By Frank Legato   Thu, Apr 09, 2009

You may not encounter a sea of machines on a casino floor formed by hundreds of games produced by Bulgarian slot manufacturer Casino Technology. (Yet.) However, it is a good bet that you will remember the ones you do find.

That’s a fact being proven by more and more players of late—not to mention slot managers—as the Sofia-based manufacturer, founded in 1999, spreads its wings across the European continent.

At a time when some slot manufacturers are hunkering down to maintain their current business, Casino Technology is establishing itself in a number of new markets. Amid news stories of manufacturer layoffs, Casino Technology has increased its workforce by around 20 percent over the past two years.

“This year we are reaching a major milestone in our company history—our 10th year anniversary,” says Milo Borissov, founder and president of Casino Technology. “The company is now well established, at a stage where we’ve proven ourselves in major markets, we have enough resources, and in 2009, we can focus on making the processes in the company more efficient. That’s not to say we’re inefficient at the moment, but you can always improve.”

One of those efficiencies, says Borissov, is to augment the company’s current group of game designers and software engineers—a central focus of the recent workforce expansion—with third-party developers.

“We’ve put a lot of effort into employing the right people, in creating the right team to create the right product,” Borissov says. “We also realize we can achieve better efficiency having simultaneous projects in place using third-party professionals.

“We believe this will help us deliver faster, enrich the library of games and make the products of Casino Technology more versatile.”

Growing Library

The company’s library of games, in fact, has been steadily growing—along with some significant hardware improvements.

New titles are consistently added to the company’s popular Gemini series of video slots. Games like “Golden Bird,” “Kilimanjaro Treasure” and “Aztec Gold” have achieved great success in Bulgaria and elsewhere in Eastern Europe, where Casino Technology commands a market share of more than 40 percent.

The company’s “MegaJack” progressive video slot won an award as the most successful video slot in the Balkans at last fall’s Eastern European Gaming Summit—along with a most-innovative product award for “PlayMe,” the multi-station automated roulette game in which player stations are built into a real grand piano.

The company launched two new versions of PlayMe late last year, including “Dueling Pianos,” consisting of two grand pianos connected around an automated roulette wheel, with four player stations on each piano creating an eight-station roulette game; and a new multi-game PlayMe unit that places video slots as player stations in the grand piano.

According to Borissov, the key to the appeal of Casino Technology games can be traced to program math first, but also to how the features are presented. “Math, of course, is most important,” he says, “but that goes hand-in-hand with the media, the graphics and sound, which provide the first impression to the player. Easy-to-understand concepts also are very important. At the end of the day, the games should be straightforward, simple and player-friendly.”

The success of these games has been enhanced by several improvements in how they are presented. Last year, the company enhanced its “Gemini Sensa” upright cabinet, a slim-footprint cabinet designed with player comfort in mind. New features include a third video monitor for video streams or other marketing functions, a simplified button panel, and touch-screen controls—called “Crystal Touch Sensor Buttons”—for which a patent is pending.

“We are very much excited about the new Gemini Sensa product,” Borissov says. “We changed the player interface with big reel symbols, we simplified the screen layouts, and we added many other features to maximize player comfort. The general look, the feel—everything is designed for maximum player satisfaction. We did player surveys in which 99 percent said they were quite happy with the improvements.”

More innovations were launched in January at the International Gaming Expo in London, where the company unveiled “Tangra Touch,” its new slant-top video slot platform.

Employing the new “Tough Rider” motherboard—a powerful CPU that improves all game functions—the new slot platform is designed for operator convenience and player comfort, with a wide-screen main player interface and a second monitor built into the top box. An ergonomic button panel and powerful new sound system complete the new package.

“The advanced solutions in the new cabinet offer a range of new possibilities to clients,” says Borissov, “mainly adding to operator serviceability and player comfort. The design impressed IGE visitors, who gave the slot machine a high appraisal.”

The new brand names are drawn from Bulgarian culture—“Tangra” is a god of Bulgarian legend, signifying strength and power; “Tough Rider” is a storied horseman who, legend has it, joined with Tangra to create the state of Bulgaria more than 13 centuries ago.

Branching Out

Bulgaria, though, is only the starting point for Casino Technology. The company is currently involved in a multi-pronged expansion effort, with the strongest push this year concentrating on central Europe and Latin America, according to Rossi McKee, vice president of the company.

This year, the company is focused on getting its games into casinos in Hungary, the Czech Republic and elsewhere in central Europe, while at the same time testing the waters in South America, the U.S. Native American markets and Asia, where the company has installations in Cambodia and Macau in the southeast and in Kyrgyzstan in central Asia.

“We believe we can have a better position in Asia in the future, of course, including installations in the Philippines, Taiwan and other emerging markets there,” McKee says.

In South America, Casino Technology already is established in Lima, Peru, where the company is represented by TransAtlantic Gaming—a partnership that has led to new sales in Peru, Colombia, Venezuela, Uruguay, Panama and the Caribbean. The Gemini video slots are proving to be successful and popular in Lima.

“We have more games approved according to the new Peruvian regulations, and this year, we expect to expand those installations,” says McKee. “We are going to be looking for business in Argentina and Chile in South America, but our main goal right now is to establish and expand our presence in Peru.”

Although McKee predicts that Casino Technology will be a bit more selective this year in deciding among the growing number of trade shows and exhibitions, the company has been using these venues to introduce its products to a growing customer base. In addition to the Global Gaming Expo in Las Vegas and the IGE in London, the company has had a significant presence at the SAGSE show in Argentina, G2E Asia in Macau and other regional shows.

Perhaps the most important new regional trade event for Casino Technology began last September in the company’s home city of Sofia, Bulgaria, with the inaugural Eastern European Gaming Summit and Balkan Entertainment & Gaming Expo. The event, organized by the Bulgarian Trade Association of the Manufacturers and Operators in the Gaming Industry, drew more than 2,000 visitors from 40 countries to a showcase of products from suppliers based in Bulgaria, Slovenia, Czech Republic, Serbia, Russia and other Eastern European gaming jurisdictions.

Casino Technology sponsored the show, which McKee says was the realization of a longstanding goal of the Bulgarian trade association.

“The association was formed in 1992 and Mr. Borissov was one of its founders,” she says. “For almost 15 years, the association supported the gaming industry in many different ways, but from the very beginning there was an idea that Bulgaria should host a trade exhibition and gaming conference, and as a member we’ve been very supportive of this idea.”

McKee says the right moment came after Bulgaria became a member of the European Union in 2007. “The show has given Bulgaria a much better presence in the industry, not only locally, but in the international gaming community,” she says. “For us, the first year was a success. We made a lot of good contacts, and the conference was well-organized. It was a pleasure to see so many international speakers there.

“It was a very good start for the conference in Sofia, because Bulgarian gaming operators need more international gaming culture. We believe next year will be even better.”

Navigating the Economy

Casino Technology’s strategy for expansion works well within the current international economic slump, mainly because the company can move into new markets at minimal incremental cost, enjoying significant incremental revenue as a result.

Borissov predicts that operators in many markets will cut back in purchases due to the economy, but he says in certain markets the economy actually works to the supplier’s advantage. “The problem has been that the European economy is based on the euro, and international markets including Asia and Latin America are based on the U.S. dollar,” he says. “The market is very volatile, and it’s difficult to predict where the euro will be versus the U.S. dollar.”

Right now, the fact that the dollar is stronger versus the euro is helping the company’s business in markets like Latin America and Asia. “For us, it was not easy to export before, because the euro made our product very expensive in international markets,” Borissov explains. “I believe that now, we have a certain advantage, because our product is less expensive for these customers than before. Customers are paying 20 percent less for our product in Latin America and Asia. This is a very important advantage.”

International expansion also will be helped along through close work with international testing labs, he says. The company has a well-established relationship with Gaming Laboratories International, certifying all of its games initially through the GLI Europe lab. More recently, the company established a relationship with GLI’s main lab in Las Vegas, where Casino Technology games will now be certified for Native American markets beginning with California.

“At G2E, we had a number of meetings with California operators, and all of them had a good impression of our products,” Borissov says. “All of them are good possibilities to install our products, and we expect to have some products in place there by the second quarter.”

The company is well-positioned for future growth as well, with a Silver membership in the Gaming Standards Association and, as of last year, ISO 9001 accreditation, an internationally recognized quality standard.

“Everything else,” says Borissov, “depends on game content. Our library is improving every day, and we are very much focused on game design. Technology is moving very fast, so our main objective is to make sure we implement the latest technologies in our products. Our game design team is focused on a variety of different game design concepts.

“If the game concept is good, and the technology is good, its success on the casino floor is guaranteed.”

By Roger Gros   Thu, Apr 09, 2009

As if we needed more proof of the sliding demand of destination gambling, the latest revenue figures released for Nevada and Atlantic City only confirmed that things are bad. Nevada posted a decline for the 13th straight month, while Atlantic City revenues hit record lows for the month.

Nevada gaming revenue fell again in January, dropping by more than 14 percent compared to January 2008. It is now over a year that gaming revenues have declined in the state.

Strip casino revenue fell by 14.8 percent, Boulder Highway and Downtown revenue by almost 23 percent and gaming revenue as a whole in Clark County almost 21 percent.

With gaming revenue down, the amount of tax revenue collected was also down. Tax revenue collection fell by 42.3 percent compared to last year.

The Las Vegas Convention and Visitors Authority also reported almost 350 event cancellations in recent months, which has cost Las Vegas about $130 million in revenue.

But the news from January was not all bad. Casino revenue in Reno and Sparks grew by almost 1 percent, while Elko County revenue was up almost 10 percent. Carson City grew by 3.3. percent, which Gaming Control Board senior research specialist Frank Streshley told the Las Vegas Sun could be attributed to recent legislative budget meetings in the city.

Half of Chinese New Year and Super Bowl weekend fell in February, which could make up for the dismal January numbers. Streshley told the Las Vegas Review-Journal that the board needed to look at January and February revenues together “to get a better idea of where we stand.”

Casino Connection columnist David G. Schwartz recently outlined comparisons between this recession and past recessions by examining hotel room occupancy statistics, and found that, although this economic slump has negatively impacted Nevada’s economy, it is not quite as severe as past crashes.

In the tough times of the early 1980s, room occupancy hovered around 76 percent, down from 86 percent the previous decade. In 2008, room occupancy was down to just less than 90 percent, which reflects the pre-boom numbers of 2003. Las Vegas has around 70,000 more rooms now than in 1983, Schwartz wrote, and room occupancy is still where it was just a few years ago.

So, though gaming revenue and room occupancy rates are down, it could always be worse.

For Atlantic City, things looked even worse when compared with its closest competitor, Pennsylvania.

As revenues continue to rise at Pennsylvania’s slot parlors, the story in Atlantic City—the East Coast’s original gaming mecca—grows ever bleaker.

Pennsylvania’s six casinos generated $125.9 million in gross revenue in February, up 14 percent over February 2008.

Leading the pack was Mohegan Sun at Pocono Downs, collecting $17.8 million in revenue—a gain of almost 44 percent. Only Harrah’s Chester Casino and Racetrack reported a slight decline. With revenues of $27.9 million, the suburban racino was down almost 2 percent.

In Atlantic City, the win for February 2009 was $310.3 million, or a 19.2 percent decrease from the same month a year ago—setting a new record for decline in the resort’s 30-year gaming history.

The 11 casinos won $214.3 million at the slot machines and another $96 million at table games during the month, with both seeing decreases of about 19 percent. The table game losses are especially troubling, as the dealer-staffed table games are one attraction Atlantic City has that Pennsylvania does not. Pennsylvania casinos offer only electronic table games.

Before February, Atlantic City’s biggest year-over-year drop was in December 2008, when revenue dropped 18.7 percent.

The top three revenue-producers in Atlantic City last month were Borgata with $57.3 million, Bally’s with $38.5 million, and Harrah’s Resort with $37 million. Bally’s Atlantic City saw a 20 percent drop.

New Jersey Casino Control Commissioner Michael Epps blamed the recession for Atlantic City’s historic slump.

“The gaming industry requires disposable income for people to make it happen,” Epps told the Atlantic City Press. “Right now, people are having to make choices between paying the bills and spending money on other things.”

Competition from Pennsylvania is also a critical factor, added commission spokesman Dan Heneghan.

“Clearly, the economy continues to take its toll on the gaming industry here,” Heneghan said. “That and competition right across our border have combined to depress casino revenues for some time now.”

But part of the year-over-year decline can be attributed to the fact that February 2008 had an extra day due to leap year. It also had five Fridays, one of the best days of the week for casinos.

Atlantic City is now in the third year of a revenue downturn.

By Roger Gros   Thu, Apr 09, 2009

Several major Las Vegas gaming companies are facing imminent bankruptcy as money tightens and results fade. At press time, Harrah’s Entertainment, MGM Mirage and Station Casinos were all dealing with the probability they would not be able to meet their debt payments within the next month, with bankruptcy looming for each.

A number of announcements from gaming giant MGM Mirage has many speculating the company is on the brink of filing for Chapter 11 bankruptcy protection.

In late February, the company tapped into its remaining credit on a $4.5 billion line. Last month, the company announced it would delay filing its annual report until it can assess its financial position and liquidity needs, although it noted it is still in compliance with all of its financial covenants.

“To ensure a thorough and up-to-date discussion of its financial position and liquidity needs, MGM Mirage expects to include additional information about its liquidity and financial position in its Form 10-K, including a detailed discussion of the impact of the matters described above,” the company said in an SEC filing.

The moves suggest to observers that the company is doing anything it can to come up with cash. Tapping into the remaining credit suggested the company was readying for a Chapter 11 filing, while the delayed report gives the company more time to come up with money, possibly by selling another property. The filing also said the company is looking at new agreements or waivers with its lenders.

