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Introduction
Part 1
Part 3
Tina Stehle
Senior Vice President and Chief Operating Officer
Agilysys
We see several trends shaping the hospitality and gaming industry, three of which are real forces in the marketplace, driving business performance and influencing guest behavior in ways that we believe will dramatically impact the business.
The first trend is cloud computing. Although there are a number of hurdles to cross before the industry realizes its full potential, cloud computing has definitely arrived. In a broad sense, cloud computing is a style of computing whereby services, software and processing capacity are delivered via a private or public network. One of its primary advantages is that customers can realize many of their computing needs with a sizeable decrease to their infrastructure requirements. Other benefits can include a lower cost of ownership as well as the ability to scale up or down as needs change. Cloud computing is especially attractive in today’s economic environment, because it enables IT staff to focus on core business tasks.
We now offer several solutions as cloud-based applications, including the Agilysys InfoGenesis™ POS system; the Agilysys Eatec® inventory and procurement system; the Agilysys eMenu online meal-ordering platform and the Agilysys eCash cashless payment system.
The second major industry trend is an increased interest in mobile applications in both full-service and self-service environments. One of the most intriguing uses of smartphones and other mobile technology in the hospitality environment is as an extension of the point-of-sale system in the food and beverage area. Here, the technology can be used as an order-taking device, offering a practical and cost-effective way to streamline service in restaurants, bars and poolside. Just as with standard POS terminals, smartphone technology enables servers to open guest checks, select menu items, send orders to the kitchen and settle accounts, but with greater speed and efficiency.
At Agilysys, we’re developing mobile POS applications for both the Android and iOS platforms for specific vertical markets. We also continue to enhance our analytical and cross-enterprise reporting applications.
The third trend, which actually began a few years ago and shows no sign of slowing, is self-service solutions. Similar to mobile applications, self-service solutions enable guests to take charge of their own hospitality experience—from selecting rooms and making dinner reservations to viewing their folios at any time during their stay. These solutions can also perform much more sophisticated functions, such as producing hotel maps, displaying event schedules and generating special messages. Savvy casino-hotels are taking advantage of this trend and are extending their service beyond the front desk, right into guests’ mobile devices.
And, for hotels that use self-service kiosks, there are more advantages, such as marketing the property. Kiosks can up-sell room categories or make special offers; and, in a casino hotel environment, they can enable guests to exchange loyalty points for room upgrades and redeem casino comps. Our Guest Express kiosk solution enables properties to utilize employees more effectively, often by reassigning some front-desk staff to jobs that provide long-term benefits, such as managing guest loyalty programs. It can also enable staff to devote more time to guests who prefer traditional check-in or need extra assistance.
The last couple of years have been turbulent ones for the hospitality and gaming industry, to be sure, and the economy is still in recovery mode. Yet, this is actually a good time for properties to assess their technology and consider solutions that will enable them to work smarter and more efficiently, as well as address the guest experience. With the right technology in place, casino-hotels can streamline operations and realize a competitive advantage, both in the short-term and well into the future.
Andrew Cardno
Chief Technology Officer
BIS²
2012: Watch for the Black Swans
In order to write this forecast, I referred back to my 2010 report. In 2010, I warned operators to watch out for the black swans as these will have unexpected impacts on the world and on our businesses. I can only say that the last two years have been dominated by the unexpected. In fact, there are so many “unexpected” events that black swans have, in my view, become the norm.
BIS2 has seen unprecedented growth in 2011 as operators have taken up the stance of needing to be able to respond to the unexpected and, in many ways, to seize opportunities before the competition. As I urged operators in 2010, I can only urge you again to prepare for the unexpected and have at your disposal the organizational ability to react to these continued volatile times.
2012: The Year to Build a War Room
In this environment of extreme events, it is time for every organization to prepare their strategic reaction capabilities. This strategic reaction capability is built around the enablement of the management team’s ability to respond to the diverse demands of the unexpected. These diverse demands step beyond the normal demands of the gaming world. Collective insight, communication and a shared direction are key elements that will be fostered by corporate war rooms. Large-scale views of the business that adorn the walls of the corporate war room will allow management teams to explore, debate and take advantage of operational and strategic opportunities.
