security issues to consider for which other industries (such as financial and medical) have already implemented controls to protect themselves, their customers’ data, and their own personal information. Why should the online poker industry be any different?

As noted above, other industries have already taken steps to protect their systems and customers by implementing security safeguards. Did they do this because they thought it was a good idea and the right thing to do? In some cases, yes. Mostly, they did this because they were forced to do so by regulation. The Federal Information Security Management Act (FISMA), the Health Insurance Portability and Accountability Act (HIPAA) and the Payment Card Industry Act are just a few examples of regulations that have forced industries to better secure their systems and infrastructures.

The new Nevada Gaming Commission regulations do list some items related to information security under section 5A.070 Internal Controls for Operators of Interactive Gaming. Some examples include: maintaining all security aspects of the interactive gaming system; protecting and ensuring confidentiality of authorized players’ interactive gaming accounts; reasonably ensuring that interactive gaming is engaged in between human individuals only; testing the integrity of the interactive gaming system on an ongoing basis; protecting an authorized player’s personally identifiable information (PII); and establishing procedures to be used in the event that an operator determines that a breach of data security has occurred, including required notification to the board’s enforcement division.

Despite these items, the current emphasis seems to be on regulation related to the financial and management aspects of online poker. This is understandable, as there is no need to bypass a firewall or perform a sophisticated structured query language injection attack if the owners of these companies can simply steal players’ money by transferring it into their bank accounts. As we move toward regulated online gaming in the United States, computer security controls need to be enforced in addition to financial controls.

Why does the online poker industry need effective security? Besides the well-known issues discussed earlier, there are a number of basic security controls that are not being implemented correctly. During the summer of 2011, I gave a presentation on online poker security at Defcon, one of the largest security conferences in the world. In my research, I discovered that simple security controls such as strong passwords and account lockout were not enabled.

While I have not discovered any vulnerabilities that could be exploited in the actual transmission of game traffic, I have identified numerous areas where poker applications interface with poker servers via web traffic. For example, I was able to exploit cross-site scripting vulnerabilities that could be used to attack the end user and gain access to their system and hole cards. Another issue of concern that I documented is how the poker client has similar characteristics to that of a root kit. Not only does the client monitor your system for illegal software (i.e., poker bots), but it goes through your browser cache, making registry changes to areas outside the poker client, and performing many other invasive acts. I also discovered other issues during my research, some of which I documented in my presentation and others that I am still researching.

This is a very exciting time, not just for online poker but online gaming in general. While the initial focus is on online poker, attention to other types of online gaming such as blackjack, craps and slots is not far behind. The companies that will be offering these games and the commissions writing the regulations must not only think about the profits, but also about the security of the game. No longer can cheating be prevented by pit bosses and cameras—strong computer security controls and secure coding must be implemented as well.

This new adventure is on the horizon, and the companies that can protect themselves and their players will be the ultimate winners.

By Roger Gros   Fri, Jan 27, 2012

Experts have been predicting the convergence of casino slot players with video game players—think Nintendo, Playstation, Wii, Halo, Warcraft, etc.—for years. But it hasn’t happened. The younger generation seems to be more drawn to table games, as proven in Las Vegas in the youth-oriented casinos, Hard Rock and the Palms.

But a recent event at Caesars Atlantic City demonstrated that there is more in common than you might think. Don Marrandino, the president of Caesars’ Eastern Division, agreed to present the first IGN Pro League tournament recently, bringing thousands of “gamers” to the Boardwalk. He says it worked very well.

“It was very interesting,” he says. “We hosted a wide variety of people from all over the country—NBA players and people from all walks of life. We had thousands of people from all around the world in town for this event.”

David Ting, the founder of IGN Pro League, says casinos were his preferred venue.

“Competitive game play is long,” he says. “It’s three to four days, 12 to 18 hours each day. People will get bored watching it all the time if there’s not something else to do. Caesars and Atlantic City were perfect locations for this event. Great food, shopping and a casino gave us more of an entertainment venue. It’s better than a convention center where there’s nothing else but the games.”

Ting says professional game play—or “e-sports”—started in Korea about a decade ago, but is spreading quickly around the country. He says there are a few players—mostly Koreans—who earn six-figure incomes by playing games professionally, but there are quite a few U.S. players who make up to $25,000 a year from the games.

“We brought these players to Atlantic City, and the results at the event give them points to the championship,” he explains. “But we also have open competition for amateurs, and that was very popular. The winner was a relatively unknown player from France, so our clientele is clearly international.”

There were more than 1,000 fans in the Circus Maximus theater for the final two rounds, and the early rounds were presented in Bally’s ballroom adjacent to Caesars.

Marrandino saw the opportunity to host the players in the casino as well.

“We integrated our live poker with it,” he says. “In addition, I watched some of the gamers migrate to the slot machines, so we got some decent play at both the tables and the slots.”

Ting points out that some of the premier gamers are also professional poker players, so the synergy is already there.

“The players were definitely playing slot machines, but poker is very popular too, given their competitive nature,” says Ting. “The favorite games were slots, poker and craps. It’s very natural for gamers who play online poker to use this as their event to get recognition in both areas. It really brings them out of their shells.”

Ting is negotiating with several casinos to offer other events, and plans to return the event to Caesars Atlantic City next year.

By Willy Allison   Fri, Jan 27, 2012

A few months ago, I had the opportunity to visit the Microsoft Global Security Operations Center (GSOC) in Redmond, Washington. After entering the main foyer and passing by a statue of Master Chief from Halo, I was led into the monitor room.

To call it a monitor room is kind of like calling the Pentagon an office block. It was a little bit more than that. Microsoft has over 170 facilities worldwide. From the GSOC in Washington they have the ability to remotely monitor and record activity in all their facilities around the world by utilizing a network of over 16,000 IP video surveillance cameras.

During the visit, my host pointed to a large screen on the wall showing an interactive map of the world and invited me to choose a location. I chose Dubai. Within seconds, I was whisked into Google Earth and connected to a high-definition camera located outside their Dubai facility.

He zoomed the camera in to identify a license plate number of a car parked outside the door. He wanted me to see the car was licensed in Dubai. He was showing off. (I don’t blame him.) The camera was surprisingly clear and quick to respond to the commands of the operator.

At that moment, every ounce of skepticism I had towards the concept of remote surveillance left me. I thought to myself, could casino surveillance be leaving the building?

 
Gaming Forward

Looking back in time, it could be argued that the casino industry was the first commercial sector to embrace the potential of closed-circuit television systems as a means of providing security and asset protection. For decades, installing and operating a CCTV system has been a regulatory requirement for most legalized casinos around the world.

Although initially other sectors may have been slower to catch on to monitoring and protecting their businesses with closed-circuit television, they now seem to be taking the lead in video technologies and systems integration. Without the conservative blinkers of old casino ways and the freedom not to be confined by outdated and often “sheep-like” regulatory requirements, other industries appear to be thinking more outside the box.

Remote surveillance is not a new concept in security. Security companies now offer cloud-based video surveillance services to small businesses around the world. Many bars and entertainment venues are using third-party providers to record and maintain up to 30 days of video at an offsite location. The video comes from the client’s existing camera system or one provided by the vendor. The client pays a monthly fee for the service based on how many cameras are recording and how long they want the video to be retained.

In recent years, discussion on remote surveillance for casinos has begun to gain momentum. It is now technically a reality and worthy of consideration. In this article, I would like to look at the benefits of remote surveillance from an operational perspective.

I realize that in some casino jurisdictions, the concept of remote surveillance would face some regulatory challenges. It is prudent for new security technologies to be scrutinized by knowledgeable professionals, but when technology has the potential to be an industry game-changer, it should not be ignored.

There are three different scenarios when talking about remote surveillance. The most common considered by casinos today is monitoring a new property from an existing property. The second is monitoring a property from an offsite location, and the third is utilizing or outsourcing a third-party service provider to monitor or review “special situations” over the internet.

Eye In The Sky

Let’s look at monitoring a new property from an existing monitor room. The business case for this concept seems to have a lot of merit. The obvious advantage of using one location to monitor two properties is you don’t need to build a surveillance operation in the new property. The room, consoles, monitors and associated systems are already in place.

The existing equipment room may need to be expanded to accommodate the system expansion, but in most cases, if forward thinking was factored into the original space allocation, it should be OK.

The real benefit of maintaining a central monitoring location is gained through labor savings. A significant saving (and a lot fewer recruitment headaches) is made by only having one management team overseeing two properties. The team is already in place, trained and culturally acclimated. The number of front-line and technical support staff may need to be increased to deal with the extra day-to-day activity of two properties. However, the savings from not having to fully staff an entire new surveillance operation to comply with regulated on-site minimum staffing-per-shift requirements are very substantial.

Choosing the appropriate staffing levels is probably the most debated topic in casino surveillance. It’s one of those “how many does it take to screw in a light bulb” questions. In my opinion, there is no one-size-fits-all calculation for staffing a surveillance operation. Each casino operation is different, and there are numerous operational factors that should be considered. The efficiency and effectiveness of a surveillance operation is more often related to team leadership, excellent training programs, motivated individuals, good pay, individual accountability and a performance-based culture. I don’t subscribe to the “more staff is better” theory. Give me one hand with four aces over two hands with a pair of aces any day.

Focus on Familiarity

Another benefit of centralized surveillance is the familiarity that gaming managers have when interacting with the same surveillance department. When an organization opens a second property, the new casino management team is usually made up of transfers and promotions from the old property.

Often, the interaction between casino management and surveillance during a new casino opening can be difficult, especially if new staff have been hired. When casino managers already have an existing rapport with surveillance staff and are familiar with how the surveillance operation “works,” the communication during the transition period is a lot easier.

The reality, unfortunately, is good surveillance professionals don’t grow on trees. As the industry continues to expand, the pool of surveillance expertise is shrinking. Casinos that open in new jurisdictions or remote areas have difficulty luring experienced surveillance professionals outside a director position. Therefore, they rely on recruiting locals, some of whom have never worked in surveillance before.

Even if they can attract experienced surveillance people, some find the professional and personal adjustment challenging. In a number of cases, importing experienced help does not work out, and the surveillance department is left in a state of flux. The inexperienced people are forced to teach themselves. It is important in today’s environment to retain and develop good people, as it is very difficult to find good professionals.

OutSourcing

The second scenario was examined in detail at the 2010 Surveillance Directors Academy at the University of Las Vegas International Gaming Institute. Our students (surveillance managers) were divided into teams and given the week to prepare and present a case for and against outsourcing casino surveillance to an outside group of surveillance and game protection experts in Las Vegas.

The team presentations at the end of the course were spirited. Obviously, the thought of outsourcing their job to someone else is a tough pill to swallow. As you could imagine, the debates were passionate. As a moderator of the project presentations, I enjoyed the passion and well-thought-out points for and against outsourcing casino surveillance to an outside company.

In conclusion, I felt that the business case for outsourcing a casino’s entire surveillance operation was definitely tough for an accountant not to look at; however, the idea wasn’t practical.

For me, the most convincing argument by the group was that the day-to-day service that surveillance provides the casino would probably suffer. An outsourced service would have many casinos on the books that they would have to service. For a 24-hour casino operation, that would be unacceptable. The students also felt strongly that an outsourced surveillance service would not have loyalty, rapport and familiarity with the property, cameras and “local ways.” I think they are right.

 
Special Situations

The final scenario is outsourcing a third-party service provider to monitor or review “special situations” over the internet. This scenario is already happening. Casinos are calling on external game protection and security experts for second or third opinions. Experienced, reputable consultants can assist and supplement existing casino asset protection programs through their wide network of intelligence sources and objectivity. From a cost perspective it’s expert advice “on demand.”

Is remote surveillance the future “eye in the sky,” or is it “pie in the sky?” Most casinos haven’t considered it. Some are considering it. A few in Macau, Las Vegas and Canada have done it.

Remote surveillance or centralized surveillance is definitely worth considering for casino organizations that are looking to build a new property in the future. In the past 12 months, a number of casinos have done the numbers and like what they see. Remote surveillance may just open all of our eyes.

By Alan W. Zajic   Fri, Jan 27, 2012

So now we start 2012 with essentially the same budgets for security that we did in 2011, with some minor variances on line items. Capital expenditures have more than ever become a wish list rather than reality, and it seems that we just do not have enough time in a day to do all the things we are supposed to do as managers, because we are also either running a shift ourselves or having to absorb duties that we used to delegate to middle managers.

The age of electronics and e-phenomena has found a way to seek us out at home, when we are sleeping, and worse yet, when we are in the bathroom because we are afraid to turn off that smart phone or tablet that has us forever tied to our work, like a super-strength umbilical cord that cannot be cut. We spend more hours at work and what is supposed to be down time at home dealing with work-related issues. We have truly accomplished the impossible (or so we thought), and it is now part of our regular job duties and is expected by our bosses. The question is: Have we cut too much?

Gaming markets have had quite the roller-coaster ride downward, and even those Native American facilities that had enjoyed strong revenues have found themselves having to address payrolls and daily expenses in ways they never had to before. The economy is showing signs of recovery in small chugs, much like that roller coaster as it climbs up the incline. Customer counts have been increasing and the protective security function that all gaming operations must have is still at the “I can’t cut anymore” level. Will I be asked to cut more?

There have been increases in criminal activity in many jurisdictions and locations over the past several years, the most noticeable being robbery events. The onetime psychological advantage that casinos had over would-be robbers has vanished. The once-well-rumored assumptions that there were heavily armed security personnel standing just out of view of cashiers and money have vanished due to the evolution of our media and the constant bombardment of news about these criminal events.

Civil Litigation

As with many other industries, employers in gaming environments have discovered that they think they can do it better with fewer personnel as a result of operating in this challenging economy. There is a long tail on security incidents, and the statute of limitations in civil litigation is just now appearing to help judge if the right decisions were made.

As part of my practice, I am quite often requested to testify as an expert in lawsuits filed involving inadequate security and premises liability primarily where third parties have committed some act against a customer. I am getting more calls for cases than ever before as the statute of limitations runs and lawsuits are filed.

The recurring allegations include inadequate security, lack of adequate staffing and training, and increases in crimes and third-party injuries. To those properties that have arbitrarily cut staffing without regard to customer volumes, cut training of security personnel and cut supervision, you may see one or more of these lawsuits on your doorstep soon if you haven’t already.

 
Staff Reductions

These staff reductions combined with the inability to find qualified security applicants in most labor markets create a potentially dangerous environment. It is certainly ironic that with the national unemployment rate over 9 percent many security operations are still down somewhere between 3 percent to 10 percent in staffing, even in markets where unemployment is much higher.

When the cuts were occurring, most operations had to scramble to deal with the deployment issues and evaluate stationary positions, duties, outside patrols and reductions to the once-impossible minimum level with even fewer boots on the ground. Overtime has become a thing of the past unless absolutely necessary for events such as New Year’s Eve. So we progressively cut the scheduled staff down, and then we have trouble filling the positions, which further decreases the number of security officers on the floor. Have we increased the number of surveillance personnel to watch all of those things that were once watched by security?