“If MGM Mirage is unable to negotiate such a waiver or amendment, a majority of the lenders under the senior credit facility could accelerate repayment of borrowings... cross defaults could be triggered,” the company’s SEC report stated.

In a response to Bloomberg News in March, the company reiterated that it was continuing to search for answers.

“Talks with our financial partners are ongoing,” MGM Mirage said. “We’re evaluating every possible option and, as we’ve said before, we will explore all serious and credible possibilities.”

MGM has $1.3 billion in bonds coming due in 2009 and an additional $1.2 billion due in 2010. The company also has a $7 billion bank loan due in 2011, along with $532 million in bond maturities. Defaults on any or all of these items would be reflected in a “going concern” notification by the SEC.

“It’s unfortunate that the company has so many near-term maturities at a time when earnings are so weak and the credit markets have seized up,” Peggy Holloway, vice president and senior credit officer at Moody’s, told the Las Vegas Sun.

There is some doubt whether lenders are willing to negotiate with the company right now.

“Many lenders are not being flexible with gaming operators,” Macquarie Securities gaming analyst Joel Simkins told investors.

The biggest drain for the company has been construction of the $11.2 billion project CityCenter, scheduled to open in part later this year. The company has already sold half of its interest in the project along with 10 percent of its stock, to Dubai World, to fund the project.

MGM recently announced that it would scale back the Harmon tower to avoid rising costs and also because the condo component of the tower was not looking like a strong seller in the current market.

Now, there is some speculation that both MGM Mirage and Dubai World might be willing to sell all or part of CityCenter.

“They could sell a hotel tower or a residential hotel tower to a hotelier,” said Deutsche Bank gaming analyst Bill Lerner.

One thing that looks like it is not going to happen is a merger of CityCenter with the neighboring Cosmopolitan. MGM Mirage was unable to reach a deal with Deutsche Bank to finance the remaining $1.2 billion needed to finish CityCenter. The plan was for Deutsche Bank to provide the funding and add Cosmopolitan to CityCenter in exchange for an equity stake.

In March, speculation arose that the company might be shopping around some or all of its properties, including the Bellagio, to raise more money for CityCenter and to repay debts.

But the company’s ace-in-the-hole may be majority owner Kirk Kerkorian. The 91-year-old investor is an acknowledged genius at making money for his companies. Some of the options being considered include selling properties, turning one or more over to bondholders, or making a deal with a third party who would then pay off bondholders.

MGM has been holding out for a good price, however.

“Among the possibilities would be another asset sale but it would have to be at the right price and the right terms,” MGM Mirage said in the statement.

The company sold Treasure Island Casino Resort to Phil Ruffin for $775 million in December, about a 7 multiple.

Station Sanctions

Another Las Vegas casino company had dual problems: fighting off a low-ball acquisition bid and dealing with a possible bankruptcy filing.

In a response to an offer to buy part of the company from Boyd Gaming, Station Casinos rejected the effort in March, saying that it isn’t for sale at this time.

Station had received a bid from Boyd to buy six of the company’s 18 properties—Green Valley Ranch, Aliante Station, Texas Station, the Wild Wild West and the two Fiesta properties in Las Vegas and Henderson—for $950 million. Aliante Station alone, which opened in November, cost more than $600 million.

The company balked at revealing confidential information to a current competitor, and also was concerned with getting regulatory approval for the purchase.

“In light of the foregoing, and for other valid considerations, our board has concluded that it is in the best interests of the company and our stakeholders to proceed with the current restructuring plan,” wrote Frank Fertitta III, chairman, president and chief executive officer, in a letter to Boyd Gaming Chairman Bill Boyd. “Should circumstances change, we will contact you.”

Analysts generally agreed that Station had to reject the offer at this time because of the possible damage to the company should any sale not be consummated.

Boyd Gaming, meanwhile, reiterated its interest in those properties, saying its offer was more accretive to bondholders than any deal that is being offered by Station.

Prior to rejecting the Boyd offer, Station Casinos announced that it had reached a “forbearance” agreement with its bondholders, that gives it another month to negotiate with them on a possible bankruptcy or restructuring. The agreement will expire on April 15.

Station has been struggling with almost $9 billion in debt accumulated during a private equity buyout that included Colony Capital, which owns 75 percent of the company, and the Fertitta family, which owns the remaining 25 percent.

Harrah’s Hassles

Meanwhile, Harrah’s Entertainment announced a plan that would exchange $2.8 billion in bonds for new notes that would mature later and carry a higher interest rate. The plan would give the company more time to craft a plan to manage its mounting debt and the payment structure.  

In December, Harrah’s was successful in refinancing some debt. The deal exchanged shorter-term bonds for longer-term ones that reduced the company’s debt load by about $1 billion. The company has reportedly been negotiating with several other lenders hoping to further reduce debt and stretch out the payment periods.

Harrah’s carries over $30 billion in debt due to an acquisition by private equity firms Apollo Management and Texas Pacific Group. The purchase was finalized just as the economy was slowing.

The federal stimulus bill recently passed by Congress and signed by President Barack Obama allows companies to refinance their debt and delay paying taxes on the forgiven debt, which was previously recorded immediately as income. Harrah’s had lobbied strongly for the bill.

Moody’s bond rating service last month revealed that Harrah’s Entertainment may not have enough cash to cover $700 million in debt payments due over the next two years. While Harrah’s declined to comment on the speculation, Moody’s said Harrah’s may be able to meet only the interest payments, causing the service to downgrade several classes of bonds due to a “high probability of default” because of declining business in the company’s strongholds, Las Vegas and Atlantic City. The downgrade was made prior to the announcement of the restructured debt offering.

Unlike MGM Mirage, Harrah’s has not sold any properties, but has delayed a hotel expansion planned at flagship Caesars Palace and halted construction on the Margaritaville casino in Biloxi, in addition to taking other cost-cutting measures including layoffs.

By Randall A. Fine   Thu, Apr 09, 2009

The good old days of 2007—when all it took was fancy talk and big words to pop a stock price. When PR was more important than ADR. When the number of awards you won and conferences you spoke at was more important than the number of customers you acquired or trips you earned.

It was a different world then—when style mattered more than substance, when the trappings of success—think Bernie Madoff—rather than success itself defined winners and losers.

Those days are over. We have entered the “Age of Optimization.” The same bankers that used to be dazzled by Ph.Ds and other degrees now only care about performance and deliverables. Perhaps it isn’t fair that the pendulum swung so far so quickly, but it is what it is, and it forces us to get back to basics in how we operate our businesses.

There is a corollary to the theory of the Age of Optimization—namely, that execution is the name of the game. Unfortunately for the “big thinkers” out there (and this is a strange thing for a consultant to say), making sure a mediocre idea is executed flawlessly is far more important than doing a poor job on the “next big thing.”

Let’s take an example of this. In 2007, a well-financed startup gaming technology company launched a new, groundbreaking method of pricing gaming action. The company spent an inordinate amount of time pursuing—and receiving—media coverage and speaking opportunities at our industry’s biggest meetings. They even were able to line up one of the industry’s most respected operators to launch their product.

But then everything went wrong. Instead of making business decisions to optimize their chances for executional success, they focused on that which would generate the most publicity. Instead of launching 20 machines at one property, then fine-tuning them, then launching 200, tuning again, and then launching a full complement of 2,000, they launched all 2,000 at once.

With too many machines spread over too many properties, the company was overwhelmed with the feedback that came in. More importantly, the product failed to live up to the expectations set by all that PR, and with only “one chance to make a first impression,” the PR quickly began to look ridiculous, and the company lost credibility—a game-ender for any startup. Over the past year, the company has effectively died.

So, how do we avoid these mistakes, and make sure we move the needle—not just talk about it? Four simple rules guide us:

• First, whatever you do, keep it simple.

Our customers come to our properties to have a good time. Many of our line-level employees simply want to work their shifts and go home. There is nothing wrong with either of these traits, and we aren’t going to change them. In fact, when we try to run complex initiatives, people can get confused; execution can break down. In our view, if you can’t fully explain something in 30 seconds, then it is too complicated. Keep in mind that the marketing initiative or new operations strategy that you have slaved over for hundreds of hours may be the most important thing in your professional life—that will likely not be the case for those expected to execute or utilize it.

• Second, start small.

In this 24/7, hyper-competitive business, where resources are tight and everyone works too much, we sometimes take short-cuts to try to maximize impact quickly or minimize work. Many properties we work with don’t “test and control” in their direct mail because it “adds extra labor,” but without it, we lose the ability to learn when we are making good decisions—and when bad. The example above showed what happens all too often when we skip the “beta test” and go straight for launch—we get overwhelmed with bugs.

• Third, under-promise.

This is a good piece of advice no matter what you do, but it is a particularly good one in the marketing world. Don’t over-promise the potential impact of your programs—and don’t under-state the challenges that come along with any and every change, including yours. When a CEO says, “In two years, this product will replace everything that is out there,” the bar is so high that it becomes impossible to reach, and a launch that in truth might be a success appears to be a failure. Politicians have been doing this for years—dampening expectations.

• Finally, and most importantly, don’t do much. In these challenging economic times, this may sound insane. Shouldn’t we be trying everything possible? No. Because even if you keep everything you do simple; even if you test it (aka, start small); and even if you don’t promise it will be a silver bullet, if you do too many such things, your executive team, staffs and customers will simply be overwhelmed by everything. It is better to do one thing well than 10 halfway. If you have ever driven from Philadelphia to Atlantic City, there are something like 200 billboards along the way. Almost each is different, and at the end of the trip, you don’t remember anything. Imagine if one property chose to make its 20 boards all say the same thing—you might actually get through to the customer.

The good news, in today’s market, is that execution is not a core competence of most companies, so if you heed the advice above, and get focused on moving the needle in a few meaningful ways, you are likely to be able to improve your results as those around you continue to fall.

And to look on the bright side, when things start to improve (and they will), you will have established a compelling platform on which to emerge into a new, more vibrant industry.

Randall A. Fine is the managing director of the Fine Point Group, one of the industry’s leading strategic consulting and management companies, which serves clients that generate more than $5 billion in gross gaming revenue. FPG was recently named the turnaround management company for Detroit’s $320 million Greektown Casino-Hotel, for which Fine was also named CEO, subject to regulatory approval. A former senior executive at both Harrah’s Entertainment and Carl Icahn’s gaming company, Fine holds both his undergraduate and MBA degrees from Harvard University. He can be reached at rfine@thefinepointgroup.com.

By Jonathan Stein & Steve Gallaway   Thu, Apr 09, 2009

The riddle of “debt-asset swaps” is currently befuddling CFOs, public debt analysts, casino buyers and hedge funds.

All look to profit from discounted gaming company debt and the sale of distressed assets. Right now, there is a disconnect between a gaming company and its debt. On the one hand, the gaming company’s debt—whether $5 billion of publicly traded bonds or $50 million in privately held notes—is trading at prices that may be 10 cents to 70 cents on the dollar. On the other hand, the gaming company may be willing to retire that debt at face value, as part of its de-leveraging process.

The theory of a debt-asset swap is to take advantage of that disconnect. If one could purchase the gaming company debt at today’s steeply discounted price, and then present it to the gaming company for retirement at face value, then one should be able to profit greatly.

Taking this concept one step further, the hope would be to “swap” the discounted debt for a casino property owned by the same gaming company. By “swapping” debt purchased for pennies on the dollar, the buyer would hope to buy the casino property for pennies on the dollar.

Or so the theory goes.

In fact, debt-asset swaps often fail in practice. Bondholder lawsuits, debt purchases that do not lead to casino property acquisitions, the ongoing threat of bankruptcy and other pitfalls have often prevented debt-asset swaps from closing. The allure continues, but such logistical problems create a riddle. How do you take advantage of the “spread” between a gaming company’s discounted debt and its face value, to purchase a casino property at a fire-sale price?

It’s becoming clear that the triangular transaction structure described in this article answers this riddle. The triangular transaction structure is practical both for large, public gaming companies and much smaller, privately held companies.

Bartering Debt

Perhaps the most important aspect of a successful deal structure is to have a triangular relationship between three parties, not a bilateral relationship between two. And the term “debt-asset swap” is the wrong term. Rather, there is first an agreement to purchase a casino property, and then a “barter” to pay some or all of the purchase price with the discounted gaming company debt.

The triangular deal structure separates the casino property purchase transaction from the off-market block purchase of discounted gaming company debt. As the table on page 30 demonstrates, the triangular structure substantially increases the effective purchase price to the gaming company, while the buyer still enjoys paying only a fire-sale price for the same casino property. Let’s look at each side of the “debt barter” separately.

First, the over-leveraged gaming company sells a casino property to pay down debt. Unlike other casino property sales, the purpose of this sale is to de-leverage the gaming company as a whole. Therefore, unlike other casino property sales, 100 percent of the cash realized must be used to pay down debt.

The gaming company may have no cash of its own to buy its debt. Nor does it want to play any role in purchasing its own debt. Because of its fiduciary and other duties to debt owners, the gaming company can get sued for purchasing some tranches of debt but not others, or for purchasing one tranche of debt from some debt owners but not others. Thus, the gaming company must be shielded from off-market block purchases of its own debt.

Nevertheless, the gaming company is happy to retire its debt at face value. If that debt is “bartered” as part of the purchase price for the casino property, but given credit for only a fraction of face value, the gaming company realizes a higher effective purchase price. The lower the ratio at which “bartered” debt is credited toward the purchase price, the higher the “headline price” claimed by the gaming company for sale of its casino property (see table).

Second, the buyer wants to buy the same casino property at a fire-sale price. A fire-sale price might be a “multiple” of four to five times EBITDA, well below historic norms of seven to nine times. “Cash is king,” and those with cash are demanding a huge upside.

The buyer doesn’t care if its cash is paid directly to the gaming company, or is used to make an off-market block purchase of discounted gaming company debt. If the buyer can buy discounted gaming company debt with the same cash, on the same day, and be assured that it can tender the debt in lieu of cash, it will.