Business is in constant change. Who would have thought that Genting would plan to build the world’s largest casino in Miami? Again, 10 years ago, who would have thought Blockbuster would essentially be taken out by a website? Management’s agility to these sorts of black swan events will define the innovators (the winners) and the laggards (the losers).
gameViz 8.0 and Preparing for Change
At BIS², our gameViz 8.0 product will be released in Q2 2012. This release takes our war room-based intelligence offerings to a new level. Deeper insights and richer interactions supported by rapid updates will comprise some of the new world elements of 8.0.
2012: The Year of Facebook
Facebook is taking over communications. Now for many people, Facebook is a primary method of communication. In some instances, communication is a social broadcast. How do you handle, interact and influence such an informal communication network? Again, insights into the leaders and followers in these social arenas are critical to understanding behavior and the opportunities and threats.
2012 is likely to see more black swan events that will challenge the way we think and do business. Anticipating such events will be difficult. Corporate war rooms will facilitate management’s success in recognizing and reacting to such events that the alacrity of today’s world requires.
George J. Levine
Executive Director, Sales and Marketing
Casino Data Imaging
These are exciting times for Casino Data Imaging (CDI), and we look forward to 2012. The CDI GlobalSuite™ data visualization and report analysis program rollout has begun and is already receiving very positive reviews. Eleven years ago, we launched the first gaming data visualization analysis program and took the industry by storm. Transitioning to the Windows Presentation Foundation has provided our engineering the perfect palette to bring to market a new reasonably priced data visualization program that truly delivers answers to questions casino management must address daily concerning the bottom line (profitability). Eleven years of experience goes a long way, and as our early adopters are finding out, the wait was well worth it. Here’s why.
First, embracing powerful Microsoft® applications has provided our development team the right tools to meet current and future industry needs at a fraction of the cost found in competing programs. When it comes to data visualization development, casino industry expertise and passion for what they do, CDI’s development team would be hard to beat.
Paramount to data visualization is the ability to spot anomalies, trends, attributes, performance, utilization and more in a simple eye-catching method. CDI moved away from a CAD environment to 100 percent graphical in displaying analysis objects which translates to a very user-friendly environment, including map maintenance. Selecting the GlobalSuite 3-D option opens up definable multi-point financial color coding and text information views providing, literally, an extra dimension of analysis. These features plus the ability to launch pivot tables and reports from within the graphical environment deliver more versatility to the end user.
Whether selecting dynamic standard reports from the GlobalSuite report library or building your own, GlobalSuite analysis embraces Data Mart and OLAP cube technology (for both the reporting and graphical environments), enabling the end user to interactively analyze multi-dimensional data from multiple perspectives. This translates to more actionable analysis that can also incorporate an assortment of visuals including stoplight flags, data bars, 3-D charts and more. With many customizable features, drill down capabilities and CDI GlobalSuite updates, end users will have the necessary information to monitor their business and make sound strategic decisions to foster growth. In working closely with our clients, CDI’s mantra is to better understand the role of each user, identify the questions they must address regarding casino performance, and strive to provide the information necessary to answer those questions.
During the development of the CDI GlobalSuite, we discussed with our clients how they would best approach a dashboard control center. The results pretty much boiled down to a home base (similar to Microsoft Outlook) where the user can, from the “get go,” view actionable information charts, compare and contrast this information, and navigate to any other aspect of the program. The dashboard was also designed to accept third party information that may be useful when analyzing the KPIs normally brought over.
CDI continues to focus on making the analysis of complex data easy for all types of user levels at a very affordable price point. Our launch of the GlobalSuite product line is just the beginning of great things to come.
Jonathan Seigle
Vice President, Casinos and Resorts
MICROS Systems Inc.
You’ve been planning your trip to Vegas for months. The day finally arrives. After a long flight and an even longer cab line at the Las Vegas airport, you’re dropped off at the hotel. As you head to the lobby, you’re excited and ready to hit the casino—you just want to check in to your room first to change. And then it hits you: The front desk line looks about a mile long. Your excitement deflates as you head toward the back of the line.
