As we begin yet another year in this exciting industry, we have much to be thankful for and much to anticipate. 2007 saw the opening of several new jurisdictions, the continued expansion of global gaming spending, and the adoption of long-awaited standards (just to name a few landmarks), all which have helped make the gaming industry stronger than ever before. With these accomplishments behind us, we look to 2008 with hopes for rising profits, more-satisfied customers, expanded gaming opportunities, and the widespread implementation of server-based gaming and all the innovation we trust it will provide.
The budgets are bulky, the pipeline is full and innovation is brewing, but the dollar is weak, the market is wary and regulations are tightening. So, 2008, what will you bring for the gaming industry? Let’s turn to the experts — leaders and innovators from all areas of the industry — to find out what they believe the New Year has in store for us all.
Frank Fahrenkopf
President, American Gaming Association
2008 is shaping up to be an exciting year, both here at the American Gaming Association (AGA) and on the broader political landscape.
Diversity has been a key initiative at the AGA for many years, and the AGA’s Diversity Task Force has major activities in store for 2008. We plan to update the most recent snapshot of employment diversity throughout the industry, as well as put the final touches on a first-ever snapshot of industry-wide diversity spend. We also plan to update the AGA’s online Diversity Resource Guide to offer an even more powerful tool for minority, women and disadvantaged business owners who are looking to access business opportunities in the gaming industry.
On the heels of an unprecedented fundraising campaign that netted $7.5 million in commitments to the National Center for Responsible Gaming (NCRG) over the next five years, the NCRG has big plans for this year as well. As the AGA’s affiliated charity, the NCRG is working to develop an ongoing casino employee responsible gaming education program that will augment the traditional activities planned once a year for Responsible Gaming Education Week. The NCRG also is partnering with researchers affiliated with Harvard Medical School to help colleges and universities address problem gambling on their campuses, and to develop a program to help parents talk to their children about gambling. The NCRG and the AGA also are teaming up to develop a new program to provide Native American casinos with the resources they need to develop comprehensive, responsible gaming programs at their properties.
Also in 2008, the AGA will continue to serve as the primary resource for the most up-to-date and reliable information about the commercial casino sector. This May, the AGA will release the tenth addition of our annual State of the States report, which has grown into one of the most respected and cited industry publications in the country. We will continue to explore complex industry-wide issues through our tenth anniversary research series and the new Real Deal website, and we will continue to expand the activities under its media outreach program in an effort to educate reporters in emerging markets on the facts about our industry.
We also will continue to build on our initiatives to promote business opportunities and innovation through our growing Global Gaming Expo (G2E) family of events. More than 30,000 gaming professionals from around the world attended our flagship G2E event last November in Las Vegas. The 2007 show included many new features that will carry over to 2008, including expanded security and surveillance and technology pavilions, as well as a new program to promote leadership skills among the next generation of gaming executives: the G2E Leadership Academy.
2008 also will mark the second year of G2E Asia, taking place this year at the newly opened Cotai Strip Convention and Exhibition Center at the Venetian Macao. Our 2007 event, held at the Macau Tower, attracted 3,000 gaming professionals from more than 50 countries and featured nearly 28,000 square feet of sold-out exhibit space. With the additional space provided by the new facilities at the Venetian, we will have the ability to develop G2E Asia into just as large and diverse an event as our flagship show. We plan to debut a significantly expanded education program at G2E Asia 2008, and we already have sold more than 77,000 square feet of exhibit space.
Of course, the AGA’s primary mission continues to be to protect the interests of the commercial gaming industry and its employees in Washington, and we will continue to promote industry positions on such legislative topics as terrorism risk insurance, travel and tourism issues related to the Visa Waiver Program, tax reform, immigration reform, and various pieces of employment legislation.
Additionally, we will continue to provide support for the Internet Gambling Study Act calling for an independent, congressionally funded study of Internet gambling so we may determine the proper way to address this issue in the United States.
Obviously, the upcoming elections most likely will stymie action on some of the more controversial issues on the Hill, and from my perch in Washington, this year’s election is shaping up to be one of the most interesting in history. It will be exciting to watch how it all plays out from our front row seat here in Washington.
ASSOCIATIONS
Jack Bulavsky
Executive Director, Association of Gaming Equipment Manufacturers
AGEM continues to grow its membership and establish itself as an international trade association representing manufacturers of electronic gaming devices, systems and components for the gaming industry.
For the coming year, the association will be focusing on creating a greater awareness of its mission so prospective companies can better realize and understand the many benefits derived from AGEM membership.
AGEM’s mission is to promote and represent the interests and concerns of gaming equipment manufacturers. Since AGEM’s inception six years ago, the association has been a strong advocate before state legislatures on gaming product services and trends, while staying abreast of gaming issues throughout the country. We also believe it is vital that manufacturers and their working partners remain unified so that membership is properly represented at tradeshows.
Speaking of tradeshows, the most valid benefit of belonging to AGEM is the 10 percent discount on exhibit space members receive at G2E in Las Vegas and G2E Asia in Macau. That 10 percent discount remains in effect as long as the company is an active AGEM member.
In an effort to better market the non-profit AGEM, several committees have been formed to lay the groundwork for its coming growth. Those committees are Marketing, Government Affairs, Education/Donation and Investment.
The Marketing Committee is chaired by Tom Nieman, JCM Global. Other members are Tracey Chernay, TransAct; Ed Rogich, IGT; Brooke Dunn, Shuffle Master; Kunal Mishra, Cadillac Jack; and Krista Colonna, Atronic.
Governmental Affairs is chaired by Walt Stowe, Elixir Gaming. His committee includes Mark Lerner, Bally Technologies; Neil Friedman, IGT; Tom Jingoli, Konami; Bill Bartholomay, WMS; Erik Batzloff, GTECH; Brooke Dunn, Shuffle Master; and Gordon Dickie, Cadillac Jack.
Bob McMonigle, Aristocrat Technologies, chairs the Education/Donation Committee. His members are Orrin Edidin, WMS; Walt Stowe, Elixir Gaming; and Brandon Knowles, Transact.
AGEM’s Investment Committee is chaired by Mark Lerner, Bally Technologies and includes Neil Friedman, IGT; Tom Jingoli, Konami; and Alisha Ray, PGIC.
AGEM is proud to support responsible gambling programs, and further exploration of these programs is on the 2008 agenda. Last year, in addition to the contributions made by individual members of AGEM, the association donated significant support to the National Council on Problem Gambling, the Nevada Council on Problem Gambling, the National Center for Responsible Gaming, and the Problem Gambling Center.
Current AGEM members include: AC Coin & Slot, Aristocrat Technologies, Atronic, Bally Technologies, Cadillac Jack, Cyberview Technology, Elixir Gaming Technologies Inc., FutureLogic, Gaming Partners International, Gary Platt Manufacturing, GTECH, IDX, IGT, IPS Inc., James Industries Inc., JCM Global, Konami Gaming, KSK, Las Vegas Gaming Inc., MEI, Multimedia Games, Progressive Gaming International, Rocket Gaming Systems, Shuffle Master, Summit Gaming, TransAct Technologies, Wells-Gardner Electronics, WMS Gaming and 3M Touch Systems.
AGEM meets monthly in Las Vegas.
Sheila Morago
Executive Director, Arizona Indian Gaming Association
In 2008 Arizona tribes will be following the money. We will be closely watching the U.S. Attorney’s office in Phoenix to see how a new pilot program is working to deter casino-related crime. The program provides funds from the Arizona Department of Gaming (ADG) to support an Assistant U.S. Attorney who focuses on casino-related crimes. It is the first of its kind in the nation.
The ADG and Arizona tribal leaders, representing the 19 members of the Arizona Indian Gaming Association (AIGA), initiated the concept of the U.S. Attorney and ADG working jointly to obtain criminal prosecutions of casino crimes. Tribes and Tribal Gaming regulators told ADG that they wanted more criminal enforcement to protect tribal assets and the gaming public. Under the terms of the pilot program, the ADG will fund the position for five years. The ADG receives the majority of its funds from revenues generated by gaming tribes.
The Memorandum of Understanding (MOU) to establish this program was signed in 2005, but a series of staffing problems delayed its launch until November 2007, when the position was successfully filled. The new Assistant U.S. Attorney, Mark Brnovich, brings a background that is unique to this position in that he is very familiar with the compact requirements, the Arizona Department of Gaming and the tribes. Tribal leaders are hopeful that his hiring will send a message that Arizona does not tolerate casino-related crime. While crime has not been a major problem at tribal casinos, tribal leaders have zero tolerance for it. We will all be watching to see how this effort pays off for tribes, the state and our customers by deterring criminal actions.
Tribes will also be welcoming new customers into our casinos in 2008. I can predict this with confidence so long as we continue to provide the outstanding service and positive gaming environment our patrons have come to expect. Why? We have numbers on our side. We are fortunate to be living in a state that continues to be one of the two fastest-growing in the country. In 2007, Arizona again grew by 3 percent. Our population is now more than 6.31 million, and the state anticipates growing by another 3 percent in 2008. More people mean more opportunities to expand our customer base.
We will also be looking to Washington in the New Year. During the next few months we should know if the National Indian Gaming Commission (NIGC) has finalized Class II gaming regulations. Arizona does not depend upon Class II gaming; we ran successful and expensive ballot initiative campaigns to ensure that we are a Class III gaming state. But we are extremely concerned about the viability of Class II because it is critical that we protect our base. Any weakening of Class II gaming has the potential of weakening our industry.
Finally, in 2008 it’s a sure bet that tribes will continue to be good neighbors. We have made it a priority in Arizona to work responsively and responsibly with our surrounding communities and with the state. Tribal governments and casinos now provide philanthropic support for hundreds of charities and good causes. In addition, through statewide gaming revenue sharing, Tribal Governmental Gaming is contributing hundreds of millions of dollars to support education, emergency and trauma care, and economic development through tourism and wildlife conservation. And, because we are fortunate to have a governor, Janet Napolitano, who is supportive of tribes, we will continue to work closely with her office in 2008 to encourage an agenda that is beneficial to tribal people and all Arizonans.
As the new year unfolds, we cannot control the national economy or the fallout from the sub-prime lending market. But if we all do our jobs right, we can ensure that Arizona’s Tribal Gaming industry continues to be a model for the nation in terms of our compacts, our regulatory structure and the positive impact that gaming has on economic development for tribes and Arizona.
William P. Rutsey
President and CEO, Canadian Gaming Association
A year ago, no one could have predicted the single biggest story in Canadian gaming in 2007: the nationwide concern about the possibility of winning lottery tickets being stolen by lottery retailers. Nor would anyone have suggested that the CEOs of Ontario Lottery and Gaming, British Columbia Lottery Corporation, and the Alberta Liquor and Gaming Commission would resign.
This notwithstanding, the Canadian gaming entertainment industry has continued to grow, to more than $15 billion (Cdn.) annually and is Canada’s biggest entertainment industry — about the same size as professional sports, recorded music, television and movies combined. Recent and near-term future growth is being driven primarily by casino and racino development.
A primary driver of growth is provincial government gaming policy, the corollary of which is the reluctance of governments to initiate new legislation in the run up to elections.
Recent elections in three provinces (New Brunswick, Ontario and Saskatchewan) bring the possibility of new initiatives, as evidenced by the new gaming strategy for New Brunswick, which includes the release of a Request for Proposals for a destination casino and entertainment complex. On the flipside, upcoming elections in Alberta and British Columbia would suggest that nothing beyond projects already in the pipeline will occur for at least 18 months.
On the racino side, two provinces (Ontario and Manitoba) are taking a look at their programs designed to support the horseracing industry. Questions that may be explored relate to the numbers and locations of gaming devices and revenue sharing.
Many people see the greatest near-term opportunity for growth in Canada as being on the non-gaming side, with an emphasis on entertainment and hospitality, food and beverage, meetings and attractions, and retail.
From a more speculative point of view, will the recent lottery concerns result in one or more provinces look at getting out of selling tickets by privatizing (and, at the same time, monetizing) its lottery operations as in some U.S. states and internationally?
And finally, will 2008 be the year that Internet gaming is given aserious look by a particular province, or more likely, the Interprovincial Lottery Corporation? Three lottery corporations (Atlantic, Quebec and B.C.) currently offer limited lottery products through the Internet, but i-gaming continues to gain in popularity among Canadians, as annual i-gaming wagering is in excess of $300 million annually.
The Canadian Gaming Association looks forward to continued growth and a full year of activities, beginning with the release of the final report from our national economic impact study, plus several other research projects, as we continue to be an important voice of gaming in Canada. We are planning the largest Canadian Gaming Summit ever for Montreal, Quebec, April 29–May 1. The Summit brings together over 1,000 Canadian gaming executives for the country’s only tradeshow and conference. This year’s program includes an expanded legal and regulatory track and a one-day symposium on the future of horse wagering, held in partnership with Standardbred Canada. Mark the date and plan to join us.
Anthony Miranda
Chair, California Nations Indian Gaming Association
As Tribal Government Gaming in California marks its eighth anniversary since the legalization of Class III gaming, several recent events have become increasingly troublesome. Foremost among these concerns is the struggle to protect Tribal Government Gaming rights.
One of the most critical issues facing tribal governments is regulations being proposed by the National Indian Gaming Commission (NIGC) relating to Class II gaming devices’ definitions, classifications, and technical and minimum internal control standards. Although the proposed regulations were first published in October, concern over the impact to tribes was so great, the NIGC announced in November that it was extending the comment period from Dec.10, 2007, until Jan. 24, 2008.
Through the NIGC’s Minimum Internal Control Standards (MICS) advisory committee, the tribes, the federal government and representatives from the gaming industry have been successful in drafting updated technical standards and MICS. Within these documents, Class II games are thoroughly defined. It would be an unnecessary divergence for the NIGC to unilaterally re-define Class II games and would violate the intent of the Indian Gaming Regulatory Act (IGRA). I urge everyone to review the proposed definitions and classifications proposed by the NIGC and provide comment prior to the Jan. 24 deadline.
Another issue of concern for California tribes is the continued attack from a handful of commercial gaming interests. This time, a Las Vegas casino owner, a labor union and two wealthy gaming tribes have qualified four separate referenda that seek to overturn the Legislature’s ratification of Tribal-State Gaming Compacts signed by four individual tribal governments and the state of California. Their efforts are purposely deceptive and attempt to undermine the government-to-government process in which the Indian Gaming Regulatory Act (IGRA) was built. For years, tribes across the country have followed the compacting rules mandated by Congress when they passed IGRA nearly 20 years ago. Now a handful of special interests are trying to undermine that process for their own benefit.
The efforts by these outside third parties, who have their own financial or political agendas, is a direct challenge to the future of the Indian Gaming industry and all California tribes, whether they have gaming operations or not. CNIGA views these efforts as a direct assault on the sovereign right of all tribal governments throughout the country to negotiate Gaming Compacts on a government-to-government basis.
Whether through ballot initiatives, referenda or legislative attacks, opponents of tribal governments will stop at nothing until they take everything of value away from tribes. We, as leaders, must always remember that the protection of our rights as sovereign governments, recognized under the United States Constitution, is of paramount importance.
The battles we face today are different from those of our ancestors; however, the goal of our opponents remains the same — to destroy our inherent rights little by little until there is nothing left. We must not let this happen. We must remain strong and focused for ourselves and for the generations to come.
Lois Rice
Executive Director, Colorado Gaming Association
The Colorado Gaming Association (CGA) is preparing for the 2008 session of the Colorado General Assembly, which convenes on Jan. 9. This year, we anticipate there will be several measures introduced that affect the limited gaming industry.
Last year the Colorado legislature repealed the casino exemption in the statewide smoking ban. Colorado casinos will be smoke-free effective at 9:00 a.m. on Jan. 1, 2008. There is no provision for indoor smoking areas, so our member properties have been working with their local building and zoning officials to design outdoor patio space to accommodate their smoking guests. It is difficult to determine how the smoking ban will affect casino AGP, but our study of other jurisdictions with smoking bans tell us that revenues may decrease 10–15 percent for the first year that the ban takes effect. Due to limited casino gambling alternatives in the state, we are hoping Colorado’s revenue numbers don’t decline to the extent they have in other jurisdictions with smoking bans. Due to the contentious nature of the smoking legislation over the last two years, we are hoping that this year’s general assembly will wait to determine the impacts of the smoking bans in Colorado before introducing additional measures in this area.
Like many other states, Colorado is examining measures to meet budget shortfalls for the coming year, particularly in the areas of education (K–12 and higher ed.), healthcare, transportation needs and renewable energy programs. Several legislators have indicated that they would be introducing referred measures to raise the $5 limited-stakes bet maximum in order to generate additional gaming tax revenue for the state. A referred measure would require a two-thirds majority vote in both the House and Senate, and given the current composition of the general assembly, it is doubtful that these measures would pass. However, if the legislature feels they have exhausted all other potential revenue sources, they may be able to garner support to get these measures passed. Our industry’s concern is that amendments may be added to the bill that we couldn’t support, such as expansion of gaming to other areas of the state. In that case, we would have to work with the industry lobby to kill the measures, as 80 percent of Colorado voters continue to oppose any efforts to expand gaming outside the three towns of Black Hawk, Central City and Cripple Creek.
Last year, the cities of Black Hawk and Central City formed a joint convention and visitors bureau to draw people to the two towns, and will be launching a print and broadcast media campaign to showcase what dining, entertainment and gaming attractions are available for visitors to the area. The CGA has been working with the bureau to help with messaging and target audiences. There will be new activity in 2008 in Cripple Creek as well. A new property, the Wildwood Casino, is scheduled to open next spring with an estimated 700 devices, which will generate some new excitement in Cripple Creek.
The CGA continues to be proactive on responsible gaming issues. This year, we are helping the Problem Gambling Coalition of Colorado in advancing legislation to amend the statutes governing the Local Government Limited Gaming Impact Fund so that problem gambling treatment providers located outside of the counties contiguous to the gaming districts can apply for grants to provide help to problem gamblers. Currently, only organizations in contiguous counties are eligible to apply for grants through this fund. We are also in the process of working with the treatment community to revamp our casino employee training programs on problem and underage gambling so that the most current problem gambling research is reflected in the programs.
We are looking forward to working with our regulators and elected officials on what promises to be a busy and challenging year for the Colorado gaming industry.
Peter DeRaedt
President, Gaming Standards Association
2008 will be a great year for GSA. It was not that long ago that GSA was founded — May 1998, to be exact. It is now 10 years later and, with our members’ support, we have achieved what we set out to achieve. Yes, it has taken a long time, but today it is virtually impossible to imagine our industry without an association such as GSA that brings together the best technical experts to discuss technologies and develop common standards.
What can I forecast for the industry for 2008? One word: imagination.
I believe this will be the year that the industry fully realizes the potential the G2S protocol standard holds, and the year that we allow ourselves to take off our self-imposed shackles of limitation and really allow ourselves to ask “what if?” I believe 2008 will be the year that OEMs let their imaginations run wild, inventing and presenting amazing new features and capabilities that will attract the players of tomorrow.
The reason for this forecast is what we experienced in GSA’s booth at G2E in November. The day before the show opened, while we were still setting up, we were flooded by a steady stream of engineers who were asking very specific, very intelligent questions about G2S and its applications to their specific needs.
We were delighted to have a booth bustling with engineers from OEMs wanting to make sure they fully understood the protocols’ definitions and the imagination they unlock, particularly the G2S protocol. We were thrilled to have engineers from properties coming in, beginning to prepare today for the coming reality of tomorrow.
This is a very positive sign for the industry, and it means we are on the cliff of a new and very exciting era, which is why I can make a prediction of imagination.
And imagination is not limited to OEMs. Manufacturers’ games have to go somewhere, and I also believe this is the year that operators will also allow themselves to imagine themselves doing business in a new and creative way, addressing a new and more sophisticated player with more sophisticated tastes and expectations.
This will be a year when operators will dream of reaching players more directly, allowing them to play in more places with more interactivity, enhancing player experience and, therefore, player loyalty.
Operators are already familiar with GSA’s standards, thanks in part to the newly founded operators’ advisory committee, where GSA now provides operators the opportunity to discuss their fundamental business requirements. If one looks at the various new products that have been introduced at G2E, it is clear that open standards drive innovation. This innovation will only accelerate over time as the development community feels more comfortable with the technology and the standards get more widely adopted.
For 2008, we have various initiatives planned. It will be the year during which we will launch the long-awaited certification program, and a Plug Fest in August will demonstrate true interoperability and plug & play. We will also announce the addition of various new services to our website and a new educational program. In addition, GSA staff will expand with the recruitment of another technical director that will be focusing on the S2S protocol.
Wes Ehrecke
President, Iowa Gaming Association
In July 2007, the last of the four new casino licenses authorized by the Iowa Racing and Gaming Commission (IRGC) opened for business, bringing the total number of commercial casinos to 17. In the 2007 legislative session, a bill was signed into law that removed the requirement for water to be under the gaming floor. Several riverboat casinos are building, or will make plans in 2008 to build, a newly defined gambling structure on land. Their expanded footprints will enhance the amenities to be offered, including convention and meeting space, restaurants, spas, a golf course, hotels, a bowling ally and more. Hundreds of millions of dollars are being invested into these facilities to upgrade their presence and provide a premier entertainment experience.
Citizens of a county where a casino is to be located must pass a referendum ballot initiative as an initial step to be considered for a license. Citizens are also required to vote every eight years to decide whether the casino should remain in existence. This referendum issue is important for two reasons.
First, there are at least four counties that passed a referendum vote that would like to be considered for a casino license. The IRGC has indicated that they may evaluate sometime in 2008 whether any more locations should be considered with analysis of any adverse impact to the existing casinos, future economic trends, etc.
Second, the legislature will be asked to consider a bill that has already passed the Senate to repeal the referendum vote requirement if a county has successfully passed the referendum two consecutive times. Eleven counties would fit this category and their previous votes in 2002 were a strong indicator of wide-based community support, as each passed its referendum by an average of 74 percent! All counties would be required to vote again in 2010 if legislative changes to repeal are not made.
The legislature is also considering in its 2008 session whether to adopt a local ban on smoking, leaving communities to decide if they want to then vote to implement one and, if so, which local entities would be exempted. The casino industry has heightened elected officials’ awareness to the considerable investment in state-of-the-art filtration and ventilation systems to accommodate both smokers and non-smokers, and also the impact of revenue loss to the state without an exemption. It is uncertain what the outcome will be relating to passage of smoking ban legislation.
Certainly the gaming industry is not recession proof, nor is it immune from inclement weather that can affect companies’ bottom lines. The recent increased heating and gas prices, housing slump and some early-winter icy weather have all combined to limit casino revenue growth compared to last year, as customers have tightened their belts somewhat with their dollars budgeted for discretionary entertainment. However, the outlook for 2008 is positive, as Iowa’s 17 commercial casinos are committed to the necessary reinvestment for upgrades or building new to remain a viable part of Iowa’s economy and tourism sector. There is optimism there will be nominal growth to exceed the benchmarks established in fiscal year 2007, as the gaming industry generated over $300 million in tax revenue, purchased over $300 million in products and services in the Buy Iowa First program, and over $70 million in charitable contributions were granted to thousands of worthwhile nonprofit organizations.
Also creating an appreciative excitement among the citizens is the legislature’s recent creation of a program that allocates gaming tax revenue to 85 non-casino counties. Qualified community county foundations were established to receive these funds, ($77,000 each in 2007), to be a catalyst for philanthropic partnerships and assuring grants are distributed to every corner of the state via local boards deciding how best to utilize those dollars.
Wade Duty
Executive Director, Louisiana Casino Association
The end of 2007 in Louisiana brings not only a closeout of the calendar, but also the end of the current governor’s administration and the beginning of the practical effect of term limits in the state. With over 50 of our 144 senators and representatives being newly elected for the 2008 term, the industry will see both a loss of supporters and opponents but, more importantly, a loss of legislative experience. Accordingly, the Louisiana Casino Association has begun an educational initiative to increase awareness of the positive economic impact of commercial casino gaming, including both direct mail-outs to all legislators and a reception scheduled for the first weeks of the new session.
With the second year of over a billion dollars in state surplus, we are not anticipating a gaming tax increase effort, but we may see a return of other past legislative efforts that have been troublesome, including restrictions on advertising, expansion of “deadbeat dads” jackpot interception and further restrictions on public smoking. The incoming governor has made ethics reform a central part of his campaign and has committed to a special legislative session in late February to pursue sweeping changes to lobbying efforts and legislators’ financial reporting requirements. This may create a zealous “reform” environment that could tempt some well-intentioned but uninformed new legislators and/or anti-gaming veteran legislators to consider legislation that interferes with business decisions that are more properly the province of the operator, while doing nothing to enhance the integrity of operations.
Another major issue for 2008 will be the status of the Certificates of Inspection (COI) issued to our riverboat gaming vessels by the United States Coast Guard (USCG). Current gaming statutes require either a COI or that the vessel be inspected by an approved third party inspector to the USCG’s COI standard. As most other riverboat gaming jurisdictions are already aware, the USCG has sought to withdraw from the inspection of these vessels for a number of years, often without adequate planning, communication or concern for the effect such an action would produce. At present, both the association and our gaming regulators are working to develop an alternate state inspection program. This is a complex process, as consideration must be given to the qualifications of the inspector, the scope and cost of inspections, how to address newly constructed vessels that have never held a COI, and how to draw reasonable delineations of responsibility and inspection authority for the area where the vessel interfaces with the shore facilities. Of primary interest to the association and its members is keeping the inspection criteria “open,” or non-proprietary, in an effort to allow competition and control costs.
Competition from nearby gaming states following the hurricanes of 2005 remains strong as Mississippi, reevaluating the wisdom of water-based gaming operations in hurricane-prone areas, brought its Gulf Coast casinos on shore without increasing state gaming taxes and is now enjoying revenues greater than its pre-storm levels. These new amenity-rich facilities, combined with the aggressive marketing Mississippi’s lower gaming tax rate allows, applies significant pressure to south Louisiana operators to maintain their revenue. In the northern part of the state, the explosion of Native American Gaming in Oklahoma (85+) has been felt as customers consider whether to drive 45 minutes from Dallas to engage in Class II gaming or three hours to enjoy the full service casinos in Shreveport/Bossier City.