Some casinos that have cut staffing overall have not evaluated and changed the security plan to deal with fewer personnel. Instead, the security staff that is deployed for patrol of a particular area is the most affected, and as a result those deterrent uniforms are less and less seen by customers and criminals. They found it easier to just cut the personnel that are mobile rather than stationary ones. Then, when incidents do occur and a security officer (sometimes several) get tied up on the call to include reports and statements, the floor suffers and the patrol function becomes non-existent until staff is released from the call.

This creates a rolling effect which causes more and more issues as incidents occur. As an example, if there are not enough security personnel patrolling the casino floor and a fight breaks out, then security is pulled from other mobile personnel such as the outside patrol or hotel officer, which leaves another void in the patrol function as a whole. The amount of time to respond also increases, and so does the potential for injury.

The shift supervisors are also stretched way too thin to be productive and actually supervise personnel. This is not a new phenomenon in security deployment and response, in that there are always times when large numbers of staff are dispatched for duties other than the basic patrol of an assigned area. The difference with reduced staffing is that it occurs much more often, and officers resume patrol less frequently.

The economics may dictate that you cannot add security personnel, and the customer volumes will not support additional staffing. You have to once again re-evaluate what and how you provide security. By completing your own analysis there may be opportunity to change stationary position assignments or posts, and get creative in your deployment of security officers to have more visibility and patrol of those thousands of square feet of your facility.

 
Taking the Temperature

Here are some basic things that can be considered and evaluated regarding staffing, economics and the deployment of security personnel in this economically challenging time:

1. Analyze your staffing: Complete an analysis of your dispatch records to determine the number of minutes and hours each security officer is actually on patrol versus responding to and from calls for service. If the patrol time is minimal, an evaluation should be made to increase the number of security personnel on patrol in a particular area. Most computerized dispatch systems can assist in this analysis, but it can also be done with the many handwritten logs still being used to record security calls and responses.

2. Review stationary positions again: Thinking outside the box becomes even more important here. Traditional positions where a security officer is deployed 24/7 may not be the answer if there are access controls and CCTV systems with people monitoring them. A single position manned 24 hours a day converts to five full-time staff members plus the fringe or burden costs associated. Combining two stationary positions and streamlining actual duties can again free up a position for patrol. It may require the arduous and painful process of requesting changes from the regulators who mandate stationary positions. Can a patrol position accomplish the same thing with some hardware changes?

3. Complete a general security risk assessment: This tool establishes the risks associated with the casino security function and the mission to protect people and assets. If the highest-ranking security manager on a property has not completed some form of risk assessment and designed countermeasures to reduce, mitigate, eliminate or transfer common casino risks, then management may be unaware of the exposures when ordering critical staffing decisions. The security director can simply obtain the format and do the assessment with the risk management department or independently.

A good example of security risk assessment was developed by ASIS International, the preeminent security professional organization with over 37,000 members worldwide, in 2003. It is called the “General Security Risk Assessment Guideline”(www.asisonline.org). This template will allow you to do a qualitative or quantitative analysis for your operation. If the security director does not possess the knowledge or time to conduct one, any professional outside security consultant can perform one for you.

4. Evaluate breaks and briefings: When and how employee breaks are managed can dramatically affect the coverage of a casino. The minutes leading up to a scheduled break, travel time to and from and the actual time on break will add up if not managed efficiently. For every 30 minutes of break time there is 15 additional minutes that must be managed, or productivity and coverage may suffer. Position rotation schedules can also be used to free up personnel.

If you have not already figured out that briefing can cost you regular and overtime costs, a very basic communication technique can replace the traditional briefing, where a room full of security are addressed by a supervisor. By issuing each security officer an email account and log-in system, all of the communication and more can be accessed by each employee at any time with proof and acknowledgements they reviewed the lookout bulletins, upcoming events and area criminal activity, without the need for a group briefing. It is also a great way for the director to send a communication to the entire staff with the same message.

5. Evaluate security job tasks: Once again, what security does every hour of every shift should be evaluated regularly to make sure that security officers are focused on the job of securing people and assets rather than performing non-security tasks for the convenience of other departments.

There is no magic formula or ratio you can use, or any published standard you can rely on to determine how many security personnel you need for your facility. Making sure you document staff reductions and tying them to reductions in customer volumes will be quite helpful in a civil trial when you are sued for inadequate security. Be careful not to just cut out a number of people who patrol the facility, but to make staff reductions based on intelligent analysis. As the customer volumes increase and the economy recovers, it is important to staff up accordingly.

By Rick Santoro   Fri, Jan 27, 2012

The gaming industry operates in varying degrees of modernization. Many companies employ old-school business practices simultaneously with high-tech, cutting-edge examples. One of the most frequently observed “old-school” business practices is the manner in which organizations handle the risk management function.

From the earliest forms of gaming to today, successful operators deploy a wealth of knowledge in managing the risks of probability and wagering. An organization’s individual appetite for risk in table games and slots is well-known both internally and externally. Casino management consistently practices risk management in the form of applying odds and limits to live games and managing payout parameters on slot machines.

This attention to detail helps the organization develop a framework of typical outcomes and normalized hold percentage, which allows the owners, leadership and other stakeholders to have a set of general operating expectations. The risks are either accepted or not based on the predetermined risk appetite of the company.

The team members of table games and slot operations groups know their role when it comes to individual responsibility for asset protection and compliance. These team members work in unison to ensure that the accepted risks are properly managed. Accepted risks are controlled by management through close procedure, policy and compliance monitoring. This attention to detail is common for all modern gaming operations.

 
Chain of Command

Risk management in casino gaming operations is typically handled by an in-house risk manager who either employs a small team comprising of adjusters and/or coordinators or oversees an outside third-party claims administrator (TPA), who process the actual claims. Some operators also have a safety manager or the equivalent. The security department typically has the responsibility of responding to, investigating and documenting the incident. The legal department normally oversees the risk management function with close interaction of the finance group. In many companies, these are the only departments that may have an overall picture of the risk management process.

Each of these departments has its own set of responsibilities and objectives when conducting risk management functions. When one looks at the other operating departments of the organization, like the table games and slot department examples mentioned above, each is managing its own risks within a silo and is generally devoid of enterprise risk understanding and prevention. This silo effect causes the company’s team members to overlook risks, because they are not involved in the process and therefore indoctrinated to believe that a risk or hazard is someone else’s problem.

Millions of dollars can be saved by operators if each and every employee within the organization is considering an all-risk and all-hazard approach to risk management and claims. Enterprise risk management (ERM), in simple terms, is the company-wide inclusion of all levels and disciplines into the risk management process. The effective minimization or prevention of organizational hazards is achieved through the empowerment of the entire company, not just individual and specialized work units.

 
Costs vs. Benefits

Most operators spend considerable resources on customer service standards and education. Today, it’s one of the only standing forms of training and communication that has survived our downsized economy. Companies know the cost to retain a guest, and also know how much it costs to recover a guest after a negative incident.

Sadly, many companies also know the hard cost of critical incidents. One negative incident in the form of a violent crime, endangered child, guest accident or defect can cause millions of dollars in a claim, increased insurance expense, and irreparable reputation damage. Minor claims as a result of property damage, theft and spoilage often accumulate into thousands of dollars of expense.

If each and every member of the organization is educated, involved and made responsible for the overall safety of the property’s occupants, incidents are prevented and minimized. Instead of allocating resources after the fact, in increasing attorney fees, insurance premiums and TPA costs, owners should consider allocating resources to an ongoing enterprise risk management program that emphasizes education and empowerment of all team members in incident prevention and mitigation. Operators who are missing this core concept of risk management will always be in the lurch when it comes to trying to get a handle on the frequency and severity of claims.

Who is minding the store? Sometimes, we tend to focus on the reactive process and get mired in the claim churn instead of trying to change the game. The outside third-party claims administrator makes its money from processing claims; the more there are, the more complicated and severe they are, the more the cost and expense of the service.

Defense counsels are retained, at great expense, to defend and protect the organization after the incident and the filing of an action. If an organization is really serious about saving money, a shift in resource allocation from reactive measures to proactive measures should be undertaken.

 
Step  By Step

These are some basic steps for implementing an ERM program:

Executive Committee: The executive committee should know what exactly the risks to the organization are. A three-year summary of claims and filings should be delivered in addition to an executive summary detailing the cost of claims, legal fees, TPA expense and insurance premiums. Once informed of the history, a clear picture of potential risks to the organization should be presented. An ERM committee should be established to spearhead the program. A cross-section of rank should be included, with the chair being a representative of the executive committee. The CEO or COO should endorse the committee and mandate participation.

ERM Committee: This should develop an incident prevention and mitigation strategy and communication and education plan drafts. A clear set of company-wide goals and objectives should be established for prevention and mitigation. A clear set of departmental goals should be established for prevention and mitigation. A clear set of individual goals should be established for education prevention and mitigation.

Management Team: The management team should be given an overview of the claims history and educated on the financial impacts of the claims history. Input should be solicited on the prevention and mitigation plan. Direction should be given on how to implement the line-level ERM prevention and mitigation program with mandatory participation.

Front-line Supervision/Line Employees: Every employee should be required to receive education on the ERM program and their roles and responsibilities for prevention and mitigation. Type of events, specific responses and team accountability should be stressed. All new hires should receive the ERM module as part of their initial training.

Risk Management: The ERM program should be developed with the direct involvement of the risk manager. The risk manager should possess the necessary communication skills to deliver, educate and monitor the plan. Measurement criteria should be established to serve as a benchmark to track and monitor the ERM program year over year.

Human Resources: ERM should become an evaluation point to be added to all performance reviews.

The economic challenges to the gaming industry of the past three years are not over yet. Most companies have undergone downsizings and substantial cost control initiatives that helped improve bottom-line results. Those that do not have an ERM program can add another level of financial relief to their balance sheets. An ERM program adds value to the organization in many ways, namely as a result of the efforts of team members who are engaged and cognizant of clearly defined and monitored risk management goals and standards.

If these standards are embraced by the executive management team at the same level of customer service standards, and then descend to each and every team member, the organization will benefit financially.

Every organization will have incidents and claims. The manner in which organizations deal with these claims and the risk management function differ greatly. One message is apparent: The organizations which implement an enterprise risk management program will deliver the ultimate form of customer service to their valued guests, empower employees to play a vital role, and also protect the assets of the organization.

By Darrell Clifton   Fri, Jan 27, 2012

Most casino executives are well aware of minors as both a liability and an asset. Whether you cater to families and welcome the little ones onto your property or you spend a lot of resources keeping teenagers out of your nightclubs and casinos, you know the challenges can be great.

This double-edged sword requires your facility to protect children from hazards and predators while protecting the company from those threats and the minors themselves. Following is a compilation of several of the strategies used by family-oriented resorts to reduce exposure while keeping guests of all ages safe.

They may not all apply to your business climate, but you may want to consult your risk manager or security expert to see how these measures can keep everyone out of trouble.

Visibility

Uniforms are a controversial topic in our industry, especially in casinos. Many casinos prefer the friendlier look of the blazer or suit. In my experience, young children, juveniles and even criminals respond better to a police-style uniform.

Kids are taught from a young age to identify and respect the badge and duty belt. Juveniles and adults see the uniform as a sign of authority and consequences for criminal actions. The security “blazer” was meant to put “security” in the background instead of calling attention to it. This is the last thing I want to do in my kid-friendly area.

The uniform here is a positive, and can even be used as a PR tool in your arcade. Smaller children love to have the attention of the uniformed officer. They will ask about the duty belt gadgets and love to get stickers from the “police.” The older juveniles—more likely perpetrators than victims—will generally mind a uniform over a “suit.”

Patrol Techniques

The patrol of your kids’ area should be as frequent as that of your casino or any other area of your property. Imagine yourself on the witness stand explaining why you put the value of casino chips over the value of a 6-year-old girl. The deployment, frequency and strategy of security patrols are designed to prevent or detect bad things that could happen.

Documentation of these patrols is just as important as the patrols themselves. The security department should keep a factual log of the patrols. Other department employees, patrol scanners and cameras are great supplements to security patrol, but do not replace a trained officer.

The officer on patrol should be armed with some valuable tools to keep everyone safe. Policies on dress code, loitering, curfew and alcohol, as well as some behavioral training, can all be used to prevent problems before they become a liability.

 
Behavioral Recognition

Behavioral recognition is a form of profiling that is not discriminatory to race, gender or any other protected class. We all make judgment calls every day based on the actions of others. A good security officer uses his experience and knowledge of the business to observe these behaviors and identify the ones that seem out of place or suspicious.

I call this “JDLR” (just doesn’t look right). A person crouched behind a video game is suspicious. A lone male watching someone else’s kids play games is suspicious. These are not crimes by themselves, but they just don’t look normal and are suspicious enough to warrant further investigation.

So, for predators, we might want to watch for people without kids, people not playing games, people who approach other kids, etc. For most other types of crimes in this area, we use the same behaviors that help us in the casino. Examples of this behavior might be persons loitering, “rubber-necking” (looking from side to side), watching security or employees, not playing, or showing an interest in everything except the actual attractions. Security officers should be trained to either watch the behavior or confront the person who appears suspicious.

Behavioral recognition also applies loosely to juveniles. Teenagers who are not accompanied by parents or are not patronizing your business are generally not welcome guests. Taking steps to prevent your property from becoming a “hangout” or meeting place for teenagers will save you in the long run. Lone juveniles who are not spending money are likely opportunists, and it is not your job to care for them. Groups of juveniles are either intent on criminal activity or they will attract it.

These groups can provoke fights or be provoked by a simple hand signal or look from another group. “Flash robs” generally start with a meeting at a popular hangout like a parking lot or arcade. Start with a warning by breaking up groups. If they continue to loiter, get them out. Of course, precautions should be taken to make sure barred juveniles do not have a guest/parent on property.

Because this type of behavioral recognition is based on common sense and real-life experience, training of the entire security department can be accomplished quickly, inexpensively, and probably in-house.

Dress Codes

Dress codes are a popular but controversial way of addressing inappropriate behavior. Make sure your dress code, if you have one, is based on behavioral issues and not on someone’s perception of a “hoodlum.” Avoid prohibiting attire like oversized white T-Shirts, Raiders jackets or baggy pants. These appear discriminatory, unless you can justify them as a safety hazard or other behavioral issue—and then apply them consistently.

Instead of targeting clothing styles, which may appear negative to some of us, target provocative items such as gang tattoos, profanity, swastikas, etc. One way of checking your dress policy is to ask yourself if you would exclude your highest-rated casino player if he/she violated it.

Curfew

0You absolutely need to enforce a curfew on your property. There is no valid reason for a juvenile to be on your property late at night without parents. Close your kid facilities at night and keep everyone under 21 (or 18) out after midnight (or whenever closing is).

Restrooms

Restrooms attract trouble in any venue, but there are some things we can do to protect the restrooms and the kids who use them. Mirrors should be covered with protective film to reduce the cost associated with etching or burning of mirrors. This is a 75 percent savings over mirror replacement, and is a faster solution.