And third, the owner of the gaming company’s debt is willing to sell that debt at a premium above market value. Like the impolitic Henny Youngman joke, “Take my wife, please,” the third-party debt owner would be delighted to make an off-market block sale of gaming company debt at a negotiated price.

The third-party debt owner may be a bank with a surfeit of troubled assets, or a private equity fund facing redemption calls, or a hedge fund that bought the gaming company debt at 10 cents to 60 cents on the dollar. Because current accounting rules require the debt owner to “mark to market,” the third-party debt owner books a profit by entering into an off-market block sale, so long as the negotiated price is above current market value.

The purchase of the casino property is one leg of a triangular deal structure, while the off-market block sale of discounted gaming company debt is a separate leg. The final leg of the triangular deal structure is to use the discounted debt purchased to “barter” for the casino property, in lieu of some or all of the cash purchase price.

The gaming company should only be involved in the purchase and sale of its casino property and the retirement of the debt “bartered.” It is the buyer that uses part of the cash purchase price to do a separate transaction with the third-party debt owner. The buyer must only ensure that the ratio used to credit its bartered debt toward the purchase price is the same as or higher than the negotiated price it pays for the off-market block purchase of discounted gaming company debt.

The triangular deal structure allows each party to pursue its different goals simultaneously.

The triangular deal structure allows different bilateral relationships to be formed between the gaming company and the buyer; the buyer and the third-party debt owner; and finally, the barter and retirement of the discounted gaming company debt. The table on the following page uses three “debt barter” scenarios to illustrate how each party recognizes a different price from the triangular deal structure.

First, the gaming company may want to de-leverage to the maximum extent possible. It would also like to generate a “headline sale price” that is as high as possible. Therefore, the gaming company is looking for a multiple of eight times EBITDA of $25 million, or $200 million.

At the same time, the gaming company is willing to accept bartered debt for up to 100 percent of the purchase price. What is important is the ratio at which the debt bartered is credited toward the overall purchase price. If the gaming company sets a ratio of 59.4 percent, then it credits the buyer with $0.594 for each $1 of debt bartered and then retired.

The three scenarios show the impact of accepting more or less bartered debt. For each $1 of debt it retires, the effective sale price increases by less than $1. The table shows how the ratio of 59.4 percent drives the effective purchase price to $200 million and a multiple of eight times EBITDA. If only 50 percent of the purchase price is paid with bartered debt, then the same ratio only drives the purchase price to $159 million and a multiple of 6.4 times EBITDA.

Not only does the debt barter yield a higher price to the gaming company, its lenders are happy. Sale of the casino property is truly a de-leveraging event. The impact on the gaming company’s compliance with loan covenants is improved by each $1 of debt retired, especially when only $0.594 is credited toward the purchase price.

Second, the buyer still pays a cash purchase price of 4.75 times EBITDA of $25 million. Using the ratio of 59.4 percent, the buyer receives only 59.4 cents of credit towards the purchase price for every $1 of debt bartered. However, if the buyer can make an off-market block purchase of that same debt at 59.4 cents on the dollar (or less), the cash it spends to buy the casino property is the same.

In the three debt barter scenarios, the buyer tenders more or less debt for barter, but its fire-sale purchase price of $118 million remains the same. It has allocated a fixed amount of cash and not paid more than 4.75 times EBITDA.

And third, the third-party debt owner has “marked to market” the gaming company debt. We assume the gaming company debt has a current market value equal to 50 percent of face value. The third-party debt owner sells this debt to the buyer in an off-market block at a negotiated price above current market value. The gaming company is not involved and neither are its fiduciary duties.

In such an arm’s length transaction, there is no tender offer and a price is simply negotiated between a willing seller and a willing buyer. In this example, where the buyer pays an average of 59.4 percent of face value, there is a “spread” of over $18 million. The spread may be shared among the debt owner, the buyer and the investment bank arranging the off-market bock sale.

Two Investment Banks, Not One

Another important aspect of a debt barter is to hire two investment banks, not just one. Today, investment bankers return phone calls better than ever, and you might as well use two of them, because trust me, both will have time to work on your project! Joking aside, the buyer should engage separate investment banks for each side of the triangular deal structure.

One investment bank should be engaged to negotiate the casino property purchase transaction. It should focus only on managing the casino property purchase and the bilateral relationship between the gaming company and the buyer.

The first investment bank should set the appropriate purchase price, fix the ratio at which bartered debt is credited toward that purchase price, and set the amount of debt to be bartered. This investment bank earns its fee based on the purchase price, and the fee is structured and paid in the usual manner.

The second investment bank should be engaged to execute a series of off-market block purchases of the discounted gaming company debt. The bank should approach third-party debt owners individually, and individually negotiate the off-market block sales.

The second investment banker should fix the price for each off-market block sale, the size of the block sold, and especially the conditions for closing this sale. The second investment bank earns its fee (or commission) based on the size of the off-market block purchases.

Five Mechanical Points For A Successful Triangular Transaction

Mechanics are a touchy subject, and never more so than in a triangular transaction. For this reason, one law firm should be engaged simply to coordinate the two sides of the triangular transaction. That firm can work with larger firms employed by the various parties, but its focus must be on communicating between the gaming company, the buyer, two investment banks, and a numerous group of third-party debt owners. The absence of this coordinating function is one reason why some “debt-asset” swaps have failed in the past.

First, there should be two separate sets of documents. The first set of documents would include a purchase sale agreement for the casino property. The purchase sale documents set forth the purchase price, the ratio at which discounted debt may be bartered, and how gaming company debt will be retired.  

The second set of documents would include a debt purchase agreement. The debt purchase documents assign the debt from the third-party debt owner to the casino buyer, and set forth the negotiated purchase price, the size of block of debt purchased, and the closing conditions for the debt purchase.

The buyer is making off-market block purchases of debt issued by a different company. It should have no obligation to offer the same price to different debt owners, or to offer the same price on one day that it offers on the next. Nor does it have any obligation to buy all of the gaming company’s debt that any third party may wish to sell.

Second, the delayed closing date for both transactions could be as much as six to nine months in the future, given regulatory approvals and other conditions required for closing. To protect the gaming company, the buyer must be given no more than 60 days to secure the debt and/or cash that it will use to close the transaction. Nevertheless, the negotiated price for the off-market block sale does not change, nor does the ratio at which the bartered debt is credited toward the purchase price.

Third, what may change over time is the amount of debt that the buyer decides to barter. This is only if the gaming company is willing to accept a range of bartered debt. The key point is that no one really knows how much debt will be bartered, so the final purchase price realized would also be somewhere within a range. The buyer should try to reduce its obligation to make only “commercially reasonable efforts” to purchase debt.

For its part, the gaming company should try to require the buyer to surmount certain “hurdle” levels for bartered debt. It may even have the negotiating position to simply demand a $200 million purchase price for the casino property. In this circumstance, the gaming company does not set any ratio for debt bartered, and the buyer is left to successfully negotiate its off-market block purchases of discounted gaming company debt. The negotiated block purchases then must be completed at low enough prices to bring the buyer’s effective purchase price for the casino property within its own range of tolerance.

Fourth, the gaming company may not have to pay taxes on retirement of the bartered debt. Under the new federal stimulus bill passed by the Obama administration, in some situations, the gaming company may be forgiven gains realized upon retirement of its debt. In essence, a portion of the sale price for the casino property may be tax-free.

And fifth, the third-party debt owner does face uncertainty. Its off-market block sale may or may not close, and it must wait up to 60 days to find out. This is a fact of life, but then again, the third-party debt owner gets a premium for its trouble.

One way for the third-party debt owner to manage its risk and maximize its profit is to avoid selling 100 percent of the gaming company debt in its portfolio. While this transaction is pending, other offers to buy may come along. Furthermore, if the off-market block sale transaction does go through, the gaming company’s remaining debt will no doubt gain in market value. The de-leveraging of the gaming company moves it away from the threat of bankruptcy and toward face value.

In a way, the third-party debt owner then gets two premiums. It receives a premium on the off-market block sale transaction above current market price. It receives a second premium on the debt that remains in its portfolio, which increases in market value as the gaming company de-leverages.

The Inherent Risk of a ‘Debt-Barter’ Transaction

While the triangular structure of the “debt barter” should prove more practical than the “debt-asset swap,” it has its pitfalls. If executed properly, the triangular structure can benefit the gaming company, its lenders, the buyer and third-party owners of the discounted gaming company debt.

However, both sides of the triangle must be handled carefully, or the deal could fail under the weight of its own complexity. And even if the deal between the gaming company and the buyer is signed, the volatility of the bond market could undermine the transaction.

First, for the debt barter to work, there must be enough gaming company debt available for sale at a discounted price. The price of publicly traded bonds and privately traded debt instruments is highly volatile.

Furthermore, transactions involving publicly traded bonds larger than $1 million usually must be registered with the SEC. Wall Street investors share information at light speed. While the exact number of bonds traded does not need to be disclosed, large transactions will likely raise eyebrows and could easily drive up the market value of the gaming company debt before all of the off-market block purchases are negotiated.

To help mitigate this risk, the use of non-disclosure agreements, non-binding letters of intent, or documents that clearly show the contingent nature of the transactions contemplated are all helpful. Most helpful of all will be using an investment bank that knows who willing debt owners are, and how to execute trading assignments swiftly and with discretion.

And second, when agreeing to a purchase price with the gaming company, it may be better for the buyer to not have a letter of intent signed with gaming company, but rather a less formal agreement. Once an LOI is signed, the gaming company may be required to make a disclosure to the SEC. Once this disclosure is made, the current market value of the gaming company debt may increase, making it more difficult to acquire at the “barter” ratio and close the deal.

If a less formal arrangement with the buyer does not need to be disclosed to the SEC, this danger is averted. However, the buyer now faces a greater transaction risk, as the gaming company may decide not to move forward with the transaction. With many gaming companies, appreciation for a handshake agreement minimizes this risk, and in the eyes of the authors this is not necessarily a real threat.

Jonathan Stein is a gaming lawyer and business litigator in Santa Monica, California. Stein increasingly is asked to restructure complex financial relationships without litigation. He is a member of the Board of Governors for the 4,000-attorneys Beverly Hills Bar Association, chairs its 500-attorney litigation section, and is a member of the International Association of Gaming Advisers.

Steve Gallaway is principal of Gaming Market Advisors, one of the gaming industry’s leading consulting firms. GMA specializes in portfolio analyses, private equity and investment banking advisory services, marketing audits, player reinvestment strategies, feasibility studies, business and marketing plans and socio-economic impact studies.

The authors would like to thank Frank Fantini and Fantini Research for its critical review.

By Roger Gros   Thu, Apr 09, 2009

Four years ago, gaming veteran Andre Hilliou was brought on as CEO of the 20-year-old gaming operator Full House Resorts, with a goal of market leadership in local casinos and the development and management of casinos on behalf of Native American tribes and commercial clients. In addition to the company’s cornerstone—managing partner of Harrington Raceway & Casino in Harrington, Delaware—the company recently purchased Stockman’s Casino, which is the market leader in Fallon, Nevada. Full House is preparing to open the Firekeepers Casino in Battle Creek, Michigan, under a management agreement with the Nottawaseppi Huron Band of Potawatomi Indians. Most importantly, the company has a good management team, little debt and money to invest. Hilliou spoke with Global Gaming Business Publisher Roger Gros at his office in Las Vegas in March.

GGB: What was the genesis of Full House?

Hilliou: Full House Resorts, Inc., a public company, was started by a group of investors, which included the late investor Alan Paulson and former Chrysler Chairman Lee Iacocca, among others.

We are doing quite well, and we’re very close to opening the casino in Michigan. The Stockman’s Casino in Fallon is the market leader, and we recently renegotiated the contract with the racetrack casino in Delaware.

When I came in, we put a new management team together that has the ability to tackle large projects. Of course, we are looking at diversifying our company from managing casinos to owning casinos. We’re doing this by taking the revenues from our management contracts, which flow greatly to the bottom line, and using that cash flow to buy properties—a very simple and effective business plan.

Anyone who knows American business knows Lee Iacocca and the role he played in reviving Chrysler in the 1980s. Was he very helpful to you when you came on board?

Lee was part of the team that recruited me. His high visibility is very helpful, and has provided us with some very valuable insight. I speak with him on a regular basis and find him very helpful.

Does he really understand the gaming industry?

He understands business. Business is business whether it’s creating the Mustang, turning around Chrysler or helping a gaming company going forward. He’s very insightful and always asks the right questions.

In addition, Full House Resorts has a highly independent board, which is quite unusual for small gaming companies. It makes our job much easier and more gratifying.

We are seeing, at this moment in history, some of the major gaming companies teetering on the edge of bankruptcy. What is the financial shape of Full House?

We are actually doing quite well. We’ve always been  very conservative in our approach to gaming. We bought the property in Fallon at the right multiple and we sold a connecting hotel at a much higher multiple. Our level of debt is almost non-existent, and we are cash-flow positive and are expecting good things out of Michigan in the summer.

Our business plan is very simple. We are looking at small, local casinos that have a leadership position in their market with good management teams in place. When we buy those properties, we expect them to be accretive to earnings immediately. And when we look at earnings, we do not look at the past, but the present and the future. The advantage of a company like Full House with senior executives in the gaming industry is that we have seen what goes on at the top of the hill and the bottom of the hill, and most importantly at the bottom of three hills beyond that. It is the reason that we probably haven’t bought more casinos—they were just not available at the right multiples—but we also know at the end of the day, we’ll have the right formula; we are extremely focused on shareholder value.

Tell us about your expectations for the Firekeepers casino in Michigan.