Casinos are focused on using technology to enhance the guest experience, maximize revenue and reduce cost. The last thing they want is the scenario described above, where valuable guests are stuck standing in line instead of on the casino floor or enjoying one of the resort amenities. MICROS has introduced several new technologies that can help casinos better service their guests, like “virtual room keys” that allow the guest to bypass the front desk altogether; tablet-based check-in/check-out devices that enable hotel front desk agents to come out into the lobby to do “line-busting;” and smartphone apps that give the guests the power to manage their own hotel stays, order food and pay their tab.
I see 2012 as the year when these technology extensions become mainstreamed and guests begin to expect this finely tuned level of service. Whether in a 5,000-room Vegas hotel casino or a 150-room tribal property, you’ll see more extensions of property management system (PMS) and point-of-service (POS) technology throughout the casino property. We’re also working on extending our connections to player tracking systems so that casino guests have a seamless experience from checking point/comp balances to using those rewards throughout the enterprise.
At MICROS, we are continually working on modules and enhancements to the MICROS OPERA property management and Simphony point-of-service solutions that leverage all these new technologies, because we see Las Vegas as the ultimate proving ground for hospitality technology. The statistics tell the story:
• 37 million-plus annual visitors, including almost 7 million international visitors
• Almost 150,000 hotel rooms
• All 10 of the 10 largest hotels in the United States are located in Las Vegas
• Las Vegas is home to thousands of restaurants, from independent neighborhood joints to five-star fine dining
With their unique combination of high guest volumes, wide-ranging functionality requirements, and 24/7/365 environments, Las Vegas operators will test the limits of any technology product:
• Scalability (i.e., Can you handle the check-in volume on a Friday night? Can you handle the 25 restaurants on a property all on one system?)
• Functionality and interfaces (complicated rate structures, comp requirements, guest tracking, service styles ranging from fast casual to fine dining, etc.)
• Uptime and stability (can’t afford downtime in a 24/7 world)
This is exactly why MICROS pays so much attention to the Las Vegas market: If our solutions work here, they’re sure to work just about anywhere. And this is why we’re proud that the OPERA solution runs seven of the top 10 largest hotels in the United States—all seven located in Las Vegas.
Bart Lewin
Chief Executive and Chief Technology Officer
NEWave
2011 was a terrific year for NEWave. We repositioned ourselves for success, brought in new leaders to our executive team, expanded our services with a new Professional Services division, expanded our client base, and launched our new name and image. We ended the year on a very high note, being named the Partner of the Year by an industry publication.
We are fortunate to have laid the groundwork for success, because extremely significant changes are coming from the U.S. Treasury Department that will affect how each and every casino files reports to the federal government. I cannot overstate that fact—every casino will be affected, and you are up against a deadline to get your house in order. Of all the forecasts in this edition, that is one that requires no crystal ball, and you can take it to the bank.
We have carefully analyzed the new FinCEN reporting requirements, and we can tell you, there are significant changes to CTR and SAR filings. According to FinCEN’s own estimates, each new CTR will take approximately 40 minutes to complete, and each new SAR will take approximately two hours. That means casinos have two choices: staff up to ensure you have the manpower to accommodate the new requirements or install software that will complete, file and store the forms for you.
At NEWave, we are moving extremely fast to update our myCompliance suite to accommodate all of the FinCEN changes to ensure you remain in compliance, and minimize labor expenses. We are also creating a new SAR Manager that will replace yesterday’s SAR-C Manager. We are forecasting that all of our software upgrades will be complete in Q1 2012, giving you plenty of time to install the software and ensure you are prepared and protected.
For existing NEWave clients, we can accurately forecast that your existing Title 31 software may not be able to accommodate the changes, and that our new myCompliance suite will suit your needs better given the new FinCEN rules.
For those casinos reporting manually, you must immediately begin planning your migration from a manual system to an electronic system, because the new FinCEN rules will no longer accept paper entries of any kind. All data (there will be no paper forms in the future) must be submitted electronically.