On a more positive note, as we enter our 15th year of gaming operations, we have seen a maturation of both the industry and regulators as each side has come to understand what the other expects of it. While there will continue to be some friction between the regulators and the regulated, the working relationships and communication are as good now as they have ever been. The incoming governor will appoint a new commander of our state police, who are the enforcement arm for gaming regulation. We also have elected a new state attorney general. Hopefully the heads of these two agencies will retain the experienced staff that has over years learned the difference between an oversight and a deliberate effort to circumvent the regulatory scheme.
Ernie Stevens Jr.
Chair, National Indian Gaming Association
As we kick off a new year, I am filled with overwhelming pride and admiration for all that Indian Country has accomplished this year. We head into 2008 knowing that Indian Gaming is a $25 billion industry and growing. This is not only crucial to the economic interests and vitality of the country, but also helps tribal governments preserve their unique cultural role in the history of the United States.
As a national organization representing 184 Indian Nations, we take our marching orders from tribal leaders and their representatives. Their first and last priority is to always protect and defend Indian sovereignty. The National Indian Gaming Association (NIGA) protects tribal sovereignty by working tirelessly on Capitol Hill against any legislation or regulation that negatively impacts Indian Country.
In 2008, we will continue this mission by working as a united front with tribal leaders and national organizations to advance the lives of Indian people economically, socially and politically.
As 2007 ended, our efforts led to the passage of legislation that helps raise awareness of Indian Country’s sacrifices in the building of this great nation. “Native American Heritage Day” passed the House of Representatives as a joint resolution, and we are now working with the Senate to ensure its passage in 2008. This day will help our national effort to educate the public about the true story and contributions of tribal governments and individual Indian people to the United States.
In 2008 we expect a great deal of our time and effort to be spent defending our Class II gaming industry. In November of 2007, the National Indian Gaming Commission (NIGC) published its proposed Class II rules establishing new definitions, technical standards and Minimum Internal Control Standards (MICS) for Class II Bingo games. Our tribal leaders immediately objected to the lack of consultation in the development of these regulations.
NIGA will continue to oppose any changes to Class II games that are in contravention of the five federal appellate court victories Indian Country has achieved over the last decade. Further, until the NIGC fulfills the consultation requirements under Presidential Executive Order 13175, Indian Country should not be forced to debate technical changes to settled law. Without proper consultation, the NIGC has caused great uncertainty in the Class II industry, and it needs to sit down with Indian Country and engage in a meaningful dialogue.
In addition to our legislative and regulatory activity in 2008, NIGA will work on a number of initiatives to help tribal governments build and sustain healthy economies through economic development.
Through our continued relationship with NCAIED, as well as other groups like the National Indian Business Association and the American Indian Chamber of Commerce, NIGA is working hard to ensure the future success and well being of our Native- and tribal-owned businesses.
We want to ensure that our Native businesses are given an equal footing with other non-Native businesses when they are contracting with Indian casinos. When NIGA launched the American Indian Business Network in 2003, our objective was to increase the levels of service and products available from Indian-owned businesses.
This network has become an important forum for Indian-owned businesses to showcase their products and interact with other business owners and potential customers. NIGA believes it is important to give our businesses the tools and expertise they need to compete and secure contracts and business opportunities. Ultimately, the American Indian Business Network is about empowering Native-owned businesses and expanding beyond just gaming.
Looking back at 2007, we witnessed amazing success, and I know the momentum will continue in the year ahead. As the Chair of NIGA, I look forward to working with Congress to ensure the voice of our member tribes is clearly heard on Capitol Hill throughout this process. Working together with a strong sense of unity, NIGA will meet this and future challenges with the deepest sense of responsibility, dignity and strength that is so representative of Indian Country.
OPERATORS & PROPERTY MANAGEMENT
Chuck Hickey
Director of Slot Operations, Barona Valley Ranch Resort & Casino
If 2007 was the whispered promise of server-based gaming, then I expect that 2008 will elevate that whisper into a shout about the next generation of slots, and more importantly, the applications that will reside on them. In developing the necessary basic functions of downloading and configuring games, we have discovered the potential for a whole new world of possibilities.
If you had asked me a few years ago if download and configuration were good ideas and the wave of the future, I most assuredly would have agreed with you that it was. A funny thing happened along that D&C road. We discovered that not only could we dynamically change our floor to reflect the patrons du jour, but we also discovered we could communicate with them in ways we never thought possible.
I believe that 2008 will be the year we explore and learn about those possibilities. We will learn how to penetrate the tunnel vision of a typical slot player, and we will hopefully learn what we can say and how often we can say it without being intrusive. The first banner ad you saw on the Internet might have convinced you to click your way toward some free offer of (use your imagination), yet now they are just bothersome pests and intrusive to your Googling goals. It seems counterintuitive to me that we have built machines to capture the imagination of our players, focus them on spinning reels and graphics, yet want to take them out of that trance. But I do know that there is an as-yet-undeveloped, killer application that will reside on our server that will encourage loyalty and increase a marketing advantage over the competition. I’m not sure that 2008 will be the birth of the killer application — but it may well be conceived in 2008.
Overall I see 2008 to be a dynamic year. Competition for floor share has heated up among the various slot manufacturers and the quality of machines and games is improving. Other new technologies are making appearances with various degrees of acceptance. 2008 may be a transition year for these technologies as we discover which the players like and which are just passing fads. Again — this is a technology in search of a good application.
In closing, I see 2008 as a year in which technology-driven developments look for applications to justify their existence. We now know that we can do lots of things with and to our guests, but now we have to figure out what to do, when to do it, and after the fact, discover whether any of it made sense to do in the first place.
Larry D. Woolf
President & COO, Navegante Group Inc.
Over the last decade the gaming industry has seen tremendous expansion. It shows no sign of letting up, and Navegante is following suit. Navegante currently manages 10 non-restricted gaming operations in Nevada, comprising 5,500 slots, 200 table games and 2,400 hotel rooms, making Navegante one of the largest privately held casino management companies in the world. We also oversee a non-gaming lodge.
2008 is already developing into a promising year for us. For starters, we will be on the Nevada Gaming Commission’s January agenda to seek and obtain approval to become the operator of a very popular Las Vegas casino. Also in January, we will have the grand opening of the Grey Eagle Casino in Calgary, Canada, a project we have been working on for almost seven years. Grey Eagle Casino will be Calgary’s newest and nicest casino in Alberta.
Navegante has become the “go-to” company for entities seeking entry into the casino industry through the purchase of an existing property or the development of a new property, not only in Nevada but throughout the world. We are currently working on more than 12 casino management opportunities around the globe, many of which will come to fruition in the New Year.
Navegante’s primary operational focus is casino development and management, but we don’t stop there. We have several departments specializing in the areas of executive recruitment, project development, operational consulting and retail operations. Here is a little breakdown:
• Navegante Gaming is the casino management arm of Navegante. In 2008, Navegante Gaming intends to consolidate all gaming management operations under one roof, allowing all operations to enjoy similar economies-of-scale benefits that the large corporate operators command.
• Navegante Search/CasinoRecruiter.com has been in operation for eight years and has become a premier executive recruiting company, strictly focusing on the recruitment and placement of top-level executives within the gaming and hospitality industry.
• Navegante Development works worldwide, evaluating and managing development opportunities and client and investor relationships, as well as keeping up to date with all jurisdictional happenings. We have our thumb on the pulse of every emerging and existing gaming jurisdiction, and our developmental team prides itself on being the ultimate authority of information related to each and every gaming jurisdiction, domestic and international.
• Navegante Consulting assists clients in several areas, such as conducting departmental and operational assessments, financial analysis, asset management, operational strategies, gaming product and system evaluation, market and feasibility studies, due diligence, and securing investment capital. As gaming companies consolidate and sell off properties, Navegante Consulting will assist many potential buyers in familiarizing themselves with the intricate details of the sale and purchase of these gaming-driven operations.
Collectively working together, Navegante offers our clients and managed operations a competitive advantage in having the quality of vast resources and access to top-level executives.
In summary, 2008 should be a banner year for our companies. We will expand our management operations into new and existing gaming jurisdictions, our development division will earn more frequent flyer miles than ever before, and our executive recruiting division will place more top-level gaming executives in more jurisdictions than previous years. Our consulting division will be immersed with new clients seeking to improve existing operations, evaluating purchase and sale opportunities, as well as continuing to monitor marketing and operational trends to best compete.
Buddy Frank
Vice President, Slot Operations, Pechanga Resort & Casino
With the unbelievable amount of technology unleashed on the casino floor in the past two years, one nagging question is lingering around the subconscious of many slot directors: Will the CIO (IT director) be working for me or will I be working for him/her next year?
You’d have lots of ammunition for the argument that the slot folks will become IT minions when you look at some of the names that were added to the slot manufacturers’ rosters recently. Top executives like Ramesh Srinivasan at Bally and IGT’s duo of Jon Wade and Andy Ingram are certainly well-known, but not for gaming! When we slot geeks were talking about stand heights, LCD displays and game volatility, those guys were arguing about whether they’d want their daughter to date someone coding java or .net, and if XML should replace English as the country’s official language.
On the other hand, some pretty fair students of the art of gaming also made some waves in the last few years. John Acres launched his new Halo slot product; Allon Englman is re-energizing many of the games at WMS; IGT’s Jean Venneman has made Wolves and Coyotes into casino mascots; and Benny Sum is still cranking out artful winners for a variety of slot platforms. If you think about it, a high-speed network doesn’t do you much good unless you have something to push out. It’s no accident that both cable TV executives and slot manufacturers are offering signing bonuses to “content providers.” Good games come from folks who like to play. The best ones understand game theory, live for graphics and have an unofficial degree in the psychology of gambling. The majority of the new IT chip nerds missed that last class, which is taught on a slot stool and operates only on a platform covered with a green felt.
If it sounds like a draw, it’s not. There can only be one group of winners. I’m convinced that they’ll be the ones who successfully cross over. Bally’s Bruce Rowe signed on as their senior VP of business development this year. A few positions back, he was a well-renowned corporate slot director with Harrah’s for years. His dark secret is that he was also their IT guy before transferring to slots. There’s a resume that works for ‘08.
The aforementioned John Acres owns, and has forgotten, more technology patents than most major companies, but his best ideas started with a napkin sketch drawn on a casino floor or in an airport lounge while watching people. Despite their collective age, Rowe and Acres are both part of a young, new breed that is in hot demand. They both crossed over.
Gamers who invest in a tech background and/or system guys willing to study operations and game theory will win. It’s not too late for any of us. If I have to learn the acronyms for HTML, APL and TCP/IP, then you computer guys should be able to decode a PAR sheet and resolve a scheduling dispute over who works graveyard on Saturday night.
Marshall Andrew
Vice President & CIO, Station Casinos
In the upcoming year, Station Casinos’ IT department will continue to focus on projects and technologies that support our mission statement: “To deliver to the corporation a competitive advantage through the integration of information and technology, which results in creating real value for our guests, team members or shareholders.”
The support of this mission statement will be accomplished through five key goals in the coming year: Team Excellence, Operational Effectiveness, Financial Performance, Continuous Innovation and Sustained Growth.
Team Excellence
Hiring, retaining and training skilled IT professionals is a key challenge for the entire gaming industry. To meet this challenge, key partnerships have been developed with UNLV and Southern Nevada College for internship programs. In addition, a new school has been established at UNLV for the School of Informatics. The curriculum was developed in conjunction with input from several casino/hospitality operators, focusing on technical skills needed in the industry. The first class started this fall, and there are high expectations from the results of these graduates in the next few years. In addition, significant funds are being allocated on training existing IT professionals to address the company’s key technical areas.
Operational Effectiveness
The continued creation and acceptance of standards for system interoperability continue to be at the mainstay for IT’s ability to deliver systems on time and within budget. Organizations such as the Gaming Standards Association (GSA) and Hotel Technology Next Generation (HTNG) are providing key direction for both setting protocols and standards and applying these standards to develop solutions. Through workgroups that are comprised of manufacturers, hardware and software vendors, and casino operators, the results of years of work are becoming realized. This is mostly evident in casino and slot systems, as well as hotel in-room applications.
Financial Performance
Efficiencies can be accomplished by standardizing applications across all our properties and operations for improved support, interoperability and system development, striving to have the same slot systems, hotel systems, casino systems, HR and payroll systems, etc., at all properties. New properties can utilize existing applications that have been “field tested” at existing operating environments. In addition, economies of scale can be realized through the acquisition and maintenance of these standard applications.
Continuous Innovation
Several projects are being implemented or explored in 2008. The most significant to a majority of operators addresses slot systems. Terms such as server-based gaming (SBG), server-assisted gaming (SAG), or simply downloadable games have been key topics for the future. Although there have been several demonstrations, and meetings involving many of the slot system manufacturers, I believe there are a lot of questions that still need to be answered about the technology concerning protocols, interoperability across sever manufacturers, impact on existing infrastructure, and ultimate cost to the operators. Hopefully, this coming year will provide answers to all these questions and allow us to continue to explore the benefits and opportunities of this technology direction.
Knowing the guest for both gaming and non-gaming operations is a key focus in the coming year. Being able to track guest spending across all revenue-generating venues and provide one-to-one or direct marketing programs is not a new concept but has proven to be a very complex and challenging endeavor. The formula for success is based on not only selecting the right applications for your environment and technical expertise, but also on the ability for the company to adjust to changes in culture and communications with the guest. Top management support, effective communications across departments, and intense training programs will be key factors to success.
Sustained Growth
Technology, in support of company growth in a multi-property business, starts with a high-performing standardized networking infrastructure. Distributed fiber, which is now available, allows for larger bandwidth, increased reliability, easier expansion and the opportunity to be more vendor-independent in managing your own network.
Developing common data architecture and enforcing data governance will be instrumental in the ability to implement interoperability across applications in support of these new technologies. Efforts are being focused on architecture and infrastructure that are essential in any sustained growth. Identifying key technology partners such as Microsoft, IBM, Dell and CA, will provide not only the products, but also the expertise to ensure success. These companies are providing more resources in addressing the challenges for the gaming industry.
In the end, how products and technology perform on the casino floor will be the ultimate test of their success. Generating revenue, saving costs or providing a guest service will be the real deciding factor on justification for technology investment.
Saverio Scheri III
Managing Director, WhiteSand Consulting
One of the reasons I embarked upon a career in the gaming industry, and one of the reasons I’ve stayed with it for more than 25 years, is the fact that as it continues to grow, it’s never the same thing twice.
With a number of major corporations going private, I’ll be watching what happens with their portfolios of gaming properties — which properties get sold off, and which additional properties are acquired. I’m also expecting to see the significant increase in foreign investment in U.S. gaming to carry through 2008. The weak dollar versus the Euro is already allowing major investments to come in from outside the U.S. gaming market, and I think that trend will continue until the dollar starts to rebound and stabilize. We’ll also see continued expansion outside the United States. Macau is continuing to grow, but we’re also now seeing additional growth throughout Europe, especially Eastern Europe. The Caribbean is really starting to mature as a market, with casinos there evolving from small little amenities to more traditional gaming with larger spaces and live gaming. It’s going to be a year to watch from both a foreign perspective and a domestic perspective.
As always, I think competition in existing jurisdictions will be the biggest challenge the industry faces in 2008. Look at what’s happening in Las Vegas and Atlantic City — and even in Indian casinos, where there are multiple casinos within a one- or two-hour drive of each other. Look at what’s happening in Pennsylvania, Maryland, New York and Delaware, which are increasing competition amongst themselves and with Atlantic City. In the past, it has been easy for gaming corporations to grow through acquisition; when they were not increasing revenues fast enough or high enough, they could just buy a new casino and all of a sudden corporate revenues would jump. That’s harder to do now, especially with the price tags on some of these casinos, or more exactly, the real estate on which they have been built. I think there’s going to be a renewed focus on same-store growth and increasing top line revenues, as well as being very careful about margins … but obviously not like the Tropicana, which became so focused on the bottom line that it got itself into trouble.
Another area to watch is how technological advances will affect the industry. We were expecting to have a lot more server-based gaming products in the market by now, but we haven’t seen it. It doesn’t seem to be a regulatory issue, and it doesn’t seem to be an operator issue. It may actually be falling back onto the vendors to create a product that’s going to be viable and easily implemented. I’m looking forward to seeing how they put the finishing touches on it and how they get it to the marketplace, because server-based gaming is inevitable. The opportunities it presents at the slot machine level to personalize offers and promotions make a lot of sense. I’m also very interested to see where mobile gaming goes — whether it’s going to be a big component of the industry and the revenue stream. I don’t think it’s going to be as widespread as some people might have hoped, but I do think it will find its niche markets and may do well in them. I’m watching Guaranteed Play, as well. We heard a lot of talk about Guaranteed Play last year, and it’s been out in a couple of properties on a test basis. It’s been met with mixed reviews — some good, but some bad — and I don’t know if it will take hold or not. Its story is very compelling and very exciting, but out in the marketplace, I haven’t seen the customer embrace it.
I think we’ll see a lot of closure in 2008; this will be the year that decisions are made on all three of these technologies as to whether or not they are something the industry is going to embrace and move forward with or sit on the shelf for another year.
For WhiteSand, 2008 is going to be a very busy year. We’ve already inked deals to provide management teams for a number of casinos, and I expect to see that continue. We’re also expanding our firm to provide both consulting and casino management for properties in the United States and internationally, as close as the Caribbean and as far away as Asia. We’ll also be opening our Miami office in early January.
Aside from a day off, in 2008 I’m looking forward to the growth of WhiteSand and watching our people take on new responsibilities. It’s something I take great pride in, and it’s very fulfilling. And, of course, I’m looking forward to finding out what gaming’s story will be for 2008. It’s a different story every year, and it’s never boring.
Liz Foster-Anderson
General Manager, Shooting Star Casino Resort & Event Center
In 2008, industry operators will focus on enhancing customer products and services to build on their customer service competitive advantage, embracing new products and services to gain loyalty.
Shooting Star Casino has increased guest service by implementing new technology at the gaming device. This technology improved the tradition of waiting in line for marketing offers; now offers can be redeemed right at the gaming device. Shooting Star Casino also implemented new marketing and advertising technology, offering promotions at the gaming device for on-property specials.
We also implemented new service amenities, which enhance our ability to be a “modern resort” where everything imaginable is offered — so why leave? We added additional retail outlets, a spa service and a new casino service that allows guests to make all their reservations in one place.
Shooting Star Casino, which is known for embracing technology and as a leader in its competitive marketplace, will continue to be a leader and find new ways to automate certain aspects of the gaming experience to further enhance guest loyalty. We are looking at online technology, interactive promotional opportunities for our guests, the enhancement of point-redemption at the gaming device, and much more. Our goal is to provide added value to the gaming experience.
I foresee a continuing soft economy, increased competition of state gaming in neighboring markets, and a general increase in the cost of transportation in 2008. Despite our thriving local economy and indicators that point to continuing growth, consumers’ concerns about interest rates and inflation continue to keep the SSC Consumer Expectations depressed. We will continue to monitor weak expectations in hopes that income growth will keep consumers spending. We are focusing a growth rate above the inflationary rate, which is a conservative approach in a soft economy.
The economic indicators for the travel and tourism industry are signaling continued growth. The hotel occupancy rate for the 12 months ending August 2007 is up 2 percent compared to the 12 months ending August 2006. An economic outlook indicates increased local gaming traffic, as opposed to trips to Las Vegas, due to the rising cost of transportation. Therefore, Shooting Star Casino is exploring traditional and non-traditional means of introducing guests to the Shooting Star Casino and getting them to the property. We have established a reservation transit system and are looking at transit stops in area markets. We are also working with the airline, train and commuter busing industries for new transportation campaigns for new and existing gaming customers.
State gaming expansion to meet state government budget deficits is expected, primarily in the eastern part of the United States. I see much discussion with new and existing jurisdictions on the expansion of gaming at lower gaming tax rates than previously modeled. In addition, there is a consideration for expansion into gaming markets, with focusing strategies in the tourism and business convention segments.
We also see the continued enhancement of gaming technology and casino operators preparing for the next phase of gaming technology, server-based gaming.
Operators are showing greater emphasis in entertainment by increasing awareness at branded gaming properties and with a marketing strategy of both acquiring new guests and retaining loyal guests. There are growing partnerships between the retail industry and the casino loyalty market.
Increased growth in hotel rooms will support marketing strategy in both urban and rural markets. There is a continued emphasis in greater profit returns for both hotel and F&B revenue.
We see the creation of a new resort concept, “A Modern Resort,” which has full services, retail products and resort amenities for the guests upon arrival (i.e., an all-inclusive Caribbean resort).
Shooting Star Casino has seen an increased focus on customer relations marketing, with the technology enhancements focused on the gamer’s experience at the gaming device. Increased bonusing options by game manufacturers, new or modified theming to entertain the gaming consumer, new marketing offers at the gaming device, and so much more will continue to enhance guest service and loyalty from returning guests.
J. Terrence Lanni
Chairman & CEO, MGM MIRAGE
2007 ended with two ballot initiatives pending in the state of Nevada that, if approved by voters, threaten the continued success of our industry. The measures propose historic tax increases on gaming companies without requiring other Nevada businesses to share the burden.
Since its inception 75 years ago, gaming has taken a leadership role in finding solutions when state budget crises loomed. We’ve stepped forward and helped address critical needs of this state in the areas of transportation, education, community infrastructure and other policy initiatives.
Even though the financial demands on the state budget have grown ever more complex, our state’s tax structure remains much the same as it was in the 1930s. In recent years, community leaders commissioned study after study, each one offering dire predictions if the state continued to rely so much on a single source of revenue: the gaming industry.
Nevada tax policy is not about gaming vs. every other business in the state. In today’s social and economic climate, no one industry can be held responsible for providing for the needs of this state.
Placing our eggs in one basket isn’t safe or wise. There must be a proper balance in our tax policy. We can certainly all agree that we are in a day and age when the services the state provides benefit us all, regardless of size or industry.
MGM Mirage is the state’s largest taxpayer. We’re also the state’s largest private employer, and we’re the largest private sector investor in Nevada. And we clearly are very successful here. We’re proud of our success, and we’ve worked hard to achieve it.
Our company has already invested some $20 billion of our shareholders’ monies here. And we are willing to continue to invest in Nevada.
In addition to the hundreds of millions of dollars we invest each year in our existing properties, we have created CityCenter, which at $8 billion is the largest privately-funded real estate development ever made in the history of the United States.
Right on the heels of CityCenter will be our development on the north end of the Strip with our partners at Kerzner Development. At the corner of Sahara and the Strip, we will invest $5 billion dollars.
Nevada-based gaming companies, led by MGM Mirage, are injecting historic amounts of capital in our state. Our company alone has plans for almost $13 billion in investment in Nevada underway. That’s far more than in Macau or New Jersey or anywhere else. In fact, that’s more than we’re investing in every other jurisdiction combined.
This investment is driven in no small measure by the tax rate the gaming industry pays in Nevada. The argument made by some that simply because some gaming companies pay more tax in some states, they should pay more here, is painfully flawed.
Investment capital flows to jurisdictions with stable tax rates. Hence, Nevada has the largest share of investment while high-tax states like Illinois and Missouri have little or none.
Nevada history has proven that if you base revenues on single-source taxes that defy predictability, you will consistently run into troubles. Nevada’s governors have consistently faced the need to make cuts in the state’s budget because our reliance on gaming and sales taxes proved unreliable.
We must all face the reality of the needs of the state of Nevada in a new century and beyond. The time came long ago for the establishment of a business tax paid by every large business that benefits from operating in this state.
Allowing for the smallest businesses to be given the chance to grow and thrive, the rest of us — gaming and non-gaming — need to step up. We have to find the resolve to overcome political obstacles. We have to accept the fact that a no-tax environment is a relic of a bygone era.
For 75 years, gaming has done its part and more, and we will continue to do so. It’s time for other industries to do their part. We have the ability to change Nevada from a state where economic and social planning extends only to the next political season into a state where we provide properly for future generations.
Gregg H. Solomon
CEO, Detroit Entertainment
It would seem that for the gaming industry the coming year would be a perfect narrative for that Saturday Night Live character, Debbie Downer (“You know, they never did catch that anthrax guy…”). In spite of my attempt to see the jackpot cup as half full, not half empty, it would seem that the reality of the next 12 months is that significant, detrimental issues are coming down the pipeline.
New jurisdictions will likely open up in states like Massachusetts, Kentucky and Texas. The process of horse and dog tracks converting to racinos will continue. However, if the recent emerging markets are any indication of what is yet to come, the cost of entry to the RFP process will exclude all but the top three or four large public gaming companies from competing. Unfortunately, the tax rates imposed on the license winners will make them nothing more than minority partners of the state, which will result in eliminating any incentive to invest in the betterment of those communities.
The recent trend of table games personnel unionizing will surely increase wages and benefit costs for positions that have historically derived most of their salary from tips. Unfortunately, the labor costs associated with running a live game will increase to the point where a $5 minimum table will be a thing of the past, and the operator will be incentivized to aggressively pursue electronic substitutes for live games, eventually leading to significant table game staff reductions.
The implementation of server-based gaming — centrally-deterministic systems, downloadable games, thin client/thick client, you name it — for 2008 has been widely heralded. The gaming manufacturers have in essence told the operators, “We now have the perfect solution …we just forgot what the problem was.” The impetus of what is now server-based gaming was to resolve some very fundamental needs of the slot director: for a game to identify itself to the network, to ensure it has preauthorized access, to upload its personality criteria to the system to automatically populate the database, identify where it sat on the slot floor and to request its configuration criteria for download.
Slot directors wanted to be able to check all the programs on the floor and on their servers for revoked or outdated programs, to flash the bill validators, to stop sealing processor boards and for once to be able to do a massive floor move and have the games update the database automatically. They wanted a system based on open standards that allowed competing vendors to provide the best server technologies for security, accounting, player tracking, bonusing, etc. They wanted a game plan that allowed them to transition to new technologies without getting rid of highly profitable games that wouldn’t be offered on the new platform, and without throwing out the system that was just sold to them. These are the things they asked for five years ago in numerous symposiums, advisory councils and surveys. Yet the manifestations of those early requests have turned into products that very few were asking for. Apparently, the manufacturers mistakenly heard us ask for a two-wire (or more) system that would make obsolete both the games and the systems currently in place to enable us to do something that no customer has ever asked for on a proprietary system tied to a company’s intellectual property, which has the added bonus of creating a public relations nightmare for the operator.
Based on the above, 2008 is going to be a banner year for Debbie, but there is a sliver of hope. Recently, one state awarded a license to a local company that was not the biggest and that didn’t have the most expensive proposal, but was best for the community. One state is rolling back gaming taxes. Some unions are making concessions to save jobs. One manufacturer has spent thousands to fund an independent survey of gaming executives to find out what their customers really want, and the Gaming Standards Association will finally see widespread adoption of its game and system standards.