We have been working very closely with the Huron Potawatomi tribal council. The tribe has been working for many, many years to bring their dreams to fruition. The casino is located on about 75 acres of land just about halfway between Detroit and Chicago on I-94 right at exit 103—couldn’t be a better location, with limited competition and great demographics. The project should do extremely well, and revenues have held up well in Michigan and outside Atlantic City and Las Vegas. My concern—and it’s a good problem to have—is that we’ll be capacity-constrained immediately upon opening.

When is the opening scheduled and what are the specifics when it comes to gaming?

We’ll open in the summer with 2,500 slot machines and 80 tables.

In this economic downturn, are you actively looking for casino purchases?’

Yes, we are, but a lot of casino owners seem to think we’ll get through this recession quickly, and they are leery about selling during the downturn. I am not sure I agree with them.

We take a much longer view. We believe the market is there and it is stabilizing. But it has completely changed. The ability to sell at high multiples is gone, so is the ability to borrow at low rates. But we have the ability to borrow at reasonable rates because we have a good relationship with our bank, having repaid our loan ahead of time, being debt-free and with a great project ahead of us. 2009 should be a banner year for the company and its shareholders.

You’ve taken a unique route up the ladder. You started in the food and beverage area. I can’t think of another company CEO who came up through that path.

Whether you start in food and beverage, finance or marketing, we all move forward based on our abilities. We all enter through different doors but we make our way based on our abilities to perform.

By GGB Staff   Thu, Apr 09, 2009

Printer supplier TransAct Technologies Inc. announced that Tim Moser has joined the company as product marketing manager.

Prior to joining TransAct, Moser was product marketing manager for leading slot manufacturer International Game Technology, where he received patents for several inventions and participated in numerous software solutions for gaming.

At TransAct, Moser will manage the marketing strategies for the company’s printer brands.

By GGB Staff   Thu, Apr 09, 2009

TableMax Gaming, Inc., a leading supplier of electronic table games, announced the addition of two executives to its management team.

Perry Stasi has joined TableMax as senior vice president of business development. Stasi is a 28-year industry veteran and has held several executive positions, most recently as director of casino operations at Mandalay Bay Resort & Casino in Las Vegas. His first executive position in the industry was as casino manager of the original Sands in Las Vegas.

Lee Weyers has joined TableMax as executive vice president of operations and sales. Weyers is an international management expert with a strong background in manufacturing and information technology (hardware and software). He started in the gaming industry in 1999, and has worked with companies including Harrah’s, Trump, Seminole Gaming and Penn National in the U.S.; Wynn Resorts and STE in Asia; and Crown Casino and the Sky City Group in Australasia.

By GGB Staff   Thu, Apr 09, 2009

Treasure Island Resort & Casino, on the Mississippi River in Welch, Minnesota, announced that Doug Kranig has been hired as director of information services.

Kranig, who holds a master’s degree in information technology, was previously MIS director for Maskawaki  Bingo Casino Hotel and for LCO Casino Lodge & Convention Center.

“After I had heard about Treasure Island Resort & Casino and what a great place it was to work from a team member, I had to apply when the director’s position became available,” said Kranig. “I enjoy the challenges of working on a multitude of projects and discovering ways to improve efficiencies, reliability and accessibility for all team members who use our systems.”

By GGB Staff   Thu, Apr 09, 2009

William Weidner last month left Las Vegas Sands Corporation, where he had served since 1995 as president and chief operating officer.

Whether Weidner resigned or was fired after 13 years isn’t quite clear, but his departure leaves a hole in one of gaming’s most important companies.

While company Chairman Sheldon Adelson is clearly the “visionary” of the company, Weidner and his team—Brad Stone, Rob Goldstein and others—were undoubtedly the engine that built and operated Adelson’s dream.

For most of Weidner’s time at the company, Las Vegas Sands could do no wrong. The demolition of the fabled Sands Hotel on the Strip was a cultural loss, but the construction of the Sands Expo Center and later the Venetian validated his vision. During the flush times of the 1990s and mid-2000s, these properties drove the company ever forward.

The expansion in Macau was a bold stroke—and one that mixed intrigue and a certain understanding of the market. It was a surprise when

LV Sands obtained one of the three licenses (the other two were awarded to gaming magnate Stanley Ho and Wynn Resorts). Adelson bested better-known gaming companies such as MGM Mirage, Caesars and Harrah’s.  And when he unveiled his vision of the Cotai Strip—a dozen hotels, shopping malls and casinos, all owned and operated by Las Vegas Sands—it seemed that everything he touched turned to gold. And this was even before the company won one of the two concessions in Singapore.

But the debt taken on by Las Vegas Sands to fund the Macau projects and the construction of the Palazzo, adjacent to the Venetian in Las Vegas, was immense, leading to the sharp drop in the company share price—from $155 last year to less than $2 in mid-March.

With Weidner’s departure, uncertainty about the roles of Brad Stone (who was recently promoted to president of global operations) and Venetian and Palazzo President Rob Goldstein will only add to the questions about LVS. And the appointment of a somewhat unknown entity, Michael A. Leven, as Weidner’s replacement will further confuse the market. Leven has been on the LVS board since 2004 and founded U.S. Franchise Systems Inc., which developed the Microtel Inns & Suites and Hawthorn Suites hotel brands. Most recently, Leven had been CEO of the Georgia Aquarium in Atlanta.

By GGB Staff   Thu, Apr 09, 2009

Courses et Jeux, the gaming regulatory board of France, has approved slot and system supplier Atronic Group as its supplier for a wide-area progressive system, to be operated in Monaco by its Atronic Systems division.

Atronic, a subsidiary of Rhode Island-based GTECH Corporation, will link approximately 400 slot machines at 100 venues to the progressive network by June. The multi-site jackpot, to be called “Superjack,” will be open to all casino operators in the nation.

Atronic partnered with casino operators Groupe Lucien Barrière, Groupe Tranchant and JOAGROUPE to test the new wide-area system in three casinos over a nine-month period.

By GGB Staff   Thu, Apr 09, 2009

Heber Limited announced the launch of a new gaming control system, designated “Pluto Comma 6a,” that is specifically engineered and approved for the Italian gaming market.

The new Pluto Comma 6a control system is a fully integrated single-platform package that combines Heber’s internationally acclaimed P6 embedded controller with a JAMMA connector mounted in a protective metal case. Together they interface seamlessly with the Italian state’s smart-card systems, and the network that monitors revenue due to the state from the Italian gaming machine operators.

Scheduled for full production during late spring of 2009, Pluto Comma 6a offers game software developers the opportunity to roll out new game releases.

By GGB Staff   Thu, Apr 09, 2009

Casinos Austria has chosen to go with the MEI Cashflow SC for new slot machines purchases.

During a trial period, Casinos Austria compared the Cashflow SC to the note validators currently fitted in their slots. The experience allowed Casinos Austria management to assess the MEI product.

Ewald Kirschenmann, head of procurement of gaming equipment at Casinos Austria, said, “Our daily experience proves that the MEI bill validator is by far the top performer in its class in the marketplace in terms of acceptance rates, validation, ease of maintenance and total costs. We have reviewed all of the products available to us at the moment, and MEI is definitely our first choice. Therefore, we will be clearly specifying MEI on all our future machine purchases. Our slot machine suppliers have been informed of this.”

Casinos Austria so far has equipped over 200 of their slots with the MEI product.

By GGB Staff   Thu, Apr 09, 2009

Slot manufacturer Konami Gaming has formally designated Techno Gaming International S.A. as its exclusive authorized distributor for Argentina, Uruguay, Paraguay and Bolivia. Techno Gaming is based in Uruguay, with sales and administrative offices in Buenos Aires, Argentina.

The distributor is headed by Carlos Mautone, an executive with more than 13 years of experience in the gaming industry. He began his gaming career with Bally Technologies, helping Bally open its offices in South America.

“Konami is very pleased to partner with Techno Gaming International S.A. to service and develop accounts in Argentina, Uruguay, Paraguay and Bolivia,” said Eduardo Aching, director of international sales for Konami. “Carlos Mautone brings a wealth of knowledge and experience to his new role as an authorized distributor. We look forward to a successful partnership.”

By GGB Staff   Thu, Apr 09, 2009

The “fun book” issued each year by the Las Vegas Advisor has always been the industry standard. During the pre-mega-resort years, the Las Vegas Advisor Member Rewards Book was Bargains were harder to come by as the billion-dollar casino resorts sprung up on the Strip in the late 1990s and early 2000s. But because of the deep recession slamming the town, Las Vegas is a bargain again.

After a decade of building bigger and more upscale resorts that commanded higher and higher prices, Las Vegas is now actively downplaying its luxury branding in favor of affordability. Hit hard by the economy—visitor volume in 2008 suffered its biggest year-to-year drop in history—bargain is once again the name of the game in Las Vegas, and deals on everything from rooms to shows to gourmet restaurants (and even gambling) are everywhere.

The 2009 version of the Las Vegas Advisor Member Rewards Book contains more than 150 coupons representing as much as $2,500 in total savings, with some of the city’s top restaurants and entertainment options participating.

The MRB is available for $37 from LasVegasAdvisor.com. In addition to the book, the website has introduced Member Rewards Online, an expanding program of printable web coupons.

“In 30 years of following the Las Vegas casino industry, I’ve never seen a more deal-minded mentality from the casinos,” says Anthony Curtis, a former professional blackjack player who founded LasVegasAdvisor.com. “They’re promoting like crazy—I can’t think of a better time to visit Las Vegas than right now.”

By GGB Staff   Thu, Apr 09, 2009

Gaming Laboratories International, the world’s leading testing lab for the gaming industry, hosted its eighth annual Regulators Roundtable last month in Las Vegas. New formats and topics attracted almost 200 attendees discussing such information as responsible gaming, the difficult economy, internet gaming, Class II gaming and more.

Keynote speakers included GLI President and Co-Founder James Maida, as well as IGT Chairman and CEO TJ Matthews.

The opening session featured a discussion of the regulatory and technical challenges of introducing a completely server-based slot floor into a new casino with the debut later this year of MGM Mirage’s Aria Casino Hotel in the CityCenter development.

Michael Volkert, vice president of slot marketing and operations at Aria, was joined by Mark Lipparelli, the newest member of the Nevada Gaming Control Board, in a session moderated by Alan Feldman, MGM Mirage’s senior VP of public affairs.

While Volkert called the system “server-assisted” gaming, he said the property was working toward fully server-based applications. He said most of the machines being purchased for Aria are stand-alone games that can operate independently of a central server.

Once the full system is enabled, however, “we will be able to offer our guests richer and more relevant content,” Volkert said.

One of the sticking points, though, is the pricing structure.

“We have had to temper the expectations of some of the slot companies about the value of their games,” Volkert explained. “We have tried to educate them about our costs and our expectations, and we will arrive at a figure we both can live with.”

He said several payment models being considered include a daily fee versus a per-use fee.

“In the long run, we’ll have a much more exciting gaming floor when the system is fully implemented,” said Volkert.

By GGB Staff   Thu, Apr 09, 2009

Table game supplier TCS John Huxley is launching a marketing effort to coincide with the company’s 20th anniversary. The company is introducing a new logo that combines the logos from its two predecessor companies, TCS and John Huxley, along with images of gaming chips, playing cards and a roulette wheel.

To coincide with its global corporate re-branding, TCS John Huxley simultaneously launched its new and improved website. TCS John Huxley’s website allows users to view what is one of the world’s most extensive lineups of table game supplies along with press releases and upcoming events by regional breakdown.

“Our new corporate identity reflects the 30-year evolution of TCS John Huxley,” said Group CEO David Heap. “We are a global brand, which is continually growing and evolving in terms of our innovative products and services, but most importantly the relationships we have with our customers. With this new visual identity, we are proud to see the company continue to develop, invigorated by a powerful brand, toward a wider global reach.”

In other TCS John Huxley news, the company will now distribute Aristocrat slots in a number of European markets. The company has signed a non-exclusive agreement with Aristocrat Technologies to distributed Aristocrat electronic gaming machines in Ukraine, Belarus, Georgia, Romania, Bulgaria and Northern Cyprus.

“We are very excited to be working with Aristocrat and feel their range of products complements our own in terms of quality and choice,” said Andrew Davies, business development director-new products for Huxley. “We fully intend to take advantage of being able to offer a complete turn-key solution in these territories, where we have established relations with many casinos and gaming venues.”

By GGB Staff   Thu, Apr 09, 2009

System supplier Cantor Gaming, operator of the race and sports book at the new M Resort, is preparing for the first big test of its software that allows in-game wagering—the Major League Baseball season.

Cantor’s system will allow customers to make proposition bets on aspects of games while the game is in progress—wagers on the next hit, the next home run or RBI, etc.

“We’ve been applying our ideas to mobile gaming and in-running wagering for some time,” Cantor CEO Lee Amaitis said recently. “Finally, we got to a place where we can showcase products.”

The system will eventually offer bettors the option of using hand-held, mobile devices to make in-game wagers. That feature of the system is slated to be operational by May 2, the date of the Kentucky Derby.

Amaitis says the baseball season will allow the sports book to fine-tune the in-game wagering system in time for its next big test, the NFL season.

“You can do so many things in a baseball game,” he said. “I think it will enhance baseball betting and allow us to see what we need to do to improve the product when football arrives.”

By David Ross   Thu, Apr 09, 2009

JCM Global recently unveiled its new compact bill acceptor, Vega.

Vega is a new-generation bill validator that comes with a lockable, removable cash box. The cash box has two capacity options: the standard, 300-note capacity cash box; and a 1,000-note capacity version. There also is an optional, multi-directional frame lock, giving Vega maximum security.

With its small footprint and versatility, Vega can accommodate a wide variety of applications. Key target markets include AWP-style gaming and commercial uses such as vending, kiosks and other terminal-based applications.

Vega’s bank note acceptance ranges from widths of 60 mm to 82 mm, enabling validation of up to €100 or £20 notes. The standard acceptance and validation time cycle is three seconds.  