What this means for NEWave is 2012 will be an extremely busy year, and we are very excited to meet the challenge head on. What this means for every casino in the U.S. is that now is the time to schedule an increase in workload to ensure you remain in compliance and avoid hundreds of thousands of dollars in fines. Or, forecast a meeting with NEWave and let us take care of the rest.
The FinCEN changes are a big deal, not because they are extensive, but because they will further help to make casino operations even more secure against cheats, thieves and those who would use your legitimate business to launder their dirty money to further their criminal enterprises. And more security in business is always welcome news, and will help to make 2012 an even happier new year.
From all of us at NEWave, our very best wishes for a happy new year!
Tammy Farley
Principal
The Rainmaker Group
As hard as it is to believe, 2011, a very busy and rewarding year, is coming to a close.
Reflecting on where things stood this time last year, I recall that we felt an upswing in the gaming industry beginning, but were cautious that recovery would be slow. Slow, I think, does characterize this year’s rebound. Still, there can be little doubt that conditions are improving—we are seeing a more active pipeline than ever before. Companies that have not previously invested in automated profit optimization systems are clearly recognizing a need to do so; those who have invested are looking for ways to improve incrementally.
Rainmaker’s focus has always been on the optimization of a gaming resort’s profitability, which means going beyond the gaming floor to the hotel, food and beverage, spa and event venues. Our customers realize the value each of these assets represent and seek to maximize their contribution, not in isolation, but as an enterprise. The value of a hotel room is not simply a threshold to be met by some combination of cash and expected gaming revenue (although, even today, this combination tends to dominate the expected value of an occupied room). The goal is to fill each hotel room with the most valuable guests regardless of the source of that value: gaming or non-gaming, retail or food and beverage profit is the driver. In order to do this successfully, organizations must have robust data warehouses with all of the required customer transaction data, regardless of source. This is not a trivial task and it is one many will continue to focus on in the coming months.
Additionally, and IT professionals everywhere can be heard groaning at this point, there is a need to have tight integration of a variety of disparate systems, often provided by multiple vendors. Rainmaker’s customers are continuing to work collaboratively with us and their other critical system vendors to ensure that there is seamless integration where it is required. For us, this will be a continuing focus in 2012.
The revenue management team is integral to the success of the overall organization. The team’s charter is to dispassionately allocate resources between hotel operations, casino marketing and other revenue generating centers to maximize profit across the enterprise. To a remarkable degree, Rainmaker’s customers have successfully integrated profit optimization into their organizations’ view of long term customer value, practicing it with fanatical discipline.
We look forward to working with them in 2012 to take their efforts to the next level of exceptional achievement.
Brian Ferrilla
Managing Director
Resort Advantage
Over the past year, maintaining compliance with FinCEN and IRS regulatory reporting requirements in the gaming industry has continued to become more complex and sophisticated.
Resort Advantage (RA) is seeing that this trend is clearly continuing into 2012, as properties are being driven to expand their use of technology to enhance the collecting, analysis and reporting of patron, employee and supplier transactional activity within their organization. Our experience also tells us that 2012 will be another pivotal year for casinos as the IRS expands its auditing reach within the gaming industry and FinCEN introduces new electronic regulatory reporting requirements that all casino properties are required to quickly meet.
Further, as competition for loyal patrons is heightened among properties, RA is seeing opportunities for innovation to enhance the patron experience, while simultaneously reducing the costs of the underlying compliance processes. These innovations facilitate a compelling intersection of two traditionally segregated disciplines: revenue development and compliance.
As the gaming industry’s FinCEN and IRS compliance management solutions leader, RA was fortunate to again experience significant growth and industry innovation recognition in 2011. Moving forward into 2012, we are continuing to dedicate significant resources to innovation, as we work with the most prominent casino properties to expand our mobile and software-as-a-service (SaaS) solutions.
RA’s software and services are designed to help minimize the impact that the compliance process has on patrons and staff. Our newest innovations also result in a significant reduction in the time and effort required to collect the patron and transaction information that is required to accurately and efficiently report to the respective regulatory bodies. These solutions are also blurring the line between the gaming and non-gaming aspects of the patron’s on-property (and off-property) experience.