It’s not too late. Let’s not give Debbie any more material than we have to. By the way, “Did you know feline AIDS is the number one killer of domestic cats?”
LAWYERS & POLITICIANS
Robert Stocker
IMGL President, Member, Dickinson Wright PLLC
Dramatic changes are afoot in the gaming industry. In addition to the headline-grabbing leveraged buy-outs (Harrah’s, Station Casinos and Penn National), MGM Mirage and Dubai World and their affiliated entities are engaged in cooperative efforts. This follows on the heals of dramatic expansion of gaming in Macau, which is rapidly establishing itself as the Las Vegas of Asia, fueled in part by U.S.-based gaming operators (Las Vegas Sands, Wynn and MGM Mirage) and the pending construction of two major casino projects in Singapore, including another Las Vegas Sands development.
After a few bumps in the road, Pennsylvania is getting its gaming ducks in order and, in the process, creating competition for New Jersey as well as drawing gaming dollars from other neighboring states. Look for more Eastern states to get on the gaming bandwagon — the jobs, economic growth and tax revenues are too attractive to ignore.
Indian Gaming is not standing still in the face of the expansion of commercial gaming. The California Indian casino market continues to expand. Tribes running highly successful gaming operations are funding the efforts of recognized tribes that are seeking to join the Indian casino market. The latest and potentially most dramatic new development is the agreement reached between the Mashpee Wampanoag tribe and Middleborough, Mass., for the development of a huge tribal casino in Middleborough. This casino, which has deep-pocket financial backers, has the potential of rivaling the famous Foxwoods and Mohegan Sun casinos in Connecticut while putting increased pressure on Eastern states to open the doors to commercial casinos. Can commercial casinos in California be far behind?
Largely ignored in the hoopla surrounding Macau and Singapore is the fact that commercial gaming is expanding rapidly throughout Asia (Thailand, the Philippines and Vietnam are the tip of the iceberg) and everywhere in Eastern Europe except Russia (which is busy shooting itself in the foot) — but that will change. A number of non-U.S. gaming operators are rapidly moving into these emerging jurisdictions. U.S.-based operators have been hesitant to enter some of the jurisdictions because of perceived political and regulator issues. The success of the Las Vegas Sands in Macau is an example of the opportunities that await the gaming companies that strike while the iron is hot. Look for U.S. casino operators to focus increasing attention on the Eastern European and Asian markets.
Finally, the tremendous growth of the casino industry worldwide bodes well for the gaming equipment manufacturers that are positioned historically or through recent focused efforts to take advantage of this rapidly expanding international market. G2E Asia demonstrated that the manufacturers in the running in Asia go beyond the industry names that dominate the U.S. market. Look for more manufacturing based in Asia and a continued consolidation of the manufacturing business and related software shops on a global scale.
The bottom line is that 2008 and beyond is going to be quite a ride for the gaming industry, with big winners, a few big losers and some new household names.
Patrick Hicks
Founding Shareholder, Littler Mendelson
The issue of immigration was the subject of major debate as well as proposed legal changes affecting all employers in 2007. This issue, which touches all employers nationwide, has a significant impact on the gaming industry considering that many unskilled immigrants are attracted to positions in hotel casinos and gaming suppliers seek the most talented and skilled technicians inside, as well as outside, of the United States. With the current unsettled state of immigration law, Littler Mendelson believes that we will continue to see many changes ahead in this area in 2008.
Perhaps the most noteworthy action in this area of the law affecting U.S. employers in 2007 was the issuance of a Final Rule by the Department of Homeland Security (DHS) addressing an employer’s obligations in response to the receipt of a Social Security Number mismatch notice from the Social Security Administration. Specifically, after more than a year of anticipation, DHS published a Final Rule in the Federal Register addressing this issue on Aug. 15, 2007, which was scheduled to become effective on Sept. 14, 2007. However, labor and civil rights organizations soon filed suit to block the regulations, claiming that the regulations exceeded DHS’ statutory authority and conflicted with existing law. On Aug. 31, 2007, the U.S. District Court for the Northern District of California granted a nationwide temporary restraining order enjoining the implementation of the regulations. After a hearing, the court issued a preliminary injunction enjoining DHS from enforcing the regulations, thereby effectively barring the government from publishing mismatch notices under the regulations for the foreseeable future.
DHS moved the court to stay further proceedings while it proceeded with additional rulemaking to resolve the issues that led the court to enjoin enforcement of the no-match regulations and to continue to push forward toward a goal of requiring employers to respond to no-match letters in the immigration setting. DHS represented that it expects to complete the rulemaking proceedings by March 2008. DHS also appealed the order granting the preliminary injunction to the U.S. Court of Appeals for the Ninth Circuit; however, it is uncertain whether the Ninth Circuit will address the appeal before the DHS’ revised anticipated regulations are announced in March. Even with DHS’ attempt to remedy the deficiencies in the Final Rule, we do not foresee that its anticipated revisions will pass without challenge. Therefore, stay tuned to the anticipated developments in this area that will surely affect all U.S. gaming industry employers.
I. Nelson Rose
Professor, Whittier Law School
Gambling and the Law®: Gambling Becomes Respectable
Forecast for 2008 © Copyright 2007, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, CA.
Legal gambling is entering a new phase, which will make things both easier and harder for everyone involved in the industry. It has grown so respectable that it can begin to be treated like every other business. As a dramatic example of how this makes things easier for owners and investors, corporate mergers and consolidations have been followed by multibillion dollar buyouts by private equity companies. This sign of legitimacy is going to result in the market for gaming companies exploding over the next few years.
Private equity is extremely interested in all successful gaming companies because of their cash flow. But buyers have been scared off by the cost and burden of having to get the approval of state regulators. It took Nevada’s State Gaming Control Board a full year to approve the buyout of Harrah’s. The board is not even the final say in Nevada (that is the Gaming Commission), nor is it the toughest barrier (that’s probably Missouri). But the board is by far the oldest and most influential. The commission and all other state and tribal regulators now have cover for approvals. This means the buyout will be finalized sooner rather than later, in early 2008. For most gaming regulators, this was their first encounter with private equity. It has taken enormous amounts of time and money for regulators to feel comfortable with the unique financing and structuring of this deal. But the next deal will be basically the same, requiring only approval of the principals of the private equity companies and not the investors and limited partners. TPG Capital and others who have gone through the process still have a leg up just for having already filled out horribly demanding forms. But other private equity firms with general partners willing to turn over their personal income tax returns will be encouraged to go after middle- and smaller-sized gaming companies.
An example of how respectability can make life harder is government-imposed restrictions on smoking. Bars and card clubs in California were able to get a three-year exemption from the state’s strict ban on smoking in buildings open to the public. But they did not have the political power to make the exemption stick. Casinos in Colorado just lost a similar fight. When legal gambling was small, unique and not considered completely respectable, it sometimes (though rarely) actually had more rights. Changes in the law follow changes in society. Since legal gambling is viewed as just another business, why should there be restrictions on advertising or collecting gambling debts? Casinos won the right under federal law to advertise over television and radio. But a few state restrictions remain. These will be either eliminated by legislators or declared unconstitutional by courts. But state lotteries still cannot broadcast commercials in states without their own lotteries. That law will remain because only Congress can change it. Courts will start opening their doors to suits by casinos to collect markers. These are important, because they require a court to declare that gambling is not against that state’s public policy. Being viewed as well-established, legitimate businesses will affect every part of the business. Take innovation. It’s easier to get a new gaming device approved if it does basically what others already do; that is one reason why almost every slot machine video screen shows the same pattern — three down and five across. But regulators are feeling more comfortable, and are beginning to allow radical changes, like the introduction of an element of skill. The gaming companies that will be the most successful are those that understand the changes sweeping society and the law.
Anthony Cabot
Partner, Lewis and Roca
In the midst of a state fiscal snowstorm, the Nevada gaming industry is in the process of its greatest metamorphism ever. The value and magnitude of the new casino resort projects in Las Vegas are staggering, with the MGM City Center, Boyd’s Echelon, the Cosmopolitan Resort and Casino, Encore at Wynn Las Vegas, Fontainebleau, Las Vegas M Resort, The Crown Casino and the New Sahara project. The cumulative effect of this expansion is to double the size of the Las Vegas Strip in half a decade. At the same time, the state of Nevada faces a severe budget crisis because it bases its tax revenues much too heavily on cyclical taxes like sales tax. The sophomoric solution to the state budget crunch is a straight 8 percent reduction in all state agency budgets, including the gaming regulators. This shortsightedness places in peril the very engine that has and will continue to drive the Nevada economy. At this time of rapid expansion, the need for effective and efficient regulation is at its highest premium. The staff of the State Gaming Control Board should be increased to ensure the basic fundamental state goals — that gaming is conducted fairly, honestly and free of criminal involvement — are met. From an industry perspective, effective gaming regulation will provide greater efficiency in processing applications and meeting opening dates. What is the value of one scandal that could have been avoided or the negative publicity from the delay of one major casino opening? By failing to prioritize where state resources should be directed or coming to the basic realization that sometimes you need to have new and broader-based taxes to provide necessary services, the state is threatening to kill the golden goose. At the same time, the state’s myopic taxation view also results in miserably under-funding other essential services, like education and transportation necessary to maintain vibrant communities. For gaming attorneys, this new economic reality suggests that attempting to meet clients’ regulatory needs, including those for approvals for necessary casino innovations, financing and new games, will become a greater challenge.
Heidi McNeil Staudenmaier
Senior Partner, Snell & Wilmer
There is no doubt that 2008 will be a big year on many fronts for Tribal Gaming. The Indian Gaming Regulatory Act (IGRA) will celebrate its 20th anniversary in October, and presidential election year politics will likely weigh heavily on what happens (or what doesn’t).
Compacts, sovereign immunity, Class II gaming and “reservation shopping” will continue to be hot issues in 2008. Let’s talk about compacts first, which involve heated battles on both coasts.
In Florida, the governor inked a Class III gaming compact with the Seminole Tribe in November, which included beneficial revenue-sharing provisions to the state. This was a momentous occasion given that the Seminole had been pursuing a compact with the state virtually since the IGRA was passed in 1988. After years of extensive legal wrangling, the secretary of the interior was poised to issue “Class III Gaming Procedures” for the tribe, which likely would have cut out the state from any revenue-sharing monies.
In executing the compact, however, the governor failed to obtain legislative ratification, notwithstanding apparent earlier promises to do so. As a result, the House of Representatives promptly filed suit against the governor, seeking to invalidate the compact. The compact nevertheless was submitted to the secretary of the interior for review and approval. It was expected that the secretary would wait to see if the litigation issues could be expeditiously resolved prior to the Dec. 28 deadline for secretarial approval of the compact. As a result, the battles over the Seminole compact will definitely continue into 2008, and perhaps even beyond.
On the opposite coast, the California compact controversy will continue to rage in 2008. The major issue concerns whether the “Big Four” amended tribal compacts (Agua Caliente, Morongo, Sycuan and Pechanga), approved by the governor and the California Legislature in 2007, will be undone through public referenda votes in February (simultaneous with the California presidential primary). Under California law, these compacts were not to be considered effective until Jan. 1, 2008. These amended compacts would collectively add approximately 17,000 slot machines to the four Tribal Gaming operations. Opponents to the compacts were able to gather sufficient signatures to force a public vote on their viability.
To add fuel to the already hot fire, these compacts were deemed “approved” by the secretary of the interior through an administrative oversight in late November. But the compacts are not considered “effective” for IGRA purposes until published in the Federal Register. The secretary was delaying publication of the compacts at the time this forecast was prepared, although it was uncertain how long the postponement would last. Whether the compacts are published prior to the February referenda will continue to be the subject of considerable legal wrangling of the compact proponents and opponents. The San Manuel amended compact also was approved by the governor and Legislature, although separately following approval of the Big Four Tribal Compacts. This compact was not subject to a public referendum and was due to be approved or disapproved by the secretary in late December.
Class II gaming regulations will remain on the front burner. The National Indian Gaming Commission (NIGC) issued revised regulations governing various aspects of Class II gaming in fall 2007, with comments to be submitted by late January. Both the tribes’ and the gaming device manufacturers’ reaction to the revised regulations was less than receptive. Expect continued fireworks on this subject in 2008.
Threats to tribal sovereignty will stay at the forefront in 2008. In November, dealers at the Foxwoods tribal casino, owned by the Mashantucket Pequot Nation, voted to form a United Auto Workers union. The election was conducted under National Labor Relations Board oversight after the board rejected a tribal appeal that federal labor laws did not apply on tribal land. The Pequot Nation filed a challenge to the elections. The case will be watched carefully as it progresses in 2008, as it has national implications for all tribal casinos and what is viewed as an encroachment on tribal sovereignty.
Although no amendments were proposed to the IGRA in 2007 with respect to “reservation shopping,” that issue will still engender great controversy in 2008. The secretary of the interior issued letters early in 2007 advising the numerous tribal petitioners that greater scrutiny would be paid to land acquisitions for gaming purposes. The secretary also has plans to issue revised regulations governing such land acquisitions in 2008 (these revised regulations were expected in 2007, but nothing ever materialized).
As predicted, more and more tribes engaged in non-gaming business ventures in 2007 on and off their lands to diversify their economic base. Expect more of the same in 2008, particularly in light of the fact that the Tribal Gaming industry — notwithstanding all the above-referenced legal issues — grew from $23 billion to $25.7 billion in 2007. There appears to be no slowing up for 2008.
Sen. Harry Reid
D-Nev. & Majority Leader, United States Senate
In November 2006, the American people voted for change, and the 110th Congress convened with new leadership. Midway through the Congress, I am pleased to report significant progress on a number of fronts, but I would like to focus on a few that are especially significant to the gaming industry.
America’s strength depends on the strength of its middle class. I believe that the gaming industry’s health also depends in large measure on the strength of the American middle class. As Senate Majority Leader, I partnered with leadership in the House of Representatives to pursue an agenda that will strengthen the middle class in the near and more-distant future, as well as position America for continued global leadership for decades to come. We turned the Congress’ attention to restoring fiscal discipline to the federal government, bolstering America’s energy security, ensuring a working wage for hard work, and making college more affordable. We achieved success on all of these efforts. These successes ultimately will lead to continued prosperity for the American people, which will in turn benefit the gaming industry.
We also confronted a number of business issues facing the industry this year. Congress extended for seven years the federal terrorism risk insurance program that was set to expire. This seven-year extension is the longest term for the program. Risk managers at gaming operators will be able to plan more easily with the certainty brought to the property insurance markets by this legislation.
Most in Congress this year supported immigration policy that would address the needs of the American economy and the gaming industry. Those who favor comprehensive immigration reform did not prevail this year, but I am committed to finding a solution to this vexing issue. I believe national security always comes first, but policymakers need to approach immigration reform with pragmatism as well. Finally, a number of tax measures passed this year — relief from the encroaching AMT tax and extending the deduction for mortgage insurance, to name a few — should help give American consumers additional resources for recreation. I worked hard to authorize and secure funding for the “model ports of entry” program at U.S. international airports, which will improve the visitor experience for our international visitors and guests. That effort also resulted in additional Customs and Border Patrol agents at the most heavily trafficked airports, which will enable those airports to process additional incoming international flights to cities such as Las Vegas.
Looking ahead to 2008, our nation and the gaming industry undoubtedly will face challenges. The deteriorating housing market is expected to be a continued drag on our economy and could damage consumer confidence. At the end of 2007, Congress passed several housing-related measures intended to curb the number of home foreclosures and buffet housing-market declines, including a bill to modernize the Federal Housing Administration and one to change the tax treatment of reductions in mortgage principal by lenders. Both will help significantly, but neither is a silver bullet. I will be exploring other ways to responsibly address housing and foreclosure problems that threaten our economy.
As always, I will continue to monitor closely all legislation that may affect the industry, including the various proposals related to Internet gaming that deserve a careful review.
SLOT MANUFACTURERS
Chris Strano
VP, Sales & Marketing, AC Coin & Slot
As we approach our 30th year in business, AC Coin & Slot, the exclusive distributor of IGT gaming devices in Atlantic City and Caribbean markets and a leader in bonusing slots and casino supply, has positioned itself for continued success and growth.
The franchise of IGT products continued to add value to the market share in 2007 and assist our customers to get the best performance from their IGT products. In Atlantic City, AC Coin & Slot sold more conversion kits than the entire number of new machines sold in the market, keeping IGT’s share larger than all other manufacturers combined.
In the proprietary lease machine market, the past three years, and 2007 in particular, has been a time of spectacular expansion and market penetration for our company. In that time, AC Coin & Slot has witnessed a 45 percent increase in the number of casinos using our proprietary bonusing machines and a 79 percent increase in the number of proprietary machines simultaneously leased and generating revenue in the field. We have doubled the size of our sales division and have expanded into several U.S. and Canadian markets, strengthening our status as a force within gaming.
2007 in particular was a landmark year for AC Coin & Slot, bringing with it our new Mega Bonus Slots™ branding initiative; one of our most innovative bonusing games yet, Super Slotto Celebration™; and a renewed focus on community-style gaming. Our 2007 games performed exceptionally throughout the year, oftentimes doubling and tripling slot floor averages. The year culminated with our strongest product research and development to date, in which we debuted 89 different games, including our second eight-station community-style game, Pirates of Bonus Island™, and several four-station “pod-style” community games.
We attribute our recent growth and tremendous success to a dramatic upsurge in the number of new proprietary bonusing games created by our company; the streamlining of our sales, installation, and conversion/replacement processes; and an intensified focus on end-to-end, on-site customer support. We have systematically evaluated each facet of our business to ensure its efficiency and effectiveness, and it has paid off immensely for both our company and our customers to keep the best games for casino players.
We fully intend to “wow” both customers and players in 2008 with a host of exciting new programs and themes designed to embody our “All about the Win” Mega Bonus Slots™ mission. Games such as Let’s Make Some Monster Cash™, Diamond Time Bonus™, Chef’s Daily Special™ and When In Rome™ will be followed by the cutting-edge pod-style community games that will make their market debut in 2008. Other themes to be launched into the market this year include Slingo™ Bonus, Super Big Game Show Bonus™, and Sparky’s Smokin’ Hot Jackpots™, as well as the current hit Super Slotto® Celebration® on a new 20-line program.
The New Year promises more changes in our industry. The adaptation of more technology, acceptance of this business in more markets, and the evolution of the overall gaming experience will continue. The key to 2008 will be focusing on performance here and now. Increased competition and new challenges of differentiation in the gaming product and merchandising will be key for operators and manufacturers alike. We at AC Coin & Slot have positioned ourselves to help each of our casino partners to meet the demands of their markets today, while being a catalyst to the gaming evolution. This is one of the ingredients that has kept our company growing every year consistently for the past 29 years and 2008 should be no exception.
Richard Haddrill
Chief Executive Officer, Bally Technologies
The year 2008 begins with increased economic uncertainty, continued geopolitical unrest and the prospect of increased competition from new market expansions and new casino openings. It is more imperative than ever for gaming operators to maximize every opportunity to build player loyalty and grow revenues and profits throughout 2008 and beyond. To accomplish this, operators must play their cards wisely by investing in games and slot/casino-management that will appeal to players, and in slot/casino-management systems that will help create greater operational efficiencies, thus driving increased ROI.
It is for this reason that we are taking a very proactive approach to driving the “Networked Floor of the Future” by providing the gaming industry with innovative gaming products and cutting-edge systems technology that can deliver the key benefits of a networked gaming environment today — not three years from now.
That is why our message and our focus at G2E 2007 was “The Future … Today!” This phrase aptly sums up our approach: To provide operators with the tools they need today to build their customer base and maximize profits tomorrow and beyond.
While some other manufacturers and suppliers may be focusing on a rather bewildering assortment of technology solutions, which could or could not be relevant in the future, we are presenting real technology, real solutions and real products that will drive ROI today, and be an excellent long-term investment as well. Some examples of this vision of the “Networked Floor of the Future,” available today, include:
• Floor-wide bonusing
• Peripheral management
• Secondary iVIEW™ games
• Data visualization and Business Intelligence
• Denomination management
• Tournament management
• Player funds management
• Enhanced customer service and marketing
• Open technology partnerships
When it comes to open technology, we feel strongly that it is imperative in the coming year for the gaming industry to further embrace common technology standards. This is why we are continuing to work with our industry colleagues to develop and market a common download product that manages configuration and content download in accordance with Gaming Standards Association, G2S and S2S protocols. Without open industry standards to facilitate interoperability between manufacturers, gaming operators will be hampered in their ability to fully benefit from the implementation of downloadable server gaming.
In certain markets like Washington and New York, we have worked in an open and cooperative manner with both WMS and Aristocrat to bring more games to the market on our platform and share revenues without fees for intellectual property. Also in 2008 we expect to introduce more games from third-party developers on our stable and robust ALPHA platform.
Finally, as we enter 2008, we are excited as a company to maintain the spectacular rate of growth that we accomplished in 2007. It is indeed fitting that 2007 was a breakout year for us as we celebrated our 75th anniversary as “The World’s Game Maker.” With a continuing stream of innovative products and an outstanding senior management team in place that is dedicated to achieving the highest standards of quality and excellence, I am confident that 2008 will be a year in which we once again raise the bar to new levels.
Ramesh Srinivasan
Executive Vice President of Systems, Bally Technologies
These are very exciting times for Bally Systems. For more than 30 years, Bally has been the clear leader in providing systems solutions to the gaming industry. The gap between Bally and its nearest systems’ competitors has widened even further the past couple of years. A vast majority of the industry’s largest single-site and multi-site gaming corporations, including 17 of the 25 largest casinos in the United States, currently use Bally Systems solutions. And the next major release of our SDS® system will be available on a Windows® platform (as well as Unix) to help us serve smaller casinos more efficiently.
Bally understands that innovations in the enterprise systems space must be built on a bedrock of dependable technology backed by strong services and customer support functions. We steadfastly believe in protecting customer investment first, continuously improving products, and providing seamless upgrade migration paths to newer versions of current products. This, in combination with innovative new cutting-edge products and modules that work well with the current solutions, has contrasted sharply with the tendency of our competitors to frequently abandon systems products and move on to new ones. The gaming industry has embraced our philosophy of standing behind our systems products as a solid long-term investment. We are steadily enhancing our products into world-class enterprise solutions backed by strengthened customer-centric support and client services fundamentals.
Bally remains the only gaming systems vendor offering solutions across multiple hardware platforms. Such choices are important for customers who operate casinos in widely different market conditions, sizes and geographic locations. Our professional teams listen to customer needs and suggest the system that best meets their casino, slot, table and server-gaming management needs. Bally already has solutions deployed in the field adopting GSA’s G2S and S2S protocols. Bally solutions already operate on open networks in multiple casino locations. Bally has been in the business of supporting server-based central determination games for over 10 years now, with more than 30,000 games connected to such systems worldwide.
Bally’s commitment to systems has never been greater. We have increased our overall systems personnel strength by more than 75 percent, and our product development personnel strength by more than 100 percent in the past two years. Our two India development centers, which have grown to approximately 400 people — most of them engineers, provide Bally with a huge competitive advantage in both cost and talent recruitment that will help us continue to advance our products to world-class levels.
With more than 80,000 iVIEW™ player-interface displays sold in the past 24 months, iVIEW continues to be the leading player communication portal for slot machines. This proven networked solution is available today, and provides improved service, unique gaming experiences and customized marketing at the point of customer and employee contact on every game from every manufacturer.
Bally’s complete set of player-centric bonusing tools, which allow for configurable options to target bonusing investment in the players that truly drive casino profits, are now being implemented across the globe. These revolutionary bonusing tools include our latest server-based Live Rewards™ product suite, featuring Payday Poker™, Blue Spot Bingo™ and Castle Crasher™, as well as Casino Challenge™ and Blazing 7’s™ Tournaments. These tools further leverage the power of iVIEW. Now, in addition to basic player service and enhanced bonusing, players can compete in live head-to-head slot tournaments or be rewarded with additional second chances to win.
This year we are rolling out our state-of-the-art Business Intelligence product, which contains extensive data analysis, and the robust, recently acquired data visualization components of Compudigm. In the coming months, we will launch iVIEW Media Server and other exciting products and modules to further enhance our customers’ investment in Bally solutions. Bally Systems continues to strive to be a great business partner for our customers; our product lines are shining today, and the future looks even brighter.
Bruce Rowe
Senior Vice President of Strategy & Business Development, Bally Technologies
You can’t look ahead to a new year without first looking back. I had the honor of joining Bally Technologies in mid-2007 and participating in the celebration of our 75-year anniversary.
During the year, we clearly demonstrated our commitment to gaming technology. Our games business experienced strong momentum due to the flexibility and reliability of our ALPHA operating system and the demonstrated modularity of our new ALPHA Elite™ cabinets. Our market dominance in the gaming systems business continued, as we signed contracts for over 45 new customer sites, including a majority of the new systems in Pennsylvania and Florida. Bally further solidified its position as the world’s number one gaming systems company, with more than 368,000 machines linked to a Bally system and 17 out of 25 of the world’s largest casinos using a Bally system.
Our success in 2007 clearly positions us to deliver even greater products, technology and customer service in 2008. To accelerate our progress, we entered into a number of strategic partnerships with leading companies (Compudigm International, Certicom, Teradata, Strategy9, Cisco Systems and William Ryan Group) under which they will provide technologies that add value to our games and systems product lines.
These technology alliances will allow us to offer gaming operators additional analytical and security tools, new promotions and tournament applications, and expanded player-reward technologies. Through our partnership with these leading companies, we will be able to more quickly provide casinos with an even larger portfolio of choices that are scaleable to meet both their current and future needs.
As we work to ensure that our customers benefit from these relationships, we at Bally will continue to focus on our core business — games and systems — and leverage our leading technology to bring gaming operators the “Networked Floor of the Future.” In 2008, we will solidify our strategy based on what is technologically practical, which solutions can be deployed in the current regulatory environment, and the return on investment we can offer to our customers as well as our shareholders.
Our “Networked Floor of the Future” will continue to evolve under our evolutionary approach that includes current and future server-gaming applications, open partnerships, and real revenue-generating technology that provides a high return-on-investment — today.