Software downloads can be achieved via USB port in less than a minute. Security measures include a new optical sensor and mechanical technology to eliminate theft methods such as stringing and fishing. All major protocol interfaces are supported, including serial, parallel pulse, MDB, ID003 and ccTalk.

The illuminated bezel makes for an attractive appearance when mounted into any cabinet.

The sealed sensor lens panels and banknote transport path provide ample protection from dust and liquid spills. The lockable cash box can be removed from either end of the frame by a simple adjustment. Similarly, the unit can be mounted to operate in horizontal, stacker-down or stacker-up positions, giving maximum flexibility.

For more information on the Vega, email sales-commercial@jcm-american.com or call 702-651-0000.

By David Ross   Thu, Apr 09, 2009

Las Vegas-based Gaming Partners International Corp. has introduced its improved table management system.

GPI manufactures low- and high-frequency RFID chip tags which, when embedded in gaming chips, allow a higher reading speed for sophisticated applications such as player tracking. In January GPI won the 2009 International Gaming Award for Best Technology Manufacturer at the International Gaming Expo in London, for its RFID table-top authenticator.

To “complete the tripod,” as GPI President and CEO Gerard Charlier puts it, the company offers software for both frequencies for casino currency control applications including automatic chip authentication, tracking and accounting at the cashier’s desk, the vaults, the pits and the tables.

The first table management system, TablesSolution, provides real-time table information on line for roulette and card games based on the chip float evolution, fills and credit, and the drop. For the drop, GPI introduced a new software module for the GPI drop box and a new bill validator made by JCM to integrate cash-related information into the system.

The second system in 2008 is a Texas hold’em poker-specific solution to automatically track the game and the pots for reliable reports. It measures and records clients’ bets, providing a database for the casino marketing department. Automatic bet recognition helps facilitate progressive and mystery jackpots for table games. GPI is working to release a Progressive Jackpot Texas Hold’em by the end of 2009’s second quarter.

According to Charlier, “RFID allows casinos to increase gaming tables’ profitability with the real croupiers, chips and cards necessary to produce the excitement the players are looking for.

“The idea came from one of our guys who used to be a dealer. With RFID, dealers can spend more time taking care of clients. Our technology allows the casino to run tables as efficiently as slots, and track customer information, too. It allows dealers to be dealers and focus on players.”

For more information, contact Justin Woodard at 702-598-2400 or by email at jwoodard@gpigaming.com.

By Sudhir Kale   Thu, Apr 09, 2009

To start with the obvious, the gaming business is in a serious recession worldwide. From Leon to Las Vegas, Macau to Murcia, and New Orleans to Nova Gorica, every casino operator has, in recent months, seen its revenues shrink and its profits evaporate.

Stalwarts such as Las Vegas Sands and Wynn have witnessed their share prices topple from highs of $95 and $125 just 12 months ago to lows of under $3 and $30 respectively. During the first nine months of 2008, Las Vegas Sands and Harrah’s both lost money while the profit of MGM Mirage plunged. Competition for customers and capital seems unprecedented.

Tough times call for bold measures. Gone are the days when executives could impress the board of directors or investment analysts by minor tweaking of operations or through creative accounting.

Drastic steps need to be taken by following one of the two available options: cost reduction or productivity enhancement.

Most casino executives I know have chosen the path of cost curtailment. Employee travel has been severely restricted, training funds frozen, and employees laid off. MGM Mirage has already trimmed its workforce by 3,200 since October 2007, and sold its Treasure Island property.

Sales of other properties and non-core assets are expected.

The cost-cutting and trimming approach is similar to the operational strategies adopted by most airlines, which now expect customers to pay for their baggage, food, drinks, headsets and even pillows. Customer service is conspicuous by its absence in the increasingly unfriendly skies. Service standards have hit new lows, and the cadre of junior managers is being inculcated in the belief that survival demands the lowest possible investment in customer-centric initiatives.

But even within the cutthroat airline industry, there are exceptions. Singapore Airlines is one company that wants to succeed by flying against the current. At a time when the dominant logic dictates that flying is torture, SIA wants to hark back to the time when air travel was a glamorous experience. When every other airline has pricing as its focus, SIA looks at the passenger for panacea. When competition lives by yield management, SIA emphasizes staff training, equipment upgrades and customer service.

Casino executives daring to be different during these turbulent times could follow the edict of the late management sage Peter Drucker. “Business,” said Drucker, “has only two functions—marketing and innovation. Everything else is a cost.”

Casino companies could use these slow times to embark on a path of product innovation and consolidate their market positions through customer-centric marketing.

Jonathan Halkyard, the CFO at Harrah’s, was recently quoted as saying, “If you look at the slot machine, it’s basically the same as it was 75 years ago,” and went on to add, “There has been a shocking lack of innovation around our core product in this industry when compared to virtually any other consumer entertainment product over decades.” What better time could there be to allocate a company’s creative resources toward product innovation than during a recession?

Executives seeking to make a true long-term difference in their company’s future could emulate SIA during this difficult time. Instead of cutting corners and slashing players’ comps, they may want to use the lean times to offer their employees the very best customer service training that money can buy.         Instead of focusing on expense reduction (though quite a few expense items should be legitimately slashed), they may want to identify and capitalize on the plentiful opportunities for strengthening their customer relationships.

Instead of forcing cuts in employee numbers or wages, they may want to challenge their front-line people to provide each customer with a truly outstanding service experience. It is OK to postpone or drop construction projects; dropping customer service levels or server motivation at a time when customer loyalty is needed the most is sacrilegious.

Swimming against the tide takes courage and mental fortitude. And a recession need not eclipse executive careers. Tough times provide executives with ample opportunities to prove their mettle. Those who take up the mantle and make bold decisions toward customer-centric innovations and consolidating their customer relationships will not only weather the recession, they will be very advantageously placed to harvest the bounty of their efforts when the economy improves. Smart managers know that the best way to keep your customers loyal is to take care of them when things are bad.

So go ahead—use the economic lull to your advantage by strengthening your bond with your employees. Use the slack period to harness your creative juices and make your product line truly innovative. Take bold steps to impress your customers by making your company the gold standard in customer service. Use this time to take stock of your marketing strategy, and to make every employee a part of your customer service initiatives.

Above all, don’t be timid when it comes to smart investments in customer relationships. Now is the time when you can employ the best talent, draw in the best consultants, and harness the best trainers at very competitive prices to provide your company with a much-needed organizational and cultural facelift.

Remember, recessions are never everlasting, but the consequences of executive decisions during recessions endure for a long, long time.

Sudhir H. Kale is the founder and CEO of GamePlan Consultants, a company that provides marketing-related consultancy and training to the casino industry.

He also serves as a professor of marketing at Bond University. You can write to Kale at skale@gameplanconsultants.com, or to access some of his writing, visit his website, www.gameplanconsultants.com.

By Frank Legato   Thu, Apr 09, 2009

This is IGT’s second major release in the “REELdepth” series of 3D video slots. REELdepth uses what IGT calls the “Multi-Layer Display” technology, which layers two LCD video monitors on top of each other to create a three-dimensional effect.

The two screens, using a technology purchased from PureDepth, Inc., create a feeling of “true 3D,” not unlike that found in a stereoscopic image.

The first REELdepth games use this effect to simulate stepper slots, with the illusion of spinning reels with animation added, and video bonus rounds in which the reels disappear to be replaced by a 3D video sequence.

“Glitter & Gold” incorporates a 50-line base game in a four-reel setup. There are four reel stops on each reel, for a four-by-four pay window. The primary game also employs a new IGT feature called “Blackout,” in which a reel symbol expands to completely fill up a reel and increase the chance of winning a jackpot. The Blackout feature is shown in 3D animation—the stacked symbols “pop” off the screen.

Glitter & Gold is a triple progressive slot as well. Gold 3D symbols stack on the reels to win the progressives. One gold stack wins the lowest progressive jackpot; two stacks win the mid-level prize; and three gold stacks return the highest progressive.

The top line jackpot returns 30,000 credits times the line bet, which is an incentive for higher coin-in from players. The progressive jackpot levels are operator-configurable.

Manufacturer: International Game Technology

Platform: REELdepth MLD

Format: Four-reel, 50-line video slot

Denomination: .01

Max Bet: 200

Top Award: 30,000 times line bet

Hit Frequency: Approximately 50%

Theoretical Hold: 5.1%—15%

By Frank Legato   Thu, Apr 09, 2009

This is one of several games in Aristocrat’s new Viridian RFX stepper series. Games in this series were on field trial in February, and were expected to be ready for release and sale by the end of March.

The Viridian RFX stepper was the result of an intense development effort in which, Aristocrat officials say, every aspect of the reel-spinning game style was broken down and examined, and redesigned with player comfort in mind. The platform uses five normal-sized, back-lit reels, with LCD monitors in the top box (listing the pays) and just over the reels for second-screen bonus rounds and breakout animation. Full stereo sound was added, with layered sound effects and original music recorded live.

Aristocrat plans to apply all of its game styles to the new format. “Big Ride,” carrying a beautifully executed Western bull-riding theme, is the first stepper game using the “Reel Power” pay method, in which wagers activate each reel and all wins are paid as scatters, for a total of 243 possible winning combinations on each spin.

In the base game, the wild bull symbol is wild, substituting for all but the “Red Bull” symbol, which triggers the bonus round.

Three Red Bull symbols trigger 15 free spins, with an intriguing feature added: Before the spins, several stop-watch timer symbols appear on a “challenge screen,” each with its dial pointing to a number. The player selects a timer. If the timer symbol lands on the reels in the free spins at least as many times as shown on the clock, the player is awarded a corresponding added bonus. Free games can be retriggered within the free spins, using the original challenge selection.

Manufacturer: Aristocrat Technologies

Platform: GEN7/RFX Stepper

Format: Five-reel scatter-pay slot

Denomination: .01, .02, .05, .25, .50, 1.00

Max Bet: 125, 200, 250, 500

Top Award: 96,000 times reel wager

Hit Frequency: 33.21%

Theoretical Hold: 4.99%—12.01%

By Frank Legato   Thu, Apr 09, 2009

Yes, it is once again time for the editor of Global Gaming Business (motto: “Your Advertising Dollars At Work”), the most distinguished source for vital information regarding the international gaming industry, to go into what I like to call “Stooges Mode,” and make fun of that very vital information on which you rely.

Hey, we may as well laugh, right? It’s better than crying.

(By the way, for those of you in our Western audience, our alternative motto is: “The Best Danged Gamblin’ Book In The Whole Dad-Blasted County.”)

Speaking of the Stooges, slot manufacturer Atronic gives us our first news item this month. As we speak, the first units of a new Atronic game called “The Three Stooges” are no doubt being delivered to a casino near you. Maybe even to your casino.

I can’t wait to play it. I’ll sit down at a slot, and hear familiar voices:

“Nyuk! Nyuk!”

“Soitenly!”

“Why, I oughtta...”

“You chucklehead!”

“Nyaaaaah!”

Then, I’ll get up, and go find the Three Stooges slot.

(Slot-playing is the only thing that makes the voices stop.)

Our second gaming news item comes from Forbes magazine. Unfortunately, it seems the moguls of our industry have been losing a lot of money. A recent article in that magazine reports that Las Vegas Sands Chairman Sheldon Adelson personally lost $26 billion last year. Kirk Kerkorian, the largest shareholder of MGM Mirage, lost $4 billion. Steve Wynn lost almost $4 billion.

I felt really bad for Sheldon, Kirk and Steve. They’re almost tapped out. How will they make ends meet? Sheldon is down to his last $3.4 billion. Kirk only has a paltry $5 billion left. Steve is going to have to make do on only $1.5 billion.

I have about $347 and a breath mint. (I’m sending the mint to Steve Wynn. Hey, it’s the least I can do.)

Our next item first appeared in the “PR Web” online newsletter. The writer was plugging an online casino, and he was using the fact that Las Vegas casinos have banned iPhone use. It says you can visit this online casino, and in the “3D Lobby,” there is Elvis Presley using an iPhone. And that’s why you should visit this particular online casino.

Look. I have plenty of Elvis sightings at real, live casinos. Elvis just greeted me outside of Bill’s on the Strip last year. I can go to Legends In Concert and hear him sing. As far as dead celebrities go, I can’t seem to get rid of the hip-swiveling guy.

A 3D image of Elvis with an iPhone is not getting me to an online casino, sorry. I prefer to see who is taking my money.

I have room for one more item. It comes to us via our good friend over at the University of Nevada-Las Vegas, Professor David Schwartz. David writes a great column on Atlantic City history for our Eastern edition of Casino Connection magazine, but if I’m strapped for goofy casino news, I can always count on his website, www.diecast.com, to give me a funny item or two.

This month, I found an item on his website that I can’t believe I missed when it happened—particularly since it happened in the city that is my home base.

It seems police arrested a guy at Bally’s Atlantic City who had broken into the kitchen. They caught him as he was leaving with—get this— 91 pounds of frozen lobster stuffed in his clothes.

A security guard noticed the shadowy figure tip-toeing out of the kitchen, and, as his subsequent report described, “His clothing was very bulky and he appeared to be concealing items beneath his clothing.”

It turns out he had more than $1,200 worth of crustaceans in his clothes. (And a song in his heart.) Let me guess. A guard stopped the guy and asked him what he had under his coat. He said, “Goiter!” (OK, I’m in Stooge mode again. That’s from the short where Curly was hiding a keg of beer from the cops. Yes, you are correct. I have no life.)

It’s just like that story last year, when security guards at Caesars Tahoe caught a wild bear roaming through the hotel kitchen rummaging for scraps of food. Except that it was lobster instead of just scraps of food. And it was a man instead of a bear.

OK, maybe it’s not anything like that story last year. Anyhoo...

I’m out of space. No more casino news. As Walter Cronkite may have said, “That’s the way it is. April 2009.”

Soitenly!