A substitute for the restroom attendant is a camera mounted at the entrance of the restroom. I mount these at eye level in a vandal-proof dome with a panic button. Every person who enters the restroom sees that they are on camera, and the camera gives us a nice facial photo before they even decide not to go in. Combined with documented patrols of the restroom, the video will provide a great photo of anyone who was dumb enough to do something in the bathroom. I have actually caught taggers still on the property after reviewing video of them entering the restroom.

There are two bonuses associated with these restroom cameras. One is that many criminals, before they commit a crime in another part of the property, visit the restroom. (Everyone has to, right?) I often get my best identifying photos of purse thieves and others using these cameras. A second bonus is that mounting the camera on a wall facing out also covers a fairly large common area such as the nearby bar or lobby. The panic button is a great safety device for someone who witnesses an assault or accident in the restroom.

Graffiti

Tagging or gang graffiti is more than an eyesore. This should be part of the regular checks of your entire property, and a system for prompt removal should be instituted. Taggers are looking for the gratification of others seeing their name or moniker. Gangs are attempting to mark their turf and scratch out rivals’ markings. Keeping up with the cleanup will reduce its recurrence, since its continued presence increases its value to the perpetrator.

Gaming/Alcohol

Underage drinking and gambling is a huge risk that is often taken too lightly. Most jurisdictions check for these violations through “stings” and undercover operations. A first offense might result in a hefty ticket for a bartender or dealer. Subsequent offenses start to point accusations at management and can threaten your gaming or liquor license—or both.

Legal concerns aside, you do not want to be the casino that served the alcohol to the teenager who crashed his car. This makes it every employee’s responsibility to prevent, but the charge should be led by security. Make sure the entire casino staff is trained to check IDs and challenge every person of a certain age. Hold employees accountable who ignore or allow minors to break the law. This initiative should begin at the highest level, because it affects the ability to operate the business.

Lost/Unattended Minors

Before establishing policies on lone minors, check with your local jurisdiction to see if there are laws that allow kids of a certain age to be left alone or to babysit others. Security policy should be written around that law, leave room for discretion, and the police called when there is any doubt.

Make sure this policy is followed consistently and includes a procedure for reuniting a child in your care with the proper parent. Children who are “lost” should be addressed using the same age parameters. Your reaction to a lost 5-year-old will be  different from that of a 15-year-old.

Establish a procedure like “Code Adam.” This program trains employees to “lock down” a facility when a child is reported missing. Every employee gets involved, and other operations stop until the child is found. This is a very successful program; more information can be obtained from the National Center for Missing and Exploited Children.

Research/Intelligence

As a casino that attracts or may cater to kids, the security department should stay current on laws, criminals, and trends involving kids. The local law enforcement agency responsible for registering sex offenders can be asked to provide notifications directly to your security department when a new offender is registered. Keep these names in the same database as security’s “watched” or “excluded” persons. If your law enforcement agency is uncooperative, there are plenty of sites on the internet with the same information, but they are not necessarily current.

Use social media to watch for trends and issues involving local kids and their hangouts. Security investigators or analysts can use an RSS service like Google Reader to track blogs, posts and news on your property or neighborhood. If you have younger employees, security can engage them to keep them informed on things they hear, such as an upcoming fight or flash mob. Encourage them to use the company tip line if they prefer.

Flash Mobs

Flash mobs are not really a new phenomenon, but the way the mobs communicate, and the video coverage of them, has improved. Protecting your property against large groups of teens who take over the retail store is part of Loss Prevention 101.

Your security professional has likely already placed cameras at eye level to identify suspects, made employees aware of how to notify security and monitor outside of store or property for groups gathering, reminded employees to be good witnesses, and secured valuables in locked cabinets. Other solutions for security to consider include: networking with other businesses to warn of these crimes occurring in the area; use of sirens, bells and strobes to scare large groups away during a flash rob; safe rooms for employees; and subsonic deterrent systems for juveniles.

Children, minors, juveniles, assets or threats—whatever you want to call them—need to be an important part of the security plan. As with everything else you do, information is power. In fact, note that the measures suggested above are not cost-based solutions but knowledge-based. Keep yourself and your staff informed of the constantly changing world of juvenile liability and the result will be a safe, family-friendly environment.

By Darrin Hoke   Fri, Jan 27, 2012

For the most part I love what I do, but sometimes surveillance gets bogged down in a quagmire of silliness and unproductive work that distracts us from the bigger picture. Don’t get me wrong here; I get it—I know why this happens. I just struggle with managing it. So let’s just dive right in to the quagmire, shall we?

It’s a Saturday night and the joint is jumping when surveillance receives a call from table games. “I have a customer John Smith, account 12345, who says he played here over the last few days and his ratings are wrong. He says he lost $4,000 and the system shows he lost $3,000. Can you look into it and let us know?” So, you pull up John’s account, and it shows he played on 12 different occasions over the last three days. Piece of cake, right?

I am all about getting it right for the customer, and I understand why this type of review could be necessary, but let’s break it down and bring some perspective to the situation. In this scenario, this review could take as long as three hours. At $15 per hour for the agent’s time, that is a cost of $45. The $1,000 the guest is claiming he was not rated for represents about $10 in cashback.

Good Business Decisions

Some people would say that is why we have surveillance, and if the customer is trying to gain a little extra we should know about it. I agree, but it’s all about making good business decisions. Has this customer ever done this before? What type of customer is he, and can I justify an adjustment to his account?

In most places, the whole rating process for table games is not an exact science, and the tendency is to err on the side of the customer. Based on some of my own research, I would say that ratings are wrong at least 40 percent of the time. The reasons for inaccurate ratings vary from missing buy-ins to average bets to time on the table.

I can’t say with any certainty, but the poor execution of the data entry at the time of the ratings is probably costing the organization a lot more money than Mr. Smith who just tried to get an extra $10. Let’s get it right the first time, and then manage our business appropriately. As for me, I will still be waiting on the call that a customer says they were overrated.

We all have those big players whith whom we just grow comfortable. They’ve been coming to your place for years and have never really been a threat—they win some, they lose some. Big players like this are sometimes placed on a pedestal and considered above suspicion by the management team. This behavior, and more importantly the perception of being a great customer, can be translated to the surveillance department. We have all heard “that’s just so and so; he’s harmless,” or “that’s how so and so is.” It is OK for other departments to have this mindset, but it’s not OK for surveillance.

Healthy Suspicion

Complacency can be costly to your organization in terms of the big player. They get away with more and expect more because they are valued customers. There is also a lot of pressure to retain that customer, so the idea that they may be cheating or taking advantage of your casino usually isn’t received well. My advice: Nobody is above suspicion in this business.

Here are some pet peeves that the entire surveillance community can relate to. I don’t know about everyone else, but if one of my team members is late, either the supervisor is aware of it or I just ask them what time they came in. The idea that a video review needs to be done to find out what time somebody clocked in or clocked out is crazy under most circumstances. Most of the time, the employee is being honest or the supervisor knows they were late and they “just want to confirm.” If it’s an exception, correct it and move on, but if it becomes a habit, then document it and give surveillance a call.

I hear this next one more often than any other: “Can you watch this guy? He’s acting funny.” Really?

The next thing that happens is the most frustrating part; the surveillance agent says “sure” and hangs up. They don’t ask any questions and they don’t get any information. Maybe it’s me, but isn’t that like driving your car to a mechanic, dropping it off, and then saying it’s acting funny?

Getting an Advantage

I have always been fascinated by management’s perception of advantage players. If you think about it, we spend a tremendous amount of time and resources on this “frowned-upon” activity. To make matters worse, there seems to be no rhyme or reason for requesting a count check on a customer. I have heard everything from “he’s winning; we can’t seem to beat him” to “I can’t figure out what he’s doing.” I have actually gotten requests for count checks on continuous shuffle machines.

So why does this happen? I can’t isolate one reason; it’s really more of a collection of reasons that drag us into this quagmire of silliness. This usually occurs across the operation, including surveillance. Accountability and ownership can be challenging in today’s work environment. Nobody wants to be the bad guy, so it’s just easier to call surveillance and get an answer. Maybe I am just old-school, but when I have an issue with one of my team, I own it, regardless of where the information came from. My feeling is that employees respect this approach and will take the feedback more seriously if it comes from their boss.

Working in silos and a lack of communication is all too commonplace. Surveillance is probably the biggest offender in this behavior. The days of the “Secret Squirrel Society” are over, and our mission should always be aligned with that of the enterprise. No separate agendas and a level of transparency are the real keys to success.

Finally, knowledge and training of everyone involved is crucial. Proliferation of gaming has created a huge gap in experience and knowledge. Back in the day, if you lost a manager, you could have him/her replaced in a day or two with someone of equal or greater experience. That just isn’t the case today, and oftentimes we promote less experienced employees to fill that void and hope that they get the experience as they go. Many times, this sets the employee up to fail because he doesn’t have the tools needed to do the job.

I am a realist, so I know the quagmire of silliness will always find its way into surveillance, and it’s nobody’s fault. So the next time someone asks you to do a count check on a guest playing at a table with a continuous shuffle machine, tell them to call you back when they get to the top of the deck.

By Rich Geller   Fri, Jan 27, 2012

Gaming operator and regulator PAGCOR of the Philippines is looking to insert itself into the Asian integrated resort equation with the development of its Entertainment City Manila project. Despite a regime change at PAGCOR in mid-2010, Entertainment City Manila appears to be on track. At the same time, local network supplier and operator PhilWeb, partly in conjunction with PAGCOR, has been making progress both at home and in nearby countries.

It was spring 2008 when news of a major casino resort development project for Manila first appeared in the media. PAGCOR—the acronym for Philippine Amusement and Gaming Corporation—was calling for outside investors to develop a number of international-scale casino resorts on eight square kilometers of reclaimed land adjacent to Manila Bay.

Said to be the brainchild of then-CEO and Chairman Efraim Genuino, the plan included five-star hotels, casinos, theme parks, convention centers, theaters, shopping malls, medical facilities, cultural and education attractions, residences, a sports stadium, an immensely tall skyscraper and other modern trappings. Total investment was touted to reach somewhere between $15 billion and $20 billion by the time the multi-phase project was completed.

It was the era of mega-plans all around the world. A liberalized Macau was setting new gaming revenue records every month. Singapore’s two integrated resorts were under construction. Las Vegas was adding billions of dollars worth of high-end properties, and even European governments were fielding approaches from developers planning entire new cities centered on casino gaming. When the international credit crisis hit, projects in Las Vegas and Europe seized up almost completely. But in the Macau-Singapore-Philippines triangle, whose promise was just beginning to unfold, outside of a few setbacks it was pretty much business as usual.

In any case, the minimum investment for an Entertainment City Manila casino resort was eventually set at $1 billion. Currently, four such projects are under development:

• Belle Grande, from SM Consortium

• Manila Bay Resorts, from Tiger Resorts Leisure and Entertainment

• Resorts World Manila Bayshore, from Travellers International Hotel Group

• Solaire Manila, from Bloombury Hotels and Resorts

The SM Consortium and Bloombury projects are under construction and expected to open at least initial phases in 2012 and 2013, respectively. Work on Travellers International’s Resorts World Manila Bay is expected to commence in 2012. Tiger Resorts Leisure and Entertainment is still seeking funding for its Manila project.

One important condition that must be met by developers is that their hotels must be in place before casino operations may begin. Each developer is required have 800 hotel rooms with an average room size of 40 square meters—about 400 square feet—and to construct a minimum of 250,000 square meters of floor area.

To ensure the massive development stays on course, in December 2011 PAGCOR announced it was seeking an independent consulting firm to monitor the individual projects. No firm was named, but a statement from PAGCOR said that the board recently had approved the measure, the Philippine Daily Inquirer reported at the time.

In a statement, PAGCOR Chairman and CEO Cristino L. Naguiat Jr. said, “This is in order to rationalize project implementation and assure a level playing field.”

The four developers also are being urged to fast-track their projects, to enable PAGCOR to meet its self-imposed tourism goals. Rather than the minimum 3,200 hotel rooms, the agency would like to see 5,000 rooms as soon as possible.

“We intend to capture a share in the total global gaming market, which is estimated at $115 billion annually, through the Entertainment City Manila project,” said Naguiat. “A 10 percent share will give us $11.5 billion, which would make us bigger than Las Vegas.”

That seemingly outlandish gaming revenue estimate was first mentioned in the PAGCOR 2010 annual report. The report said that 3,200 hotel rooms could accommodate 1 million visitors annually and that at then-current gaming trends, 1 million visitors would produce the $11.5 billion in GGR. Comparing a future completed and fully functioning Entertainment City Manila to Singapore, the report stated that the revenue generated would equal that of the two Singapore IRs. 

“Our location in Asia and Filipino hospitality and service set us apart from other countries in the region,” said Naguiat. “We expect to generate 1 million jobs and 1 million tourists in the next few years.”

Present-Day PAGCOR

PAGCOR the operator is not just waiting around for future visions to materialize. In November, the multi-sector gaming concern booked a record PHP2.32 billion—$52.7 million—from its own ongoing gaming and wagering operations. That figure was up almost 36 percent from November 2010 and over 6 percent from October 2011 revenue. Gaming revenue in all of 2010 totaled PHP21.8 billion and revenue from all sources PHP31.5 billion. After the first 11 months of 2011, total revenue had already hit PHP33.15 billion.

PAGCOR owns and operates 13 casinos around the country. The casinos are situated mainly in hotels, and all are open 24 hours to those age 21 or older. Besides casinos, PAGCOR operates its own slot arcades. Combined slot revenue from casinos and arcades showed a significant increase in the first 11 months of 2011, accounting for more than 50 percent of GGR.

The rise in slot revenue is attributed to the installation of more popular, state-of-the-art machines at casinos and arcades.

Naguiat said, “We are getting better in our gaming mix. We hope to continue this momentum, with the hope of eventually tapping more foreign tourists to visit our casinos and arcades.”

The company also gleans revenue from licensing private casino operators and from licensing and supplying a number of gaming and wagering activities to the private sector, including sports betting kiosks, bingo and intranet gaming cafés.

Until recently, PAGCOR has shied away from the at-home online gaming business. But the Manila Bulletin reported that Naguiat, speaking at a hearing of the Senate Committee on Games and Amusement in early January, said PAGCOR is now looking at the potential of the sector.

“We’re really studying this internet gaming,” said Naguiat. “The estimated take for 2011 from the internet gaming is about $30 billion, so we’d like to be part of it.”

PAGCOR’s initial share of that $30 billion, Naguiat said, could be at least around $11.4 million.

The company would only offer the product to players outside the Philippines, meaning online gaming would remain off-limits to Philippines residents. The website would be blocked and inaccessible to anyone within the country, with payment transfers via local credit cards and bank accounts also blocked.

There are currently three companies—Eagle Sky, Oxford and Fontana, all located in the Clark Pampanga Freeport Zone—that have online gaming permits issued by the previous management of PAGCOR. However, so far, none have begun operations.

At the hearing, Naguiat emphasized that PAGCOR opposes the concept of being able to bet from home in the Philippines. That was also the reason the company did not approve a similar proposal from PhilWeb Corporation, PAGCOR’s partner in server-based gaming cafés. An online gaming venture involving the two companies was announced in January 2010, but has apparently gone by the wayside.