In short, 2008 will be a year of clarification, integration and implementation for Bally Technologies. First and foremost, we will work closely with our customers to ensure that we fully understand what they need to enhance their gaming floor and how we can continue delivering the gaming experience their players want. Then we will integrate our new technology solutions into our already-robust gaming and systems product lines and present them to operators, allowing them to plan for a series of technology phases. Our 2008 focus, and our commitment to our customers, will be centered on delivering solutions that are practical, offer tangible benefits to gaming operators, and meet our customers’ immediate needs today and as they grow. It’s going to be an exciting year!
Brian R. Gamache
President & CEO, WMS Gaming
In 2008, WMS is moving forward to execute on the Casino Evolved™ vision we announced at G2E and help operators move toward the promise of server-enabled gaming. The Casino Evolved strategic roadmap seamlessly integrates the building blocks of multiple gaming platforms, operator efficiency solutions and revolutionary player experiences into a fully networked environment enabled by the open architecture of uniform industry standard communication protocols. Casino Evolved is designed to bring the significant benefits of server-enabled gaming to casino operators, including enhanced customer intimacy, innovative new gaming experiences for their casino patrons and increased productivity. It also brings the benefits of server-enabled gaming to players by providing the next-generation of gaming experiences personalized to their own preferences.
WMS continues to be an industry leader in developing revolutionary products destined to appeal to players and operators alike. At G2E, we showcased Adaptive Gaming™, the next in our series of innovative gaming platforms, with the Star Trek™ theme. This new platform brings to life today the dream of personalized game play. In a world where players are increasingly more familiar with the Internet, high-definition graphics and the ability to create their own customized entertainment experience, gaming companies must provide equally sophisticated and entertaining gaming experiences. Our leadership in development reflects our relentless focus on creating innovative new player experiences enabled by new advancements in technology, and the most important asset in our industry: intellectual property (IP). Our tireless focus on IP makes these innovative platforms a reality, and the benefits enabled by the advent of server-based gaming.
Building on a foundation of nearly 70 years of creating entertaining products, WMS introduced a record number of successful, innovative player-appealing gaming products in 2006 and 2007 that led to significant growth in both product sales and in our installed base of participation gaming machines. Demand for these new platforms and titles — including Top Gun™, Monopoly™, Super Money Grab® and Monopoly Big Event® — exceeded our expectations, and we are equally excited by the next installments on each of these platforms with the rollout of the Press Your Luck™, The Wizard of Oz™ and John Wayne® games. With our continued emphasis on creating innovative and differentiated products in fiscal 2008 and expanding the breadth and depth of high-earnings products available for operators, we anticipate further strides in improving our market presence.
In 2008, the industry’s eyes will remain focused on the substantial opportunities offered by the international adoption of new gaming technology and growth in markets outside North America. Expanding markets in Asia, Europe and South America will present the industry with its greatest growth opportunities, and with WMS’ broader product offering and expanded international presence, we are poised to benefit. With the breadth of products now offered, including those of our Orion Gaming subsidiary and by our recent acquisition of Systems in Progress, and the opening of several new international offices, we have the ability to leverage innovative technology, offer localized content and launch new products simultaneously on a global basis from Macau to Buenos Aires and London to Madrid. As a result, we expect our international product sales growth will outpace our North American shipment growth in fiscal 2008.
Our industry’s growth is powered by the global opportunities that arise with the evolution of gaming technology. It enables new and entertaining game experiences for players that in turn create the player appealing products that produce high-earnings products that our casino operators demand. The future of gaming is upon us, and WMS has the creative talent, intellectual property and technology to take us there.
Danny Gladstone
CEO, Ainsworth Game Technology
For 2008, Ainsworth Game Technology (AGT) announces the global launch of a new enhanced range of Ambassador™ game themes. Marketed under the Gameplus™ brand, AGT has designed an extensive product portfolio to cover a broad cross section of market segments. The product range provides slot managers with a vast range of options, mix and matching games into a variety of exciting formats including link progressives, ante bet, standalone mystery progressives and symbol-driven mystery progressive games. “AGT is delighted with the response to the new games that form the basis for the Jackpot Kingdom™ 4-level symbol-driven progressive, Hot Reel ™antHot Reel ™ante-bet, $Mystery Progressives and our Double Shot™ symbol driven standalone progressive options. AGT’s strategy is totally focused on providing a quality choice to our customer base. We are not limiting ourselves to a single stream game development program. We have enhanced the attributes of our 26” Ambassador via a lateral approach to game design providing an improved excitement packed flexible proposition for our customers.” Danny Gladstone, AGT’s CEO, said.
All games take advantage of AGT’s unique 26” LCD superior high-resolution graphics presentation and feature rich, headlining retriggering free game features, random bonus prizes and second screen features. In addition to this, Dragon Power, the new 6-reel bonus free game feature, adds extra multipliers and substitutes symbols to free game wins.
As well as Dragon Power, exciting new themes such as Wild Outlaw, Pyramid Secrets, Paradise Moon, Cash Mint and Birdsville Bucks headline the latest in AGT’s game library. Based on already evident excellent performance results, Gladstone is confident that not only will these games be solid performers, but more importantly, AGT will provide to the global marketplace a range of quality products for standard and ante-bet games, standalone and linked progressive game product segments into the future to enhance all gaming floors.
Seamus Mcgill
CEO, Cyberview Technology
2008 will be a significant year for Cyberview Technology in the North American market. We have already obtained several Tribal Gaming licenses and anticipate receiving licenses in other key jurisdictions, which will allow us to bring our award-winning server-based products to the U.S. market.
“Cyberview has the experience, technology and patent portfolio to be very well positioned for the rollout of server-based gaming products this year,” Seamus McGill, CEO of Cyberview Technology, said. “The operators and regulators have been evaluating server-based technology for a number of years and are now at a point where they feel more comfortable with the integrity and security of the systems, which plays to Cyberview’s strengths. With the sponsorship of strategic operating partners, we have great hopes for the placement of our technology in casinos across the United States.”
“Server-based gaming offers operators a large array of services in addition to regulatory accounting functions, and it is our belief that the benefits of our distributed gaming technology will become clearer to operators in the very near future,” Thierry Brunet de Courssou, chief technology architect for Cyberview, said. “Our award-winning scheduler will act as an essential management tool to assist operators in maximizing their revenues. With this software application, operators can cater to players based on demographics or history of play. In addition, gaming machines will have a large portfolio of games themes, marketing capabilities and other applications to suit different sets of players. With our company’s proven performance and expertise in this new gaming segment, we are excited about the future and the products that we will bring to our operator partners.”
Sean Evans
Senior Vice President, Game & System Sales, Aristocrat Technologies
This coming year Aristocrat is extremely well positioned to lay the foundation and lead the industry into the new era of technology-driven products in what is shaping up to be a fantastic 2008. Over the years, Aristocrat’s diverse product line-up, ranging from market-leading electronic gaming machines and tables to back-of-house casino management systems, has provided casino operators a complete gaming solution for their floors. In 2008 we are excited to add a new generation of gaming to our versatile portfolio with the introduction of our new VIRDIAN™ cabinet and our most powerful and adaptable platform yet, the GEN7™.
Our new generation line of VIRDIAN cabinets has been designed using environmentally responsible design and production methods, making us one of the first manufacturers to do so on a global scale, and resulting in a 100 percent RoHS-compliant product that minimizes energy consumption for operators. Featuring a slimmer footprint, high-resolution dual LCDs, an innovative flexible and modular design, and configured for optimal player comfort and operator serviceability, VIRDIAN is a truly unique product offering.
As the gaming industry evolves and matures, we have noticed an emerging trend toward technological advancement as well as variety in content delivery channels and methods. The launch of our new GEN7 platform brings both our customers and the industry new and innovative concepts, including advanced life-like graphics and sound to real-time dynamic scorecards in the LCD top-box. One of the major moves we have made is to shift away from traditional-style button panels and mid-trims, and move toward a new, modern player-friendly look and feel with our new Easy Game Play Interface. This new interface features touchscreen player-selectable line and bet structures while utilizing only six buttons on the mid-trim not the traditional 13, creating a portal for us to migrate customers and players toward server-based gaming. Our new interface and the open-architecture style platform offer our customers a migration path from the current proprietary form of gaming to what we and many believe to be the future of gaming in server-assisted, server-based and Ethernet floor applications. The path that our new platform provides, supporting everything from our top-performing proprietary MKVI™ games to the new and innovative GEN7 games, to server-based applications, makes Aristocrat “future ready.” Even with the introduction of this new technology, we know the adoption path has been and will continue to be relatively slow, which is why we have created a platform to accommodate today’s style of gaming, as well as gaming for tomorrow and the future.
The other piece of the puzzle, the back of house management system, is where we extend to our customers a true and complete gaming solution. With our OASIS 360™ product, we have the ability to offer system-based bonusing through the SpeedMedia™ application utilizing our Sentinel III™ in-game display, as well as a new business intelligence tool, WAGER™, providing our customers a 360 degree view of operations. Where the benefit really lies is when we start linking server-based game applications to our customer’s systems requirements; Aristocrat has the ability to bundle the total solution as our OASIS 11.6 product offering is Ethernet ready.
We are truly excited to enter 2008 armed with future-ready technology and to help the market and our customers drive the future direction of the industry while still supporting and providing for today’s gaming environment. We are confident that our innovative and entertainment-rich game concepts, coupled with our new advanced technology, will provide our casino operator partners with the perfect formula for 2008 and beyond.
Ron Harris
CEO, Rocket Gaming Systems
On the whole, I expect to see the accelerating pace of change in our industry continue unabated in 2008 and beyond. We all work in a technology-centered industry, and the convergence between gaming technology specifically and entertainment technology generally will impact both the products we make and the way they’re used.
Multi-player entertainment gives rise to the kinds of exciting gaming experiences that are unmatched in the one-dimensional, game-in-a-box scenarios. By spreading the multi-player experience across a wide area, we can now bring players together for exciting, interactive play and high frequency jackpots. These are the kinds of social and interactive gaming experiences that will be in greater demand as the general population continues to embrace the “always on, always connected” culture of the Internet and our increasingly fast-paced lifestyles.
Multi-player gaming is best achieved through server-based systems that can centrally manage the kind of high-value progressive jackpots sought by players. Server-based systems likewise afford operators the added benefits of customizing game play to match their market’s specific requirements. Even as a specific market’s dynamics change from day to day, the technology behind centrally managed gaming can help operators deliver the optimal gaming environment for their customers.
At Rocket, we feel confident that opportunities will continue to grow for the kind of server-based technology we’ve been deploying for 11 years now.
As we all know, the gaming industry hasn’t always kept pace with the latest advances in technology that are already commonplace in other industries and amongst consumers. As gaming’s dependence on technology increases, it is likely that we’ll see better and larger volumes of new gaming content, and innovative new systems that work behind the scenes. As a result, regulatory bodies are likely to look to non-gaming technology companies and other manufacturing experts for guidance on developing safe and secure standards that protect the integrity of our industry.
In this regard, the National Indian Gaming Commission may have been well ahead of the curve in 2007. Beginning early last year, the NIGC brought together a variety of experts to craft regulations for Class II that are both supportable and fair. The NIGC’s attempt at opening the process of developing technical and minimum internal control standards could well become gold standard for collaborative, productive working relationships among manufacturers, operators and regulators.
The fast pace of technology, with its direct impact on the player’s experience, and an evolving regulatory landscape will be two of the hallmarks of progress I expect to see in 2008.
Greg Gronau
President & CEO, Cadillac Jack
We are extremely optimistic about the year ahead, and we have been fortunate to have achieved a great deal of success in such a short amount of time. This past year has been one of building a solid foundation for the company, expanding and revamping our product portfolio, increasing our footprint in core markets, and gaining entry into new markets.
2008 will mark the culmination of Cadillac Jack’s transformation from being known strictly as a provider of Class II products to being recognized as an enterprise-level provider of gaming solutions, encompassing both Class II and Class III gaming, as well as international markets.
From a domestic perspective, one of the most exciting strategic moves for Cadillac Jack is our initial penetration into the Class III marketplace. We have spent a great deal of time developing new products specifically for this market, and the response we saw during G2E confirms our commitment to this new direction. We expect to see significant growth in this area in the coming year, while continuing to gain strong market share in the Class II and charitable gaming market.
Cadillac Jack continues to gain a strong leadership position in Mexico through the introduction of products developed specifically for Mexican players. We recently established regional headquarters in Mexico City for sales and marketing, along with additional sales and service centers throughout the country. To meet the growing interest, we continue to develop products specifically for the Mexican players including our Latin Bingo game suite, and Mobile POS system.
Understanding what matters to our clients is the driving force behind everything we do and is one of the key factors in our success. We take the time to understand our customers’ priorities and challenges so that we may develop and deliver the right solutions to ensure the continued success of their business. This philosophy allows us to tailor our products to meet local player preferences in markets we compete in.
Our focus this past year has been to substantially enhance our game development initiatives and to upgrade our operating system in order to create highly competitive products. From the games side, our suite of server-based, market-specific products including wide area progressives, licensed products and our increasing portfolio of video and reel slot games have been and will continue to be the driving force in our rapid expansion. On the systems side, we’ve made significant advancements to our server-based system for greater compatibility with third-party systems. We have also developed a data warehouse that employs state-of–the-art analytical tools for customer profiling, data mining and predictive modeling.
The success of our Wide Area Progressive, Cadillac Cash™, has already exceeded our expectations though its global commercialization. Currently operating both domestically and in Mexico, this product fills a niche in casinos through its multiple game themes linked to a common jackpot award and instant payouts of life changing jackpots. We expect to see significant growth of this product in 2008.
Adding to our product portfolio, we previewed Mega Money Maker™ at this year’s Global Gaming Expo. Already generating a great deal of interest with our customers, Mega Money Maker features an exclusive combination of wide area and local area progressives linked to create an entertaining and rewarding experience for the player.
To sum it up, Cadillac Jack had an incredible year, and we are moving forward into 2008 with a focused vision of the company’s direction. We believe the industry will be hearing a lot about Cadillac Jack in 2008.
Steve Morro
Chief Operating Officer, IGT
The evolution we’re going to see throughout the gaming industry in the next few years will be significant, as casino companies unveil larger and more luxurious properties, expand into new markets and offer players entertainment options on a scale never seen before. IGT is driven to be innovative, and to develop and deliver products and technology that take our customers wherever they want to go, right now and for the future.
All of our machine technology is evolving to our AVP® platform because it provides such a strong, flexible PC-based foundation for the imminent server-based gaming future. Downloadable games, system and peripheral software via Ethernet connection, electronic funds transfer and advanced funds transfer are all part of that mix and a key to credit capabilities like cashless gaming. The AVP® platform also supports multi-monitor, ultra-high resolution LCD displays in standard and widescreen formats, and high performance digital sound.
We introduced several new products for the platform at the Global Gaming Expo (G2E) including the new eBay™ video slot, the Star Wars™ Multi-Level Progressive, and the Indiana Jones™ and the Last Crusade™ slot with its Multi-Layered Display.
We also introduced five new gaming machine cabinet designs for our AVP® platform at G2E. These include several new widescreen formats for slant, upright and bar top configurations. Our current cabinet initiative is the most expansive in the history of IGT.
Our award-winning sb™ Service Window technology is a revolutionary advancement in player communications that lets a casino engage and interact with players while they play. For the first time, a casino brand can be delivered directly into the game space. Through the Service Window, the player can view points, comps, offers, branded promotions and services through a touchscreen menu located directly in the game space. And the Service Window is interoperable with multiple platforms: video, reel, Poker, table, thin-client application and even other manufacturers’ machines. Through the use of the sb™ NexGen™, legacy games can also take advantage of the power of the Service Window.
We expect multi-player stations and electronic table games to become increasingly important platforms for game content. Development continues on our MP-Series™ multi-player product, which features several individual terminals connected to a central control device. The MP-Series™ will introduce Baccarat and Roulette games in early 2008, and other themes such as a horserace game will follow. We’ll be working jointly with DigiDeal to expand its game content library and electronic table game products.
IGT was chosen by Microsoft as a Channel Partner to develop gaming applications for its new MS Surface, a multi-player table surface that provides interaction through gestures and touch. Our IGT Labs group is exploring how this new technology can be deployed in the casino industry.
We will continue to move forward with the development of server-based gaming, working with both our competitors and customers to ensure that the market of the near-future is powered by an open network. In the coming year, we plan to further refine our server-based sb™ framework by expanding its reach to include multiple manufacturers’ machines and large scale applications. We will also prepare for the first full installations of our sb™ products in 2009.
IGT is committed to supporting industry-wide collaboration, especially as it relates to server-based gaming. In January, we will open the IGT Global Technology & Interoperability Center near our Reno campus. To facilitate industry cooperation and ensure that the gaming network environment is truly open, we are opening our doors to our competition, customers and manufacturers of third-party products. The lab will offer a secure, private setting where any vendor with a product that operates within a casino’s open network can test the compatibility of their GSA protocol-based products. IGT will openly report on the results of our testing and maintain an IGT-certified product list outlining the non-IGT products guaranteed to perform alongside any IGT network product.
Last year, we saw the passage of legislation legalizing gaming machines for race tracks and a limited number of casinos in Kansas, as well as for race tracks in Indiana. In West Virginia, electronic versions of table games were legalized as part of the live table games legislation passed this year. Gaming machine legislation is being considered in Massachusetts and Maryland, and Kentucky; New Hampshire and Texas may look to gaming machine legalization. We expect to see a period of growth in new or expanding domestic markets in 2008, and that’s good news.
Internationally, the development of gaming is possible in Brazil, China and India. In China, we have a joint venture partnership with China LotSynergy Holdings (CLS) for that country’s lottery business and other opportunities in the Chinese market.
Prospects for the casino industry in 2008 and beyond are very positive, and IGT intends to make innovation its primary contribution to that success.
Victor Duarte
Chief Operating Officer, Spielo, a GTECH Company
In 2008, Spielo is looking forward to what should prove to be an interesting and exciting year. Its parent company, GTECH, is expected to complete its acquisition of a 50 percent controlling interest in Atronic early in the year. This transaction will bring both Spielo and Atronic under GTECH’s Gaming Solutions umbrella. Both companies share a commitment to providing great products and unparalleled customer service — two things that the industry will always demand.
We expect to see an evolution in the government-sponsored, native and commercial casino markets. Expansion should continue as new states such as Kansas enter the venue-based gaming market and as others such as Massachusetts and Maryland consider gaming expansion. Well-defined domestic gaming markets and developing markets such as Pennsylvania and Florida will continue to seek products to meet varying player demands. Regulated gaming will continue to evolve in Asia, South America and Europe.
Server-based gaming is certain to gain even more attention in the coming year. As server-based gaming solutions find their way into some properties, we should start to see which features of these products are most utilized or needed by the industry; how well they will interface with existing systems and technologies; and the impact on overall floor performance.
We also expect to see cabinet and component technology take on an important role. As certain technologies move into common aspects of our daily lives, so too will they move into gaming. We anticipate the reach of the viewable player interface to extend toward more shared environments such as large overhead monitors. Higher definition monitors and dynamic 3-D animation will also be incorporated into existing cabinets as well as these new viewing spaces. Many vendors have recently or will soon introduce enhanced gaming platforms to take advantage of the available technology. Spielo’s new sensys™ gaming platform allows for such advances. With an increase in processing speed and game space, there will be corresponding improvements in the playing experience. Games will challenge that processing speed and take full advantage of the additional real estate.
Improvements in technology will also feed operators’ and players’ appetite for community games. Social community and competitive community games should continue to evolve into both standalone and banked unit options. Their introduction will complement the performance of existing base games as we have seen with progressives and bonusing features. We expect this emerging trend in gaming to begin capturing a greater share of floor space in the upcoming year.
We expect social responsibility to continue to gain importance in the domestic casino industry. The awareness of social responsibility in gaming is well-entrenched in many global markets especially in Western Europe. Already an integral part of most government-sponsored programs, responsible gaming will become more prevalent in tribal and commercial casinos. As properties develop such programs, they will, no doubt, look to companies such as Spielo with broad experience in this area and responsible gaming features already built into their products. There is an environmental component to the gaming industry’s push for greater social responsibility. Consequently, gaming machines will also see marked improvements in energy efficiency and Restriction of Hazardous Substances compliance will become commonplace.
These events and others are just a sampling of the opportunities in the industry, and Spielo is already meeting or preparing to meet the challenges of these new opportunities. Players continue to demand games that are more entertaining, and technology will drive many of the changes. One challenge will not change — the challenge to create games that are fun to play for a variety of player segments. Spielo, along with GTECH and Atronic, is committed to embracing and leveraging those new technologies while it develops new games, gaming concepts and gaming cabinets for various segments of the industry.
PERIPHERALS & COMPONENTRY
Gary Platt
President, Gary Platt Manufacturing
The outlook for the gaming industry, and especially for Gary Platt Manufacturing, is almost unlimited. The growth that we see today could not have been predicted 10 years ago by the most optimistic dreamer in this business. We are fortunate to work very closely with the machine manufacturers to provide them with the proper seating for their games to maximize time on device for their players. This has led to additional business from the casinos and contact with a large network of people that have become boosters for our company. The recent G2E show in Las Vegas gave us the opportunity to talk to people and hear their plans for future projects that are very substantial that will include Gary Platt chairs. We have provided a very large quantity of seats to Mexico in the last two years. We were visited by a representative from a hotel in South America at G2E that told us they have a five-star hotel and expect to receive approval to build a casino and wanted to provide their players with the most comfortable seating possible.
The popularity of live Poker has been beneficial to the growth of our business in recent years, with the largest Poker establishment, located in the Los Angeles area, using over 2,000 of our chairs. This has led to additional business from other Poker room managers that have seen our chairs in use when visiting there.
Indian Gaming has been a growth area for us for many years, and one of our chairs, the Barona, is named for the first casino that used that series. California, Oklahoma, Washington and other areas of the country are still opening casinos that are a credit to Indian Gaming. We recently provided over 3,000 seats and chairs to the Four Winds Casino in Michigan, which should win Casino of the Year honors for its tribe, operators and designers. It is beautiful.
We are fortunate to have two rep organizations, Gitchi Gaming in the upper Midwest down to Oklahoma, and Modern Gaming in Mississippi and Louisiana, that understand seating usage and customer service, and have provided growth to our business.
There is still a lot of the country and the world out there that needs Gary Platt chairs, and our business has grown every year with the expansion of this wonderful gaming business. Fifty years ago when we received an order for 50 seats, it was a cause for celebration. Times have changed, and what will be happening only 10 years from now will be phenomenal.
Scott Hagermoser
Gaming Business Manager, 3M Touch Systems
3M Touch Systems, with more than 20 years experience in developing and commercializing touch interfaces for casino games under the MicroTouch™ ClearTek™ brand, sees 2008 as a significant year of change for casino gaming.
For more than 20 years the touch interface for casino video games has been largely unchanged. Aside from the recent transition from CRT touch displays to LCD touch displays, the touch interface has solely relied on audio and video cues. To push the audio/visual limits of casino games, game developers and manufacturers continue to optimize their machines with brighter, bolder graphics and displays, and with sophisticated sounds and speaker systems. But as developers reach these limits, additional avenues are necessary, and tactile touch is the “next big thing.”
Adding tactile touch — which creates the on-screen sensation of pressing a mechanical button — to the touch interface allows game developers a whole new level of game design. Now, by combining audio, video and tactile cues, casino games can become more enticing and more engaging to players, and potentially keep them playing longer.
While tactile touch may be the future of slot gaming, casinos that want tactile touch to extend their investment in today’s games can incorporate their own hardware and software solution. The process is relatively simple. By working with their preferred display integrators, casinos would upgrade their existing CRTs to tactile touch-enabled LCDs or add tactile touch components to existing LCDs. Then tactile touch zones are created (resident in the touchscreen controller’s firmware) to correspond with existing software touch buttons. Because the tactile touch zones reside within the touch controller and not the CPU, this upgrade has no impact on the regulated operation of the casino game. With this aftermarket enhancement, casinos are able to refresh their popular slot games and extend the life of their older and less popular games.
It’s apparent that server-based gaming will soon become the norm in casino gaming. And when that transition occurs and video slot games can be selected by players or downloads scheduled by casinos, the next generation of gaming machines will be designed with fewer, if any, mechanical buttons. By their nature, mechanical buttons are static and correspond directly to the dedicated slot game. But on a networked gaming floor, game manufacturers using compact wide-aspect-ratio touchscreen displays in place of rows of mechanical buttons can instantly convert and optimize the entire game to a new theme or different language. Flexibility is the promise of networked games, and the touch interface will help enable the transformation.
With casinos aggressively competing for slot players, game manufacturers continue to expand the outward dimensions of their machines to make them more vibrant and alluring on the casino floor. As these dimensions increase in size, so does the opportunity to use newly introduced wide-aspect-ratio displays and in ever-increasing sizes, such as 22”, 26” and even 32”. Touch manufacturers will have to demonstrate their engineering flexibility and touch sensor scalability to meet this expected demand.
Tracey Chernay
Senior VP, Sales & Marketing, TransAct Technologies
Among the highlights, server-based gaming continued to take center stage as a focal industry topic in 2007. I expect this to continue in 2008 and 2009.
It is our role at TransAct Technologies to make sure we are adding value to this equation.
Indications are that SBG is going to be more of an incremental transition to an improved product than a one off investment that will change the way slot floors operate overnight. Given that there is often a healthy and sensible hesitance to commit investment dollars to something unproven, I believe this is a positive sign for SBG, as each group will invest to the degree they are comfortable.
Clearly, one very exciting objective of SBG (asserted by many) is the ability to improve the player experience by “knowing” and being “sensitive” to the player sitting at a slot machine, based on previous play experiences.
This is a dynamic and ambitious goal, but very achievable. Yet some of the less ambitious goals will reach the market first, merely for practical reasons; they are ready and easier to implement today. For example, extracting information from a peripheral device will allow an operator to understand the levels of activity at given times and respond with greater floor management; prompting a player with a promotional offer to a half-empty showroom for half-price will improve site outlet management. The ideas that will drive SBG will be a combination of customer experience enhancement (extreme marketing), and property management enhancement.
2007 also brought about heightened interest in several new products and ideas that are evidence of the innovation and bright minds that continues to drive our industry. Some examples are “Immersion Gaming,” “Guaranteed Play,” “Community Gaming,” 6-reel stepper games, etc. These are products that players will experience for years to come, and those that enjoy a little flutter will have many more choices to satisfy their entertainment needs.
At TransAct Technologies, we are committed to supporting the entertainment needs of our customers and to enabling further advancements in our industry. We will continue to work closely with our partners and customers so that we can create quality and unified ideas, meet expectations and drive technological growth.