By Frank Fantini   Thu, Apr 09, 2009

A funny thing about 2009. The world has not come to an end.

Despite the Samson and Delilah act going on in Las Vegas where the love of beautiful and expensive buildings threatens to bring the pillars tumbling down, the rest of the country is going along about as to be expected in a recession.

Business is down. Expenses have been cut. Projects delayed or canceled.

And people are still gambling. Less than in the best of times, but about the same as last year, which wasn’t bad for the first eight months.

The National Revenue Report published by Fantini Research revealed that gaming revenues outside of Nevada rose 1.17 percent in January. The comparison was helped by five weekends this year vs. 2008, but it was growth nonetheless.

February was more impressive. As of this writing, eight jurisdictions have reported revenue and six of them grew, several substantially—New York 15 percent, Pennsylvania 14.3 percent, for example.

Even states that declined were basically flat if adjusted for the calendar with last February having an extra day, and a weekend day at that.

One such case is Illinois, which declined 5.7 percent. Take out 3.6 percent fewer days, factor in how much a missing weekend day matters, and casinos held their own.

Better yet, Illinois has stopped the double-digit bleeding that beset it in 2008 thanks to the state’s smoking ban. The same is true for Colorado, which has grown revenue so far in 2008 after its smoking ban slammed casinos last year.

More good news is likely ahead as Missouri casinos ramp up following the $500 loss limit repeal, and as Colorado casinos add 24/7 play, craps and roulette, and raise the betting limit from $5 to $100 on July 2.

As we’ve stated before, such regional resilience bodes well for Penn National, Ameristar, Pinnacle, Isle of Capri, MTR Gaming and the Las Vegas locals-regional hybrid, Boyd.

Each of these companies has issues to deal with. They face higher interest rates as they refinance debt, or as they renegotiate covenants. The economy could weaken further, putting more pressure on profits.

But, over time, people will gamble. They will seek entertainment. And recessions end.

For now, the stocks of regional operators appear to reflect a gloom greater than their prospects.

Investors looking for opportunity in gambling stocks also might take a peek at the suppliers.

They’ve been mostly under the radar screen as investors transfixed on woes of the big Las Vegas casino operators.

Suppliers have been hurt by the recession, of course. Slot companies with machines on participation lease suffer lower play, just like the casinos. And casino operators who are tightening their budgets are buying fewer slot machines.

But there are several forces that limit the downside in this economy, and some that actually could prompt growth. Consider:

Balance sheets. Suppliers do not have the huge debt of casino companies, as they did not spend billions of dollars building mega-resorts.

Some, like WMS, are in net cash positions. Shuffle Master generates cash and is paying down debt. Bally has cleaned up its balance sheet. And even though IGT must refinance debt next year and address a $900 million convertible note this year, it generates positive cash.

Participation leases. Casinos might hate sharing slot win with suppliers, but it is appealing to be able to put new machines on the casino floor without having to lay out cash. Thus, hard times could help build the recurring-revenue business for IGT, WMS, BYI and Aristocrat.

Productivity. Whether it is little DEQ or mighty IGT or all those in between, companies can make the case for products that help increase revenue or reduce costs.

Whiz-bang products. Each company has exciting new products, platforms and cabinets that will be must-haves, not just in a recession, but also because of the recession, as it is now more important than ever to be competitive.

Gaming expansion. Governments in the U.S. and abroad are considering gaming expansion to raise revenues. This phenomenon helps lottery companies, too, such as Scientific Games listed in the U.S., Lottomatica in Milan, and Intralot on the Athens exchange.

Obsolescence. Suppliers today are technology companies. And just like computers, iPods, movies, DVDs or other electronic devices, technology forces customers to buy new products. This might not happen in a recession, but afterward, pent-up demand will be released.

Aging slot floors. That lull in the replacement cycle that has held down sales for so many years also means the day is nearing when those machines have to be replaced.

Sales are currently running so low it would take 18 years to replace them. The machines just don’t last that long.

In summary, suppliers are similar to regional casino companies. They’re going through a slow economy, but the business model is not broken, and today may represent opportunity for the investor who can spot winners and be patient.

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

By Frank Fahrenkopf   Thu, Apr 09, 2009

Though the political and media elite have made business meetings, events and incentive travel symbols of corporate misspending, few Americans agree with them. According to early survey results from the American Gaming Association’s annual resource, State of the States: The AGA Survey of Casino Entertainment, the vast majority— 87 percent—of business travelers think meetings and events are crucial to the success of their employers. In addition, two-thirds of Americans say gaming facilities—many of which include state-of-the-art convention centers—are a vital part of the business travel market.

And yet, the campaign against corporate travel for meetings and events continues to gather steam. Since I last wrote about this issue, policy-makers eager to score political points and media representatives in search of enticing headlines have vilified companies planning business trips at popular tourist destinations. They have branded corporate events in gaming cities—particularly events in Las Vegas—as frivolous and wasteful.

In response to the intense public scrutiny, companies receiving taxpayer assistance and others concerned about becoming the next “easy target” are rolling back business travel plans in 2009. Already, Las Vegas alone has lost an estimated $20 million in canceled trips and meetings from Fortune 500 companies. Each day, that number grows at an alarming pace.

Other markets are being hit as well, from Atlantic City to Biloxi to St. Louis. This toxic environment poses a serious threat to the gaming industry and to the broader economy. It also puts at risk the livelihoods of millions of working families.

An assault on business meetings and events is, ultimately, an assault on jobs. Corporate gatherings create at least 1 million jobs throughout the United States, including thousands of jobs in the gaming industry. When revenue from business meetings and events deteriorates, bellmen, custodians, casino employees and other hourly wage employees often are the first to lose their jobs. Hard-working Americans suffer.

Predictably, as those employees are laid off—and as restaurants, florists, gift shops and other companies that rely on corporate gatherings have to shut their doors—the economy sinks further into decline. At a time when America is starving for economic revival, demonizing legitimate business meetings and events does not make good sense.

The AGA is proactively addressing the sustained, unfair attacks on meetings and events at gaming destinations. We have joined forces with the U.S. Travel Association to play an active role in its major, multi-faceted campaign to restore common sense to the public discourse on this issue.

One key component of the campaign is a nationwide grass-roots effort to demonstrate to policy-makers and other opinion leaders that business events and meetings are crucial to the economic health of communities across the country, including many gaming cities. To that end, the AGA recently developed a tool kit to help gaming industry representatives respond to opponents and repair the negative perception of meetings and events at gaming destinations. The tool kit includes talking points, sample letters to the editor and a sample letter to members of Congress. It also links to a similar tool kit developed by the U.S. Travel Association that includes a wealth of information about the value of meetings and events for businesses and communities. (The complete tool kit is available at www.americangaming.org/industry/getinvolved.cfm.)

Last month, the AGA also widely released early data from State of the States, which closely examines public perceptions of travel to gaming destinations. Along with the findings I previously mentioned, the data also indicate that more than eight in 10 Americans think domestic tourism can boost the national economy. A majority (56 percent) considers casinos valuable community assets in recessionary times, and 65 percent agree that casinos are crucial to the travel industry. (Additional details on the early results from State of the States can be found at www.americangaming.org.)

These are just two of the steps the AGA has taken to minimize the damage created by the campaign against business events at gaming destinations. However, all of our efforts will only be successful if others in gaming industry speak out on this issue as well.

Already, several industry executives have publicly appealed to policy-makers to cease overheated rhetoric about corporate gatherings at gaming destinations and to avoid rash policy decisions that jeopardize jobs and burden local economies. In addition, the Las Vegas Convention and Visitors Authority has actively engaged the media on this issue, providing useful statistics about how meetings and events impact the Las Vegas economy and the city’s many residents. In fact, the LVCVA, in partnership with Meeting Professionals International, recently released research that found that the meeting and convention industry injects an estimated $200 billion into the national economy annually.

These outreach activities have had a tremendously positive impact on public perceptions of meetings and events at gaming destinations. But there is still more work to be done.

Lawmakers, opinion leaders and media representatives need to hear from the entire gaming industry—from industry representatives in every corner of the United States.

Armed with the tools the AGA has developed, industry representatives can call or write to their local elected officials to inform them of the value of business meetings and events, as well as the negative consequences of discouraging business travel to gaming destinations.

Industry representatives also can make their voices heard by submitting op-eds or letters to their local newspapers. Additionally, they can broaden the reach of their efforts by discussing this issue with coworkers, casino patrons and business partners and asking them to get involved.

The demonization of business travel to gaming destinations for meetings and events is one of the most pressing challenges we face right now. Immediate, decisive action is crucial to the health and future prosperity of the gaming industry. If we don’t act now, everyone stands to lose.

By GGB Staff   Thu, Apr 09, 2009

The Michigan legislature has approved a compact with the Gun Lake tribe that will allow a casino to be built near Grand Rapids. The compact, negotiated between Governor Jennifer Granholm and the tribe in 2007, puts nearly 150 acres into trust and assures that the state will get at least 8 percent of the casino’s profits.

By GGB Staff   Thu, Apr 09, 2009

Russian slot supplier Alsart announced it has purchased more than 5,000 used slot machines from key worldwide slot manufacturers, for resale to new Russian gaming entities that may operate in the nation’s four new “gaming zones,” to become effective July 1. A statement from Alsart says the company also will buy equipment from the current casinos, which will be forced to close on July 1, for refurbishment and resale later.

By GGB Staff   Thu, Apr 09, 2009

The permanent casino for Indiana Live! near Shelbyville, Indiana, opened on March 13. The casino, part of the Indiana Downs racetrack, had been operating out of a temporary building until its permanent home was completed.

By GGB Staff   Thu, Apr 09, 2009

Casino Brantford is striving to become the most environmentally friendly resort in Canada with a $37.5 million renovation. The project is being tailored to the Leadership in Energy and Environmental Design program’s standards, and is expected to meet requirements for the program’s Silver certification.

By GGB Staff   Thu, Apr 09, 2009

Connecticut Governor M. Jodi Rell has abandoned plans to allow 24/7 bar service at the state’s two Indian casinos. Her action was prompted by revelations that a Navy sailor who was charged in an accident that killed a college student had been drinking at the Mohegan Sun prior to the crash. The extended hours had not yet been implemented at the casinos, and the sailor had been drinking during normal serving hours.

By GGB Staff   Thu, Apr 09, 2009

Just introduced a few years ago, mobile gambling wagers worldwide are expected to reach $5 billion this year, according to a report issued last month by Juniper Research. This leap has occurred in spite of the global recession, and is expected to increase.

By GGB Staff   Thu, Apr 09, 2009

Mississippi lawmakers have passed a bill that will give casinos tax incentives to add amenities like golf courses, hotels, convention spaces and amusement parks. The legislation is now going before Governor Haley Barbour for approval.

By GGB Staff   Thu, Apr 09, 2009

Members of Nevada’s Senate and Assembly formed a joint taxation committee to discuss solutions to the state’s tax revenue shortage. Leaders of the gaming and mining industries appeared before the committee to talk about their hardships and express the need for the state to look elsewhere for tax increases. The industry leaders did mention their support of a broad-based business tax, which some members of the gaming industry proposed prior to the recession. Committee members have not yet decided whether to increase taxes.  „

By GGB Staff   Thu, Apr 09, 2009

Maryland’s Anne Arundel County is considering a bill that will change zoning laws to allow electronic slots. One county councilman, Daryl Jones, wants to alter the language of the bill to permit possible new slot locations in the future. There currently is one license available, expected to go to Cordish Company, which is planning a casino at Arundel Mills Mall.

By GGB Staff   Thu, Apr 09, 2009

The government of Macau is considering raising the gambling age from 18 to 21. The government is reportedly concerned with excessive gambling by the SAR’s youth and members of the casino staffs. Leong Heng Teng, a member of the SAR’s Legislative Assembly, questioned the government about the increase in problem gambling among young gamblers.

By GGB Staff   Thu, Apr 09, 2009

The Seminole Casinos of Florida have come up with an attention-grabber of a marketing ploy: a $5 million traveling cash display made up of $100 bills, stacked up in a 1,300-pound, $90,000 bullet-resistant Lexan showcase. It’s the largest amount of money ever publicly displayed at a casino, and coincides with a promotion that gives Seminole Player’s Club members a chance to win $1 million by swiping their cards at a designated kiosk. The road show kicks off at Seminole Hard Rock in Hollywood on March 18 and will travel nearly 1,000 miles over the course of about 40 days.

By GGB Staff   Thu, Apr 09, 2009

With revenues down at nine Canadian casinos owned by James Packer’s Crown Casinos, some casino employees have been asked to take unpaid leave or cut their hours. Up to 10 percent of staffers at the Palace and Baccarat casinos in Edmonton will be asked to take unpaid leave for up to two months. The four Lake City Casinos will also cut staff hours. The cuts accompany a 15 percent tumble in gambling revenues since October.

By GGB Staff   Thu, Apr 09, 2009

Isle of Capri Casinos intends to cease operations in the Bahamas and the United Kingdom to cut costs. The 2004 hurricane season damaged the island of Grand Bahama, and tourism has declined in the years since then. Isle of Capri’s Grand Bahama property has suffered as a result. In the U.K., the struggling casino in Coventry may be shuttered if a buyer can’t be found.

By GGB Staff   Thu, Apr 09, 2009

A law that North Carolina legislators passed in 2006 that banned video poker, except for an Indian reservation, has been overturned by a Superior Court judge, who says you can’t have one law for one part of the state and a different law for another.

For years lawmakers have been trying to figure out a way to legalize internet-based video poker, terminals which sit in many gas station and convenience stores. Players play on them using a prepaid phone card.

But the legislature’s latest attempt to address that just seems to have created problems for the Eastern Band of Cherokee Indians and its Harrah’s Cherokee Casino, which lawmakers had not intended to harm.

The judge has stayed the execution of his order pending an appeal, so no one has been affected by the ruling as yet.