PAGCOR and PhilWeb

PhilWeb Corporation owns and operates the server-based system used by PAGCOR’s network of online café outlets, known as PAGCOR e-Game Stations, or PeGS. The terminals at a PeGS outlet allow customers to play table games and slots like those found at a regular casino.

The first joint project of the two companies was the establishment of the nationwide Internet Sports Betting Stations network of kiosks in 2003, which featured the sports-based numbers game Basketball Jackpot. The following year, the first 11 online cafés that would eventually become PeGS debuted, and by the end of 2007 that number had grown to 76.

In January 2010, PhilWeb signed an agreement with MegaSportsWorld, the only sports book licensed by PAGCOR, through which PhilWeb offers online betting on a wide range of local and international sporting and other events through the PeGS network.

As mentioned above, at the start of 2010, PAGCOR and PhilWeb announced the introduction of E-games Online, the team’s traditional internet gaming product. This was intended to be the first legal online gaming site in the Philippines, but never went anywhere.

On its own, PhilWeb has begun to find markets for its networked and mobile product platforms in other countries in the region.

In July 2010, a joint-venture agreement with 5P Corporation Ltd. of Cambodia was completed to operate internet-based and mobile-based games of chance under a Cambodian national gaming license. The Cambodia partner is a diversified company controlled by Madam Hun Sen Ny, the sister of Cambodian Prime Minister Hun Sen.

In November that same year, PhilWeb signed a memorandum of understanding with Simoung Group to jointly develop and operate internet and mobile games of chance in Laos. And in June 2011, PhilWeb received a license to operate mobile gaming and SMS-based instant games in East Timor, under the brand Gold Mobile.

The arrangement between PAGCOR and PhilWeb has not always been viewed as positive by everyone. In September 2010, the Philippine Daily Inquirer reported that Senate President Juan Ponce Enrile was calling on PAGCOR to review what he referred to as the “sweetheart deal” between itself and PhilWeb to operate the kiosk and online café networks.

PhilWeb President Dennis Valdes, in a statement, disagreed with Enrile’s charges and called the lawmaker “misinformed.”

“If anything, it is a sweetheart deal for PAGCOR,” said Valdes. He pointed out that the deal to operate internet casino stations had been PAGCOR’s most profitable contract with any private-sector entity—excepting traditional casinos—since its signing in 2004. “Over the life of the contract, PhilWeb has remitted to PAGCOR over PHP2.3 billion, and the remittance for 2009 alone totaled PHP1.1 billion.”

At the time, PAGCOR had a 60-40 net profit sharing arrangement with PhilWeb, in favor of PAGCOR.

Enrile pressed the matter, questioning why the company owned by former Trade Minister Roberto Ongpin was “so special” that the former head of PAGCOR, Genuino, had given the firm a contract that would run as long as that of PAGCOR, until 2033.

Naguiat, who replaced Genuino after the election of President Benigno Aquino III in June 2010, responded to Enrile’s question, saying, “We share the same sentiment, your honor.”

In fact, the contract with PhilWeb was one of those subsequently reviewed by PAGCOR. It has since been changed to PAGCOR receiving 40.8 percent of gross gaming revenue, which gave PAGCOR an additional PHP100 million in 2010.

Immediately after the hearing, former Defense Minister Enrile told the Philippine Daily Inquirer that he did not have a grudge against former fellow Marcos cabinet member Ongpin. He said he was only getting back at Ongpin for what he saw as the poor treatment of former PhilWeb President Alex Villamar.

“I don’t like his attitude,” Enrile said of Ongpin. “He put in jail of the NBI Alex Villamar, who was the one who put up PhilWeb’s business. He had all of his assets attached on the ground that he was stealing from the company. He took everything back, including his several billion shares.”

Valdes countered by saying there was no truth to Enrile’s allegation, or to the perception that Villamar had developed PhilWeb’s software.

“Villamar was president of PhilWeb from its inception in 2000 to May 2004,” said Valdes. “During his tenure, PhilWeb ran up a deficit of over PHP800 million, in large part due to his poor management. Worse, Villamar set up several personal companies on the side, keeping the revenues for himself and leaving the expenses with PhilWeb. Due to this dishonesty and his illegal use of company time, over PHP300 million in losses were incurred by PhilWeb.”

Whatever the truth, it is clear that the hangover from the Marcos era, in which PAGCOR was created, has not entirely dissipated. But under Naguiat, the organization appears to have become reinvigorated. The key to maintaining that vigor will be continued progress at the Entertainment City Manila site.

By GGB Staff   Fri, Jan 27, 2012

The Pascua Yaqui tribe of Tucson has taken a reasoned approach toward expansion: When the market is ready, the tribe is ready. The new addition to Casino del Sol makes it one of the most impressive resorts in the Tucson area, competing even with the high-end properties dotting the surrounding mountains. Mark Birtha, a Las Vegas gaming veteran, was brought in last year to develop the new project and operate the facility. He discusses the goals of the tribe and how they hope the new facility will help them accomplish those goals. Birtha, with experience at Mirage Resorts and Las Vegas Sands, understands why service is the key component, however, and how the employees—largely tribal members—were trained and educated. He spoke with Global Gaming Business Publisher Roger Gros just days before the debut of the new facility on 11/11/11.

To hear a full version of this interview go to www.ggbnews/podcasts.

GGB: Your main gaming competition in Tucson is the Desert Diamond casino, owned by Tohono O’odham tribe. But you believe you’re really competing with the impressive resorts that surround the Tucson area, correct?

Mark Birtha: Yes, we are the best of both worlds. We are gaming and we are a hotel resort. We have the opportunity to look at both market segments. And so, yes, we will compete on the gaming side with the Desert Diamond property, but more importantly, we’re going to be diversifying our revenue streams and looking at competing on the resort side, with some of the well-known resorts here in southern Arizona.

Give us some of the ideas of what other amenities you have here.

We’ve got a great bunch of amenities that are very publicly available, and some other hidden surprises that you would find on the property. Our 10th floor of rooms is something we call the “Sky Level,” which is our “V-VIP” level of rooms. It’s kind of a little boutique hotel within a hotel, with great incentives and amenities that guests on that level will be able to enjoy, including one- and two-bedroom suites. We have this brand new spa, 65,000 square feet of both indoor and outdoor meeting space, including our 18,000-square-foot ballroom, a beautiful, brand new outdoor pool area that has five cabanas, the Oasis Bar and Grill out there, as well as a splash pad, two Jacuzzi whirlpool tubs and a 30,000-square-foot event lawn.

Our hidden jewel, however, is the Fountains of Sol, which are six different water shows each evening that are choreographed to songs like Frank Sinatra’s “Luck Be A Lady,” or an Andrea Bocelli song, or even the Black Eyed Peas. We’ve got four levels of parking—an 1,100-spot parking garage—and two brand new Starbucks. We’re the only casino in the state of Arizona to have the Starbucks program in the property, and we’re only the fifth tribal gaming property in the United States to have a Starbucks venue. We also have a new steakhouse and a brand new buffet.

Casino del Sol  has that Tuscan theme, and while it’s not a tribal theme, there are still a lot of touches of the tribal culture here. How did you arrive at that?

We wanted to create a 4-Star, 4-Diamond resort experience. So if you were here in Tucson, or you were coming from Mexico, or from anywhere in the Southwest, you almost felt like you were being whisked away to Lake Como, an Italian lakeside, a Tuscan village, something like that city where you would have that kind of quality and the detail of the finishes in the rooms.

But at the same time, it was absolutely essential to us to make sure that we kept in mind the culture, the history and the journey the tribe took to get to where they are today. We wanted to make sure we evoked that in a way that was not commercialized. So, very clearly, we basically created a thread that ran through the entire resort property. And that thread is the names of all the rooms and restaurants. They are all tribal words and meant to evoke the Pascua Yaqui tribal culture.

Another thing that’s unique to this property is that the vast majority of your employees are tribal members, correct?

Our commitment was to try to reach 80 percent tribal members, and now, we are actually at 82 percent. So of those 350 positions, the vast majority are tribal members. I don’t know that this has been done anywhere in the industry before, and it was a huge victory for our entire management team.

And you’ve stressed that while this is a beautiful facility, all the great amenities really don’t deliver unless the employees deliver.

Absolutely. And they’re all committed to that. They realize that passion, training, and that the level of expectation is absolutely critical for us to be successful. In fact, our branding statement is “Raise Your Expectations.” And that was as much a public statement to our guests as it is a private kind of internal statement to our employees and to the community. We’ve done great business up to this point at this level, but we are all committing to trying to create something truly unique here, define a whole new level of experience, and of course, raise expectations across the board.

By GGB Staff   Fri, Jan 27, 2012

At the December annual meeting of the American Gaming Association, the AGA board of directors elected Richard Haddrill, CEO and director of Bally Technologies, Inc., to a two-year term as chairman of the organization. Haddrill, who served as AGA vice chairman for the past two years, follows Keith Smith, president and CEO of Boyd Gaming Corporation, in the position. James J. Murren, chairman and CEO of MGM Resorts International, replaces Haddrill as the AGA’s new vice chairman.

In addition to the transitions in leadership, the AGA board welcomed a new director in Adam Rosenberg, managing director and global head of the gaming group for Goldman Sachs & Co. Rosenberg previously served as director-elect and was elected for a one-year term as an at-large director. He succeeds Robert Heller, managing director and head of gaming and leisure for the Americas at UBS Investment Bank, whose term as an at-large director had expired. Richard Byrne, CEO of Deutsche Bank Securities, Inc., was designated by the AGA board as a director-elect for the coming year.

Also at the annual meeting, Murren and Smith were re-elected to the AGA board of directors for three-year terms, as were Patti S. Hart, CEO of International Game Technology, and Gavin Isaacs, CEO of Shuffle Master, Inc. Larry Ruvo, senior managing director of Southern Wine & Spirits of Nevada, was re-elected to a one-year term as an at-large director. 

By GGB Staff   Fri, Jan 27, 2012

The National Center for Responsible Gaming last month announced Alan M. Feldman, senior vice president of public affairs for MGM Resorts International, has been named the new chairman of the organization’s board of directors. Feldman replaces Glenn C. Christenson, managing director of the investment firm Velstand Investments, LLC, who has served as chairman of the board of directors for three years and will remain on the board. The NCRG board also elected Mark Vander Linden, executive officer of the Office of Gambling Treatment and Prevention at the Iowa Department of Public Health, to join as a board member.

“Alan has long been a strong voice in the gaming industry on issues of responsible gaming and finding effective methods for addressing gambling disorders,” Christenson said. “He has an unwavering commitment to the NCRG. I am delighted to remain on the NCRG board to support Alan’s leadership as the NCRG continues to address these issues through peer-reviewed research and public education.”

Feldman has served on the NCRG board since 2000.

By   Fri, Jan 27, 2012

Thermal printing supplier FutureLogic, Inc. has appointed veteran supplier executive Laurent Gaubout as its sales agent for France, Monaco and French-speaking portions of Switzerland.

Gaubout, the longtime marketing and sales executive with Gaming Partners International and WMS Gaming, will promote FutureLogic’s range of thermal ticket printers and the PromoNet couponing solution to all casinos in the French-speaking territories.

Gaubout has more than 19 years of casino industry experience. He started with GPI predecessor and current division Bourgogne & Grasset in 1992, and moved to WMS as commercial operations manager in 2007.

By GGB Staff   Fri, Jan 27, 2012

Gaming industry veteran Chris Kern recently was promoted to general manager of MTR Gaming Group’s Mountaineer Casino, Racetrack & Resort in Chester, West Virginia. Previously, Kern had served as assistant general manager and vice president of marketing since June 2011.     

Kern joined Mountaineer after four years as vice president of marketing at Hard Rock Hotel and Casino in Biloxi, Mississippi, where he was responsible for rebranding and operations initiatives. He also served as director of marketing at Boomtown Casino and director of casino marketing at IP Hotel and Casino, both in Biloxi. He began his casino career in 1995 in Caesars’ Mid-South Region and at the Grand Casino Gulfport.

Bally Names Sales Director for Europe and North Africa

Slot and system manufacturer Bally Technologies announced that Stelios Tsapatos has been named director of game sales for the European and Northern Africa regions. He will be based in Bally’s European headquarters in Amsterdam.

Tsapatos will manage the regional sales force and oversee all gaming equipment sales throughout Europe and northern Africa. Among his objectives will be to lead Bally’s product proliferation in both western and eastern Europe and further establish Bally’s presence in those markets.  

Tsapatos most recently was European sales manager for International Game Technology, where he was responsible for developing and executing the sales strategy in several European countries and maintaining relationships with key accounts.

By GGB Staff   Fri, Jan 27, 2012

Slot manufacturer International Game Technology last month signed a definitive agreement to acquire Double Down Interactive, a leading online social gaming company and developer of the popular DoubleDown Casino found on Facebook, for $500 million.

Launched in April 2010, the DoubleDown Casino is the world’s largest virtual casino and one of the top four social media games in 2011 as rated by Facebook. According to AppData.com, DoubleDown Casino currently has 4.7 million monthly active users, up from 3.3 million in October 2011. Double Down offers blackjack, slots, slot tournaments, video poker and roulette to social gamers all around the world.

The total consideration includes $250 million in cash, $85 million in retention payments over the next two years and up to $165 million in cash payable over the next three years subject to Double Down meeting certain financial performance targets. IGT expects to fund the transaction from cash on hand.

The addition of Double Down provides IGT instant size and scale in the fast-growing world of casino-style social gaming, and is expected to broaden IGT’s popular gaming titles beyond the physical casinos to Facebook, the world’s largest social network with over 800 million global users.

“Double Down and IGT share complementary cultures focused on innovation and creativity,” said Greg Enell, CEO of Double Down. “Both companies are committed to providing unrivaled quality, service and entertainment to millions of players. Leveraging IGT’s research and development, global reach, and best-in-class content will provide our loyal player base with an even more robust experience and is expected to augment Double Down’s growth trajectory.”

“As technological innovations increasingly influence consumer behavior, social dynamics are quickly transforming entertainment and gaming experiences everywhere,” said Patti Hart, CEO of IGT. “The addition of Double Down launches IGT into a leadership position in social gaming, extends our global reach through new mediums, and leverages our unmatched expertise in game development.”

By GGB Staff   Fri, Jan 27, 2012

Cantor Entertainment Technology, Inc. has filed with the U.S. Securities and Exchange Commission for an initial public offering of its Class A common stock on the NASDAQ exchange.

The company, a unit of financial services giant Cantor Fitzgerald, produces software systems and hardware for race and sports books, including its popular “in-line” wagering system that allows wagers on in-progress sporting events. The company hopes to raise up to $100 million with the offering.

Company officials say they would use the money to repay debt. The company’s common stock would be listed under the symbol CETI. The filing did not reveal how many shares the company plans to sell, or the expected price.

“We are a leading technology company that provides, through our subsidiary Cantor G&W (Nevada), software, services, data and content to the gaming industry and additional entertainment channels worldwide,” said the filing. “We are a market leader in comprehensive account-based and over-the-counter race and sports book solutions and mobile gaming technology for casino-style gaming and race and sports wagering for the global gaming market. Our technology infrastructure platform allows us to provide scalable services at minimal incremental operating costs.”