One area where we have a big part to play is in the area of promotional coupons at the slot machine, and we have been working with our partners to enable this very crucial moment of contact with the customer. It creates what we like to call a “Customer Now” moment, in which a reward or promotion is offered to the customer with a time window in which to accept or reject the offer.
There is a lot to be excited about in looking forward to the next few years in gaming: Incredible growth in Asia, growth and expansion in all of the Americas, Australia’s shift to TITO, SBG and exciting new dimensions of entertainment brought about by the products previously mentioned!
We are very excited about 2008, and the future of gaming.
Michael Sigona
Regional Manager, Tyco Electronics Elo TouchSystems
We at Tyco Electronics’ Elo TouchSystems are seeing the trend to widescreen displays due to the economics caused by HDTV production. The shift is obvious when visiting a computer store that desktop monitors are moving to widescreen format. Due to decreasing costs per square centimeter on wide formats, while standard panel prices are increasing, the gaming industry will follow the trend while providing players with a more exciting visual impact. Gaming companies should look at the panel trends before committing to a specific size, as a shakeout period is sure to occur, reducing all the offerings today down to only a few preferential sizes that have multiple sources and optimum pricing.
In addition, the increasing native resolutions and different aspect ratios of these panels will also require new software, graphics and animation, and perhaps dictate increased processor power and RAM to hold all those larger graphics. Finally, the 14 percent import duty on DVI in Europe can add a cost premium to larger displays.
At Elo TouchSystems, we have developed five new widescreen monitor platforms, 19” wide, 20.1”, 22”, 26” and 32”, based on our investigations into the panel trends. We offer those monitors with surface wave, capacitive and the new technology Acoustic Pulse Recognition (APR).
Come see the new models at ICE in London, Jan. 22–24.
Bob Magnanti
General Manager, Glory Gaming Division
Technology will continue to drive the gaming industry in 2008. All of the gaming operators will be looking for products that can give them improved solutions — products that can speed up processing time by their employees, provide to management more detailed reports, and provide to casino patrons a hassle-free experience when they visit a casino.
Self-service kiosks will continue to be embraced by patrons as they offer more and more features. Products that were purchased only a few years ago will be considered obsolete as casino management becomes more “technology focused.”
The newer jurisdictions will present great opportunities for many individuals and companies. Native American casino resort complexes will grow and grow as the local clientele demands more entertainment choices that expand beyond just a casino. In spite of the economic difficulties we all face today, the prospects for the gaming industry remain very strong for all of us in 2008.
Sim Bielak
VP Sales, Global Gaming, CashCode
With the recent announcement of the newly designed $5 bill being entered into circulation on Mar. 13, 2008, operators have less than 90 days to adapt their machines to accept the new bill.
The labor time involved in physically having to visit each machine is a task all too familiar and dreaded by all operators. This is probably why so many OEMs and operators have started to seriously consider server-based gaming deployment. CashCode has been one of the pioneers in remote updating of currency validation and firmware updates using its CCNet protocol for many years now.
As 2007 was a full year with TITO, cashless and other emerging technologies, 2008 should prove to be just as full in terms of new gaming innovations, especially as how they relate to the peripheral technology business. CashCode, for example, is launching a revolutionary new global gaming product. It is the fastest, most advanced bill validator on the market today. What’s more, it’s a global solution — “One unit is all operators and OEMs need.”
As the needs of our customers get more technologically advanced, CashCode has responded by becoming vertically focused. Now with sales and marketing leads for each of the verticals it supports, CashCode’s new global gaming group within the Crane Payment Solutions infrastructure will support the specific needs of our gaming OEM and operators internationally.
SYSTEMS & TECHNOLOGY
George Levine
Executive Director, Sales & Marketing, Casino Data Imaging
For Casino Data Imaging (CDI), success is judged in the eyes of the customer and by doing something we can be proud of. The input and feedback loop we’ve established with casino operators, analysts and consultants is the mechanism allowing CDI to provide real-world solutions to our client base.
Compatible to slot systems, game servers and data warehouses, CasinoCAD© and CasinoCAD© Enterprise enhances existing slot systems by saving hundreds of man-hours while maximizing earnings. Today we can be found in over 140 casinos worldwide, monitoring over 200,000 machines. We have unparalleled client support services that can answer the hard questions fast, provide in-depth expertise, and expedite delivery of time-critical solutions. We’re very proud of our team and of knowing CDI continues to be a leading provider of data visualization and report-writing analysis solutions to the gaming industry.
2007 was a great year for our company, exhibiting at G2E Asia, currently installing in Macau and achieving another record year for sales. New developments to meet end-user analysis requirements are ongoing and have resulted in significant advances within our Enterprise and standalone CasinoCAD programs. Performance indexing analysis, consolidated analysis, data-flow features, fair-share reporting and intuitive program features are examples of new updates and developments. Now that game-level information is available, we are working with our users on how best to query multi-game/multi-denomination machines. Whether you do your own analysis or develop applications for others to use, the same challenge exists: the need to manipulate large amounts of data quickly and accurately, find the most pertinent information, and display the results. CasinoCAD will help users not just manage massive amounts of data, but also access and leverage the knowledge in the data.
The upcoming year will bring great opportunities to CDI, as we’ve made significant investments in local and off-shore software development teams. These investments are allowing CDI to leverage leading-edge technologies for current and future product developments. Our new engineering structure will reduce development time, save costs, accelerate time to market and, most importantly, achieve accurate, reliable results. Best of all, our product development team can continue to focus on understanding our clients’ current and future analysis needs, allowing CDI to build a solution designed to generate rapid results and measurable returns.
The company’s new .NET developments will facilitate unique partnering opportunities, bringing additional value to our customers. CDI will continue to develop, support and market CasinoCAD and CasinoCAD Enterprise, a dynamic, proven and affordable program. Later this year, we will release the CDI Analysis Suite, a premium analysis program for table games and slot machines.
For Casino Data Imaging, 2008 will be an exciting year.
Tom Nugent
Executive Vice President, Gaming, MEI
G2E 2007 proved that 2008 in the gaming industry will be a year driven by technology. The market holds its breath looking forward to the implementation of downloadable games, and the early adopters will start to commence experimentation and implementation with the new technologies shown at G2E. More than likely, it will take until 2009 for the industry to experience a significant return on these products.
Unlike previous years, the casino boom will be less evident in the United States. However, change and growth continues in markets like Oklahoma, California, the Northwest, Pennsylvania, Maryland and migration from Class II to III. The international expansion will be localized in Latin America, Europe and Asia.
In Latin America, Chile will be the hot area, with 15 new casino openings; other expanding markets are Argentina, Colombia and Peru. There will be an increasing adoption of TITO-enabled slots in international casinos in 2008 as a response to the success of this technology in North America and other parts of the world. Mexico will experience its first gaming tradeshow, taking place in May 2008 and perhaps driving further expansion. Technology remains a key driver in Latin America as operators are looking for new methods to increase efficiency and effectiveness while attracting and retaining more players.
Europe is all about flexibility in 2008. Market expansion and opportunities move quickly. Spain and Greece will be places to watch, while France and Germany continue to implement new technologies after changes in regulation. Eastern Europe continues to show interest in gaming with the first tradeshow in Bulgaria as the industry still waits to understand the forthcoming changes in the Russian market.
Asia finds itself between the explosive growth of Macao and Singapore, while the Philippines, Malaysia, Cambodia and Vietnam could all see growth activity as the region follows the lead of Macau. Japan’s current Pachinko/Pachislo market is under a significant change, and expectations continue to surface regarding a turn to casino gaming in 2008. Australia’s experimentation with TITO will drive a change in technology for the market.
Overall, 2008 is going to be driven by innovation — the industry is waiting for the next game-changing technology. The gaming industry continues its growth in 2008, and MEI as a global supplier will expand our technology to serve our customers and the market wherever it surfaces.
Stephanie Maddocks
President, Power Strategies Technology Consulting
Within the technology consulting arena, I believe 2008 is going to continue to be a busy year, focused on the implementation of many new technologies within the gaming industry. New systems products are being released to build the foundation for the migration to downloadable technologies. By enhancing the current system infrastructure to accommodate a more robust floor network, casinos will be beginning the upgrades from legacy slot floor configurations to the gaming floor of the future. In addition to this high-speed floor network, casino management systems are being improved to include business intelligence and data mining tools that will enhance the casino’s ability to target-market its customers and increase the return on investment for each marketing dollar.
As systems become even more complex, the need for highly skilled and qualified technologists will become even more pronounced. Experts in the field of system analysis, selection upgrades, implementation and training will almost become a requirement for any casino that wants to migrate between systems or technologies while at the same time minimizing the impact on its current operation and staff. By utilizing outside resources for new technology implementation, the casino’s team can continue to focus on day-to-day tasks that keep the casino operating efficiently until the new solutions can be deployed. The partnership between internal and external resources will present the best skill sets available to create seamless technology transitions.
It is my company’s goal to provide a wider range of services to the gaming industry, including systems implementation, project management, technology review and analysis, and training. These services are integral to any technology implementation’s successful outcome. As always, it is a continuing challenge to find highly qualified team members with superior skill levels, and my goal is to find and build a power team to provide excellent service to all my casino partners.
Technology change is the driving force for my business. As technology evolves, there is always a new/different/better/ faster/simpler/more-complex/cheaper/more-expensive solution to the problem of the moment. With each new product offering, enhanced technologies will offer updated solutions to address casino operations, and qualified technologists will be required to assist in the transition from the old to the new. These skill sets are the creation of technology consulting businesses, and the use of quality consultants helps ensure successful implementation of a wide variety of new products and features.
Claudia R. Winkler
President, G.H.I. Solutions
As I enter my 20th year in the gaming and hospitality business, my enthusiasm and passion for our industry only grows. G.H.I. Solutions is wrapping up the busiest year in our five-year history, and we expect 2008 to push us to new levels. Our business plan is focused, providing strategic information technology guidance, assisting clients with major system selections (all systems and software that runs in a casino/resort enterprise), facilitating system implementations, tackling integration and system interface challenges, and performing due diligence work on mergers and acquisitions. We expect that technology will continue to move at warp speed in 2008. There are three key areas where we see tremendous growth and opportunity in 2008.
Business Intelligence/Analytics
Operators have discovered the power of business intelligence (BI) and the analytical tool kits that can provide “real-time” information to drive revenues, manage margins and identify areas in the business that require “immediate” attention. There are a wide variety of tools available, and choosing the right one for your organization can be a daunting exercise. This is one of the areas where G.H.I. Solutions has facilitated the system selection process to assist operators in choosing the right set of tools for their organization. Understanding all the underlying systems, what BI tools the system(s) interface with (or in some cases, come with their product), and how all these systems play together is important in determining what BI tool or tools are right for an organization. Many operators are moving to standardize on one or two solutions to streamline the cost of ownership, reduce the number of systems/tools that must be supported, and develop a bench of trained users who can manage the power of the data that these tools can unlock.
Integration and Interoperability
Integrating all the systems and data that currently exists in gaming and hospitality organizations is an ongoing challenge. Much work has been done by the GSA and HTNG to develop standards to streamline the development of interfaces and overall system integration. New and/or improved technology tools like Microsoft’s BizTalk and SharePoint will enable operators to run multiple legacy systems and still provide a seamless guest experience.
For many years, we have lived with proprietary, point-to-point interfaces that had to be purchased from each vendor and that only supported their application. Historically, these interfaces have been expensive to maintain, have provided limited data, and at times have hindered the upgrade cycle for the core software applications.
Organizations are now seeking ways to improve their effectiveness by accelerating shared business processes, sharing information across the enterprise, and having easy-to-use web services and web portals that can be easily and effectively managed. The development of mature and robust interfaces and cohesive integration strategies that incorporate the required business rules engine that can support all the core applications will be the next step in streamlining this process.
Slot, IT and Server-Based Gaming
Slots, IT and server-based gaming are converging. The lines between what the slot department is responsible for and what the IT department is responsible for are blurring. Casino management systems are all moving to an Ethernet floor, where the game will become an IP address on the network. The days of belly glass and paytables in the top-cabinet will be a thing of the past, replaced by a variety of new displays (TFT/LCD/LED) that will be dynamic and whose content and appearance will be managed by downloading new content to the game and the in-machine display (player interface portal).
Several casino organizations have already moved the support of the game hardware (displays, ticket printers, card readers) and the networks required to support the floor under IT. As server-based gaming, downloadable technology and wireless applications are adopted, organizations will have to “re-think” their organization charts to more effectively utilize their resources and develop the required skill sets.
Technology is not going to stand still. Manufacturers and software developers are working overtime on the “next generation” of games and applications to create a more exciting, seamless guest experience and take us all to the next level. We are excited about the future!
Bart A. Lewin
Industry Consultant
During 2008, the demand for computer-savvy employees in the casino industry will rise. This is not restricted to the IT department. Many line employees will have to acquire general technical skills beyond those that they have relied on for the everyday operation of their computer systems. This will, out of necessity, result in the realignment of the traditional lines of responsibilities between the system vendor, the IT department and the operating departments.
Other industries have faced this problem. Modern cars, for instance, have many more computer controls than ever before. They now have the ability to automatically parallel park, have engines that shut down cylinders to save gas, provide proximity sensors, utilize variable suspensions, and use transmissions that adjust to driving conditions. All of these features are computer controlled. Automobile mechanics have been forced to acquire more electronic technical skills and generally become more computer savvy. Car manufacturers have had to develop comprehensive diagnostic tools to assist mechanics in identifying and repairing problems. The driver has also had to learn to operate the more sophisticated features.
Comparably, in the casino, digital surveillance systems have turned cameras and video recorders into nodes on a computer network with servers, large disk-drive systems, CD burners, routers and switches. Downloadable games will all operate over a computer network, perhaps requiring a separate network for each game manufacturer. Many of the new e-games (electronic table games) are self-contained computer networks managed by their own larger network.
Computer networks are complex to administer. In fact, several certifications are available for network administrators covering all major components (e.g., Microsoft certifications for network software and Cisco certifications for network hardware) and are required by many organizations. Casino operators will have to decide where to draw the lines on their support regarding the responsibility of the vendors, the slot department and the IT department.
In the past, we have asked IT departments and vendors exclusively to perform these duties. Unfortunately, their hands are already full. IT departments typically manage in excess of 100 systems, with new ones being added each year. CIOs tell me that IT departments currently face the largest backlogs of work they have ever had. One CIO said that his department currently has 500 open work orders from end-users, and the number has increased every year. Slot-machine vendors must now employ many more software engineers and computer support technicians to produce and support downloadable games, as well as the ever more complex casino management systems they now supply.
Both IT departments and vendors complain that it is difficult to find qualified employees. According to the U.S. Bureau of Labor Statistics, the number of positions for computer support specialists will grow between now and 2014 at a minimum of 18 percent, and the number of positions for computer system administrators at a minimum of 27 percent (www.bls.gov/oco/ocos268.htm). A smaller pipeline of new qualified applicants and the aging of the existing supply of qualified personnel will aggravate this increase in demand. According to the Commission on Professionals in Science and Technology, college enrollments in computer science disciplines declined 40 percent between 2001 and 2006. From all accounts, this trend continues in the United States (“STEM Workforce Data Project: Report No. 9”; www.cpst.org/latest_news.cfm). For organizations that do successfully recruit those qualified, the price tag in salary and benefits will increase.
Vendors have looked overseas for software engineering talent, but support technicians, installers, trainers and network administrators are most effective when they are on-site and at the user’s elbow. The clearest illustration of this is the frustration felt by many users who must rely on assistance from remote technicians compared to how they feel when they receive personal service.
The options and beyond are these:
• Outsource services
• Pay the higher wages
• Hope for more immigrants
• Train line employees, provide them with the tools, and give them
more responsibility to operate and solve system problems
Of this list, in 2008 the most promising and cost effective option is likely to be the final one. Remember the 1984 movie Revenge of the Nerds? Perhaps their true revenge is that they have caused us all to become one of them — at least in part.
Tom Platt
Director, William Ryan Group
Since the advent of slot machine management and customer-relation database systems, the industry has recognized the value of implementing automated systems to empower management with critical information to better manage their slot machine events.
The further automation of the slot machine environment, including electronic ticketing and advanced interactive customer communication displays, have provided ever more opportunities to improve operational processes, and to track and control the customer’s slot experiences while on property.
The introduction of electronic peripherals, including automatic shufflers and customer chip and bet recognition systems for table game management, has provided similar opportunities for operators to improve their table game processes as well.
Going into 2008, the gaming segment’s relentless movement toward a totally wired, integrated business environment will continue unabated.
As all games, peripheral devices, customers and casino personnel are connected in this march toward a “networked floor of the future,” the opportunities to optimize revenue via gaming and peripheral equipment uptime management, and the automation of customer interaction and employee and supervisory activities, will grow unabated as well.
The William Ryan Group’s proprietary, patented, real-time customer service and employee optimization tools and systems have been designed to allow operators to leverage the data captured by these enabling technologies to facilitate the continuing evolution from ineffective reactive manual processes to automated managed processes.
With systems controlling slot machine events and food and beverage services for table game and slot patrons, which are currently installed in over 50 casinos across the United States, and key industry and technology partnerships and alliances, the William Ryan Group is uniquely positioned to deliver several key 2008 initiatives:
• Developing richer automated customer service interaction
functions via advanced slot and table game communication devices
• Adding additional monitoring and maintenance scheduling
features into our Peripheral Optimization Management Tool
• Automating additional inventory, bar well management and
beverage service functionality into the Real Time Beverage on
Demand (RT-BOD) casino floor product offering
• Advancing the slot, table and beverage service supervisor and
management alert capabilities to continue to integrate
management into automated operational processes
• Introducing a next-generation Excel-based report management
tool linking customer, employee, equipment uptime, service and
operational data across multiple departments
• Extending the delivery of across-department, across-property
service analysis reports and scoreboards to upper and corporate
management
• Continuing to develop key vendor and client partnerships, and
continued support for an open system standard for the industry
We look forward to working with our partners on these exciting initiatives in 2008 and to continue driving our client’s revenue optimization and the ever-increasing return on technology investment that our enabling software tools provide to them.
Happy New Year!
Susan Mitchell
President, Slot Tickets
Tickets, tickets everywhere and not a coin to flip! The outlook I see for tickets in 2008 is similar to this past year with moderate to slow growth as new properties come online. All the major players have made the switch to tickets, and we do not see a product coming out to replace the paper-ticket concept anytime soon. The EFT and smart card products that we thought would replace tickets have a lot to overcome in cost and player acceptability. But that is not to say we haven’t seen some very intriguing new cash-out products, but tickets are very cost effective and a proven, reliable, safe cash-out method.
Jay Walker
CEO, Walker Digital Gaming
The gaming industry has enjoyed phenomenal growth in the United States since 2000. Spurred by new billion-dollar entertainment destinations, the opening of new jurisdictions and the ever-expanding Indian and California gaming markets, two-thirds of Americans now live within a two-hour drive of one of 800 casinos.
But surprisingly, when we take a closer look at the health of our industry, there is one troubling statistic that tells us something is amiss. For each of the past seven years, the total percentage of adults who have gambled at a casino has remained nearly identical at 25 percent of the population. Put another way, revenues and profits have shot up dramatically, but our market share of adult participants hasn’t budged. Why aren’t we attracting more customers?
The problem is not that only 25 percent of Americans like to gamble. At Walker Digital, we estimate that 85 percent of U.S. adults gambled in one form or another in the past year. There are lotteries, office pools, fantasy sports, raffles and even church Bingo. With so many casinos so close by, why are 60 percent of adults who enjoy the activity of wagering and winning staying away?
Let’s divide the gambling population into two groups. We’ll label the 25 percent of adults who go to casinos “active gamblers.” That leaves 60 percent of adults who are “casual gamblers.” Casual gamblers like to wager, but when it comes to choosing entertainment, they select other activities instead of casinos. We suspect that almost all casual gamblers have been to a casino at some point in their lives and know the product we offer. What is it about casinos that the enormous casual gambling market finds unappealing?
At Walker Digital, we suspect that it isn’t our product that they don’t like — it is the inherently uncertain way we price it. Most people who are planning to go out and have some fun have two budgets: a time budget (e.g., an afternoon, an evening, a weekend, etc.) and a money budget (e.g., $50, $100, $200, etc.). Whether they are going to rent a movie for an evening, go out for dinner or spend the afternoon playing golf, consumers plan ahead to make sure that they have enough time and enough money. This is true for every leisure activity except one: casino gambling.
The way we currently price the casino experience doesn’t allow consumers to know in advance how much their gambling is going to cost and how long it’s going to last. How long will $40 last playing slots? How much money do I need to bring to have an evening of fun at the casino? It all depends on your luck (and your skill at managing your bankroll).
When customers don’t know in advance what their entertainment is going to cost, they assume the worst, thinking it’s going to cost more than it actually does, and then decide not to do it. Uncertainty is a tax — and a very high tax when it comes to buying entertainment. So how do we get customers to think about gambling in terms of the reality of what it costs versus the perception?
We believe server-based networks will allow casinos to address this problem. While server-based networks provide the ability to serve customers in all kinds of new and powerful ways, let’s focus on the enormous opportunity to deliver gaming in the form of fixed-price sessions. For example, a customer will be able to buy 500 spins of 9-line nickel play for $40, or a half-hour (30 hands) of $5 Blackjack for just $20.
Once casual gamblers have the choice of buying gambling by the spin or by the session, they may be very attracted to the fixed-price certainty of knowing just how much gambling they can buy — before they leave their house.
The network will allow for sessions to be pre-sold using a new kind of TITO ticket, denominated in spins or hands instead of dollars. This turns gaming into a ticketed event. And with tickets for fixed-priced gambling sessions, gambling can be sold for peak and off-peak prices, as well as included in all-inclusive value packages with food, hotels, shows and all of the other assets properties have to offer.
Up until now, or in the pre-network era, the casino had to price its gaming based on the spin or the hand. But everything else in the casino is priced like entertainment. The network allows for a completely different kind of pricing to occur. Once we price gaming like entertainment, that elusive 60 percent of adults in America who like to gamble but who don’t go to casinos will have a new reason to reconsider casinos among their entertainment choices.
2008 is the beginning of “the value revolution” that server-based gaming will make possible. Once properties start pricing gaming in two ways instead of one, they can unlock demand, increase the number of adults who come on a regular basis, and dramatically grow their entire property. Value can drive entire industries to new levels of growth and profitability (e.g., Wal-Mart, Disney, Club Med, long distance calling). And the new server-based networks offer dozens of new ways to create value. Pricing is just the start.
Tina Stehle
Sr. VP & GM, Hospitality Solution Div., Agilysys
In 2008, Agilysys will continue to enhance our product and service offerings, broaden our customer base and expand our markets to assist our customers in enhancing guest satisfaction.
Agilysys, through our strong relationships with our clients, realized the value of the emerging and increasingly international gaming markets in Asia. Through our office in Hong Kong, which opened in 2006, we’re positioned to provide local support to our Asian client base. We continue to expect strong growth in China and across Southeast Asia.
The Visual One product line will now be integrated with the Oasis Aristocrat player tracking system, which will enable us to offer another property management system to the gaming community. The Visual One suite of products operates in a client server environment. Agilysys’ clients preferring an open-system platform now have a choice within the Agilysys suite of products.
The casino industry is moving away from the “pre-conceived” level of what should be offered as a complimentary. More flexibility will allow casino patrons to use that comp availability to its fullest extent, or to use a small portion and then pay the remainder of their charges via credit card or cash. Agilysys is bringing our 20+ years of experience in casino hotel management to enhance our comp accounting module.
At the Global Gaming Expo we received positive feedback on our Hospitality Analytics Solution. This system consolidates all of a property’s data across disparate systems and multiple geographic locations into a single, integrated source for comprehensive reporting, auditing and predictive analysis. We will be using analytics across all our product solutions.
Our new Sign & Secure solution by Agilysys captures and electronically stores signatures and receipts for an easy and efficient way to handle disputed credit card charges. Archiving receipts reduces the need for boxes of receipts that are disorganized and unsecured. This pay-at-the-table solution offers the following features: store and index documents at a table (receipt and signature), automatically calculate tips, credit card authorization and print receipt.
Also in 2008, the web will continue to be a major influence. Services-oriented architecture (SOA) takes integration to a whole new level. SOA enables systems to request services of other systems without executing program calls. In other words, integration is easier because disparate systems no longer need to have inherent knowledge of other systems in order to interact with them. SOA can also provide opportunities to craft a custom user interface and/or process around data and logic that may reside across multiple systems.
In 2007, Agilysys Hospitality established a client focus group to study loyalty requirements within the existing client base. We were expecting to hear that the client base was looking for a points-based system with rewards and redemption, but the team was surprised at the actual requirements most often mentioned. The Agilysys client base was overwhelmingly interested in client recognition, subtle perks and rewards, and providing personalized service to high-value clients. The desired tools mentioned most often were:
• Customizable total-value ratings, allowing management to
select which criteria determine a guest’s overall value, including
both past and future events
• Flexible guest levels, allowing management to determine which
ratings qualify a guest to be elevated in level
• Internal level-based incentives that flag management when a
guest changes levels and recommends guest incentives based
on guest preferences and hotel policy
While any loyalty system allows for points accumulation, research is showing that the focus of the system should be the guest’s “total value” recognition.
Agilysys set out with a goal of bringing together a powerful product line to offer leading solutions to the gaming industry. 2007 was a successful year, but we look to the future and 2008 as being a year of increased development and growth, both organically and through further acquisitions. We are committed to our clients’ success and look forward to a prosperous year for all.
Jon Berkley
President & CEO, Las Vegas Gaming Inc.
Bringing server-based applications from “the future” into “the present,” LVGI is a company whose time has come. 2008 will be the definitive year for us. As first to market with server-based applications on existing gaming devices, LVGI is poised to make considerable leaps in the coming year. And with new regulatory approvals on multiple software applications, LVGI is deploying its technology around the world.
The innovative PlayerVisionTM platform transforms the gaming floor of today. It allows operators to optimize the ROI of their legacy technology by driving server-based applications directly to the slot player, utilizing the casino’s existing server infrastructure and existing games. That existing server infrastructure may include the media system, media servers, the Keno system, the horseracing tote, the sports book, the bonusing controller, the player tracking system, etc. We are then able to take that underlying IT infrastructure and deliver software applications directly to the game screen using our patent-pending pop-up technology to deliver new and exciting applications.