Meanwhile, the tribe is asking for a new gaming compact that would allow it to expand the games it offers to include poker and blackjack.

The governor, Bev Perdue, said she wants to figure out how the court ruling might affect this process before moving forward. “We have a team of lawyers going back to see what that means for the compact,” she said last month.

By GGB Staff   Thu, Apr 09, 2009

A ruling by the U.S. Supreme Court in a Rhode Island case, Carcieri v. Salazar, in one fell swoop alters the landscape for Indian casinos, and may call into question dozens of existing ones.

The court ruled in late February that a tribe that was recognized after a 1934 federal law was adopted is not eligible to put land into trust.

The tribe in question is the Narragansett tribe, but there are many other tribes which fit the description, including quite a few that already have casinos, which could now be in jeopardy.

The law the ruling refers to is the 1934 Indian Reorganization Act, which states that tribes recognized after its adoption were not eligible to put land into federal trust. However, the Interior Department has operated under an interpretation that it could put land into trust for tribes recognized after that date.

Interior argued that it could put land into trust for a tribe no matter when the tribe was recognized. The high court disagreed. So, many tribes that put land into trust in the last 20 years could be facing problems.

“Because the record in this case establishes that the Narragansett Tribe was not under federal jurisdiction when the IRA was enacted, the secretary does not have the authority to take the parcel at issue into trust,” Justice Clarence Thomas, writing the majority opinion, declared.

The ruling prevents the Narragansetts from building a housing project on 31 acres in Charlestown, near Providence. It doesn’t address gaming, only the tribe’s desire to avoid paying state taxes. The Reorganization Act referred to tribes that existed after 1889. However, Rhode Island’s legislature disbanded the Narragansetts in 1880, and it was only in 1983 that the federal government recognized it.

But the ruling appears to have a more widespread effect on Indian gaming tribes. Tribes affected include some who operate some of the most profitable casinos in the country. It could invite lawsuits from states that want tribal land to revert to state jurisdiction.

Some legal experts say the decision may not affect post-1934 tribes whose land is already in trust. They agree that only Congress can remove land from federal trust.

Other experts say that tribes whose status is in doubt could ask Congress to amend the 1934 law to specifically include tribes recognized after that year. “I think it would be pretty easy to just do a technical amendment to the Indian Reorganization Act,” said one such expert.

States whose jurisdictions contain such tribes would probably oppose such a move.

Just some of the tribes that could be affected by the ruling include the Oneida Indian Nation in New York, owners of Turning Stone Casino; the Shakopee Mdewakanton Sioux Community in Minnesota, owners of the Mystic Lake Casino;  the Seminole Tribe of Florida, owners of several casinos around the state; the Mashpee Wampanoag tribe of Massachusetts, which is trying to build its first casino in Middleboro; the Gun Lake Band of Pottawatomi in Michigan, which hopes to build a new casino in Wayland; the Oneidas of Wisconsin, owners of several casinos in the state; the Santa Ynez Band of Chumash Indians, which hopes to build a compacted casino; and California’s Chemehuevi tribe, which is bidding to build a casino in Barstow.

By GGB Staff   Thu, Apr 09, 2009

A South Australia organization called Duty of Care wants the government to require electronic identity cards for all casino visitors.

The Independent Gambling Authority is looking into the use of biometric or smart card technology to stop compulsive gamblers from entering gaming venues.

Sue Pinkerton of Duty of Care says it would not cost the SkyCity Adelaide casino much to initiate such a system.

“If people had to swipe a card to get in, if the card contained a photo ID, it’s going to cost them maybe A$6,000 because they’ve got two entrances and they would be able to detect barred gamblers quite quickly,” she said in an ABC News report.

Pinkerton said that barred gamblers will go to great lengths to get back into a casino.

“We’ve had women who’ve dressed as men, men who’ve dressed as women, women and men who’ve worn wigs and colored contact lenses to get into a venue.”

Casino spokesman Andrew Lamb says the cost would be much more than A$6,000.

“It’s been tried in one casino,” said Lamb, “and at that casino revenue dropped by 30 percent.

“If our revenue dropped by 30 percent we’d close down and send 1,100 people home without jobs.”

SkyCity wants more flexibility in problem gaming countermeasures, saying that the current penalties could lead to unfair results and even jeopardize its license. The company also urges the lifting of a minimum three-month ban on problem gamblers.

Hotels in the state also offer slot machine gaming. The Australian Hotels Association said that a security card system like the one described would be “gross overkill.”

By GGB Staff   Thu, Apr 09, 2009

The 2010 Winter Olympic Games in Vancouver could put several hundred casino workers on the dole, at least temporarily.

Casino and off-track betting operations at Hastings Park Racetrack will be closed for about a month in the name of Olympic security. Finance Minister Colin Hansen says the Games “will be one of the greatest job generators in British Columbia’s history,” and employees who are displaced can find other work during the Games.

Howard Blank, vice president of Great Canadian Gaming, said his company’s bid to stay open was formally rebuffed last month by the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games.

“We’d love to be a part of the Olympics,” Blank said. “But it’s not going to happen.” The company is now trying to negotiate preferential hiring for its staff for Games-related employment opportunities.

By GGB Staff   Thu, Apr 09, 2009

As a U.S. company studies the feasibility of gaming in Bermuda, factions are squaring off on both sides of the issue. Those in favor of legalization include Premier Ewart Brown and island hotel owners. The opposed include church groups like the Seventh Day Adventists and the Muslims, who issued a statement calling gambling not just “criminal and immoral” but “an incredibly stupid pastime.”

The Innovation Group is conducting a $300,000 study—funded in part by the hotel industry—on the potential impact of gaming on the island’s deflated tourism industry, including probable tax benefits and possible social repercussions.

Accused by opponents of having a bias in favor of gaming, Innovation President Stephen Szapor said the company has no stake in the issue because its fee does not depend on the outcome.

“If we were just rubber-stamping,” Szapor told the Royal Gazette, “we would be out of business. We have no ax to grind.”

Company Vice President Matthew Landry backed that claim by referencing the group’s recent survey on expanded gaming in California. In that case, Innovation concluded that the market is already saturated.  

“It’s not ‘pro versus anti,’” Landry said. “It’s, ‘Is this going to boost tourism?’”

The study will also assess the possibility of a lottery and internet gaming in Bermuda.

Though the study was not completed until the end of March, Landry has already tipped his hand somewhat by pointing to the success of gaming in another island nation.

“If you take a look at the Bahamas, a lot of the incentives put in place to develop Atlantis are a positive thing that’s really helped that country,” he said.

The Muslim community, however, remains adamantly opposed. A statement from Masjid Quba, one of Bermuda’s two mosques, says its stance “is reflective of the majority of people in Bermuda. We would like to commend Premier Dr. Ewart Brown on his work to seek potential employment opportunities for the people of Bermuda during these tough economic times; however, we feel the risks outweigh the potential benefits... Economically, gambling tends to redistribute money from the working class to the wealthy.”

Hoteliers have been lobbying for years to bring casinos to Bermuda. They are joined in their support by former Premier Sir John Swan and Chamber of Commerce head Philip Barnett.

By GGB Staff   Thu, Apr 09, 2009

Australian casino operator Tabcorp has enlisted an Asian junket operator, the Neptune Group, to increase international visitors to its properties.

The agreement is expected to increase the number of premium players that will visit Tabcorp’s casinos and boost high-end tourism in New South Wales and Queensland.

Under the three-year agreement, Neptune will introduce junket operators to Tabcorp that will encourage premium players from throughout Asia to visit Star City casino in Sydney, Conrad Jupiters on the Gold Coast and Conrad Treasury in Brisbane.

By GGB Staff   Thu, Apr 09, 2009

Despite having licenses to conduct wagering, more than 20 outlets of Cambo Six, operator of betting shops in Cambodia, were shut down for ambiguous “moral reasons” by the government.

Prime Minister Hun Sen claims to be fulfilling a campaign promise, blaming the gambling shops for family unrest and other social ills. His decision apparently did not affect a large casino in Phnom Penh owned by NagaCorp. In addition, legal casinos along the border with Thailand and Vietnam remained in operation.

Senator Phu Kok An, the owner of Golden Crown Casinos, said the government directive did not affect slot machines in his border casinos.

Because Cambodian citizens are banned from gambling in these casinos, the prime minister’s edict to protect families was intact.

Operators protested, saying they had valid licenses, some running through 2011, and could not be simply canceled for no good reason.

“We told the prime minister we have an agreement; we cannot immediately end the agreement,” said Nancy Chau, manager of Cambo Six’s corporate offices.

In addition to Cambo Six, the internet gaming centers operated by Sporting Live Group were also shut down.

“We agreed to close our business in accordance with the government’s decision,” said a Sporting Live employee who requested anonymity.

“We will punish—in accordance with the law—any business licensee who disrespects this declaration,” said a government minister.

The threat apparently carried some weight.

By GGB Staff   Thu, Apr 09, 2009

Las Vegas Sands on target for December Singapore opening

Suggestions that the Sands Marina Bay integrated resort being built by Las Vegas Sands would not open as scheduled in 2009 were shot down last month when the company announced that the debut will indeed take place in December.

Bradley Stone, the company’s president of global operations and construction, said most of the property will be ready at that time.

In addition to the casino, the resort will feature an art-and-science museum, 300 retail stores, and three 55-story hotel towers, with more than 2,500 rooms, connected at the top with a pool, restaurant and observation deck.

Las Vegas Sands expects revenues from the project to rescue the company, currently mired in financial turmoil after construction was halted on its ambitious Cotai Strip development in Macau.

“What happened in Macau certainly won’t happen here in Singapore,” said Stone. “This project is fully funded.”

Already, however, tourism has declined in Singapore, even before the LVS casino or another owned by Malaysia’s Genting Corporation opens. The government expects as much as a 19 percent dip in tourism this year.

“We know the economic situation,” Nigel Roberts, president of Marina Bay Sands, told the Associated Press. “But we have a product that’s going to be stupendous and will override that.”

As for its difficult financial shape, LVS Chairman Sheldon Adelson says the sale of its Macau retail developments should keep the wolves at bay until the revenues from Singapore kick in.

“We can’t control very much the top line, but we can control the middle line and therefore the bottom line,” said Adelson.

While analysts bemoan the timing of the retail sales, Adelson claims to have 16 to 19 buyers interested in the Macau projects, which will keep the company in compliance with its lending requirements.

By GGB Staff   Thu, Apr 09, 2009

In what can only be a blow to the plan to increase tourism in Taiwan by legalizing casinos in the Penghu Islands, the Chinese government has said it will prohibit its citizens from gambling while visiting Taiwan.

“It is Taiwan’s own business to legalize gaming. The mainland’s law makes it very clear that gambling is not permitted,” said Shao Qiwei, director of China’s National Tourism Administration.

The remarks came during a visit to Taiwan by Shao, leading a large delegation of tourism officials and travel industry representatives from China’s 30 major provinces. The visit was designed to boost tourism between the two countries.

Most impacted is the island of Kinmen, which is immediately offshore of the major Chinese city of Xiamen, which is connected via a ferry service. Casino developers will likely shun Kinmen without access to the huge market of Chinese gamblers.

Tourism between Taiwan and China was banned until July 2008. Even so, only 300 of the possible 3,000 permitted daily visas were used by Chinese. The number has doubled to 600 during the first two months of 2009, but still lags far behind expectations.

Tourism groups in Jiangsu and Shandong provinces have launched a campaign to promote tours to Taiwan, with the goal of 10,000 residents from each of the provinces traveling to Taiwan between late February and June.

By GGB Staff   Thu, Apr 09, 2009

The duplicitous nature of the Macau gaming industry was on view last month. In one scene, the six operators have agreed to form a trade association to create a unified front. In another, former monopoly holder Stanley Ho railed against “foreign investment” in Macau, a remark clearly aimed at Las Vegas Sands and its chairman, Sheldon Adelson.

For the trade association, representatives from SJM, Galaxy Entertainment Group, Venetian Macao, Wynn Resorts, Melco Crown and MGM Grand Paradise met last month to discuss the common good. SJM Chairman Ho was elected to lead the organization. He reportedly initiated the meeting. The group will be called the Chamber of Macau Gaming Operators.

Members expect the organization to improve communications among the various companies and between them and the SAR government, which should benefit the entire gaming sector.

The first issue the group discussed was a proposal by the governments of Hong Kong, Macau and Guangdong to allow unlimited visits to Macau and Hong Kong by Guangdong residents. All three governments agreed to the proposal, but it still must be approved by the Chinese central government. The chamber hopes it can be approved by May 1, the beginning of the Golden Week holiday, one of the biggest of the Chinese year.

Despite his leadership in the new association, Ho has never truly accepted the breakup of his gambling monopoly, and has been rankled by the American companies that tried to overshadow his SJM company.

Now, Ho has stepped up his attacks, focused specifically on Las Vegas Sands and its Cotai Strip development, sensing a weakness in the organization when Chairman Sheldon Adelson ousted President and COO William Weidner (see People, page 53).

Comments attributable to Ho in Chinese media outlets demonstrate his stepped-up campaign.

“We are Chinese,” said Ho. “We should unite against foreign capital. We cannot keep silent. If not, the foreign capital will bully us.”

Adelson did not know what to make of the comments.

“You never know the effect his words could have,” Adelson told the Wall Street Journal.

The Journal story continued, however, “If Mr. Ho is trying to stir up nationalist feelings to help steer business from his rivals, it is unclear how much support, if any, he has in higher political circles.

“While he is a member of a top mainland Chinese political consultative body, it was with Beijing’s blessing that the Macau government broke his monopoly on gambling in Macau earlier this decade.”

Ho’s Shun Tak ferry service also recently challenged an agreement that LV Sands had with the government to run high-speed ferries directly to the Venetian in Macau’s Cotai district. A Macau court struck down the agreement, but LV Sands is appealing.