By GGB Staff   Fri, Jan 27, 2012

Table game supplier Shuffle Master, Inc. has acquired Fire Bet, considered the most popular proprietary side bet for craps, from Henderson-based HopBet, Inc., for an undisclosed amount.

Fire Bet is a patented side wager that can be incorporated into any standard dice game to give the players another way to capitalize on the number of points that the shooter has made. Fire Bet payoffs are similar to a six-spot keno ticket, wherein a player will be paid for 4, 5 or 6 individual points made. Players win the Fire Bet if the shooter makes at least four distinct points before he or she sevens out. If the shooter makes all six distinct points, bettors can win up to 1,000-to-1.

“This is truly one of the elite products in table games,” said Roger Snow, executive vice president of Shuffle Master. “You can count on one hand the number of side bets that have ever demonstrated the popularity and longevity that Fire Bet has. This acquisition is a continuation of our strategy to build our intellectual property portfolio. We are pleased to add Fire Bet to the Shuffle Master suite of brands.”

By GGB Staff   Fri, Jan 27, 2012

Slot and system manufacturer Bally Technologies announced that Navajo Nation Gaming Enterprise has signed an agreement to implement Bally system solutions including the iVIEW Display Manager system and Elite Bonusing Suite, which enables networked interactive bonusing events on machines from individual banks to enterprise-wide events.

Along with the iVIEW DM system, the tribe selected Bally’s SDS/CMP 12 for Windows casino management system, with modules including Bally Business Intelligence, CoolSign media management, Bally Command Center for updating iVIEW content, the TableView real-time table rating and player tracking system and the mobile browser system Service Tracking Manager.

Implementation is across Navajo’s three operating casinos and one, the Twin Arrows Navajo Hotel & Casino Resort, under construction with a projected spring 2013 opening.

Bally also is designing a single-card loyalty system for the tribe’s casinos. “Bally’s seamless one-card patron-loyalty solution was very important to us and to our enterprise as we continue to build strong, lasting relationships with our customers and retain, reward, and recognize them properly through targeted, customized marketing programs,” said Derrick Watchman, chief financial officer of the Navajo Nation Gaming Enterprise. “When you combine that with iVIEW DM and the Elite Bonusing Suite, Bally truly offers us a powerful suite of marketing, promotions and player-rewards solutions.”

By GGB Staff   Fri, Jan 27, 2012

Reno-based Leap Forward Gaming has reached deals with two major suppliers for use of its technology.

Printing supplier TransAct Technologies announced a development deal under which its Epic 950 printer and Epicentral Print System have been successfully integrated into the SaffariNet wireless ecosystem created by Leap Forward.

With successful integration into the SaffariNet system, the Epic 950 and Epicentral Print System can now communicate directly not only with existing gaming machines, but also with systems independent of the gaming machines. The setup allows casino operators to quickly and easily generate coupons and other player-specific offers from back-of-the-house systems.

In the second project under its partnership with cash-handling equipment supplier JCM Global, Leap Forward Gaming announced a collaborative development effort with JCM to integrate LFG’s PlayPal casino cashless payment solution as part of its wireless SaffariNet ecosystem. By way of JCM’s relationship with leading mobile phone payment system developer TechFirm, LFG will collaborate with TechFirm to develop the solution.

The companies will pool their resources and experience to create a system whereby casino patrons will be able to use their mobile phones to conduct transactions at gaming machines and other devices that use bill validators to accept both currency and mobile e-money.

The technology will be used in a wide range of LFG applications, from slot machines to kiosks to ATMs.  LFG’s low-cost, patented wireless SaffariNet ecosystem will utilize the technology in its PlayPal casino cashless system designed for the global gaming industry, as well as for other applications.  

By GGB Staff   Fri, Jan 27, 2012

Now that the U.S. Justice Department has upheld its legality (see page 18), Nevada could become the first state to offer online poker in the United States.

The Nevada Gaming Commission in late December unanimously approved rules that would regulate and control the online activity. The Nevada Gaming Control Board, which promulgated the regulations, announced earlier in the month that five companies had applied for licenses to operate the games.

The online poker rooms would only be able to operate within the borders of the state, and companies operating the sites would have to demonstrate that their systems would be able to limit betting to Nevada residents or visitors.

The bill designating the Nevada regulatory agencies to establish online gaming regulations also stipulated that the state could only legalize online gaming if it got the blessing of the Justice Department. Mark Lipparelli, the chairman of the Gaming Control Board, predicted the DOJ would deem it legal since the state has offered other intrastate online wagering without any federal objections. Now that the Justice Department has weighed in, it’s likely that Nevada will act quickly to become the first state to host online gaming.

Prior to the Justice Department action, Nevada Gaming Commission Chairman Peter Bernhard didn’t predict legalization anytime soon.

“There’s not going to be anyone turning on machines to gamble on the internet, either interstate or intrastate, on poker in the near future,” Bernhard said. “But at least the framework is there to allow the process to continue so we’re ready when and if an applicant before us meets our standards.”

The failure of Congress to pass a bill legalizing online poker could spur an avalanche of legalized online gaming on a state-by-state basis. After Nevada, the New Jersey legislature is likely to legalize online gaming. Iowa and California have each debated online gaming/poker bills in the last year and are sure to take them up again in 2012.

Most experts expect state legalization will force Congress to reconsider its current ban.

“I think it will be a domino effect,” said Richard Bronson, a former executive with Wynn Resorts who now runs an online gaming company, U.S. Digital Gaming.

By GGB Staff   Fri, Jan 27, 2012

The anticipated January 1 launch of Denmark’s regulated online gaming market came off as planned. As of January 5, there were 40 companies holding a variety of licenses for online casinos and sports betting.

Danske Spil, Denmark’s government-owned monopoly lottery operator, has launched online poker and casino games from bwin.party for its online product operating under the name Danske Licens Spil.

Prior to the opening of the market, Danske Spil already had 600,000 registered online customers, which is slightly more than 10 percent of the total population.

Jim Ryan and Norbert Teufelberger, co-CEOs of bwin.party, said in a statement, “Building on our recent announcement regarding deals with both MGM and Boyd in the U.S. market, this is another important milestone in the execution of our stated strategy that is focused on securing leadership positions in regulated and to-be-regulated markets.

“We are delighted that DLS has recognized our expertise and high standards of business practice, and we look forward to building a market-leading customer offer for the Danish consumer.”

By GGB Staff   Fri, Jan 27, 2012

Brent Beckley, who processed payments for the online poker site Absolute Poker, took a deal offered by prosecutors recently to end his role in the infamous April 15 Black Friday indictments brought by the U.S. Justice Department against three online poker sites and related payment processors and banks. Beckley is the stepbrother of Scott Tom, the co-founder of Absolute Poker who was also indicted in the April dragnet. Before a judge in Manhattan in December, Beckley admitted to conspiracy to commit bank fraud and wire fraud as well as to violate the Unlawful Internet Gambling Enforcement Act of 2006. Beckley will be sentenced in April to a term of 12 to 18 months in prison and will be required to forfeit $300,000.

Beckley’s plea follows that of Bradley Franzen, another payment processor affiliated with the PokerStars and Full Tilt Poker websites, also targets of the Black Friday indictments. Ira Rubin, another Absolute processor, is also expected to enter a plea bargain in upcoming weeks.

Pre-trial hearings have been held for defendants John Campos, a Utah bank executive, and Chad Elie, another payment processor indicted with Franzen and Rubin. A trial for the two is scheduled to start on March 12.

The location and legal status of the more notorious individuals indicted in the case, including PokerStars founder Isai Scheinberg and Full Tilt CEO Ray Bitar, remains unknown.

In October, a second indictment claiming UIGEA violations was handed down by federal prosecutors in Baltimore. No action or plea bargains have yet been revealed under those charges.

By GGB Staff   Fri, Jan 27, 2012

The Maryland State Lottery Agency (SLA) has become the latest lottery organization to examine creating online games to be played within the state.

As part of a report required of the lottery under Maryland’s new budget law, the agency said Maryland should develop an internet program to expand its appeal to younger players.

“From small businesses to Fortune 500 companies, businesses are utilizing e-commerce to complement brick-and-mortar retail locations to grow their bottom line and remain competitive. Otherwise, they risk falling behind the curve,” the report says. “The Maryland Lottery is no exception. The SLA believes it is time to take the necessary steps to offer its products on the internet to remain competitive and accomplish our core mission.”

Five states currently offer lottery draws over the internet, but the District of Columbia is paving the way for casino-style games to be offered online as well. D.C. lawmakers recently passed legislation to allow the D.C. Lottery to offer online games including poker and blackjack.

While internet gaming is considered illegal by the U.S. government, the Maryland SLA report points to a 2001 federal appeals court decision that found a 1961 anti-gambling law cannot be applied to lottery games. Intrastate transactions also are exempt from the 2006 Unlawful Internet Gambling Enforcement Act.

“It would appear, although it is not entirely clear, that Maryland could initiate an internet-based intrastate lottery program provided certain protections were put into place,” the SLA report says. “These protections, required under UIGEA, could be accomplished by the SLA implementing regulations that specifically provide for a subscription program and establish protections limiting access to the program by minors and people outside the state.”

Many in the industry have speculated that, absent a federal law permitting online poker, the states will fill the void with their own laws—and lotteries are increasingly seen as the likely venue, since several lotteries already operate video lottery terminals in brick-and-mortar casinos that are identical to slot machines.

Several state governors, including Maryland’s Martin O’Malley, have written to leaders in the U.S. Congress to oppose bills that would legalize internet poker but restrict its operation to licensed casinos, racetracks and card rooms. O’Malley and others have argued that state lotteries should be included in any federal legalization measure.

By GGB Staff   Fri, Jan 27, 2012

Legal online gaming in Spain will debut up to six months later than the originally announced January 1 start.

The cabinet decided at the last minute to give the Spanish regulator and the operators more time to get things in order. The regulated market is now scheduled to open by June 30 at the latest.

The law legalizing online gaming came into effect in May 2011, but the regulations were still being created. Applicants were then asked to apply for licenses between November 19 and December 14. The National Gambling Commission was given up to six months to review the applications, and it was expected that some licenses would be granted by the start of January.

Online gaming operators who had sports team sponsorship agreements in place before 2011 were initially allowed to maintain the arrangements only until January 1, 2012. But the postponement of the start of licensed gaming activities means such agreements could be in force until June 30.

Betfair Adds Fixed-Odds Offering

U.K.-based bookmaker Betfair, known for its exchange wagering program that allows punters to wager against each other on races, is adding a fixed-odds sports book platform to its offerings which CEO David Yu says will mean punters “have no reason to go anywhere else.”

The fixed-odds sports book is currently under development, and Yu says it will be ready for launch before the 2012 UEFA European Football Championship in June. Yu said Betfair’s customers currently spend around 60 percent of their sports wagering bankrolls with the company, with 40 percent going to rival bookmakers. He said the addition of a fixed-odds sports book will give customers multiple and pool betting, and will allow Betfair to have a “promotional wallet” for the first time, to compete with bonuses offered by traditional bookmakers.

By GGB Staff   Fri, Jan 27, 2012

Caesars Entertainment Corporation, the world’s largest gaming company, recently bought out Playtika Ltd., improving its position in online social games.

Founded less than two years ago by Uri Shahak, the son of former IDF Chief of Staff Amnon Lipkin-Shahak, and gaming expert Robert Antokol, Playtika is one of the web’s fastest-growing companies. Based in Israel, Playtika offers two social media games, Slotomania, which is a slot game, and Farkle, which is a game of dice. Playtika currently has 10 million unique users every month, half of whom are Facebook users. In contrast with Zynga, the company also markets its games on the Russian Facebook equivalent, V kontakte.

Playtika’s casino slant may have been appealing to Caesars as the company eyes the future of internet gaming. Caesars acquired 51 percent of Playtika at a company value of $80 million-$90 million last May, and has acted on its option to buy all shares within two years.

“It is no coincidence that we chose to acquire the balance of Playtika shares now,” Caesars Interactive CEO Mitch Gerber told Globes. “Playtika’s activity is advancing according to our plans, and company growth has been consistently strong. We have learned that controlling a portion of a company’s shares it not the same thing as having complete control. The integration of Playtika and Caesars Interactive was important for Playtika’s long-term growth… We reached the conclusion that we prefer acquiring full control of the company before it is too late, which will enable us to fully integrate it within Caesars Interactive. We have many plans for the future.”

Playtika will now fall under Caesars’ Interactive Entertainment unit, and will increase the number of employees from its current 50.

“2012 is going to be a very big year for Playtika, which will be reflected by, among other things, the hiring of additional employees in Israel,” Gerber said.

By Frank Legato   Fri, Jan 27, 2012

I was just sitting here reading the stacks of newspapers from all over the world that I have delivered to my front door every day.

Hey, how else can I keep up on all the casino news every month? It’s not like there’s some magical machine with a video screen that lets me type “casino” in and instantly gives me all the related news stories. (What a crazy idea.)

Anyway, I decided to take a few casino-related items from the news and extract a bit of humor, complete with professional-looking bullet points:

• The trial of the group that allegedly conspired to rob the Rio last February is not short of its amusing little subplots. For instance, suspect Hiroyuki Yamaguchi allegedly drove a “getaway taxi” after the robbery. He is accused of dropping the other robbers off and waiting for them until after they had robbed the casino at gunpoint—one of them, according to witnesses, “wearing a fedora hat, a wig, a fake mustache and sunglasses.”

First, what was the other guy wearing? A clown suit and a funny nose? Secondly, a “getaway taxi?” What was Yamaguchi going to do if someone else got in the taxi? Cut them in? But it gets better. There’s a camera in the taxi, so there’s a video record of the robbers getting in with the chips they robbed.

Yes, we have real criminal masterminds in this business.

Incidentally, Yamaguchi appeared in court with an interpreter, because he doesn’t speak English. (Evidently, they didn’t want to raise suspicion by employing an English-speaking taxi driver.)

• Anti-gaming folks in Australia are up in arms over “Slotomania,” the popular free Facebook game that simulates playing a video slot. They are upset that minors are able to sign on and learn how to play the “pokies,” as they’re called down there.

Ah, it reminds me of my own childhood, when I sat in my playpen with my Fisher-Price toy slot machine (“My First Slot”).

Seriously, though, this may or may not be cause for concern, but it’s not like kids are shielded from gambling without “Slotomania.” Why, I remember gambling away my baseball cards when I was a kid—even though “flipping cards” was technically a skill game. And, what about learning how to play poker and blackjack as a kid? Didn’t that train us for our later encounters across the felt tables?

These kids may be learning how to watch spinning reels and little cartoons, but they’re also learning how to win less than their initial bets. That last little lesson may actually cure them from wanting to play the pokies.

• With casinos approved in Massachusetts, it appears Bostonians are inflicted with gambling fever, or what we in the trade like to call “gaming fever.” Just look at the charity event being held the week after the Super Bowl.

The Boston Bruins hockey team, taking advantage of the fact the football season will be over, is holding a charity event in which Bruins fans can play blackjack, poker and roulette with their heroes. You can go to “Bruins Casino Night” to play blackjack with Patrice Bergeron, Tim Thomas, Milan Lucic and other Bruins stars.