The coming year will bring many changes in the way players interface through the EGM. PlayerVision will change everything. Think of it as getting a basic cable TV package for your slot machine. The core suite of PlayerVision software applications give the operator the ability to drive new media directly into the game interface and communicate with the player in ways never before available.
• PlayerVision TV (PV-TV™) allows players to view their favorite
shows or watch a race or sporting event while playing their
favorite video slot machine.
• AdVision™ allows you to communicate with your player to
optimize revenue across your enterprise or turn machine
downtime into advertising revenue for your venue.
• NumberVision™ allows you to access add-on numbers games
such as the wildly popular Nevada Numbers®. In many cases this
application alone can create a higher ROI for your legacy
machines.
We also offer premium applications that sit on top of the PlayerVision platform.
Our first premium offering is WagerVision™. Imagine a player walking through your casino during March Madness. As he walks by the banks of slot machines, he notices an advertisement flashing on AdVision saying: “Place your NCAA Wager HERE!” He stops, puts $100 in the game, wagers the intended $50 on the NCAA game of his choice, keeps the $50 balance in the machine and plays a little Video Poker while watching the game. When he has played out the balance, the PV-TV shuts off and he decides to put in another $100 to play more Video Poker and watch the game. When the game ends he cashes out, pausing only to buy a Nevada Numbers ticket. This is the power of WagerVision.
You have a very satisfied customer who has wagered three times what he would have without the power of PlayerVision with WagerVision.
At G2E 2007 we launched BonusVision™, the newest premium add-on to the PlayerVision line-up.
Bonusing is a powerful tool in the world of gaming. Sophisticated and experienced clientele expect more from their favorite casino to earn their regular business. To optimize those bonusing meters and create a more satisfying player experience, what if you could drive bonusing directly to the player interface and create celebration modes that went across the entire gaming floor, directly to the player’s primary focus? What if you could deliver that kind of excitement to legacy games utilizing existing distribution tools and controllers? This is the power of BonusVision.
As I said, 2008 is the year that will see the adoption of server-based application delivery in a significant percentage of the gaming market. PlayerVision will change everything. We are looking to the coming year as one of the most exciting times in the advent of gaming technology.
David Porter
Gaming Industry Manager, Teradata Corporation
We anticipate continued strong growth in our gaming business in 2008. The industry continues to strive to achieve a single view of the patron/guest across all amenities, which our solutions address in a unique way. This single view includes a real-time understanding of guests’ preferences so operators can differentiate how they treat guests and impact their visit before they arrive and while they are there.
In addition, casino operators are looking to optimize their understanding of the entire business, including hotel, gaming, dining and other venues. Again, our solutions address these challenges in a unique way. We provide a view across the entire enterprise so operators can determine the profitability of each guest across the entire business, with the ability to do it in real time.
We also see more operators adopting advanced technologies to facilitate a deeper understanding. These include things like data visualization, advanced predictive analytics and CRM tools to augment more traditional reporting and analysis environments. RFID is another area to watch closely. The good news for Teradata is that these applications generate and consume large amounts of data, which is our sweet spot.
Teradata launched our Gaming and Hospitality division in 2007, sharpening our focus on these markets. We also deployed, or are deploying, several gaming industry solutions based on our industry-leading Gaming Logical Data Model. These, along with several significant wins, were highlights for us in 2007. We will continue to deploy solutions for gaming customers and gain market share in 2008.
We believe gaming operators will continue to drive for the single view of the guest across all parts of their businesses, and continue to deploy technology solutions to facilitate this mission-critical need. There will be ever-intensifying competition that will force operators to compete on their capabilities and differentiation from competitors. This will be driven as gaming opens up in more and more jurisdictions.
Our business will continue to embrace new technologies that provide further differentiation of Teradata’s offerings in the marketplace. Our investments will continue to be in the real-time understanding of the business, enabling real-time business intelligence and facilitating one-to-one interaction with guests through applications and systems.
REGULATION & TESTING
Larry Gregory
Executive Director, Mississippi Gaming Commission
2007 was a year of recovery for the Mississippi Gulf Coast gaming industry. Two short years after the country’s worst natural disaster hit our shores, the gaming industry returned strongly. Now gross gaming revenues are expected to exceed pre-Katrina numbers for the 29 state-regulated casinos operating throughout our state. There are 10 casinos in the Tunica area, three in Greenville, four in Vicksburg, one in Natchez, and 11 along the Gulf Coast. Each market has its own sets of challenges.
The Tunica market has been a very successful gaming jurisdiction for nearly 15 years. This market, while stable, has shown a modest increase over the last couple of years. The last new entry into this market was in 1996. The challenge lies in its transportation infrastructure. The opening of a section of Interstate 69, along with a planned expansion of the Tunica airport, should add some interest to the market. The tourism board continues to reach out to airlines to attract new flights. Over 14 million patrons visit this venue every year, and the majority of them come from Tennessee.
On Nov. 23, 2007, Harlow’s Casino Resort in Greenville became the newest casino to open in our state. Historically, Greenville has been challenged with economic conditions that have hindered investment in that area. Harlow has added a hotel, an entertainment complex and restaurants into that market. This competition will ultimately bring about improvement to the overall market. There continues to be a high degree of interest in Greenville.
Construction is underway in Vicksburg for the Riverwalk Casino. Gaming has been a part of the local economy since the early 1990s. Over the last couple of years the market has been somewhat flat, but some are reinvesting as a way of generating competition and interest. In 2005 the state legislature enacted laws that allow casinos to be built on pilings rather than be completely encompassed on a barge. This adds stability and increases a property’s ability to make additions to its facilities. This market’s particular challenge is how to generate interest in a well-established market. The Vicksburg casinos are meeting this challenge by adding convention space, upgrading their hotels and restaurants, as well adding new hotel rooms.
Natchez is the smallest gaming jurisdiction in our state, with only one casino. Two proposed additions to that market are in the development stage. The city recently added convention space and three new hotels. This investment into the amenities available in that area should generate additional interest.
The Gulf Coast market has a completely different set of challenges from the Mississippi River County casinos. The majority of patrons to this market are from Louisiana, Alabama and Florida. As of November 2007, both bridges connecting the Gulf Coast have reopened. This will increase the traffic to those areas. With a scheduled 2010 opening, Harrah’s has broken ground on their new development at the Grand Biloxi site to be marketed under the trade name Margaritaville Casino. Katrina has proven the Coast market to be a strong market. Several investors have plans to develop casinos in Harrison and Hancock counties. Many of the casinos following Hurricane Katrina utilized their convention space to relocate their gaming floor. This has resulted in limited convention space for that area. Following Katrina, the casinos used the opportunity to upgrade not only their gaming floors, but also their hotel rooms and other amenities. The challenge will be for the surrounding amenities to be replaced.
Overall, the gaming industry is thriving in Mississippi. I see 2008 as a year of stability and growth. As a result of a solid political and business environment, developers exhibit strong interest in the Mississippi gaming market.
James Maida
Co-Founder & President, Gaming Laboratories International
Based on what we saw at the Global Gaming Expo (G2E), and based on what is already coming into the lab, 2008 is shaping up to be a very exciting year for the gaming industry.
For the past several years, and most notably over the past several months, the issue of finally defining what exactly a Class II game is has been reaching a boiling point. And based on the incredible turnout for this session at the recent G2E conference, interest is piquing. We expect that 2008 will be the year that these types of gaming devices are fully defined once and for all. But we have said that before!
Of course, as some operations continue to use both Class II and Class III devices — often side by side — the use of GSA standards and standard protocols will be increasingly important, which brings us to prediction number two: expansion of protocol usage.
As GSA enters its tenth year, it should be congratulated for its continual push for and development of open protocol standards. The G2S standard should not be underestimated for its potential in bringing new and more-refined products to the next generation of players, who will also be new and more refined. That said we expect to see a rapid, wide-spread adoption of GSA standards, led by the G2S and the S2S protocols. Most major manufacturers have already fully embraced G2S, and now it is up to operators to begin to prepare their gaming floors for the new games. We also expect to see regulators updating regulations to address potential challenges presented by the new games, new technology-including wireless, multi-station and handheld gaming. We may even see the resolution of the internet gaming issue here in the United States and around the world.
Internationally, we expect to see a broader acceptance of gaming in Argentina, Chile and other Latin and South American regions, Asia and Eastern Europe. As these governments begin to interact more closely with, and gain greater acceptance of, test labs and test results, operators and manufacturers should begin to see a more widespread acceptance of gaming device test results and an establishment of trust in all areas around the world.
Philip N. Hogen
Chair, National Indian Gaming Commission
The National Indian Gaming Commission (NIGC) expects to see continued growth throughout the Indian Gaming industry in 2008. We see the potential for larger increases in specific markets where plans for additional gaming operations are on the horizon and the potential for additional gaming machines may be negotiated with states.
In 2007, a handful of new Indian Gaming facilities opened and several operations expanded, which we expect will result in higher gaming revenues than the $26.1 billion generated in 2006. The NIGC will provide a breakdown of 2007 revenues when all reports have been received around mid-2008.
Hopefully 2008 will bring to a successful conclusion the commission’s long-standing effort to adopt regulations to better distinguish uncompacted Class II Bingo and pull-tab games played with electronic and electromechanical aids from Class III slot machines and facsimiles of games of chance, which require Tribal-State Compacts. On Oct. 24, 2007, the NIGC published in the Federal Register for comment a package of related proposals that included a revision in the definition of “electronic facsimiles of games of chance;” classification standards; technical standards to ensure the integrity and security of Class II games and equipment; and Minimum Internal Control Standards (MICS) for the operation of Class II games. While this has been a work in progress and has taken on several different looks, we feel the Class II Indian Gaming industry will benefit from clarity in this area of ambiguity in that tribes will be better informed regarding what sort of gaming technology to invest in, and in that manufacturers will have rules to consider when developing new and improved gaming machines.
The original ending date for the comment period for these proposals, Dec. 10, 2007, was extended to Jan. 24, 2008. Once the comment period on these proposals expires, the commission will consider all comments and determine how to proceed thereafter.
The NIGC also looks forward to continuing to strengthen federal-tribal government-to-government consultations, as well as to providing technical assistance and training throughout the Indian Gaming community in 2008.
The NIGC will observe with interest any steps the Department of the Interior (DOI) takes in the coming year with respect to rules relating to sites for off-reservation gaming and the Revenue Allocation Plans the department reviews and approves with respect to tribes’ expenditures of gaming revenues. While any new rules will be written and adopted by the DOI, the application of such rules will relate to NIGC’s oversight of Tribal Gaming, and further clarity on these issues will be useful.
The NIGC will also be watching with interest what Congress may address with respect to Tribal Gaming in the coming election year. Last year Congress examined legislation that would have reconsidered NIGC’s oversight role with respect to Class III or compacted casino gaming — the segment of the industry responsible for over 90 percent of the $26+ billion the industry generates. Court rulings that restricted NIGC’s oversight in this area have generated initiatives on the state level to expand states’ roles with respect to such matters as the MICS that govern Tribal Casino Gaming, and this has resulted in a number of tribes reaching out to the NIGC to resume an oversight role. I continue to believe that the integrity of this large segment of the industry is well-served when an entity separate from the tribe itself has an effective oversight role and Congress’ interest in restoring an NIGC presence has merit.
These issues, along with unanticipated ones, will make for a very busy and productive upcoming year at the National Indian Gaming Commission. At the NIGC, we will continue to strive to help make Indian Gaming the effective tool it has become in helping tribes satisfy many unmet needs and making tribes self-sufficient.
Linda M. Kassekert
Chair, New Jersey Casino Control Commission
Last year was a particularly challenging one for New Jersey’s casino industry. Racinos just across our borders in Pennsylvania and New York gave the industry its most intense competition ever. As a result, casino revenues fell for the first time in the history of legalized gambling in Atlantic City. Yet Atlantic City’s future has rarely looked brighter than it does now. Everyone knew that slots at racetracks just across our borders were going to take some business away from our existing casinos, just as the opening of a new casino in Atlantic City takes business away from the other casinos. What is happening is the basic economics of supply and demand. There was a significant increase in supply that diluted the market faster than it could increase demand. It’s the same thing that happened when new casinos opened in Atlantic City — they lured away some customers from existing casinos while also attracting some new customers to the market. The downturn in 2007 is not the start of a trend, just a speed bump in the growth of the market. If anyone doubts Atlantic City’s future, he or she need only look at the $10 billion of new casino construction that is either underway or on the drawing boards. This summer, Harrah’s will open a 950-room hotel addition that will cost over $550 million. The base of the new addition includes an enormous domed pool and spa area that is helping to redefine the property. In addition, the Borgata will complete its $525 million expansion this summer when it opens the Water Club at the Borgata. That will add another 800 rooms and dramatic new pools and a spa. And over at the Trump Taj Mahal, a $250 million tower will add approximately 800 rooms that should open by the end of 2008 or early in 2009. That represents a dramatic expansion of Atlantic City’s gaming industry, which will help expand the market, attract new visitors, and fuel gaming and non-gaming revenues alike.
Those three projects make me quite optimistic about the industry for this year, but there are other projects in the works that show the long-term future of Atlantic City’s gaming industry is also quite bright. Revel Entertainment, a new gaming company, is partnering with the investment firm of Morgan Stanley to build a $2 billion plus facility in the city’s South Inlet area next to the Showboat. When completed, that facility will have 3,900 rooms. Pinnacle Entertainment bought the old Sands Hotel Casino and demolished it last year to make way for a dramatic new casino hotel complex. The company had not unveiled plans before the start of this year, but it clearly is expected to be a project that will cost $2 billion or more and have another 2,000 or more rooms. Former casino executive Wally Barr and developer Curtis Bashaw, who had headed the Casino Reinvestment Development Authority in Atlantic City, have plans for something they have called a “boutique” casino. They, too, have not released specific details, but it is expected to carry a price tag of more than $1 billion. Executives at the Atlantic City Hilton would like to add a 1,000-room hotel tower to their facility. While the parent company hasn’t given final approval, the new rooms and additional public space would cost about $1 billion. And the big project on the horizon is MGM-Mirage, which is interested in building in the city’s marina district next to the Borgata and Harrah’s. The company has announced a $5 billion project dubbed CityCenter East, which will include 3,000 hotel rooms in three towers, more than 500,000 square feet of retail space, a convention center and a 1,500 seat theater.
In short, Atlantic City’s casino industry is healthy and growing despite new competition, and it will continue to grow in the years to come.
Robert R. Russell
Gaming Analyst, Regulatory Management Counselors PC
This past year the Michigan economy continued to experience the fallout of the losses affecting the “Big Three” American automobile manufacturers headquartered in Michigan and Tier 1 suppliers to the auto industry, coupled with a declining real estate market, high unemployment, and a state government budget short fall of $1.7 billion. Despite the negative economic indicators in the state, the state’s gaming operators invested significant amounts into capital infrastructure in the Detroit casino market, as well as the Native American casino market. The investments dramatically improved the product offerings in Michigan and will position the market well once the state’s economy turns around in 2009 and beyond. In addition, as the state economy transitions from one heavily dependent on manufacturing to an economy more diversified with a strong tourism industry, the casino operators will both benefit and also assist in the state’s economic turnaround.
In 2008 Michigan’s casino gaming market will expand as casino operators in Detroit finalize construction of three permanent casino complexes with a total investment of $1.2 billion. This expansion will include the addition of 75,000 square feet of collective gaming space, bringing the total market gaming floor space to 300,000 square feet. Each of these properties will also be adding 400 hotel rooms along with ancillary entertainment amenities. On Oct. 2, 2007, the MGM Grand Detroit unveiled its new $800 million dollar casino and resort, and in late November the MotorCity Casino opened its permanent casino hotel. Also in November, Greektown Casino opened a new 2,900 space parking garage.
In addition, a number of Michigan’s 10 Native American tribes, which collectively operate 18 and soon to be 19 Class III casinos, will be remodeling and enhancing casino gaming complexes in 2008. On Aug. 2, 2007, the most recent Native American casino, Four Winds Casino, opened and is servicing southwest Michigan, which was a region of the state void of any gaming operations. The next Native American casino expansion project set to open is the Saganing Eagle’s Landing Casino which was scheduled to open on Dec. 31, 2007. The Saganing Eagle’s Landing is owned and operated by the Saginaw Chippewa Indian Tribe, which runs the Soaring Eagle Casino in Mount Pleasant, Mich. The Saganing Eagle’s Landing is scheduled to have 600 slot machines and electronic table games. In addition, the Nottwaseppi Huron Band of Potawatomi Indians is scheduled to begin construction of its Class III casino in 2008, which will be in Battle Creek, Mich., and will be managed by Full House Resorts.
The year 2007 brought changes to the composition of the staff at the Michigan Gaming Control Board (MGCB), which is charged with regulating the Detroit casinos. The agency has a new executive director, Richard Kalm, who took control on May 10, 2007. Kalm came to the MGCB after a successful career working for the Macomb County Sheriff’s Department. During 2007 Kalm and the MGCB successfully worked with the Detroit casino operators in overseeing the opening of the newly constructed MGM Grand Detroit and the new MotorCity Casino. A position that is currently open at the MGCB is the important position of Deputy Director of Licensing. Deputy Director of Enforcement John Page has been appointed as acting Deputy Director of Licensing. In addition, Carol Flores, manager, and Rae Jim Burnett, manager, and their respective staffs have assumed numerous duties and responsibilities in order to ensure smooth licensing and investigation operation. In 2007 the MGCB announced that it will be consolidating office operations into its Detroit office. Consequently, it is expected that in 2008 the mid-Michigan MGCB office staff will begin a transition process to the Detroit office.
Although Michigan’s Native American tribal casinos are overseen by the MGCB, the agency does not have any regulatory responsibility over the tribal operations in the state. Rather, each tribe has its own independent gaming commission that is responsible for enforcing its licensing and regulatory processes and which works under the guidelines of the National Indian Gaming Commission.
Legislatively, 2007 was an off election year. During the 2006 election cycle, the Democratic party took control of the House from the Republicans and the Republican party held control of the Michigan Senate. Therefore, for the first time in several legislative sessions, the Michigan legislature was divided. In 2006, Michigan re-elected Democratic Governor Jennifer Granholm for a second term in office. In 2007 the Michigan legislature did not take up any major pieces of legislation that impacted the commercial or tribal casino industries in the state. This is largely the result of the passage of Proposal 1 in 2004, which amended the state constitution to require the public’s vote on any casino-style gaming expansion. In addition, because Proposal E, which authorized the Detroit casinos in 1996, was passed by a voter referendum, amendments to the Michigan Gaming Control and Revenue Act require a super majority vote in both chambers of the legislature. Consequently, garnering support for any changes to the act is a very difficult task and one that is not likely with a divided legislature in 2008. Also impacting the legislative process was a stalemate on the approval of the 2007–2008 fiscal budget for the state. The one legislative matter that has been gaining momentum is the approval of a Class III Tribal Gaming Compact with the Gun Lake Band. In May 2007, the Michigan House approved a resolution approving the compact that the governor entered with the Gun Lake Band earlier in the year. The compact is now awaiting action by the Michigan Senate.
For several years, the Michigan horse racing industry has sought to find a way to enhance its wagering offerings with video lottery terminals. The passage of Proposal 1 in 2004 was damaging to these efforts. Rumors continue to float throughout the state that the industry will gear up for another campaign to take the issue to Michigan voters. However, no official ballot petition efforts have been announced. In December 2007, the horse racing industry was given a boost with the announcement of a $142 million development project that will bring thoroughbred racing back to metro Detroit. The Wayne County development is being backed by successful banker Jerry Campbell, who has had a long history of promoting and assisting the Michigan horse racing industry.
Economists from the University of Michigan announced in November 2007 that the state will continue to see job losses in 2007 and 2008, with only modest increases in job creation in 2009. The net result, according to the University of Michigan economic data, is that Michigan will have experienced its largest losses of jobs in 2007, at 76,000, since 2001. The predictions for 2008 are another 51,000 job losses, and a net gain of 15,000 jobs in 2009. According to a statement released by the University of Michigan, “the improvement in 2009 results from fewer job loses in the auto industry as Detroit three’s light vehicle sales stabilize and from a local housing market that begins to turn around, thereby jumpstarting the construction industry.”
2008 will make its historical mark as the year that the Detroit permanent casino hotels are finally up and operational. Given that voters approved this concept in the fall of 1996, it has been a long road to fulfillment of the vision of the original proponents. In addition, a number of the Native American properties will be enhanced, and there is the potential that two or three new Native American Class III casinos will open in the state. Based on economic projections, it is my expectation that the Michigan casino market place will see relatively small revenue growth, in large part because of the continued trouble in the automotive sector upon which the state’s economy is heavily dependent. Notably, however, several the projects that were constructed in 2007 will mature and become established in the market place in 2008, and will position the Michigan market to experience gains as the state’s economy improves in 2009 and beyond.
Nick Farley
President, NFA/Eclipse Compliance Testing
2008 will see NFA/Eclipse continue its growth as an independent testing laboratory. We predict that our staff of 12 will continue to increase, as will the 135 jurisdictions where we are currently authorized. We will see sales continue to grow in our core markets as we gain market share and develop new business opportunities.
As it is our role and purpose to test new games and technology before being installed on the casino floor, we are privy to insider information that is customarily considered privileged and confidential. Without giving away any of our customers’ trade secrets, we see advances in gaming technology, as well as new gaming concepts, at the forefront of our 2008 predictions.
2008 will see advances and evolutions in server-based downloadable gaming systems. As these systems advance in the gaming industry, the question of “what are the benefits of downloadable software?” will decide the fate of this new-to-the-gaming-industry technology. We believe that the social benefits to players will define the success or failure of these systems. The ability for couples or friends to play their favorite games in a casino while sitting next to each other, rather than at opposite ends of a casino, will be the biggest social benefit to casino players.
We believe that 2008 may be historically viewed as a “blur.” We predict that 2008 will become the defining moment in time when the lines “blur” between gaming devices and other types of games that were previously viewed as innocuous. For example, 2008 will see the lines between gaming devices and amusement games blur. As Generation X comes of gaming age, gaming devices will increasingly employ skill-based outcome elements. This will go way beyond the type of skill implored in video Poker. Gen-Xers have grown up with video games in which their decisions and actions dictate their success or failure in the game outcome. Gaming devices of the future will incorporate such strategy or skill in rendering game outcome, and 2008 will see the introduction of such games. This is just the tip of the iceberg for the opportunities that will present themselves with skill-based gaming devices.
2008 will also see the lines between Class II and Class III gaming devices continue to blur. The NIGC has made great strides to try to define a “bright line” between Class II and Class III gaming devices. But tribal sovereignty matters and rapid advances in technology will blur the line, not brighten it. Stay tuned to this “Bingo Battle” as industry professionals and federal agencies continue their cooperative efforts to define and refine Class II standards.
The surprise entry in our forecast for many in the gaming industry will be advances in the way sweepstakes will be played. Sweepstakes will no longer be defined as a visit from Ed McMahon on your doorstep to deliver a huge check. Sweepstakes will now present the results in terminals resembling video slot machines. This new means of revealing sweepstakes will present marketing and promotional opportunities for new products and services. Conversely, it will present logistical difficulties with regulation and enforcement, as most jurisdictions permit sweepstakes but have little or no guidelines or regulations on their implementation.
NFA/Eclipse is excited by the opportunities in the gaming industry that we see 2008 presenting to our company. Our continued growth and recognition with regulatory agencies has been a testament to our credibility. We are most grateful to our customers and staff members that have been loyal to us. Without them, our ability to flourish would be stifled. 2008 may be viewed as a blur in the future, but this blur will create new opportunities and possibilities for the gaming industry.
Pat Leen
Tom Nelson
Principals, Gaming Regulatory Consultants
The gaming industry has established a clear track record of imaginative thinking and micro-planning for future innovations. Using imagination and creative ideas, it has maintained its leadership role as one of the more dynamic, pioneering and responsive industries within the entertainment universe.
As we muse about what may lie ahead, we know from experience that the real leaders are not necessarily thinking about this next year, but instead are looking three, four or perhaps five years down the road, as they visualize new strategies and advancements with which to populate the gaming landscape. These visionaries not only know the road, but they are building it as they go.
Though we hesitate to claim such long-range prescience, we can recognize several trends for the coming year that doubtless will continue into the future.
Once again, GSA will continue to pave the way for the full implementation of futuristic game technology through G2S and S2S. With the advent of more widespread applications of these protocols, GSA members and partners will also increase the pace of its work with regulators and gaming test laboratories to make the final push for full implementation of these protocols, which will ultimately result in significant and more universal implementation of server-based games. We visited extensively with these folks at G2E, and we came away very impressed with their clear vision for how to safely and realistically create this “networked floor of the future.”
On the manufacturer side, we will continue to see them demonstrate that they too “know where they are going” by the marriages of large corporations with even larger ideas, such as the joint partnership of IGT and Atronic Gaming, or Bally Technologies’ acquisition of Compudigm. These are just two examples of resources and infrastructure focused on one goal: the practical, seamless and secure implementation of a server-based floor.
This is the area where the greatest advancements and leadership must be demonstrated as regulators respond to the industry’s drive to adapt to ever-changing market forces. The individual jurisdictions will need to grapple with issues like defining what constitutes skill-based games and how these games will affect existing technical standards like minimum and maximum par percentages, rules of play and player interaction. The regulators will also have to work closely with the manufacturers and GSA on each of the next short, but critical, steps to complete the circle of universal protocols. In this regard, regulators will need to rethink the historical “testing process” and further define and interpret exactly what a gaming device is as it applies to each jurisdiction. This is a critical step in the final full implementation to make server-based gaming available on the floor of the future. These innovations will almost universally mean a significant revamping of game technical standards and the accompanying Minimum Internal Controls standards that will define how each jurisdiction handles these new technologies.
A significant subset of gaming regulation that will have a far-reaching and dramatic impact on the entire landscape of casino gaming is the recently published NIGC Class II game classification standards. The NIGC has created a “bright line” of definition for Class II gaming devices. The Class II manufacturers and many of the tribal organizations have drawn an equally clear line of opposition to many of these game classifications. While the negotiations on classifications will continue during most of 2008, we predict that these standards will be adopted by the NIGC and that they will be similar to the currently published standards. What happens next should be very entertaining. It should add significantly to Chair Hogan’s “nightmare,” which he so eloquently and humorously shared with us at G2E when he bravely addressed these issues during our panel presentation entitled “Class II: Who Will Win?”