By GGB Staff   Thu, Apr 09, 2009

The recent anti-casino ship rhetoric from the opposition party in Goa may have had more to do with upcoming elections than anything else. But the result has been to spur the government to finally come up with a clear set of rules for the Indian state’s casino operators.

Diwan Chand, special secretary of home affairs for Goa, told the assurances committee of the state legislature that the government is drawing up a comprehensive law on casino gaming. According to the Times of India, within one month the draft legislation will be completed and presented to the law department for examination on legal details.

The government is looking at gaming legislation in force in other countries. Currently, Goa is the only state in India to have any form of legally accepted casino gaming, consisting of an increasing number of casino ships operating on the local Mandovi River and slot machine gaming in a number of hotels.

In recent months, the casino ship industry has come under increased pressure from opposition political leaders and anti-gaming organizations. Accusations have ranged from operators dumping raw sewage in the river to government officials granting gaming licenses and sailing permits illegally.

The new law is expected to contain measures on all aspects of gaming, including taxation.

Legislator Francis D’Souza wants the government to include the appointment of an agency that would be in charge of calibrating gaming machines. Currently, D’Souza said, “no one knows who is getting looted in the casinos.”

The legislation is also expected to set out clear operating rules for casino ships, defining what constitutes an offshore casino. At present, the ships remain within the territorial waters of India at all times, a situation that does not meet the internationally accepted definition of “offshore.”

The former director of the Shipping Corporation of India, Captain Taru Hazari, has said that casino ships should be anchored at least 12 nautical miles from shore, the Times reports. The ships were recently ordered to move out of the city limits to Aguada Bay, only about three-tenths of a mile from shore.

After the law department has completed its examination, the bill will be presented to the legislature. Chand said this will probably occur during the July session.

By GGB Staff   Thu, Apr 09, 2009

Worsening economic conditions in the Baltics and throughout Eastern Europe are forcing Olympic Entertainment Group to change its previous policy of continual expansion.

For the first quarter of 2009, the group announced plans to close 15 casinos that had negative cash flows, closely monitor several others and reduce payroll by 356 employees, around 9 percent. Salaries were also cut by 20 percent.

Because of shrinking demand in slot play, plans are under way to modify the casinos into gaming lounges, with increased food-and-beverage service and fewer slot machines per location. The change will result in savings due to lower per-machine fees. Some casinos will no longer be 24-hour operations. The first of the revamped properties will debut in early Q2.

While revenue compared to 2007 increased in five markets—Belarus, Poland, Romania, Slovakia and Ukraine—the Baltic countries all showed declines. Revenue was down 14.3 percent in Estonia, 5.2 percent in Latvia and 11.7 percent in Lithuania.

OEG ended the year with 133 casinos, up from 122 the year before. In 2008 the company opened 21 new casinos and closed 10. Renovations were performed at 15 casinos acquired from other companies.

In Estonia, the number of slots has decreased 31 percent during the first quarter and dropped 40 percent year-on-year, according to Andri Avila, CEO. There are considerably fewer casinos, and the rate at which the smaller slot casinos are closing is increasing. Avila expects this trend to continue for the next two or three quarters and then—hopefully—stabilize.

Finally, in a move that recalls the glory days of just six months ago, last month OEG announced the opening of a new casino in Lithuania, in the city of Siauliai. The tropic-themed casino has a bar, 31 slots and four tables, and is the second casino in the city of 130,000 to have table games. Total investment was €1 million.

By GGB Staff   Thu, Apr 09, 2009

The de facto casino clubs of Ireland are soon to become licensed and regulated if the government follows through on its new plan.

Ireland has about 50 private members’ clubs that feature casino-style gaming.

The plan was necessitated by the collapse of efforts to set up an all-party committee to come up with national regulations for various sectors of gaming. The refusal of certain Labor Party members to participate on the committee, without a guarantee that fixed-odds betting terminals would be excluded from all consideration, forced the government to rethink its approach to gaming reform.

The result is a two-step plan that will begin with the establishment of a Casino Gaming Control Section within the Justice Department, the Irish Times reports.

First, the new section will register the existing clubs and monitor whether or not they are operating within guidelines that are yet to be established.

Second, the section will be responsible for creating a completely revised gaming act.

A new bill dealing with money laundering will include the legislation relevant to gaming in the private members’ clubs.

Justice Minister Dermot Ahern said clubs will be expected to comply voluntarily with a code of standards and ethics, and that there is no guarantee that all current operators will be granted licenses.

“In reality, by virtue of introducing regulation, it is likely that some venues may have to close down due to an inability to meet the conditions and standards expected in a regulatory environment,” said Ahern.

Ahern said the eventual goal is to develop “a modern, responsive code that recognizes the fact that some people gamble and enjoy gambling. That does not include large-scale casino developments.”

By GGB Staff   Thu, Apr 09, 2009

Gaming operators in southern Russia have reportedly sent a letter to local authorities and legislatures, and to the president’s envoy, asking for their support of a bill that would push back the coming casino closure law until 2012.

The bill was drawn up by the assembly of the Primorye Territory, which is one of the four zones where gambling will be legal as of July.

“The infrastructure of the Azov City gambling zone has not been built,” the operators said in the letter, referring to the Rostov-Krasnodar region. “Its construction cannot be accelerated due to the global financial crisis and the regional budgets’ deficits.”

The association warns of increased illegal gambling and unemployment as a result of closing existing gaming venues with no prepared replacements. About 30 percent of casinos have closed since January 2007.

Meanwhile, about a third of Moscow’s casinos will begin holding poker tournaments after the July deadline for stopping casino gaming, according to an unnamed source at the city’s Gaming Business Association.

While other countries still argue whether poker is a game of skill or a game of chance, Russia’s Federal Sports Agency decided in 2007 that poker is a sport. The order, signed by FSA head Vyacheslav Fetisov, officially added Texas hold’em, Omaha and seven-card stud to the All-Russia Registry of Sports.

The transformation is one option for casino operators, who are looking for new business directions for their properties when casino gaming activities are forced to a halt this summer.

By GGB Staff   Thu, Apr 09, 2009

Mired in an effort to resolve some thorny financial issues that will likely result in bankruptcy, Station Casinos received an offer from rival Boyd Gaming last month that would have Boyd acquiring certain assets of the company.

Boyd offered $950 million for six of the 18 Station Casinos properties: Green Valley Ranch, Aliante Station, Texas Station, the Wild Wild West and the two Fiesta properties in Las Vegas and Henderson. In a letter to Station Chairman and CEO Frank Fertitta III, Boyd Chairman Bill Boyd and CEO Keith Smith said they would be willing to consider purchasing other assets of Station Casinos as well.

Boyd plans to use part of the $2 billion it has in a revolving credit line that it had arranged for the construction of the now-delayed Echelon project on the Las Vegas Strip. Station recently missed payments of $14.6 million and $15.2 million. On February 3, the company submitted a second bankruptcy plan to its bondholders, who rejected an initial plan late last year.

Station Casinos rejected Boyd’s offer, saying that it is not for sale at this time. Boyd later reiterated its interest in the properties, but failed to provide details about assumptions of debts held by those individual properties or whether it would purchase some of Station’s debt to give it standing in any bankruptcy proceeding. The company contends its purchase offer gives bondholders greater value than Station’s revamped bankruptcy plan.

Station’s new bankruptcy plan asks creditors to forgive much of the company’s indebtedness and allow Fertitta and his brother Lorenzo to continue to run the company.

Secured lenders, such as banks, would recover most of what they are owed by Station in a bankruptcy. Bondholders, and secondary unsecured lenders, would likely only get a few cents on the dollar, and would be a roadblock to any bankruptcy approval.

Station has until mid-April to come to an agreement with its creditors.

By GGB Staff   Thu, Apr 09, 2009

With the projected opening of CityCenter just nine months away, MGM Mirage is trying desperately to line up the final funding and refinancing for loans already granted for the project, which some estimate to be as expensive as $11 billion.

In an SEC filing last month, the company warned that it could declare bankruptcy unless better terms were negotiated on over $13 billion in debt.

In the filing, the company declared: “If (MGM Mirage) is unable to negotiate such a waiver or amendment, a majority of the lenders under the senior credit facility could accelerate repayment of borrowings and cross defaults could be triggered.”

The company is also seeking the final $1.2 billion that will complete CityCenter. There was some hope that discussions would incorporate the adjacent Cosmopolitan into CityCenter, with the property’s owner Deutsche Bank raising the final CityCenter capital. Those talks failed, however.

While MGM Mirage did not deny that it was considering sales of any of its assets, Alan Feldman, senior vice president of public affairs, pointed out that existing properties are profitable and that the expectations for CityCenter are equally as high. But the parent company is keeping its eye on the ball.

By GGB Staff   Thu, Apr 09, 2009

Australia’s Crown Ltd. is no longer planning to buy Cannery Casino Resorts, at least not now. However, the Australian gaming giant has replaced the former purchase agreement with a new agreement to make a substantial equity investment in the Las Vegas-based casino operator, and has retained the option to buy the company at a later date.

The agreement followed a contentious two weeks in which Cannery was threatening to sue Crown for trying to back out of its December 2007 agreement to acquire Cannery, which owns three Las Vegas casinos plus the Meadows racino in southwestern Pennsylvania.

The $1.75 billion sale had been approved by Nevada regulators, but hit a snag when Gretel Packer, Crown Chairman James Packer’s sister, joined with three unnamed investors to petition the gaming board to withdraw from the bid to purchase the Meadows racino, citing privacy issues due to Pennsylvania’s public disclosure laws. The original agreement was conditioned on the purchase of all four Cannery casino properties.

The solution to the problem was reached last month in an agreement under which Crown will pay Cannery a fee of $50 million in cash to terminate the former acquisition agreement, and will make a $320 million non-voting investment in Cannery Casino Resorts, with an option to acquire the operator should the regulatory issues be worked out.

Cannery officials were pleased with the outcome. “Today’s announcement puts CCR in an enviable position in the gaming industry with a strong balance sheet, ample liquidity, exciting new properties in Nevada and Pennsylvania, great growth opportunities and more certainty for our employees,” said Bill Paulous, who will now remain co-CEO of Cannery Casino Resorts along with Bill Wortman. “CCR will continue its tradition of excellence in serving local customers in Nevada and Pennsylvania with the highest-value gaming experience.”

By Roger Gros   Thu, Apr 09, 2009

God Bless the “Blue Hairs.”

There have been some disparaging comments recently in several forms of media on the one market that is really keeping the gaming industry afloat in several jurisdictions: the senior citizens.

This is not a new phenomenon. It’s been repeated over and over again in new and existing gaming jurisdictions. The gist of the comments is that casinos are “robbing” senior citizens of their retirement income and that casinos should be prevented from doing that by being banned, shut down or restricted in how they market their product.

Of course, this is just another projection of the “nanny state,” where the government must protect members of society who can’t protect themselves. And it is just another insult to this “greatest generation” that built the society and the privileges we all enjoy today.

It seems that the general theory goes that once you reach somewhere around your 70th birthday, common sense flies out the window and you become susceptible to all sorts of disagreeable scams, with casino marketing at the top of the list.

These contentions are, of course, hogwash. Senior citizens are no more vulnerable in a gambling environment than any other segment of society. These are people who have somehow gotten through their entire life, amassed a retirement income and in most cases raised their children with little or no help from the government or any other group. To intimate that they can’t take care of themselves in the twilight of their lives is not only insulting, it is plain wrong.

These folks have the luxury of leisure time after working hard their entire life. To tell them what they can and cannot do is the ultimate in insolence. But that doesn’t stop people who think they know it all.

In the gaming industry, we welcome all people who make the choice to partake in our particular style of entertainment. And because senior citizens are discriminating in their choices in many ways, casinos are obviously doing something right.

And it’s not just the slot machines that draw them to our properties. It’s the camaraderie, the recognition and the social interaction that they enjoy above any gambling experience.

And while we celebrate this market that is so loyal to us, we have to be concerned about a large falloff in other markets during these difficult economic times.

We had thought we were well on the way to lining up replacement markets for the senior citizens prior to the downturn. The ultralounges were packed with the X, Y and Z generations, plunking down hundreds of dollars for bottle service. Baby boomers were arriving in droves to listen to the bands from the ’60s and ’70s, and enjoy those slot machines themed on their favorite movies and TV shows. And they all enjoyed the gourmet restaurants and exciting shopping experiences.

But those “non-gaming” experiences have suffered as our customers watch their nickels and dimes. And even the gaming budget has been cut as players reduce their annual visits or stay closer to home. This is a disturbing trend, one that may only reverse itself when the economy improves.

The danger, of course, is that these former customers may not return.

So this is the time for our superior marketing departments to come up with some reasons that will keep people coming to casinos.

In Las Vegas, the hook has become the “value” offered by casinos. No longer can the fancy hotels of the Strip demand—and get—$300 a night and more in ADRs. I got an email the other day offering rooms in what is undoubtedly the Strip’s most luxurious resort—Encore at Wynn—for $149 a night. You can bet that the other casinos are offering corresponding rate reductions.

Other jurisdictions might use other solutions. In the early 1990s, Atlantic City was suffering the results of a severe recession in the northeastern United States. One of the ways it pulled out was to present championship boxing. Luckily, Mike Tyson was the premier figure in the sport and he fought frequently on the Boardwalk.

Day-trip destinations like riverboats or Indian casinos might try some of the tried-and-true marketing solutions such as cashback or bounce-back coupons.

I don’t have the answers, clearly. But we can’t just sit back and feast on the largesse of senior citizens. We must develop other markets and market segments so that when the recession ends—and it will—we will be prepared to serve a wide variety of expanding markets.

So while we welcome our existing customers, we need to have our sights set on the future, when things get better and people start spending money again. And we once again concentrate on growth, not survival.