Yes, hockey fans, spirited fights are expected, and even encouraged. Watch for the high stick across the chops after the player on third base takes the dealer’s bust card by splitting 10s. The ensuing melee will clear both benches. It will be a good way for Boston fans to blow off steam after football season. (I’m writing this in January, so I don’t even know if the New England Patriots were in the Super Bowl. Were they? No, don’t tell me. I like to be surprised.)

• Now that Las Vegas Sands CEO Sheldon Adelson has contributed $20 million to Republican presidential candidate Newt Gingrich’s Super-PAC, how is Newt going to repay him?

At press time, our beloved Las Vegas oddsmakers had Newt as an 18-1 longshot to be elected president. So that means he’s probably not going to be president. Since no gift goes unpunished, I’m imagining walking into Sands Bethlehem some day and being greeted by the ex-Speaker of the House. I’m hoping he’ll have a huge novelty gavel in his hand.

I love that we can get odds on anything in Las Vegas, by the way. I think you can get 100,000-to-1 that the world’s going to end this year. One problem: If you win, you won’t be able to collect.

Oh, well. It won’t matter anyway. Have a lucky day!

By GGB Staff   Fri, Jan 27, 2012

This is the first title released on Bally’s new Alpha 2 Pro Series V22/32 cabinet, which offers a dramatic 32-inch vertical display above a 22-inch touch display as well as all the other Pro Series features such as the iDeck button panel/touch-pad, LED cabinet lighting and HD surround-sound.

The base game is a five-reel, 40-line video slot available in penny through nickel denominations with a 300-credit maximum bet. The classic Blazing 7s theme, in its unique Hot Shot configuration, is augmented with tournament features.

The Hot Shot configuration features miniature versions of five of the most popular classic Bally reel-spinners—Blazing 7s Sevens Times Pay, Triple Jackpot Triple Blazing 7s, Double Jackpot Triple Blazing 7s, Diamond Line and Blazing 7s. When the bonus is triggered, one of the miniature slots spins to a bonus award or a progressive jackpot. The top line jackpots on the mini-slots result in progressives at resets ranging from $20 to $2,000.

The new feature on this version, though, is the mini-slot tournament mystery feature. When the random trigger is enacted, linked games go into a tournament, with paying combinations translating into points. Players with point totals between 2,000 and 2,999 win $100; points totaling 3,000-3,999 win $1,000; and, 4,000 or more points return the top prize of $10,000.

Manufacturer: Bally Technologies
Platform: Alpha 2
Format: Five-reel, 40-line video slot
Denomination: .01, .02, .03, .05
Max Bet: 300
Top Award: $10,000
Hit Frequency: 36.6%
Theoretical Hold: 3.97%—14.97%

By GGB Staff   Fri, Jan 27, 2012

This new video slot in Konami’s KP3 format includes a fun mad-scientist/electricity theme with the classic free-spin bonus and a special feature called “Action Stacked Symbols.”

The base game is a  30-line video slot with a wild symbol—the scientist—substituting for most of the other symbols. In the random Action Stacked Symbols feature, the man, switch, woman, dog, microscope, flask or any of the poker symbols randomly appear in adjacent spots. If one symbol fills up every spot on the first reel, it is duplicated on one or more of the other reels during the reel spin—Konami calls it “copy and paste,” and it results in either additional reels or it can trigger the bonus feature.

Three, four or five switch symbols trigger five, 10 or 15 free games, respectively. During the free games, pays for all wins are doubled. Landing the triggering symbols during a free spin causes the corresponding number of free spins to be tacked on to the end of the free game round.

One unique aspect of this game is that the player can choose a straight credit prize in lieu of the free spins. When the free-game feature is triggered, the player is given the choice of “FREE GAME” or “CREDIT PRIZE.” The credit prize is a random amount that, on average, is larger according to how many free games the player is trading. The player can even do both free spins and the credit prize if the feature has been re-triggered. As long as there are more than 20 free spins remaining, the player can press the credit-prize button and be awarded the straight credit bonus in addition to whatever has already been won in the free games.

Manufacturer: Konami Gaming
Platform: KP3
Format: Five-reel, 30-line video slot
Denomination: .01
Max Bet: 300
Top Award: 50,000
Hit Frequency: Approximately 50%
Theoretical Hold: 9.81%

By GGB Staff   Fri, Jan 27, 2012

This is a unique multi-level progressive on Multimedia’s new “High Rise” cabinet, which, with a 37-inch vertical top box, is promoted as the industry’s tallest top-box video display on a stand-alone machine.

In this case, the top box displays five progressive jackpots, with reset levels ranging from $5 to the top prize starting at $2,000. Winning the progressives is a simple proposition. The base game is a nine-reel setup. At first glance, it looks like a three-reel game, but each of the nine symbols is actually a complete reel for the purposes of the game.

The “One Cent Red Deluxe” symbol is the trigger for the progressive. When landing on four reels, it returns a win of 160 credits times the line bet. However, on five to nine reels, the symbols trigger one of the progressives. The game-title symbol on all nine reel spots returns the top prize.

There also is a separate picking bonus, triggered by three penny symbols on the seventh payline. When that happens, a giant penny rolls across the main video screen to turn all symbols into doors. The player is prompted to pick doors to reveal a nickel, dime or quarter—which translates into a multiplier of 5X, 10X or 25X, applied to the total bet as a bonus.

The multipliers are added together as the player picks. You keep picking doors until you reveal a penny instead of one of the other coins—that ends the bonus, and the accumulated multiplier is applied to the bet for the bonus.

One more twist: Every 50 bonus events, on average, the giant penny will spin until revealing a 100X multiplier.

Manufacturer: Multimedia Games
Platform: High-Rise
Format: Nine-reel, 32-line video slot
Denomination: .01
Max Bet: 160
Top Award: Progressive; $2,000 reset
Hit Frequency: Approximately 50%
Theoretical Hold: 2.2%—14.98%

By GGB Staff   Fri, Jan 27, 2012

This is a radical new twist on the multi-play video slot—games that feature multiple pay windows, allowing the player to wager on up to four reel-sets and spin the reels on each window simultaneously.

Aristocrat’s Wonder 4 takes this concept and applies it to various base games. The screen displays four reel sets, but each is an individual Aristocrat video slot game. Four games can be played simultaneously, each with its own free-spin, stacked wild or other game-specific bonus. Alternatively, the player can pick one of the four games and play it on all four reel-sets, as in a standard multi-play game.

Wonder 4 takes full advantage of Aristocrat’s new “Viridian WS” wide-screen monitor to combine four popular Aristocrat titles into a single game. The games included in the initial launch are “Buffalo,” “Fire Light,” “Pompeii” and “Wild Splash.”

To pick how to play, the player selects the on-screen menu and drags each desired game to the screen area. In the Wonder 4 Super Spin, when free games are triggered, the player can play the free games on one game or four independent sets of free games.

Manufacturer: Aristocrat Technologies
Platform: Viridian WS
Format: Five-reel multi-line video slot; four independent games
Denomination: .01
Max Bet: Various
Top Award: 2,000—25,000, depending on game selected
Hit Frequency: Varies according to game selected
Theoretical Hold: 5.86%—12.14%, depending on game slected and number of games

By GGB Staff   Fri, Jan 27, 2012

GPI’s RFID Poker Table is an innovative way for casinos to optimize their live-stakes poker performance and improve game speed through the use of RFID technology.

The system combines a chip tray, an attractive touch-screen display and an RFID reader installed underneath the table that can read and validate up to 25 chips per second (or 400 chips per second in high frequency). The fast pot-scanning can increase game speed by up to 30 percent, and reduces down time so casinos can generate increased revenue by allowing more rounds per hour at their poker tables. 

The RFID Poker system also minimizes dealer errors by instantly calculating rakes and roundups, while identifying counterfeit chips. And, since the dealer no longer has to manually count the chips, more time can be allocated to other tasks such as supervision of the players and attention to giving payouts.

The system can also enhance poker table management processes by providing reports and statistics with the information necessary to maximize a casino’s efficiency. This information can be used to identify the most profitable hours of play, and the data can also be sent in the form of daily reports to external gaming authorities, if required.

Player appeal is further enhanced with the all-new optional progressive jackpot module that gives players the ability to win all or part of an incrementing jackpot, which can be linked to operate on multiple tables.

For more information on the RFID Poker Table, contact a local GPI sales representative or visit www.gpigaming.com.

By GGB Staff   Fri, Jan 27, 2012

Interbrief.Org  assists gaming owners and operators by delivering a set of services that include security consulting, vulnerability assessments, labor action contingency planning, emergency procedure development, ethics testing, customer service standard testing and expert witness assistance.

One of the most valuable services for anyone in the gaming industry is an asset protection audit. Human, financial, fixed-property and informational assets are at risk from a constant and increasing threat picture. Interbrief is equipped with the ability to evaluate and recommend target-hardening elements that properly protect critical assets.

In addition to evaluating critical assets, Interbrief digs deeper to identify other potential liabilities through ethics testing. Ethics testing involves undercover operatives posing as guests to specifically and randomly target owner and guest assets including nightclub door cover charges, liquor revenue, marketing gift promotion and parking receipts, among others.

Ripple effects of a shrinking economy have resulted in management/supervisory/administrative downsizings and reduced hours and tips for team members. The results of these scenarios in some cases show up in decreased operating profit, which is incorrectly attributed to economic drivers as opposed to ethical breeches. Today, more than ever, operators can benefit from proactive shopping services like those offered by Interbrief.Org.

Undercover Ethics Testing enables the organization to endure potentially expensive and embarrassing guest recovery measures. Similarly, Customer Service Standard Testing services are designed to measure the compliance of team members.

Every year, the cost of customer retention and service recovery measures rise, which justifies the recurring utilization of professionally trained and expert undercover operatives. Market share changes can also be attributed to guest service breakdown. Only a percentage of disillusioned guests actually voice their displeasure to operators; many will simply choose to take their business elsewhere.

In addition, Interbrief provides Enterprise Risk Management design and training services, specifically geared for gaming operations. Education, commitment and understanding of risk across the entire organization emphasizes prevention and mitigation for each and every team member. Interbrief performs presentations and education of ERM for new or established programs.

For more information, visit www.interbrief.org.

By Frank Fantini   Fri, Jan 27, 2012

The year 2011 was one of uneven recovery for the American gaming industry.

Gaming revenues grew through most of the year, then slipped in the fourth quarter, but they roared back in December with a vigor not seen since before the recession.

Here are some examples of the great end to 2012:

• Atlantic City revenue grew 4.25 percent, breaking a 39-month losing streak.

• Detroit surged 10.01 percent, the biggest gain since April 2008.

• Illinois leaped 32.03 percent on the opening of Rivers Casino in the Chicago suburb of Des Plaines, but even factoring out Rivers, gaming revenues grew in a state that had declined steadily for several years.

• Indiana grew 2.4 percent, the best showing since October 2009, and that despite Rivers taking away some northwest Indiana customers and Caesars’ Horseshoe Southern Indiana losing Kentucky patrons to a bridge closing.

• Iowa jumped 16.05 percent, the best showing since May 2008. Much of that came because of the addition of the new Grand Falls Casino, but even without it, revenues leapt 11.49 percent.

And so recovery went throughout the country. Even the Las Vegas locals market gained 7.25 percent in November, the latest month reported as of this writing.

Obviously, the calendar helped in December with one more weekend date. And weather throughout the nation was better than the previous year.

But it is just as obvious that gaming is genuinely recovering.

Economists and pundits are divided about how well the national economic recovery will continue in 2012, but let’s assume it does continue. Who then benefits?

The answer is just about everybody. And that is especially true as we head into a big gaming expansion year with casinos opening in Kansas, Louisiana, Maryland, Ohio and Atlantic City.

If business grows as we expect, stock prices should follow, because gaming stocks were beaten down during the recession and never fully recovered.

And while the case can be made that some of the good news is in the stock prices, human nature is such that when the profits begin to flow, many investors will jump in.

In other words, now might be a good time to assess opportunities.

Gaming expansion is an obvious benefit to suppliers such as IGT, Bally, WMS, Aristocrat, Shuffle Master, Multimedia Games and others.

Brian McGill of Janney Capital calculates that expansions will add 25,224 new slot sales this year, plus leases of 4,750 at Maryland Live! when it opens. Replacement sales should grow 10 percent over last year to 55,000, he thinks.

Expansion adds only 4,950 games next year, McGill says.

But that is the lowest probable figure. In fact, we can expect Ohio and Illinois VLTs to begin coming online through 2013 and beyond. And then Massachusetts kicks in, and maybe New York and Kentucky.

Slot machine companies also are poised to enjoy two other benefits—their share of the rise in casino revenues, and the growing market for replacement games that both an improved economy and aging slot floors will spur.

Obviously, higher gaming revenue means increased revenues from games placed on participation leases, or what the slot companies call gaming operations.

 Gaming ops has been of increasing value to the major slot companies for a number of years, and remains an especially big part of IGT’s business.

And gaming expansion will grow the recurring revenue base, whether of machines on participation leases, or monthly rentals of card shufflers and table games by Shuffle Master.

Greater prosperity, growing competition and improving technology in the face of aging slot floors will drive sales of replacement machines, which actually have been growing modestly over the past two years.

McGill estimates 55,000 replacement sales this year, up 10 percent from 2011.

All of that expansion is more of a mixed bag for casino operators as new properties cannibalize existing ones.

How much cannibalization affects any one company or property is always subject to speculation until a new casino has been open a while.

In the case of Rivers Casino in Des Plaines, Illinois, for example, revenues at surrounding casinos sank significantly after its summer opening. But by December, most properties were growing again.

In the Middle Atlantic, much of the damage has been done to Atlantic City, and new casinos, such as Genting’s Resorts World at Aqueduct, are likely to cannibalize each other more than Atlantic City.

Still, a continuing recovery in gaming revenues will mitigate much of the cannibalizing effect.

And a new casino offsets the loss of new competition.

Penn National, for example, would probably gladly trade the gains it will get from opening two casinos in Ohio for the losses it will suffer in Baton Rouge as Pinnacle opens its new casino to complete with Penn’s Hollywood.

In addition, casino operators have long talked about how they had cut expenses during the recession so that added revenues would fall disproportionately to the bottom line.

We saw some of that effect in third quarter earnings. There’s no reason to believe we shouldn’t see it throughout 2012 if the revenue recovery continues.

By Frank Fahrenkopf   Fri, Jan 27, 2012

The U.S. Department of Justice recently issued a highly anticipated opinion regarding the scope of the Federal Wire Act and how it pertains to online gambling. While undoubtedly an important and significant step, the reality is the DOJ’s opinion creates more questions than it does answers. In doing so, the opinion further illustrates the urgent need for federal legislation to prevent a patchwork quilt of rules and regulations governing domestic online gambling, and the continued proliferation of unlicensed and unregulated foreign gambling websites targeting the millions of Americans playing online poker.