One such example is the work that we are doing with many of the country’s most respected gaming organizations to deploy Slots Jackpot Accelerator™ (SJA), our new unique mobile jackpot payout processing solution. By quickly bringing the entire jackpot payout process to the patron while they are at the gaming machine, our SJA wireless tablet solution is able to greatly streamline the compliance experience for jackpot winners.
SJA seamlessly integrates all of the various legacy gaming and non-gaming systems (slots management, patron management, cage management, IRS forms filing, etc.) into a simple touchscreen tablet interface that walks the user through all of the required jackpot payout processing steps including immediate patron information verification, ID image collection/validation, jackpot confirmation, electronic IRS forms processing and BSA compliance monitoring. With all of these steps being performed electronically on the tablet according to the property’s own business rules, paperwork is virtually eliminated, all compliance data is quickly gathered/verified, and the patron is able to get back to gaming quickly. The result is an enhanced patron experience, more than 80 percent reduction in back-of-house jackpot paperwork processing, and increased revenues for the property.
A second example is the significant opportunity we see for properties to give their loyal patrons access to more self-service tools. What we are referring to goes beyond the typical player’s club type marketing tools and applications. Properties that implement RA’s cost-saving patron compliance self-service portal can give their patrons secure access to their regulatory forms filing history (e.g. W-2G, 1099), win-loss statements, etc. This web-based portal empowers patrons to access their regulatory reports on-demand, thus reducing the costs for internal staff to respond to patron requests for copies and report creation. Making this portal available to patrons via the property’s marketing website not only offers convenience to the patron, but also provides an opportunity to increase the latest promotions impressions to those patrons.
Finally, 2012 will also be a challenging year for properties due to imminent FinCEN and IRS changes to forms submission and processing. In the case of FinCEN, it is anticipated that 2012 will mark the complete transition of currency transaction report and suspicious activity report forms filing away from paper-based submissions to 100 percent electronic filing of all forms. This requirement could mean a significant investment by properties across the country to implement an electronic filing solution that readily meets the government expectations.
Again, RA has worked with FinCEN and IRS to make turnkey e-filing solution options available to all properties, large and small. Embedding innovations into the e-filing process, such as real-time SSN verification, real-time patron data “reasonableness” checks, real-time form content verification, and direct connection to the government regulatory bodies, RA is eliminating the outdated hard-copy intensive forms processing tasks, which virtually eliminates the need for properties to deal with incomplete or inaccurate filings. Bringing these capabilities to properties in 2012 will dramatically reduce their risk of fines and concurrently reduce their cost of compliance.
We believe that our offerings noted above have the potential to be compliance process game-changers for our customers. Resort Advantage will continue to seek out and work with the gaming industry’s most respected properties and strategic partners to uncover new and exciting innovation opportunities that will result in regulatory compliance risk reduction, process cost savings and enhanced revenues for our customers.
Rory Fagan
Director, Hospitality & Gaming
SAS
Investment in analytics technology will accelerate in the coming months to deliver business insights to knowledge workers up and down the casino’s organizational chain. Whether redesigning service offerings, improving retention, launching loyalty programs or pricing to maximize revenue and profit, in-depth knowledge of patron behavior, market conditions and competitor influence is critical in this highly competitive environment.
With the depth and breadth of offerings beyond gaming, it is no longer enough to define patron value simply by casino floor activity. Patrons spend freely across the property, meaning your most valuable patron may not be the one with the highest theoretical gaming value. In order to get at this 360-degree view of the patron, casino operators will need to extract data from ancillary outlets, such as restaurants, retail and spa, to include in their analysis of total guest worth. When casino operators are able to access, integrate and cleanse the data from these ancillary outlets to build that 360-degree view, they can become more targeted in marketing efforts and develop offers that are more relevant to their patrons.
Casino operators continue to struggle with delivering personalized service in a high-volume environment. Consolidating data from siloed sources throughout the organization also provides the opportunity to create a master “golden record” for each patron. Many operators are seeing the value of implementing a true master data management system to ensure a single source of information about the patron that is available to all customer touch points (i.e., call center, web, kiosk, hosts and reservations) in real time. When line-level employees have access to this information, they can make better decisions about how to treat the patron, whether it’s offering dinner reservations to a patron who is losing, recommending a new spa treatment, or highlighting a club opening. This level of personalized service not only fosters loyalty, but it increases spending and keeps your patron on your property. Master data management platforms will become a crucial part of the service delivery at casinos in the months and years to come.