Though the above developments are a significant part of the gaming infrastructure, most of these activities are basically invisible until some new technology wows us when we visit our local casino.
This year on the gaming floor we can expect more proliferation of the interactive table game revolution. More amazing card games like Three Card Poker™ and Rapid Roulette™ by Shuffle Master should continue to make the simulated table games market a significant force as it fights for prime gaming floor space.
Skill games like PONG™ will continue to reinvent themselves and become more popular. WMS gaming has another hit with the next generation of Player-Driven Innovation™ games. New and innovative gaming manufacturers, like ID–Interactive, bring a stable of games that promise fun and player loyalty. They are interesting, attractive and fun to play. These games should do well in the New Year.
On the player side, some original ideas come from Cash Systems of Las Vegas, which has teamed up with Bally to bring an interesting twist to game-level player convenience.
Obviously, the casino industry not only knows where it is going, but also that it is blessed with fantastic and imaginative leaders to see that it gets there in one piece.
TABLE GAMES & GEAR
Chris Halligan
CEO, PokerTek
Poker is a challenge for operators. It’s on TV constantly. It’s fed by the Internet. It’s a great game that attracts a tremendous demographic to the casino.
If only it could be more profitable.
At PokerTek, we recognized this opportunity and embarked on an exciting journey that’s taken us from an idea in the basement to the world’s finest casinos in just three short years. When we started out, people thought we were crazy. Today, the world is bought in to the notion that automated Poker is the future of the Poker room.
And in 2008, PokerTek will continue to lead that charge.
We’ll start by building off our amazing progress in 2007. And that progress goes well beyond the mere installation of tables (and we put in well over 100 new tables last year). Our progress in 2007 was marked in several ways:
• We established the world’s first 100 percent automated Poker rooms at prestigious sites around the world.
• We partnered with some of the finest casinos and operators in the world, including Harrah’s Entertainment, Isle of Capri, Mohegan Sun, Four Winds Casino, Galaxy Starworld in Macau, Carnival Cruise Lines and more.
• We rounded out the core features of the PokerPro table, which now offers Texas Hold ‘Em, Omaha 7, and Seven Card Stud ring games, as well as multi-table tournaments, kill pots, straddles and the ability to chop blinds.
As we look to 2008, we’re turning our attention to adding features that add to player enjoyment and operator profitability. Everyone knows that PokerPro increases operator revenue by increasing hands per hour, but in 2008, we’ll raise the stakes with several new revenue boosting features.
For example, we’ll introduce Flop-a-Lock, a house-banked side bet that the flop will contain a pair, flush or straight. We’ll also debut Rabbit Hunting, where players will be able to view un-shown community cards for a small fee. These features are now a reality, and that’s just the beginning.
When you add fun new features like these to the core benefits that PokerPro brings, you can see the future of Poker in the casino. It plays faster. It’s error free. Every now and then, the table roars like a Craps table when a big house banked bet hits. It’s more exciting.
What we’re building at PokerTek isn’t just a better game. It’s a platform that structurally changes Poker. We’re making it more fun for the players and more profitable for the operator.
As if that’s not enough, distribution of our new amusement product, Heads-Up Challenge World Series of Poker Edition, has just begun to bars and restaurants. This brings automated Poker to local watering holes everywhere and will continue to feed the growth and popularity of Poker.
With these developments, PokerPro rooms can do now everything and more that manual rooms can, faster, mistake free and with reduced staff. Thanks to PokerPro, Poker’s profitability is catching up to Poker’s popularity.
Mark L. Yoseloff Ph.D.
Chair & CEO, Shuffle Master
As the gaming industry’s leading table game technology and content provider, Shuffle Master continues to lead the way in advancements that help casinos expand the gaming options of their players. Building on several 2007 accomplishments, we remain well positioned to enhance the gaming experience with new and better technology, more exciting and lucrative gaming content, and multiple electronic table systems, and anticipate that 2008 will be another significant year for worldwide gaming growth, continued growth of electronic gaming and further expansion of the specialty table game market.
First, we anticipate that the rapid globalization of gaming will continue, most notably in regions like Asia, where the past, present and future projected growth is nothing short of remarkable. In addition to Macau, Asia’s current crown jewel, the region is experiencing a number of other key progressions, including the advent of gaming in Singapore; the potential introduction of casino-style gambling in Japan; gaming growth in the Philippines, and efforts under way to introduce gambling in Taiwan. These developments and the resulting growth Asia is projected to experience during the next five to 10 years make it a significant opportunity for gaming suppliers, particularly for companies like Shuffle Master whose products require minimal localization and are ideal for this predominantly table-centric market. We estimate that during the next five years, the Asian gaming market will add over 12,000 new live tables to the worldwide table game market, and with the projected growth other key areas should also experience, by 2012, we estimate that there will be over 75,000 live tables in operation worldwide.
Second, we anticipate that the worldwide proliferation of electronic table gaming will continue to increase, and we are confident that e-tables will become even more important components of the casino product mix as more operators realize their fiscal and operational benefits. First, electronic table games enable casinos to offer popular games at a fraction of the cost required to run a live table. Second, by increasing the number of patrons they are able to serve, e-tables also increase casino profitability by maximizing the use of prime floor space without requiring additional personnel. This factor is of particular significance in key gaming areas like Macau where dealers are becoming difficult to find; we estimate that this will cause Asia’s e-table seat installed base to more than double during the next five years.
Electronic tables can also operate in numerous gaming environments where live table games are not allowed. Despite demand, racinos and video lottery markets in North America, arcades in Europe, and clubs in Australia and New Zealand do not permit live tables, but do permit electronic versions of these popular games. Consequently, e-tables that offer popular content like Three Card Poker®, Blackjack and Roulette can be installed to provide customers with a table-style experience within existing regulations. And, looking beyond 2008, these e-products will enable casinos to offer gaming content that is too complex to be offered on a live table due to complicated betting structures, rules and payouts. Because of these key advantages, we expect the worldwide e-table installed seat market to nearly triple by 2012.
Finally, we anticipate that the worldwide specialty table game market will continue to grow. Over the past several years, we have witnessed the resurgence of table games’ popularity, and the specialty table game segment continues to be the fastest growing segment in gaming. Games like Three Card Poker and Ultimate Texas Hold ’em™ consistently appeal to a growing number of players who are interested in fun and exciting table game play combined with the opportunity to win odds for high hands. And, as player demand increases and more casinos recognize the increased profitability these games bring to the table, we anticipate that the proliferation of specialty games will increase worldwide, fueled not only by their exciting content, but also by new progressive jackpot options and the ability to protect game security with automatic card shufflers like our i-Deal™ shuffler that can verify jackpot hands.
With the gaming industry’s continued global expansion, 2008 should be another banner year, and Shuffle Master looks forward to contributing to the industry’s success.
Andrew Cardno
CTO, Innovation, TableMAX
As a seven-year Las Vegas resident, I have watched the city turn from a gaming town to the entertainment center of the world. The trends in gaming are now managed globally, with the mega gaming corporations running faster than ever to meet the needs of a truly global industry. Running alongside this, we see the emergence of a new type of Las Vegan — the global executive and continuous traveler who is part of a global multibillion dollar corporation, analyzing how customers in Vietnam are different from the New Yorker.
Global Las Vegas-based gaming companies now stand at the middle of a dynamic three-way transformation. The first force of change is the growing spread of entertainment into gaming; a great example of this transformation is that currently more cash is being generated in Las Vegas by hotels than by slot machines. While the shift in Las Vegas is profound, 2008 will bring the deployment of lessons learned in market development leadership in the United States to the growth of mega-resorts worldwide.
The second force of change is the radical shift in gaming products from traditional slot machines back to table games and, finally, the emergence of electronic table games, including electronic Blackjack, Texas Hold ’em and Caribbean Stud. These games allow players who were once excluded by the seemingly formidable dealer and the high minimum bet to play the games they enjoy. Who can doubt the influence of the Macau market on worldwide gaming trends? This former Portuguese colony is the largest gaming city in the world. A huge labor shortage will cause leadership in the electronic pit to emerge in this extremely fast-moving market.
The third force of change is the worldwide demand for Las Vegas-based gaming companies to assist in the worldwide spread of gaming. This incredible flattening of the world is resulting in an enormous capital-intense program of resort-development companies building the highest capital projects the world has ever seen.
2008 will be a year when gaming executives are in more demand than ever to manage an increasingly global business and many new kinds of gaming products. The workforce will become more global, more diversified and truly multicultural. 2008 will be the start of a backflow of executives from the offshore branches of global gaming corporations back to Las Vegas. The common factor is the gaming industry’s amazing ability to produce enormous volumes of free cash.
Mark Jones
President, INAG
2007 was a fast-moving year in our industry. Many new and exciting jurisdictions opened with great potential for large and small vendors alike. Many casinos chose 2007 as the year of expansion, both in casino remodels and outside investments. Tribal casinos have grown by leaps and bounds, and many wise ones have made off-reservation investments a priority. California has seen several tribal development corporations, such as Viejas and San Pasqual, create consulting and development businesses to assist other tribal properties develop, expand and fine tune their existing properties. Tribal Gaming will see attempts to chip away at its exclusive position in several jurisdictions in the near future, as governments and interested parties see the upside potential.
Several prominent tribes have reached agreements with the governor of California for new compacts that would allow for the large expansion of those properties versus the older compacts. The opposition amassed enough signatures to force the approved compacts to go before the voters for endorsement. We all need to figure out a way to avoid this kind of issue, as it reflects poorly on all gaming. 2008 needs to become the “Year of Communication.” We all have a piece of the pie at stake.
2008 also needs to be a year when small table game vendors come together and make a statement that they matter. G2E needs to understand the need to bring these vendors together in their own area of the show floor, where table game managers can spend their time more productively viewing new products relevant to their jobs rather than wasting time trying to find them in single booths spread all over the place. Many jurisdictions place limits on machine placement numbers, making table games an area that can expand to increase the casino’s bottom line.
I work a lot in California and have to deal with the “War of Intimidation.” Advisories are sent out by the Bureau of Gambling Control, stating they feel that certain games are not legal or compact compliant. The problem with these advisories is that they clearly state that they do not represent a legal opinion. They serve as a tool to try to intimidate Tribal Gaming commissions and have had some success. The casinos need to step up in 2008 and put a halt to this type of intimidation. The Tribal Gaming commissions in California are given the authority to approve all gaming activity for their casinos. Many tribes are leaving a lot of money on the table that should be going to the bottom line. As a vendor, I go through the same maze of attempted intimidation. 2008 will be the year we battle for equality and stand for what is right and legal. We hope the tribes join us.
Large growth is not always a positive thing when it comes to new and exciting products. With the demand for products so high in 2007, I feel that creativity suffered as all were busy filling orders. We see a lot of prototypes on the gaming show floor that never make it to market. 2008 needs to see a renewed commitment for fresh ideas. We saw many new concepts for Blackjack table games at this year’s show, as well as new electronic table games concepts.
The economy has created new challenges for us in 2008 with the U.S. mortgage crisis.
We need to work harder to keep our existing customer bases loyal to our properties. Many properties have a good understanding of this issue and are doing great things to accomplish this loyalty.
May we all continue to prosper in 2008, and learn to work better together in unity to promote gaming in a positive manner.
Roger Hawkins
CEO, Americas TCSJOHNHUXLEY
If only we were able to predict the future … I imagine we would not be in the gaming industry … or maybe we would! None of us can guess what the future will hold, but as business managers and product suppliers, we have to try our best to determine what the future may look like for our customers in this exciting market we work in.
At TCSJOHNHUXLEY, that is exactly what we try to do on a daily basis, utilizing the skills of our international management team to best manage the products of the future.
With leading market intelligence, in addition to being at the forefront of industry research and development, we manage to stay ahead of the game, so to speak, with revolutionary products and services.
2007 was a year of change for us as a group, with several senior management role appointments resulting in an even stronger team to drive our business of supporting casino operators into the future. I was once taught that “you do not know what you do not know” by a great mentor, and how true those words have proved.
The year 2008 will continue to see us go from strength to strength in a continually polarizing market. Having developed one of the industry’s most extensive product portfolios over years past, which enables us to offer a full turnkey solution to operators, we are well positioned to service the needs of our customer base for years to come.
Recent years have seen TCSJOHNHUXLEY focus on bringing to the market what are termed “hybrid” games, which focus on combining innovative technology with traditional games, with the launch of products such as AccuPLAY, TouchTable MultiPLAY Roulette, and the Novo TouchBet Live suite of games, including Roulette, Blackjack, Baccarat and Sic Bo.
Vendors of current times face the daily challenge of bringing new products to their customers, who in turn are confronted with bringing new excitement to their players. 2008 will see the debate continue over server-based platforms for transient properties over more traditional platforms for the local markets — what we can be certain of is we will find solutions to suit all.
Our strategy for the future is delivering solutions to casinos that bring operational cost reduction and enhanced player enjoyment. We are committed to developing products that are less intimidating to a new player base and more operator friendly, and which reduce discrepancies and increase the speed of game play through accuracy and performance.
So what does 2008 hold? Another challenging and exciting year for operators, vendors and customers, as the ever-changing requirements of all mentioned continue down the route to sanity. Good luck!
Hoping you and your families have a prosperous coming year from everyone at TCSJOHNHUXLEY.
SECURITY & SURVEILLANCE
Fernando Pires
VP of Sales & Marketing, Morse Watchmans
We expect Morse Watchmans’ presence in the gaming industry to grow in 2008 as the market continues to experience exponential growth, and new Native American-owned properties open and established facilities expand. The casino market is also expanding internationally, and we will continue to actively pursue new business opportunities in developing markets overseas. Our KeyWatcher® Key Management System has been a mainstay product for casinos over the past few years, and we’ve continued to evolve and improve the system to offer greater functionality and utility. As the physical size of casinos continues to expand, so have demands for more advanced operations like networked key management systems with detailed tracking and reporting. Additionally, as the use of keyed locks evolves to more advanced access devices, such as card readers, proximity devices and biometric readers, there is a growing demand for systems to help secure and manage physical access to these devices. Morse Watchmans is responding to these needs with innovative solutions to better manage every type of access device while incorporating these technologies into our core product lines.
In 2007, Morse Watchmans experienced continued growth in the gaming industry through the introduction and implementation of new key management systems that meet the evolving needs of the marketplace and provide scalability to accommodate future expansion. We are continually evolving our suite of products to incorporate the latest technologies, such as software-driven networked systems, to best meet the needs of our customers.
We hope to have continued growth in 2008 in our core markets, such as gaming, and that is our primary objective. We are fueling this objective by implementing sales programs that allow our customers to upgrade their legacy Morse Watchmans key management systems to more advanced new systems through aggressive exchange programs.
We are looking to bring all our legacy system users up to date with the latest key management systems and technologies. This is a two-fold objective relative to providing the highest levels of service and support to legacy system users, which is one of the mainstays to Morse Watchmans longstanding customer relationships. The second objective is centered on providing our customers with the latest key management solutions available to assure they maintain the highest levels of security.
Security systems overall are becoming more intricately integrated. Morse Watchmans’ latest key management solutions deliver the hardware and software to achieve interoperability with virtually any manufacturers’ access control solutions, which results in overall improved efficiency.
From our perspective, new technologies represent the greatest area of growth as casinos look to implement security systems with greater functionality, scalability and integrated capabilities.
Technology drives our business. Key management systems were once purely standalone systems but are increasingly becoming an integral component in a facility’s overall security solution. We work closely with virtually every leading access control supplier to assure we deliver the interoperability required for seamless integration. This is a critical issue that contributes to Morse Watchmans’ core competency as the leading supplier of key management and guard tour systems.
Cynthia Freschi
President, North American Video
To say that advances in security and surveillance technology for gaming applications over the past few years have been truly revolutionary does not fully do justice to the innovative and groundbreaking improvements that have emerged. Some recent examples include videotape recorders replaced by network video recorders and servers; cables and wires replaced by wireless transmission and Ethernet; large black and white tube cameras replaced by compact digital color CCD cameras; and standalone systems replaced by complex integrated solutions.
These technology improvements have resulted in a growing trend of a more active and intelligent surveillance methodology that is affecting the way the concept of security systems design and implementation is approached for gaming applications. For instance, point of sale (POS) data can be combined with video surveillance images to provide a visual record of activity to accompany sales transactions. Visitor management data can be combined with HR databases or linked to federal government databases to help ensure a more comprehensive, secure and smoother visitor log in procedure that can be implemented in seconds. Access control systems can be combined with biometrics, video surveillance, RFID and time and attendance systems to produce a robust security management system. Visual intelligence that is wirelessly managed and delivered to any mobile or location-based device via any proprietary, cellular, Mesh or WIFI network also can provide security personnel, regardless of their location, the ability to monitor live or recorded images on-demand. These are just some of the more prominent security applications we believe will continue to take hold in the gaming arena in 2008.
What all of these advanced integrated applications have in common, and what has become the basis for the trend of active and intelligent surveillance methodology, is the use of some form of a common collection platform, often referred to as a front-end or middleware. The name is adopted from the computer world where middleware sits in the middle, between the operating system and the application. An early example of middleware usage is in ATMs where the software manages auditing transactions, balances accounts and verifies identities with access control. In physical security and surveillance, middleware allows various applications — such as analog and digital visual surveillance, access control, time and attendance, POS, license plate recognition, fire and alarm, time and attendance, and with guard/virtual guard functionality — to be seamlessly connected in order to control the entire system and further be able to share and manipulate the data from one software platform or control and command center, which can be also referred to as a dashboard. In most instances, these dashboards provide system-wide control through a Graphical User Interface that simplifies operation of complex systems by a single individual using touchscreen displays and/or a mouse. The simpler, the better.
As an example, middleware can link video in the database to related alarms or events generated from other systems such as access control, fire alarm, intrusion detection, etc. The software recognizes the different events are related and organizes the data to be viewed as a single occurrence. In addition to monitoring activity, the software also allows centralized management, administration and reporting along with customized dashboards or intelligent video walls.
In moving forward with the security convergence model supported by middleware, it is expected that applications hosted on wireless devices and accessing real time search engines and databases will garner the most development. This makes sense when you consider laptop computers are outselling desktops and even the most inexpensive cell phones include cameras, while smart-phones feature e-mail, word processing, television, movies and music functionality. These software-driven solutions allow users to remotely access, monitor and control security systems from virtually any manufacturer using any computer or hand-held device, such as a cellular phone, PDA or tablet.
All these security measures are applicable to gaming facilities to help assure the safety of their patrons and staff. Expect to see more security applications employing middleware implemented at gaming facilities in 2008.
Douglas L. Florence Sr.
Director, Gaming Sector, NICE Systems
The most significant challenge that the gaming sector will see during 2008 will be the adaptation of the IP or mega-pixel camera used for table games and financial areas. With the development of video content analytics for table games and the superior video quality of mega-pixel cameras being recognized, those properties experiencing new builds and upgrades are now requiring this as a component of their installations. Although the cost of video storage is greater using this next generation in video imaging, financial control and live game areas are the primary users — so the amount of cameras involved is not overwhelming in the scheme of things.
The mega-pixel camera provides the end user the ability to pan-tilt-zoom within the field of “live view” and not lose the ability to record the full field of view that the camera has been designated to observe, unlike the PTZ camera that, when zoomed into the area of interest, only allows for the area of interest to be recorded. Additionally, the recorded field of view is also afforded the ability of greater zoom range along with pan and tilt capability versus that of 4 CIF quality standards. The wiring requirements and networking capability of IP and mega-pixel cameras is networked, as the video is, or can be, encoded at the camera versus at the digital recording device, providing the ability for virtual matrix control.
Also in 2008 there will be a great number of gaming properties leaving the analog world of recording video on VHS videotapes with VCRs behind. There will also be properties, primarily Indian Gaming properties, that have already completed refreshing their technology; this is due to the fact that Indian Gaming operations began using digital video solutions in some cases over seven-plus years ago. Las Vegas and Atlantic City, on the other hand, have only seen digital installations in casino surveillance operations in less than 10 percent of their operations, and most of those were installed not more than three years ago. This digital convergence will require digital video providers and system integrators to step up their support services to meet the demand of customers and new construction worldwide. In the case of NICE Systems, which already holds a 29 percent install base of all digital video currently being used by casino operations throughout the world, we have already designated specific sales managers to support the gaming sector.
Recently I participated in a gaming conference in Singapore that was attended by a very boutique group of speakers and attendees. It was quite evident that they have done their homework in the APAC region, comparing their operations to the Las Vegas market. Over the next five to 10 years, we will see an even greater shift in gaming profitability in this region, outpacing Las Vegas’ destination location characteristics and planning on how to maintain that edge. It is also obvious they have greatly evolved over the last five years, not unlike Indian Gaming did in the United States — keeping in mind that Indian Gaming in North America now accounts for almost a third of all gaming revenue worldwide. This growth will also tap the resources of digital video manufacturers and system integrators, so properties investing in digital video and business service integrations must know whom they are dealing with and take into consideration the amount of experience, the market share and the level of technology achievements of each of these companies. In order to have some level of confidence in the long-term relationship that will result from their decision, they will need to consider much more than just how much they have to invest.
The growth of gaming worldwide has also contributed to stretching human resources to their limits, which will require a greater emphasis on training and development of surveillance, security and investigations personnel. This will also require gaming operators to make a greater investment in the salaries required to retain their managing surveillance executives, security and investigations employees, and the recruiting and training personnel who help protect guests, employees, profits and the integrity of the gaming operations. A colleague of mine, Stephen Van Zwieten CPP, said it best during a 2001 G2E presentation: “The cost of security is too high until security is not enough.”
CONSULTING & PROPERTY MANAGEMENT
Andrew Zarnett
Managing Director Co-Head, High Yield Research Gaming Lodging & Leisure , Deutsche Bank Securities
For 2008, our industry outlook is somewhat negative as we expect the residential real estate slump, the global credit market crunch and rising oil prices to have a negative impact on domestic demand for regional casino entertainment and keep some people from visiting Las Vegas. Looking to industry demand, we believe it will be impacted by slower macroeconomic trends on one hand mitigated by (i) the cheap U.S. dollar, (ii) continued strong business and leisure travel trends at the upper end, and a (iii) strong 2008 convention calendar. On the supply side, we believe the casino industry will continue to experience limited jurisdictional expansion (mostly Pennsylvania, the Palazzo in Las Vegas, Harrah’s in Indiana and Pinnacle in St. Louis), leading to a nominal increase in supply. Further, the cost of entry on the Las Vegas Strip ($3+ billion) and Atlantic City (near $2 billion), coupled with the difficulty in securing capital and the cost of that capital, will limit and push back the timing of new developments in each of those markets as well. Were it not for the limited license environment, we believe the supply adds that would be introduced into each market would be greater as well. Nonetheless, this is not the case. We believe the combination of limited supply and slightly negative demand should provide for a challenging operating environment, leading to approximate 1–2 percent revenue growth in most markets (excluding those impacted by new competition), along with lower EBITDA as costs continue to increase. We will be watching how fast companies hunker down by reducing costs and eliminating new capital investment.
Gamers Have Illustrated Great Economic Resiliency
On the recession resiliency point, the most recent recession of 2001 and its aftermath proved that the gaming industry is extremely resilient to many economic pressures. Whether it be the continued imbalance of demand (driven by the growing baby boomer segment) versus supply, one thing is clear: gross gaming demand continues to be very strong. And there is no reason to suspect that demand will slow beyond the modest slowing we are projecting or that significant unforeseen supply spurts are in waiting. This reality looks even more impressive against the lodging backdrop, which experienced significant demand contraction during the most recent recession. In fact, leverage in lodging among select lodging names from 2000 to 2005 was up almost one turn while gaming was up less than half a turn. That has somewhat changed of late, thanks to easy money that was available in 2006 and 2007. Over the past years, thanks to readily available capital, leverage for the selected gaming companies has increased from 2000 to 2007 (4.2x in 2000 increasing to 5.2x in 2007), while coverage has remained steady (3.2x in 2000 decreasing to 2.9x in 2007) during the same timeframe. Looking ahead to 2008, we estimate that leverage will move up to 5.9x (versus 5.2x in 2007), while coverage slightly increases to 3.4x (versus 2.9x in 2007). We would caution, however, that while the 2001 recession had a nominal impact on gaming companies, it is difficult to predict what impact a large-scale consumer recession would have on gaming companies. Particular to Las Vegas, with ADR soaring to all-time highs attributed to increased convention business and high-end consumer demand, we believe that the risk of cyclicality has increased and operators are now more vulnerable to weakened demand due to the reliance on convention business and discretionary income growth. This dynamic, coupled with a terrorist event, remain the largest risks to Las Vegas.
Impact of Credit Crunch on Gaming Industry
The large capital raises of 2006 and 2007 led a significant increase in company leverage that has since had a negative impact on some gaming companies. In fact, over the past three years, according to our estimates, select industry leverage has increased from 4.9x to 5.2x. And as fundamentals decline, we expect select company leverage will move higher as we round the calendar into 2008. Further, as the availability of credit has dried up, some companies have chosen to postpone new capital plans or opt for alternative sources of capital, such as fresh sources of equity or alternate forms of debt. A creative financing undertook in 2007 to reduce the leverage of MGM Mirage was MGM’s successful effort to take CityCenter off its balance sheet and sell 50 percent of the equity interest in that venture to Infinity World Development Corp (subsidiary of Dubai World). MGM will continue to develop and manage the project for a fee, while Dubai World will contribute cash to the project. As per terms of the agreement, Dubai World contributed approximately $2.96 billion (for 50 percent stake in CityCenter), wherein MGM received $2.47 billion in cash and the remaining $490 million was retained by CityCenter Holdings to fund short-term construction costs. Other companies are not as fortunate and are seeing leverage and cost of capital move up dramatically. For example, Herbst Gaming, an owner of regional assets and a Nevada-based slot route business, watched its cost of debt capital move upward by approximately 25 percent. Herbst, which has been adversely affected by a new anti-smoking law in Nevada, amended its total leverage through 2012, initially setting that covenant at 9.65x. Clearly, the current market underscores how challenging market conditions can be for issuers in need of relief. All in all, there are as many as 10 companies with yields trading greater than 10.75 percent, up dramatically from prior years.