Last May, the American Gaming Association called on Congress to enact federal legislation that would allow states to license and regulate online poker so Americans who play can do so safely using responsible, law-abiding operators. We believe passing federal guidelines would keep minors from gaming online, prevent fraud and money laundering, address problem gambling and ensure players aren’t being cheated. And with this new opinion from DOJ, it is now more important than ever for Congress to act to protect American online poker players.

The DOJ decision makes it clear that the Federal Wire Act only prohibits the transmission of communications relative to bets or wagers on sporting events or contests. It also clarifies that intrastate lottery tickets sold online are legal, so long as the lottery games do not involve sports wagering, even if the transmission crosses state lines.

While it is clear how the decision affects these facets of online gambling, it is remarkably unclear how it affects many others. For example, it does not specify if lotteries and states can authorize intrastate online poker, slots and other casino games. At first glance, it appears that a specific state law would have to be passed in order to authorize such play, especially since all states have broad bans on gaming except where there is a specific authorization.

The DOJ also does not address whether different states that have legalized online gambling activity can link their lottery and/or other state-approved online gambling in an effort to increase liquidity. The constitution makes it legal for states to negotiate interstate compacts, though Congress does have the power to disapprove and overturn them. In 1994, Congress adopted amendments to the federal anti-lottery statute that expressly authorize the Powerball lottery interstate compacts, making it legal for interstate play. But it remains to be seen whether this type of “pooling” would be allowable for various types of online gambling.

There are several other questions related to how different sectors of the gaming industry could be affected in light of the DOJ’s decision. For instance, the DOJ has long asserted that the interstate Horse Racing Act, which regulates off-track betting, does not exempt the horse racing industry from the Federal Wire Act, yet the recent decision does not address how the opinion affects that sector.

Additionally, the Indian Gaming Regulatory Act, which established the jurisdictional framework that governs tribal casinos, is not at all addressed in the decision. In fact, it’s unclear if IGRA even applies here, or if existing tribal-state compacts must be renegotiated in order for tribes to offer online gambling.

How to deal with offshore operators also is unclear. It is clear that the Unlawful Internet Gambling Enforcement Act would still apply if offshore operators attempted to provide online sports betting or if the operator was not licensed in the state. However, if state authorities are silent and an offshore company obtains a license, then UIGEA likely would not apply.

The DOJ also has not clarified what effect, if any, its decision will have on individuals who have been previously convicted under the Federal Wire Act. Will there be any recourse for those who have served time or paid civil penalties?

Finally, it is important to remember what the DOJ decision really is. It is an opinion of the current Justice Department, not the law of the land as determined by a Supreme Court—or any other court—decision. The opinion is counter to that of the prior four administrations that considered this matter, and when President Obama ultimately leaves office, the DOJ that serves under the next president could reverse this opinion.

Near the end of last year, I had the opportunity to testify on behalf of the commercial gaming industry before the U. S. House Committee on Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade. I told Congress that without a federal framework for online gambling, there will be a patchwork quilt of rules and regulations that, while aimed at protecting consumers, could have the opposite effect by confusing customers and making it difficult for law enforcement to manage. I believe this still, and the DOJ’s opinion and its implications reinforce my concerns.

The current environment puts American online players at risk by forcing them to play in an unregulated market. The current conditions also put children at risk.

Consumers could be protected from this risk if Congress enacts federal legislation to modernize and strengthen the Federal Wire Act with conforming amendments to the UIGEA to unambiguously eliminate illegal internet gambling. Such legislation should allow states that want to license and regulate online poker to do so, following federal guidelines. It should also create a level playing field so all segments of the gaming industry have a fair opportunity to participate.

Federal legislation that protects states’ rights can establish uniform safeguards to protect U.S. consumers, keep children from gaming on the internet, and provide the tools law enforcement needs to shut down illegal internet gaming operators. It would also prevent fraud and money laundering, and address issues of problem gambling.

Simply put, federal legislation regulating online gambling is necessary to safeguard Americans. The DOJ opinion starts the conversation. Now, we need to finish it.

By GGB Staff   Fri, Jan 27, 2012

Florida’s controversial gaming bill, sponsored by Fort Lauderdale Senator Ellyn Bogdanoff, vaulted its first legal hurdle last month, passing the Senate Regulated Industries Committee by a 7-3 vote. But it didn’t pass without a lot of tinkering.

The so-called “destination resort” legislation would allow up to three $2 billion casinos in Miami-Dade and Broward counties, create a state gaming commission, require voter approval in each county where a resort is planned, prohibit any new parimutuel permits and regulate so-called internet cafés. About 1,000 of the cafés, which claim to operate as sweepstakes, not gambling, have cropped up in shopping centers around the state; critics say they prey on the poor and increase crime.

An amendment to the casino bill, tacked on over Bogdanoff’s objections by Senators Charlie Dean and Maria Sachs, would give South Florida parimutuels the same casino games and tax rate as the larger gaming halls (10 percent).

According to the Miami Herald, that amendment could prove fatal to the proposed legislation, especially in the House, where support for expanded gaming is minimal. The bill’s co-sponsor, Rep. Erik Fresen, said the plan was designed to limit gaming to destination resorts, and eliminate lesser forms of gambling like dog and horse tracks and even the state lottery.

In a prior version of the bill, parimutuels would have had to pay $125 million for an expanded gaming license, the same fee proposed for destination resorts. They would also have had to pay an 18 percent tax on slot machines, instead of the 35 percent they currently pay.

The changes—18 amendments in all—weren’t enough for one of the bill’s chief naysayers, Senator John Thrasher of St. Augustine. “I’m not sure that the amendments in the strike all have made it better,” Thrasher griped. “Frankly, I think they have made it worse.”

Bogdanoff said the vote is just “the beginning of the discussion.”

By GGB Staff   Fri, Jan 27, 2012

Genting America, the Malaysia-based gaming company behind the hugely successful racino at Aqueduct (above), is now pitching a $4 billion convention center at the Queens complex.

The company wants to build a 3.8 million-square-foot facility with up to 3,000 hotel rooms in South Ozone Park, making it the largest convention center in the U.S. It would be known as the New York International Convention and Exhibition Center, or NICE.

New York Governor Andrew Cuomo announced his support for the project in his recent State of the State speech. He said the Jacob K. Javits Center on Manhattan’s West Side is too small and no longer competitive with convention centers elsewhere in the country. In the speech, Cuomo also announced support for an expanded casino industry in the state, with neither the number nor locations of the casinos specified.

In a letter to Assembly Leader Sheldon Silver and Senate Majority Leader Dean Skelos, Cuomo called it a “low-risk, high-reward business opportunity for the state.”

“The economic impact of the project would be enormous,” Cuomo wrote, “estimated to create thousands of construction and private-sector jobs. The state investment would be minimal with potentially the greatest number of jobs produced in the state in many, many years.”

But some worry the plan would deep-six plans for a Shinnecock Indian casino at nearby Belmont Park, and even force hockey’s New York Islanders to relocate to Quebec. The hockey team had considered building a new arena at Belmont if the Long Island tribe chose the site for its planned gaming hall.

Christian Goode, chief financial officer for Genting in the U.S., acknowledged that the company “would like no new competition in our immediate area. If somebody could come in and erode that market share, it would be problematic in generating an investment, given the capital intensiveness of building a convention center.”

Goode acknowledged that the firm is considering the plan and called it “conceptual.”

As for the timeline, the company says the first 2.6 million-square-foot phase could be completed by 2014 at the earliest, with construction of hotel rooms slated to begin in November 2015.

By GGB Staff   Fri, Jan 27, 2012

The new legislative session in Kentucky began last month with one overriding question hovering over the world of gaming: Which road to expanded gaming is most likely to succeed?

Some state lawmakers are confident that the legislative road, torpedoed repeatedly over the first term of Governor Steve Beshear, can succeed now, since Beshear trounced the main opponent to expanded gaming, state Senate President David Williams, in November’s gubernatorial election.

State Rep. Dennis Keene, saying he is confident that the legislature can pass expanded gaming this year, pre-filed a bill for the new session that would allow free-standing casinos and either slots or full-blown casino gaming at the state’s racetracks.

A recent statewide survey, meanwhile, shows that an overwhelming majority of Kentuckians want the chance to vote on whether or not to amend the constitution to allow casino gambling—the method that has been favored by Beshear. The survey, conducted by Washington, D.C.-based national public opinion research firm Garin-Hart-Yang Research Group, shows that 87 percent of respondents favor legislation that would create a statewide referendum on whether to amend the state constitution to allow casino gambling. The same survey shows that 64 percent of Kentuckians would vote in favor of a constitutional amendment legalizing casino gaming.

Beshear quickly cited the poll to support his position. “Once again, a new poll shows Kentuckians demand an opportunity to vote on expanded gaming,” he said in a statement. “The call for a direct vote by the people of this state has only gotten stronger over the last few years.

A recent report in the Louisville Courier-Journal suggests that Beshear’s plan for the constitutional amendment could propose as many as nine casinos.

By GGB Staff   Fri, Jan 27, 2012

Although it would be a “last resort,” Duluth, Minnesota Mayor Don Ness recently said he would shut down the Fond-du-Luth Casino if the city and the Fond du Lac Band of Lake Superior Chippewa are unable to negotiate a new profit-sharing agreement. “Our goal is to come to an agreement, and we will allow adequate time,” Ness said. However, he added, “We need to get this done in a timely way.”

Ness said at a news conference the city’s 1986 contract with the band gives it the authority to prohibit all gambling at the casino if the profit-sharing agreement becomes invalid. In response, Fond du Lac Chairwoman Karen Diver said, “The band believes the mayor is reaching in his legal opinion.” She said Ness was “saber-rattling” and “trying to influence public opinion in a negative way toward the band. He’s promoting hatred, and it’s irresponsible.”

The 1986 agreement guaranteed that the tribe could exclusively operate a casino in the city, and the city would receive 19 percent of video gaming proceeds, or about $6 million annually. In 2009, the tribe stopped sharing profits with the city. Last year, the chairwoman of the National Indian Gaming Commission determined the tribe’s agreement with Duluth was improper and ordered it to stop making payments.

In November, U.S. District Court Judge Susan Nelson ruled that the tribe did not have to make further payments to the city as of April 2011, although the same court said the tribe had to pay the city $12 million-$14 million in back payments withheld from 2009 to March 2011. The city and the tribe both have appealed the decision.

Diver said another court would need to overrule Nelson for the city to stop gambling at the casino.

Ness said the agreement between the city and the tribe had served both parties well for more than 20 years. However, he said Duluth would consider finding another casino partner if the Fond du Lac Band will no longer share any of its profits with the city.

By GGB Staff   Fri, Jan 27, 2012

For supporters of Indian gaming and Indian sovereignty, the year 2011 was unfortunate in terms of court decisions as well as inaction by the Congress on issues important to tribes.

Indian tribes did not do well either in the arena of federal courts or in the halls of Congress in 2011.

Early in the year, a Michigan resident won status to sue the Department of the Interior to try to stop it from putting land into trust for the Gun Lake Tribe of Michigan. The suit also challenges a long-held principle, the Quiet Title Act, which says that once the federal government has put land into trust, it cannot be challenged in court.

Congress failed to address what many Indians feel is their No. 1 issue, a “fix” to undo the legal precedent created by the U.S. Supreme Court’s Carcieri v. Salazar ruling, which says that tribes recognized after 1934 may not put land into trust. Opponents of Indian gaming wasted no time in suing under the Carcieri decision to challenge the federal government’s decision to put 152 acres into creating an initial reservation for the Cowlitz tribe of Washington state.

On the positive side, the Bureau of Indian Affairs announced that it was reversing a Bush-era policy that in most cases prevented tribes from putting land into trust if it was more than “commuting” distance from the original reservation.

In reaction to that, however, and as a way of preventing any action toward a Carcieri fix, U.S. Senators Dianne Feinstein and John McCain sponsored bills to make it extremely difficult to take off-reservation land into trust.

In October, the Supreme Court upheld an earlier decision that prevents the Oneida Indian Nation from claiming or being paid for over 260,000 acres taken by the state of New York, even though the court recognized that the taking was illegal.

By GGB Staff   Fri, Jan 27, 2012

The Navajo Nation Gaming Enterprise’s $60 million Northern Edge Navajo Casino opened in January near Farmington, New Mexico. It’s the third casino of the NNGE. The fourth, Twin Arrows Navajo Casino and Resort, is scheduled to open in the spring of 2013 on the Navajo Nation Reservation outside Flagstaff, Arizona.

The 86,000-square-foot Northern Edge offers 750 slot machines, six poker tables, 10 live table games, a full-service restaurant, food court, gift shop and players club. Designed by the Friedmutter Group of Las Vegas and built by a Navajo-owned joint venture Arviso/Okland JV, the casino will showcase Navajo culture, featuring commissioned artwork by Navajo artists including rugs, baskets, wood carvings and pottery. 

Bob Winter, chief executive officer of the NNGE, said, “The opening of Northern Edge represents a significant turning point for the economic health and prosperity of the Navajo Nation.”

Added Quincy Natay, NNGE board chairman, “We look forward to welcoming everyone from the region to enjoy genuine Navajo artwork and the best gaming facility anywhere in the Four Corners. Northern Edge will be an economic boost to the Navajo Nation and surrounding communities.”

Officials at the Southern Ute Indian Tribe’s Sky Ute Casino Resort said they’re not worried about competition from the Northern Edge Casino. “We know that competition breeds excellence, and Sky Ute Casino Resort is definitely up for the challenge,” said Ben Fernandez, executive director of marketing for Sky Ute.

By GGB Staff   Fri, Jan 27, 2012

The beginning of what could become a lengthy legal struggle was launched last month when Wynn Resorts former Vice Chairman Kazuo Okada filed suit in Clark County, Nevada court, charging that some key financial records of the company have been kept from him. Okada charged specifically that data concerning a $135 million contribution from Wynn Resorts to the University of Macau has not been produced.

Okada indirectly owns almost 20 percent of the company and is the largest shareholder, owning twice as many shares as Chairman Steve Wynn. He invested $260 million when the company was formed in 2000 and another $120 million in 2002 when the company’s Macau venture was launched. Following his 2009 divorce, Wynn owns less than 10 percent of the company.

According to the lawsuit, Okada objects to the University of Macau donation, which will be paid $25 million upfront and $10 million for the next 10 years. He claims documents related to the donation have not been shown to him, despite numerous requests.

Okada, meanwhile, has been busy in the gaming industry on his own. He is the owner of Universal Entertainment, which controls the U.S.-based Aruze Gaming and is developing an integrated resort in Manila at PAGCOR’s Entertainment City. Okada’s removal from the board was directly related to this project, which Wynn considers competitive, although Okada claims that he and Wynn visited Manila in 2010 to consider a project together. When Wynn declined to participate, Okada went ahead alone.

Okada was removed as vice chairman of the board at the October board meeting (although the company has yet to report that fact to the Securities and Exchange Commission), citing irregularities in the acquisition of the Manila gaming license and the need to insulate Wynn Resorts from any alleged wrongdoing. Okada denied any issues in Manila, or in Japan, where Universal is one of the largest manufacturers of pachinko machines in the country.