Integrating customer intelligence solutions, such as SAS® for Patron Value Optimization, with revenue management solutions, such as IDeaS Revenue Management, will bring additional competitive advantage. Revenue management forecasts must account for demand motivated by marketing offers to ensure accurate pricing, and the content and timing of promotions should be synchronized with demand patterns to minimize dilution. Total patron value should be considered in the revenue management optimization to ensure that the most valuable patrons always have access to rooms. In order to accomplish this, users must have access to key information from both solutions in real time in their own environments. I believe you will see IT departments start to move away from niche software solutions and focus on platforms that enable easier expansion of capabilities and use a common framework and data warehouse for all software solutions. This common platform simplifies extracting, cleansing, analyzing and reporting on data from all operations within the casino.
In the year ahead, casino operators will expand the scope of marketing and revenue management departments to include analysis of social media data and other unstructured text, such as customer service surveys.
Due to continued focus on profitability, casinos are also now looking at using advanced analytics to forecast labor and food and beverage in order to streamline costs. Watch for that to heat up in 2012.
2012 and beyond will be all about turning the volumes of operational data, both structured and unstructured, into meaningful, useful information. In order to accomplish this, operators will need to expand their data management and analytical capabilities. Intelligent use of information, carefully synchronized across the enterprise, will spur improvements in service offerings, drive loyalty programs and refine pricing strategies for competitive advantage. The growing reliance on analytics will be unmistakable.
Eugene Christiansen
Chief Executive Officer
Christiansen Capital Advisors
Internet Gaming
Federal legalization of Internet poker has moved from “unlikely” to “possible.” Broader federal relaxation of existing Internet gambling prohibitions remains in the “unlikely” category.
At the state level, things are a little more complicated. More states are likely to emulate Illinois and authorize their state lotteries to sell their products on intrastate Internet sales platforms. Illinois combined its intrastate Internet sales initiative with a partial privatization of its lottery, hiring a private-sector consortium (North Star) to build and operate Illinois lottery Internet sales. Assuming the state of Illinois enjoys increased lottery revenues from its Internet sales/privatization initiative, other states are sure to follow suit. Lotteries aside, the prospects for state-level Internet gambling remain unclear. California and New Jersey have legalized exchange betting on horseracing, but neither state has issued licenses. The District of Columbia has authorized its lottery to offer online poker but has hesitated to implement it, partly, no doubt, because it is wary of Department of Justice reactions. There is considerable state-level interest in Internet gambling, but except for putting lottery products online, no consensus of how to proceed.
New Gaming Jurisdictions
Domestically, the map is filling up. With Massachusetts and Ohio legalizing gaming, the number of major metropolitan areas without casinos dwindles to cities in Texas; Portland, Ore.; Atlanta; possibly Seattle, and that’s about all, folks. San Francisco and Los Angeles would be major markets, but tribal compacts appear to preclude state-licensed casinos in either city for the foreseeable future. A sea change in gaming’s public acceptance has occurred. Gaming is losing its controversial character: Cities today that don’t have a casino are wondering why. The days of monopoly profits extracted from new and grossly undersupplied markets are numbered: This part of the future will not be like the past.
Pretty much the same sea change in attitudes toward gaming is occurring offshore. The number of casino-free developed countries is shrinking fast: There’s Japan and, well, there’s Japan. The planet isn’t fully supplied with gaming, at least not with brick-and-mortar gaming. The developing world is creating new wealth in countries that are grossly undersupplied with casinos. India is one case in point; China is another. But investment opportunities in markets that are grossly undersupplied are harder and harder to find.