Gaming Operators Continue to Generate Strong Free Cash Flow
Even with the market changes, gaming operators will continue to generate strong free cash flow in 2008, with those in our coverage universe expected to generate approximately $2 billion of free cash flow (after maintenance capital, interest and cash taxes). Preceding any acquisition transactions, we expect the majority of operators to use free cash flow to fund new projects (approximately $3.0 billion) and dividends (approximately $800 million), leading to negative free cash flow for the year. On a select company basis, many issuers will generate significantly more free cash flow than average, as much of the macro new capital (credit specific) will be invested in the four companies Boyd Gaming, Pinnacle and Wynn Las Vegas. This does not include MGM Mirage’s CityCenter, as it is now an off-balance-sheet subsidiary, or Harrah’s.
How Will Competition Impact Atlantic City?
During 2007 the growth of properties in Pennsylvania has had a decidedly negative impact on the performance of Atlantic City assets. In fact, November marked the eighth consecutive month (and 10 out of 11 months in 2007) of overall market revenue decline as Atlantic City operators continue to struggle with new casinos in Pennsylvania and New York. Since the outset of 2007, revenues in Atlantic City have been down by approximately 5.3 percent. Our view of continued declines into 2008 remains intact as Pennsylvania casinos ramp up marketing efforts to lure the day-tripper away from Atlantic City. With a softer economy on the nation’s doorstep and gas prices boosting the cost of a day trip, we think Pennsylvania casinos look more and more attractive to the day-tripper. And as supply continues to come on line in Pennsylvania, we believe Atlantic City gaming revenues beyond 2008 will be down. Expected supply includes Mount Airy Casino Resort (opened on Oct. 15, 2007), two downtown Philadelphia casinos and Las Vegas Sands’ Bethworks (expected to open Q2 2009). Additional supply will come from the MGM at Foxwoods and the Mohegan expansion expected in 2008 and 2009, respectively.
Bob Brandt
Founder and CEO, Robert Brandt & Associates
Ah, the crystal ball annual: What is the future of gaming in 2008? It can be summed up quite succinctly.
A new casino opens in a prior non-gaming state. More casinos are subsequently built, some close to the borders of non-gaming states. When the revenues from the neighboring new-to-gaming state are revealed, the non-gaming states start to mourn the loss of revenue from its own citizens spending “our state’s” money in a neighboring state. Legislatures “spring into action,” and a new casino bill is passed. Then a new casino opens in a prior non-gaming state. And the game goes on.
More and more casinos are thus built (except, of course, here in Illinois, where our governor is more concerned about his bangs than having the bucks to keep public transportation moving), and this growth will continue, not just in the United States, but also in markets and countries around the world. This is a no-limit game, and you can’t lose if you play your cards … and slots and dice, right?
I’ll tell you something that I think won’t happen in 2008: the advancement of casino marketing. If prior years are any judge, then it will be “same old, same old” coming out of marketing departments across the country. TV spots with slot action, overly dressed models around a Craps table, steaks on a plate, same old players’ cards … you get the picture. Nobody’s really doing anything new and innovative out there. As an industry, casino marketing has been unbelievably slow in developing new ideas and approaches.
Yet most casinos have more information about their customers than some of the more sophisticated marketers in the world — Wal-Mart, P & G, Target, Macy’s, et al. Oh, I know the info is used, and we can send different mailings to hit a silver, gold or platinum member, but the info you have should go a lot deeper.
How do I know? In the past two years, I’ve been an invited speaker to this magazine’s West Coast and Midwest CasinoFest™ gatherings of casino executives, and I’ve presented to hundreds of casino marketing people. In one way or another, here’s what I mostly hear: “We don’t have the time to think about innovative approaches — it’s hard enough just keeping up with our day-to-day work.”
Here are just a few of the ideas that were news to them: customized car key fobs that will bring up a personalized, unique message to a player on your property signage as the player drives by; mobile marketing that works; marketing direct to the player’s desktop and bypassing e-mail; snail mail that recommends new game titles based on the player’s previous play habits; new ways to build community around slot stations; and many more. There is so much new marketing technology that can be applied, especially with all the player data you have.
The vast majority of the casino marketing budget should be reserved for one-to-one marketing. There should be two budgets: direct and branding. I know it’s a necessary branding investment at times, but how well have you been able to track the ROI on that expensive TV schedule?
Let’s hope 2008 will be the year that marketing departments have enough time to plan campaigns and not just do what was done the prior year.
Greg Shay
CEO and President, VCAT LLC
The upcoming year will be the most challenging year in a decade for gaming operators, vendors and technologists.
Gaming is not as “recession proof” as it may have been in decades past, but recession resistant. Massive expansion over the last 20 years makes our industry less resistant than when the phrase was coined. The current effects of our challenged economy, loss of paper wealth due to today’s mortgage and real estate markets, the weak U.S. dollar, and loss of consumer confidence, all add to the challenges of growing any business in 2008.
The year 2008 will show who is excellent and who has been fortunate. We are at a perfect place to view how many businesses have confused the bull market over the last 10 years with brains.
We will see minor gains for the very best among us, minor losses for the fair operators who block and tackle well, and a “day of reckoning” for others. The effects of the current state of our economy have already been felt in financing and development announcements, delays among operators, reviews of new programs, plans for new technology launches from vendors, and less aggressive initiatives into new technology.
Rest assured that the current economy will be viewed as a “normal adjustment” that all economies see in their economic cycle. Just as the word “cycle” implies, it goes up, flattens out and goes down before it can flatten out at the bottom and go up again. The length and severity of the cyclical decline is an open, but important question.
Who will shine in this challenging time? As always, the smart and the fearless. Smart operators, who understand that the cycle is just that, a cycle, will know that their healthy business is not the problem; they will also know that their healthy business will be the solution or the engine that will continue to keep them healthy. They will continue to invest and improve their business so that when the cycle begins to turn upward, as it always will, they will be the first to capitalize on the new resurging economy and confidence.
Nothing startling will happen in gaming technology in 2008. Get ready for more CRM focus by the bright operators and vendors and continued development for some server-based and system-based networks to be available in 2009 and become important in 2010.
Oh, and the Patriots will win the Super Bowl in 2008.
John Long
Product & Marketing Consultant, Sunset Communications
Rather than prattle on in this year’s CEM-prognostication-fest about SBG, visual analytics or the looming tensions between IP mavens and big operators as we head into 2008, I have decided instead to delve into a pet-topic: the Byzantine, but fascinating, direction of gaming in Mexico.
Lately I have had the pleasure of co-authoring a series in this magazine with two Mexican colleagues, Srs. Lazcano and Benavides, about gaming in their country. As a team, our biggest monthly challenge is not to find something interesting enough to write about, but rather which rapidly evolving topic to focus on. On that note, as 2007 began to wind down, we started seeing an increased likelihood of a serious collision of interests in 2008 that could potentially precipitate events in Mexico that may in fact go far beyond the boundaries of gaming.
Keep in mind that since 1947, and for the next 50 years, Mexico’s gamblers were essentially limited to pari-mutuel wagering on racing and sports. But starting in 1997, and in less than 10 years, electronic gaming in Mexico has since gone from zero to 60 in the blink of an eye. The five years between 1998 and 2003 saw the quiet appearance of Bingo halls and even within that short span, a subtle but faster-paced evolution of the traditional Bingo form was injected with electronic card-draw terminals and video displays.
Then, barely three years ago, in 2004, some or the larger “formally-licensed” operators decided to try the Native American expansion strategy of deploying Class-II style gaming devices under a similar Bingo-theory. Surprisingly (or not) the Mexican government didn’t complain, and guess what? The stampede was on.
Now, with the newly discovered electronic gaming spigot of revenue turned on, it is no wonder that there are already an estimated 150 new electronic gaming locations operating in Mexico, with more coming online every day. No one seems to know how many of these are actually licensed — let alone operating legal machines — but by many estimates, counting only the recently planned or announced locations, the number of electronic wagering locations will probably double in less than three years and could continue that rate of growth unless there is some intervention.
Clearly, the mini-casino land-rush has created a lot of excitement and optimism for the Mexican entrepreneurs who are attempting to capitalize on this recent explosion. Just as significantly, scores of equipment suppliers from the four corners of the globe — both big and small — have already launched armadas of trucks to Mexico with gaming products that are not subject to even minimal testing, let alone standardized scrutiny for fairness and security.
As 2007 came to an end, another alarming trend began to emerge for gaming in Mexico. Almost daily in Mexican newspapers, radio and television, and even on the street and in taxi-cabs, there has been increasing criticism of the Mexican government for its seeming lack of willingness or ability to effectively enforce the sparse laws or regulations that are on the books already. There is also a growing and vocal sentiment in the Mexican Congress that the country’s new mini-casinos are not the only places where games are being played, as overly cozy relationships between key government officials and dubious permit holders are openly discussed in the media.
In December, the Mexican Congress acted to force the Gobernación (the Department of the Interior) to make its dealings, policies and procedures for gaming transparent. But that move was immediately challenged in the Supreme Court by gaming regulators who have foiled Congressional efforts at accountability.
So we can see that the stage is set for 2008. Mini-casinos are opening virtually at will. The federal permit grantors — who just happen to also be the regulators — seem to have become very cozy with certain key gaming figures all while the Mexican Congress continues to try and implement effective controls.
It seems all of a sudden many are making money in gaming in Mexico, but my prognostication for 2008 is that the ingredients at hand are either a recipe for disaster or a well-timed cue for the government to effectively harness that economic energy and regulate it properly for the benefit of all concerned — especially the citizens of Mexico — and ensure that tax revenues and regulations are applied appropriately.
Finally, companies with gaming interests in Mexico should be mindful that the current administration won the presidential election just one year ago over a fairly radical socialist by less than a percentage point. In fact, even today it is hard to find a citizen in Mexico that doesn’t acknowledge that slim margin was the direct result of years of political corruption framed by campaign promises to reform the culture of political patronage. If things go well, the industry will flourish and citizens and entrepreneurs will both benefit. If not, it could be the catalyst for more serious discontent.
I guess this falls short of a prediction in the end, but we’ll have to wait at least another year to see how the cards are played.
Beth Deighan
President, Casino Careers Online and Casino Executive Search
As HR professionals develop their strategic plans for 2008, they have a myriad of considerations:
• The shrinking labor pool of experienced professionals due to
rapid growth stemming from legalization of gaming in new
jurisdictions, and expansion and construction of new facilities in
existing jurisdictions
• The fast-moving technological advancements, which require
managers who are familiar with new hardware, software and
systems affecting all departments, such as HR, accounting,
marketing, hospitality, gaming operations, etc.
• The impact of SOX compliance and financial disclosure, resulting
in the shortage of qualified accounting/finance and internal
audit personnel, both within and outside of our industry
• Preparation for global expansion to address new hire concerns
relative to relocation/housing, immigration, health insurance
coverage, etc.
• Privacy concerns related to personnel information, which
restricts recruiters’ access to employee databases
• The need to outsource some of the HR function to maintain a
competitive advantage
As a full-service recruitment company, the staffs of Casino Careers Online and Casino Executive Search understand how these factors will have an impact on the hiring of employees at all levels.
Therefore, our primary focus in 2008 will be on customer service, the dissemination of information and the enhancement of recruitment tools available to employers to assist them with efficiently attracting and retaining talent. Simultaneously, we will continue to focus on the education and development of the job seeker to identify and secure the right opportunity.
For employers, our goal is to:
• Provide technology, techniques and resources to better assess
the qualifications and personality of the candidates
• Assist in the development of a detailed overview of the
company’s career opportunities and growth potential to target
and attract candidates who possess the required qualifications
• Provide personal training to ensure that recruiters are using the
recruitment tools available to them effectively
• Provide expertise in compensation analysis, as
well as the development of programs such as
deferred compensation, relocation, and health
and welfare to assist in the development of a compensation
package that will attract candidates for the short and long term
• Offer resources and information to assist in the recruitment of
international talent, such as currency conversion, cost of living,
immigration requirements and processing, tax equalization
policies and procedures, international benefit programs for
international assignees, cultural environment, etc.
Enhance the applicant tracking process to ensure organization and personalization, yet increase the efficiency of communicating with the masses
For job seekers we will:
• Enhance the program that apprises job seekers about new
career opportunities
• Provide online tutorials to assist candidates in presenting their
qualifications and accomplishments more legibly and concisely
• Prepare candidates to communicate their credentials articulately
to the prospective employer
• Make the application process easier
• Educate candidates on cost of living, personal income tax,
schools, housing and other important information relative to the
location of the new employer
To ensure a continued flow of qualified applicants, we will continue to cast a worldwide employment net by:
• Identifying the technical schools and universities offering
curriculum in operational skills and gaming management theory
and techniques worldwide
• Developing additional systems to communicate employers’
open positions to a wider and more diverse pool of job seekers
to attract candidates in specific disciplines and industries with
transferable skills such as IT, CRM, Internal Audit, POP, SAS, ATR, etc.
• Developing professional affiliations to publicize career
opportunities to candidates worldwide
The New Year will bring changes in the labor market, both domestically and internationally. Our goal will be to provide our clients with the information and assistance necessary to deploy innovative sourcing strategies to attract the best staff in the global recruitment market.
Russ Ristine
Co-Founder and President, Radical Blue Gaming Inc.
Not so very long ago, a credit meter on a slot machine was quite a novelty, and to gain public acceptance, slot machine manufacturers often added a button to allow players to choose whether their winnings would go to the credit meter or to the tray. Soon after this, we started to see note acceptors alongside the slot machines, either dispensing coins on their own, or in more innovative cases, dispensing coins out of the slot machine’s hopper (or even adding credits to the credit meter). The next thing you knew, every slot machine had an integrated note acceptor!
In 2000, Barona Valley Ranch Resort and Casino paved the way for the TITO revolution by ordering all of the slot machines for their new casino without coin hoppers, and insisting that all manufacturers support cashout tickets (in and out). Chaos reigned for a bit as protocols were modified; manufacturers had to figure out what to do when a $4.05 ticket was inserted into a quarter machine, and in-house slot technicians worked with manufacturer representatives to figure out the proper settings to get ticketing working properly.
While all of these radical innovations of the past now seem commonplace, we are currently on the verge of an even more dramatic revolution in slot machine technology: the introduction of high-speed networks that can connect each slot machine to one (or more) servers. Using standard Internet technology, and an industry-created game-to-system protocol (G2S) that has been adopted (and is being implemented) by most of the major gaming machine manufacturers, this new network architecture will revolutionize the slot gaming experience in the same manner that the Internet has changed our day-to-day existence. Innovation will reign when casinos can dream up a new feature or promotion for their slot players and have it implemented on their floor in a matter of weeks or months, rather than months or years; and when games and peripherals can be remotely configured, and if needed, new code can be downloaded as effortlessly as Microsoft and other Internet enabled providers now download new updates for installed programs.
But back to the upcoming year — Radical Blue (RadBlue) has moved from building development tools to building scriptable testing engines, and now to building load testers that ensure the newly developed applications work effectively in this new environment. More importantly, development teams all over the world are purchasing them from us because these are the tools they now need.
What this indicates to me is that the manufacturers have moved beyond thinking about the protocols to actually implementing them, so deployment is right around the corner. Further proof of this is the new certified G2S Engineer program being offered by UNLV’s International Gaming Institute, and the industry coming together (via GSA) to work out a deal where RadBlue’s test tools will be made available to regulatory testing agencies around the world. The shifting of our focus (due to customer demand) to developing tools for testing and product assurance, and now to those which enable regulatory test labs, means that this new networking technology will be soon coming to a casino near you. Like ticketing, it will start in one or two small areas, but before you know it, as is the current case with TITO, 95 percent of all games sold will be G2S enabled. I would not be surprised to see another innovator, like Barona, drag this new technology into the spotlight by insisting that their whole new floor (and all slot machines that want to be on that floor) are enabled for the new world of G2S. Then the fun will really start.
ARCHITECTURE, CONSTRUCTION, & DESIGN
Barry Thalden
Principal, Thalden • Boyd • Emery Architects
Gaming, resorts, entertainment — it’s a great industry that I have prospered working in for 37 years. Today, while the rest of the economy seems to be dragging, or worse, this industry is still robust and expanding.
Las Vegas and Atlantic City both have “Coming Soon” signs up. 2008 will be a “wait-and-see” construction year with over $20 billion worth of “giga-resorts” not opening until 2009. In fact, the only new openings will be the Venetian’s and Wynn’s cousins, Piazza and Encore on the Las Vegas Strip. We will also have to wait to see what other major gaming companies — Harrah’s, Station, Icahn and Penn National — intend to do after their buy-outs are completed.
Indian Gaming in 2007 has continued to open new properties and expand existing facilities. In addition, in a surprising paradigm shift, a series of Indian/Commercial crossover deals have rocked the separation of Indian Gaming. The most unprecedented were the Seminole’s purchase of Hard Rock International and Foxwoods’ joint venture with MGM Mirage. Other deals include Four Fires (a joint venture of four tribes) developing and operating a commercial Marriott hotel in Washington D.C., Sycuan’s purchase of the historic U.S. Grant Hotel in San Diego, and the Pojoaque Pueblo developing a four-star Hilton resort north of Santa Fe. This last project, which is being designed by our firm, will raise the bar for Indian casinos. It will open next summer and will be the largest resort in the state of New Mexico. These deals give us a glimpse into the future of tribal business enterprises.
As the lines become blurred between commercial enterprises and Indian business interests, expect to see much more of this activity announced in 2008 and beyond. Indian Gaming revenue now exceeds $25 billion. Even with recognition of other uses for tribal funds, it still could mean $7 billion to $9 billion available per year in cash flow as equity for business expansion. When increased by potential debt funding, that could leverage up to more than $30 billion available. That’s a lot of money for development and investment. It certainly supports our firm’s decision 10 years ago to focus on Indian Gaming, as our firm has 11 casino projects slated to open in 2008.
Because tribal opportunities on the reservation are restricted by compacts, location, acreage or market share, expect to see tribes venture into off-reservation commercial ventures. Naturally, they will first do the things they know best — gaming, resorts and entertainment. At first look, these off-reservation commercial opportunities may have a very low ROI compared with their current business, but I predict that tribes will nonetheless use their capital and expertise to start purchasing, developing and operating commercial hotels and casinos, and perhaps even buying hotel or casino companies. They will also compete head-to-head for commercial gaming opportunities in new gaming territories both in the United States and abroad.
With the tremendous opportunities for Indian Country, I stand by my previous prediction that Indian Gaming annual revenue will double to $50 billion by 2012.
As an architect, this vision of expansions makes my creative juices boil. What about design? I believe that after this current wave of “modernism” in Las Vegas (also known as “my modern can be more modern than your modern”), gaming companies will return to building things that are just more fun. Perhaps that will mean the return of “themed” architecture.
In Las Vegas, having successfully predicted 10 years ago that 2006 would bring developments twice the size of MGM Grand, I now believe that a counter trend will emerge. A “small for the sake of being small,” intimate and special resort/casino will emerge. This yet-to-be-seen idea of a “boutique casino” will be equivalent to the world’s most exclusive resorts. It will not be a place built for the masses, nor will it be developed by the industry’s giants. It will be super exclusive, five-star luxury and a bit snobbish. It will have special appeal to the wealthy who, although they are treated well by the big casinos, would rather not be associated at all with the “riff-raff.”
Finally, sustainable architecture is here to stay. This will not be dictated by the inevitable administration change in Washington. The new administration will have its hands full cleaning up the disasters of the past administration and creating future disasters of its own, as governments tend to do. It will instead come from demands by the consumer and the continuously escalating price of oil. While at one time people marveled at the Bellagio fountains, in the future they may look at flagrant wastes of water, energy and other precious resources as unacceptable.
In 2008 the economy may suffer as the nation’s housing industry falters, oil prices rise and the big banks lose their “assets” over the sub-price mortgage crisis. However, the gaming industry will continue undaunted, creating fun experiences for people around the world.
Dick Rizzo
Vice Chair, Perini Building Company
This has been a record year for Perini Building Company. We are currently building at capacity, and at the same time, starting to actively speak with prospects to begin new work within the next couple of years.
One of the most significant challenges facing the commercial contracting business is finding sufficient qualified craftspeople to meet building needs. To meet our labor demands, we are actively recruiting skilled employees and subcontractors nationwide through advertising, attending construction conferences and visiting different college campuses.
Hiring a more diverse labor force is also a priority. This year we launched a nationwide direct-mail campaign targeted to minority subcontractors about contracting opportunities with Perini and, specifically, CityCenter, the largest private development in the country located in Las Vegas. In addition, Perini’s diversity development department attends conventions nationwide to promote interest in women and minority-owned businesses about the economic opportunities on our projects.
Perini also acquired Rudoloph & Sletten, a top California general contractor, which has helped Perini keep up with the demand from its Native American clients in California.
We anticipate that commercial contracting in the gaming and hospitality industry in 2008 and for the next couple of years will be strong, and we are talking to a number of companies about future projects throughout the nation.
TRADE SHOWS
Willy Allison
President, World Game Protection Inc.
The second annual World Game Protection Conference (WGPC) last February exceeded all of our expectations. Attendance grew 45 percent from our first year, and the Technology Expo tripled in size. The most common question we were asked after the show was how do we top that in 2008? We believe the answer to that question is simple: relevant subject matter, create a sense of community and keep it fresh.
The foundation for the WGPC is built around a strong conference program. The program is developed throughout the year to address contemporary topics in an ever-changing industry. We are committed to addressing subject matter that is globally important in today’s casino environment. We start with a general theme for the conference but often make changes leading up to the show to make sure we hit the news of the day. We want attendees to leave the WGPC with a feeling that they are one step ahead of the bad guys.
Realizing game protection is an important — if not unique and fundamental — aspect of gaming management, the WGPC is beginning to attract a broader audience. A must for all casino surveillance managers, the conference program is also appealing to casino operational managers, executive management, regulatory and law enforcement agencies. By giving game protection its own international annual forum, we are increasing the awareness and importance of casino surveillance in the eyes of casino decision makers around the world.
In 2007 the casino industry was reminded of how vulnerable casinos can be, when 41 people were arrested across the country for their alleged involvement in an organized collusion scam that successfully beat numerous casinos over a five year period. This was a key event in our industry’s history that I believe served as a catalyst for a change in the way our industry shares information.
The WGPC is a leading networking forum for casino managers to gather intelligence from insiders. We believe a sense of community and sharing of information helps prevent crime. World Game Protection Inc. is committed to facilitating more information sharing within our industry. Due to the nature of organized casino cheating, we realize the need for more than an annual forum to stay one step ahead, so this year we added more features to our free monthly e-newsletter, The Catwalk, like training videos, regional news, polls and CCTV technology articles.
So, moving forward to the 3rd annual World Game Protection Conference next month, we are excited about what we think will be the best WGPC yet. To ensure we stay in touch with what is really important to casino managers, we recently established a conference advisory committee. The advisory committee is made up of six members with a combined 130+ years of casino operational experience. Our motto: Casino operators for casino operators.
Courtney Muller
Show Manager & Industry VP, Reed Exhibition Services
G2E continues to stay true to its mission of being the only event by the industry and for the industry by staying abreast of industry trends, listening to our customers and then responding to both.G2E holds its position as the market leader because we serve the needs of the industry and deliver year after year what our customers ask us for. For seven years, G2E has evolved to represent the growth of the industry by constantly adding new offerings to F&B at G2E, the culinary trade show and conference for F&B executives within gaming; expanding the Security & Surveillance and Technology Pavilions; adding new conference tracks and topics; building the G2E Leadership Academy; and more. And when the industry started to focus its energies on the opportunities in China, G2E was there to continue to serve our customers. We were incredibly proud to present G2E Asia to the market in Macau and look forward to serving the needs of all of our customers through our Las Vegas and Macau events.
The industry recognizes that G2E is the best business-building resource annually to access new products and innovations, world-class education, networking and a glimpse into the future of global gaming. With 2008 upon us, we are excited and enthusiastic about continuing to innovate and serve the gaming industry worldwide — continuing to cross borders in Asia and beyond into some of gaming’s most exciting and evolving markets.
G2E has experienced seven straight years of growth since its inception, and 2007 marked the largest and most successful event yet, with customers telling us that fierce business was being conducted and networking was at an all-time high. With more than 30,000 gaming industry professionals from 112 countries in attendance, G2E experienced record growth in attendance and in floor space, with 751 companies showcasing their products and services in 331,000 square feet of exhibit space — the largest square footage ever in the history of G2E. Strong areas of growth at G2E 2007 were security-related companies spanning 18,700 square feet of exhibit space, a 20 percent increase from 2006; food and beverage-related exhibitors at F&B at G2E spanning15,500 square feet, a nearly 7 percent increase from 2006. In addition, the G2E 2007 Conference Program offered 146 sessions in 15 tracks, five of which were brand new, and the all-new G2E Leadership Academy offered management training for gaming’s next great leaders. All of this, plus the a buzz-factor at a fever pitch that was contagious throughout the Las Vegas Convention Center for four straight days, helped make G2E 2007 one of our best shows to date.
As we look toward G2E 2008, we already have a number of new ideas in the works in response to feedback from our attendees and exhibitors, ranging from new pavilions such as Retail; an even further expanded F&B at G2E with a more robust F&B conference track; new conference tracks and sessions; enhancements such as going to 100 percent online badges to make the customer experience as easy as it can be; and more. G2E 2008 will take place Nov. 18–20 at the Las Vegas Convention Center, with the G2E Training & Development Institute Nov. 17 and the G2E Leadership Academy Nov. 17–18. So keep your eyes open for another brand-new experience at G2E 2008 — more details to come over the next 12 months.
The G2E trademark of quality and excellence, combined with its “by the industry, for the industry” mantra, allowed us to successfully launch G2E Asia 2007 and take advantage of this emerging and explosive market. With nearly 3,000 gaming industry professionals converging on Macau Tower in June 2007, the industry turned out to see the latest products from 75+ exhibitors across 2,589 square meters of space and learn about critical Asian and global-gaming trends.
And with G2E Asia 2008, the industry can expect more of the same — only better! We are proud to move to our new home at the Venetian and anticipate the backdrop of this incredible property will make G2E Asia one of the most exciting events in the world. G2E Asia will feature a greatly expanded exhibit hall floor, which will be four times larger than the inaugural G2E Asia. The event will offer two new pavilions for iGaming and Security & Surveillance, an expanded and segmented conference program with the addition of tracks to address a wider cross-section of industry topics, the return of the ever-popular casino property tours, and more networking for serious business opportunities. In addition, G2E Asia also will feature the Gaming Investor’s Forum in cooperation with Goldman Sachs. With more than six months to go, we still have a lot of other new features in the works for G2E Asia, held June 4–5 at the Cotai Strip Convention & Exhibition Center at The Venetian Macao.
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