Okada’s lawsuit, Global Gaming Business sources say, is in retaliation for that action. In addition, the lawsuit claims that following the Wynn divorce, a shareholder amendment was put it place that “purports to impose restrictions on the shares of Wynn Resorts owned by Aruze USA (a subsidiary of Universal) and Ms. Wynn and confirm the ability of Mr. Wynn to exercise certain rights in respect of such shares.”

In a press release, the company says it will vigorously defend itself.

“This action is an attempt by Mr. Okada, who was removed as vice chairman of the company in October of 2011, to deflect attention from a dispute between Mr. Okada and the board of directors of Wynn Resorts related to Mr. Okada’s decision to directly compete with the company by pursuing a project in the Philippines despite repeated admonishments from the board,” the release said. “The dispute also involves Mr. Okada’s misuse of his director position to imply the company’s participation in projects that the company had made firm decisions to avoid.”

Universal responded in kind.

“Steve Wynn and the Wynn Resorts board of directors continue to prefer secrecy over transparency,” the company said in its release. “Despite the court petition and repeated requests by Mr. Okada to inspect the company’s books and records, the Steve Wynn-controlled board still refuses to comply,” Okada’s company said in a statement.

By GGB Staff   Fri, Jan 27, 2012

The explosive growth in Macau gaming revenues continued in December, bringing in 23.6 billion patacas ($3 billion), a 25 percent increase over December 2010. For the year, the SAR’s gaming industry posted revenues of 268 billion patacas ($33.5 billion), an increase of 42 percent over 2010 figures.

The December figures concerned analysts, however. The increase of 25 percent was much lower than previous months, which had averaged 35 percent to 48 percent throughout the year. Analysts differed on what that means. While no analyst predicted an end to growth, they did differ on the extent.

“The main concern would be whether the high-roller customers will get credit lines,” said Philip Tulk, an analyst at Royal Bank of Scotland, who reflected concern about a slumping Chinese economy. He predicted only a 20 percent growth rate in 2012.

Teng Yee, an analyst with CIMB in Hong Kong, said the Chinese economy is a concern because it would impact the all-important VIP segment. His growth estimate is only between 15 percent and 20 percent.

Carret & Co., Deutsche Bank and Credit Suisse have all pegged growth between 19 percent and 20 percent.

Credit Suisse analysts Gabriel Chan and Isis Wong say the opening of Sands China’s Cotai Central starting in February should increase visitation a bit.

“We may see meaningful earnings upgrades post 4Q11 results and better-than-expected GGR growth after Sands China’s Cotai Central opening,” they wrote in a note to investors.

Wells Fargo Securities analysts Cameron McKnight and Barry Jonas were the bears of the group, estimating only a 6 percent to 11 percent growth rate for 2012.

Union Gaming Group’s Grant Govertson is much more bullish.

“We continue to believe the VIP segment should remain strong through at least the early part of 2012,” he advised investors, “as our channel checks suggest VIP demand is growing, not shrinking (despite macro China fears) with junkets asking for additional tables at many/most properties. Further, new supply in the form of Sands China’s Cotai Central should be a driver of demand, much as other new properties have driven demand previously (most recently Galaxy Macau).”

By GGB Staff   Fri, Jan 27, 2012

A small sampling of Bermudans polled indicates the local attitude may have become favorable to introducing casinos.

MP Charles Swan, who serves the Southampton West Central constituency, told the Bermuda Sun that early results show 71 percent are in favor of legislation that would allow gaming. That compares to only 13 percent opposed, with 16 percent still undecided.

The preliminary results are based on interviews with 40 people, only 3.5 percent of constituents. However, they are seen to be similar of those garnered in a poll by MP Kim Swan, conducted in his St. George’s West constituency.

Swan began polling in early December and has reached 7 percent of his constituents. So far, 63 percent are in favor of legalizing gaming, 22 percent are opposed and 15 percent undecided.

“There definitely seems to be something of a trend,” says Kim Swan. “Charlie’s constituency is very different from mine, but there definitely seems to be a shift in opinion.”

Separately, a poll of 400 Bermudans conducted by MindMaps for the Royal Gazette newspaper found that 60 percent of those asked think that gaming should be legalized.

Of those aged 65 and over, only 44 percent were in favor of legalization. But the 45-54 demographic showed 77 percent answered “yes” to the question: “Should gambling be legalized in Bermuda?”

Thirty percent of respondents were opposed to gaming and 9 percent did not know or refused to answer.

On the subject of cruise ships being allowed to operate their casinos while docked at Bermuda, Charles Swan is undecided. However, he said if they are allowed to open their casinos after a certain hour, they could be asked to share revenue with their host.

“I believe that a multi-party approach needs to be used to explore the entire issue from research to implementation, including the private sector. An independent exploratory committee should be considered,” he said.

By GGB Staff   Fri, Jan 27, 2012

The five-year review required for license renewal of the Star casino in Sydney, Australia concluded favorably despite some concerns about the top clientele.

According to Australia’s ABC News, Gail Furness, who performed the review for the state Casino, Liquor and Gaming Control Authority, wrote in her report, “I have concluded that the Star remains suitable to hold the casino license and that it is in the public interest that the casino license should continue in force.”

Furness does note, however, that the Asian Crime Squad says many of the individuals it targets are also among the Star’s top 100 players.

Moreover, the squad continues to receive information that money laundering, loan sharking and recruitment by criminal gangs occur at the casino.

“It is important that systems are in place to detect transactions which may be suspicious of money laundering taking place,” her report says.

Furness also recommends the creation of an offense of loan sharking. However, she says she saw no evidence of systemic corruption involving the casino operator, and that suitable policies and procedures are in place to guarantee the Star stays free of criminal influence.

By GGB Staff   Fri, Jan 27, 2012

The Chilean gaming commission is estimating that the 15 casinos currently operating under its authority will show gross revenue of $515 million and a total of 6.4 million visits for 2011.

Comparisons with 2010 are difficult due to the disruption caused by the earthquake in February of that year. Nevertheless, the numbers indicate an increase in revenue of 60 percent in 2011.

“Casino revenue grew for two reasons,” Gaming Commissioner Francisco Javier Leiva told Spanish-language news source Soloazar. “The number of persons playing increased and so did the average spend per person. For this reason, 2011 was a period of consolidation for the industry.”

Rodrigo Guiñez, general director of the Chilean Casino Association, said, “The positive aspect of 2011 is really the increase in the average revenue and the number of visits. But we have to understand that during 2010, the earthquake caused casinos to close for up to three or four months.”

In fact, eight of the 15 casinos then in operation were forced to close for some period of time.

For 2012, it is estimated that growth will be about 5 percent. That translates to gross revenue of $540 million and total visits of 6.6 million.

By mid-February, the opening of Casino Dreams Coyhaique is expected. Enjoy Casino Castro would be next, with an anticipated opening in early May.

The last of the 18 casinos, Casino Ovalle, has not reported progress to the gaming commission and is not expected to open this year, which means it could risk the loss of its license.

By GGB Staff   Fri, Jan 27, 2012

South Africa-based Sun International is said to be preparing to invest $800 million in a resort project in Sri Lanka.

Reuters reports that the head of Sri Lanka’s state-run tourism board, Nalaka Godahewa, said Sun City, which is owned by Sun International, will make the investment in a 200-acre private property.

“That decision is finalized,” said Godahewa. “That is one of the biggest investments.”

The location of the project is Katana, a coastal town 15 kilometers north of Colombo that the government hopes will receive a total of $1.5 billion in resort development, including retail shopping and a convention center. There was no mention of casino gaming.

Reuters said Sun City had declined to comment on the project before the end of 2011. As of this writing, no word was available from either Sun City or Sun International.

By GGB Staff   Fri, Jan 27, 2012

The government of Cyprus is studying potential locations for a casino should it decide to proceed with a decision taken last October.

The Cyprus Mail reported in October that legislation was to be written that would allow the first casino to be established on the southern half of Cyprus.

Casinos have flourished for years on the Turkish-controlled northern half of the Mediterranean island.

Finance Minister Kikis Kazamias said in October, “Many among us would probably never enter such establishments during our lifetime, but this does not mean that we should not respond to the needs of the age, taking into consideration the public interest.”

In the closing days of 2011, Communications Minister Efthymios Flourentzos said the government would be exploring all possible locations for a casino. Initially, proponents had singled out the old Larnaca airport terminal as the best spot.

Flourentzos said a decision is not expected soon, as a study exploring the options is still under way. He said when decisions have been taken and the study completed, the procedure will advance.

The Cyprus Mail also reported in late 2011 that Sheldon Adelson, the chairman of Las Vegas Sands, had visited the presidential palace to discuss an integrated resort plan with President Demetris Christofias and Kazamias.

After the meeting, the newspaper quoted Kazamias as saying that the project concerned “a big building complex” and could be a “much bigger investment than the Qatar-Cyprus hotel complex in Nicosia.”

By GGB Staff   Fri, Jan 27, 2012

A takeover offer for Slovenia’s Casino Portoroz dating from November is still in the works. Meanwhile, a new offer from Casino Bled is said to have been made.

The original offer, from Casino Riviera, Eurotas and the municipality of Piran in which Portoroz is situated, has the investors picking up almost a 52 percent stake in the financially troubled casino for €250,000.

In October, the partially state-owned funds Kad and Sod and insurance provider Modra Zavarovalnica called for bids on the Casino Portoroz stake. The funds also announced a tender for the purchase of 46.5 percent of shares of Casino Bled. The original deadline for submissions was November.

Now, state-run news agency STA is reporting that Casino Bled has emerged as a second bidder for the Casino Portoroz stake. How that will square with the deadline for bids having passed in November remains to be seen.

The original bid from Kad, Sod and Modra Zavarovalnica has an expiration date of February 21.

As an example of the Portoroz financial situation, a labor action that had been planned for the day before New Year’s Eve was postponed after management paid 60 percent of employees’ November salaries.

By GGB Staff   Fri, Jan 27, 2012

For the first time in over a decade, Poland is seeing a decline in official figures for gaming revenue.

Polish business source Puls Biznesu recently said that 2011 tax receipts from gaming were off PLN100 million from the previous year, coming in at PLN1.48 billion—about $422 million.

The decline reflects the reported 11.3 percent drop in the amount Poles spent on all gaming and wagering in 2011. The total was put at PLN14.3 billion.

State lottery operator Totalizator Sportowy said sales of its products should remain steady this year. But in the slot machine sector, the decline is expected to continue due to the expiration of machine licenses.

In late 2009, legislation was passed that called for the gradual elimination of the non-casino slot market. As machine licenses expire, the government is not allowing their renewal. It is expected that all non-casino slots will disappear by 2016.

The future for casino development is slightly more positive but still restricted. The law stipulates that there can be only one casino per 650,000 inhabitants of a given region. A maximum of 70 slot machines per casino is allowed in addition to table games such as roulette, blackjack and poker.

By GGB Staff   Fri, Jan 27, 2012

In Belgium, population 10.8 million, there are currently 15,888 people who have requested a ban from casinos. The ranks of those no longer allowed to gamble could grow soon due to a potential new twist on the law.

The Standaard recently reported that, within the next several weeks, the Belgian gaming commission will attempt to automatically exclude anyone with too high a debt load from all casinos, slot arcades and legal gaming websites in Belgium.

National regulations for any gambling ban include all gaming venues, not just casinos.

The new move is just the latest tweak to the system. Last fall, the commission began to allow those dependent on a suspected compulsive gambler to request exclusion of a family member.

“Not your mother-in-law and not as harassment,” said Etienne Marique, chairman of the gaming commission. “It has to be someone who depends on you financially and there has to be a demonstrable problem. For example, we had a child here with a pile of bank account statements that we compared to casino visits, whereby we saw that Dad had a problem and would be better off not going to the casino.”

Those lacking such a thorough paper trail may also request the ban of a family member. In that case, the person in question must appear for a consultation and basically prove they are meeting their financial obligations.

Those banned in this way cannot request a lifting of the ruling for at least one year. Even then, they must demonstrate that they now have enough money to play with and are more in control.

By Roger Gros   Fri, Jan 27, 2012

When I was a child growing up in Brooklyn, my parents would take my brother and me to Manhattan to see the first run of films at Radio City Music Hall as a special treat. Yes, that theater, famous for the Rockettes and many notable concerts, was also a grand movie hall in the middle of the last century. Even outside of New York City, most towns had a large movie theater where customers enjoyed the cinema. They usually were large, very ornate and ultra-exclusive. No more.

And remember LPs? I have about 1,000 records from the 1960s and ’70s in boxes in a closet in my house. During those years, an LP was a true work of art. Scattered among those LPs are a few boxes with eight-track and cassette tapes.

What’s the point of this trip down memory lane? As quaint as we now view those movie theaters or LPs, they are things of the past, never to be duplicated. So my question this month is, could this happen to the casino as we know it today?

The big movie companies failed to respond, first to television, which kept people home as the visual medium entered the domicile, and second to VCRs, videotapes and now Blue Ray discs. It’s a very rare movie today that makes money on its theatrical release. Most depend upon the DVD sales, cable TV presentations or online downloads for profits.

And the music industry kept its head in the sand for years until the sales of CDs had virtually disappeared. The free download model pioneered by Napster didn’t disappear when that groundbreaking company did. Apple’s iTunes actually saved a small bit of revenue for the companies, but the time of platinum-selling albums or CDs is long gone.

So now that online gaming is going to become the law of the land worldwide within the next few years, what will the casino of the future look like? That is very hard to tell right now, because we don’t know the proclivity of people to gamble at a site that can be trusted. Even in Europe, where online gambling has been legal for nearly a decade, rules and regulations vary from one jurisdiction to another. The collapse of Full Tilt Poker because of last year’s indictment in the U.S. has burned as many European online gamblers as it has their U.S. counterparts. Only now is the European Union trying to consolidate regulations across the continent.

So, the jury is still out on how the online casino will impact the land-based casino. But if you can gamble anywhere, whether it be on your home or office computer or your mobile phone, what need is there, really, for a full-fledged casino?

Certainly, you lack the social interaction that is so enjoyable at a real casino. Those table games just aren’t the same without the guy at third base hitting a stiff or that moron at the other end of the crap table betting the don’t. But if you’re planning to head out to your local casino and it starts to rain or snow, why hassle? Just sit down on the computer to get your daily gambling fix.

Now that will be great if your local casino has a successful online casino. They’ll stay in touch with you and won’t lose your patronage if you decide to stay home and play. But what happens if the state legalizes online gaming for its lottery rather than its casinos? That changes the dynamics in a major way.

And what about the mega-casino or integrated resort? What impact will this dynamic have on them? Las Vegas, Atlantic City, Singapore, Macau? Will the “mass market” that ensures the success of each of these regions stay home or continue to show up?

For years, we’ve referred to our business as “casino entertainment,” and now the ball is in our court to bring that label to life. A casino resort has to be more than just gambling. You can stay home to fix yourself a nice meal, but nothing compares to going to that great restaurant and getting served. You can shop online, but you can’t hold the item in your hand or try it on. And you can watch a performance of an artist, but you can’t experience the thrill of that personal bonding.

Yes, the casino industry is changing, and we can’t make the mistake that the movie and music industries made. We have to embrace the changes and plan for future success.