Taxation
As domestic supply and demand for gaming approaches equilibrium, downward pressure on gaming privilege tax rates will increase. Casinos are capital intensive. They cost money to build and more money to keep fresh and attractive. High rates of gaming privilege tax and high upfront license fees, capital items that have to be financed and add to the interest expense line of casino operating statements, make the investment capital (whether debt or equity) that is gaming’s life blood harder to come by. This fact of life is reflected, most recently, in the 10 percent tax rate proposed for three casino resorts in Florida’s pending gaming resort legislation—this in a state that taxes its racetrack slot machines at 35 percent. Looking back in time, quasi-monopoly market conditions made high tax rates sustainable in many jurisdictions. Looking forward, quasi-monopoly market conditions will be a thing of the past almost everywhere in the United States. Casino capital needs, however, will remain high. If states want to preserve their casino revenues, gaming privilege tax rates will have to come down.
Andrew Zarnett
Managing Director
Deutsche Bank
For 2012, our industry outlook is more optimistic for continued gains, as the domestic recovery continues against modest year-to-year comparatives. Nevertheless, we are still concerned as to the impact from the wake of the great recession, high unemployment and the continued contraction of residential housing prices. Longer term, we are worried as to the crowding out effect that higher taxes, along with price inflation, are having on discretionary spend. Looking to industry demand, we believe visitation and spend will be stronger in 2012 but still impacted by dubious economic trends including reduced consumer wherewithal and stubbornly high unemployment. On the flip side, better convention volumes in Las Vegas, we believe, will help 2012’s performance. On the supply side, near-term capacity additions have finally abated in Las Vegas. Along the Atlantic coast, near-term supply is expected to grow by 28 percent, which includes the Revel in Atlantic City (May 2012). We expect that supply will be detrimental to operators in a hesitant demand environment. Thus, we believe the combination of sizable new supply and moderate demand will provide for a challenging operating environment.
Away from Atlantic City, we estimate the regional markets will experience a low single-digit increase in revenues along with higher EBITDA. In 2012, we will be watching how companies further align their cost structures to perhaps slightly higher revenues after rapidly reducing costs in
2010 and 2011. We expect little can be done to further reduce costs, and some operators may have to add expense to fill gaps left behind as significant cost cuts were implemented. We note, in the future when we look back on gaming, it will be clear that gaming is very much a recessionary industry.
Regionals Holding Up
Our review of the regional market clearly indicates that regional gaming properties continue to hold up. Over the past 12 months (same store basis), Missouri (SS) at -0.9 percent, Iowa (SS) at -1.0 percent and Detroit +2.9 percent have been relatively stable during the downturn, while other regional markets such as Louisiana +0.9 percent, Illinois (SS) at -5.4 percent were down in the mid single digits (due to new competition), indicating the relative stability of these markets relative to Las Vegas (SS excl new capacity) (FLAT) and Atlantic City (-8.6 percent). Looking ahead into 2012, we expect regional markets to continue to outperform Atlantic City, as we believe they will benefit from a modest recovery in the economy, easy year-over-year comparatives and consumers’ preference toward traveling closer to home. Further, many of these markets have little supply additions compared to the Atlantic coast market.
Atlantic City: How Will Competition Impact this Market?
During 2011, the continued growth of properties in Pennsylvania and the introduction of table games had a decidedly negative impact on the performance of Atlantic City assets. In fact, October 2011 marked the 38th consecutive month (and 43 out of 46 months in 2008, 2009, 2010 and 2011) of overall market revenue decline as Atlantic City operators continue to struggle with competition from Pennsylvania and New York. In addition, Atlantic City has been impacted by the higher unemployment in Atlantic City’s key feeder markets (New Jersey unemployment was 9.1 percent in October, while New York unemployment was 7.9 percent in October 2011, and we believe this will move upward after the temporary hiring for the holiday season is let go in Q1 2012) of New York and New Jersey and a continued soft regional economy.
Our view of continued declines into 2012 remains intact as Pennsylvania supply continues to grow and existing casinos ramp up marketing efforts and undergo expansions to lure the day tripper away from Atlantic City. With a recession well underway and unemployment high, we think Pennsylvania casinos will have the upper hand versus Atlantic City. And as supply continues to come online in Pennsylvania, we believe Atlantic City gaming revenues beyond 2011 will continue to trend down on a same-store basis. Expected supply includes two Maryland casinos, New York’s Aqueduct, Revel Casino in Atlantic City and the expansion of SugarHouse and Parx Casino in Philadelphia.
Budget Deficits
In light of the recent state budget update (June 17, 2011) by the Center on Budget and Policy Priorities (CBPP), most states have experienced large declines in revenues during the economic downturn, translating to shortfalls in their budgets. In addition to the contracting economic environment, rising unemployment (now at 8.6 percent; U6 at 15.6 percent) has significantly weakened state income tax revenues, adding additional pressure on the state’s budget deficit levels. According to CBPP, nearly 42 states hold a somber economic outlook for fiscal 2012 (ending June 2012) and are forecasting a shortfall in their respective state budgets. With federal aid provided by the American Recovery and Reinvestment Act mostly absorbed in 2009 and 2010, states are now up against the wall with limited alternatives to plug the budget deficit (including mid-year gaps), which is now currently projected to exceed $130 billion in 2011 and $103 billion in 2012.
We believe the budget deficits described above are on the lower side, given the likely negative impact the extension of the Bush tax cuts, reduction in payroll tax and extension of unemployment benefits by 13 months, will have on the federal and state budgets. That being said, we believe the pressure to mitigate these large deficits in a challenging economic environment will put renewed focus on states implementing more job lay-offs, scaling back state services and possibly pension cuts. We believe that these actions will put additional pressure on employment and consumer spending, slowing the pace of the overall economic recovery. Further, states may also be propelled into bridging these gaps by legalizing gaming in oversaturated markets or higher taxes on gaming. Gaming is top of mind in Illinois, Louisiana, Florida, Massachusetts (now passed), Texas and New York, where gaming is being sought as a potential bridge to the rising budget deficit.
In early November, the Illinois House voted down a gaming expansion plan that would have added four new casinos, slot machines at the racetracks and increased the positions on existing riverboats. However, speaker Lou Lang recently stated that he hasn’t given up on the plan and may look to introduce an amended bill next year, more in accordance with Gov. Pat Quinn’s vision. In Louisiana, the gaming control board awarded the 15th gaming license to Creative Casinos LLC (in partnership with MGM Resorts International) to build and operate a casino in Lake Charles. The Mojito Pointe property, which will be branded under the MGM umbrella, will include 1,500 slot machines, 40 table games, 400 hotel rooms and other amenities, with an expected opening date set for mid-2013.
In Massachusetts, Gov. Deval Patrick signed legislation Nov. 22 that allows three stand-alone casinos and slots at one racetrack, licenses for which will be auctioned off at a starting price of $85 million for the stand-alone casinos and $25 million for the slot parlor. The casinos will pay approximately 25 percent in taxes to the state, while the slot parlor will pay 40 percent and an additional 9 percent to the horse racing industry.
In Texas, voices behind gaming have appeared and disappeared in the past, but with a staggering deficit of $9 billion in FY 2012, we believe the upcoming year will see a more critical look on gaming as a measure of bridging the budget deficit. There are many more examples of gaming expansion potentially underway at oversaturated markets. Overall, we see this as an added negative in the next few years as states start to compete for the same consumers’ discretionary dollars, without growing the market.
Internet Gaming
A key initiative that raised its head this year was the potential legalization of Internet gaming in the United States. At the state level, New Jersey was extremely close to becoming the first state to legalize Internet gaming (run by computer servers based in Atlantic City casinos) for residents residing in New Jersey only, but Gov. Chris Christie vetoed the bill, as he rejected the theory that by placing servers in Atlantic City, the bill would satisfy constitutional requirements.
At the federal level, there was an effort made by Nevada senator and Senate Majority Leader Harry Reid (D-Nev.) to add legalization of online poker to the proposed tax deal reached by President Obama and the Republican Party. After the failure of these initiatives, we do not see a renewed effort heading into the 2012 presidential year, especially given the Republican Party controls the House of Representatives. While online gaming may appear to be a large opportunity, we believe it is too early to estimate revenues generated from online gaming business and capital invested, given the lack of clarity with respect to rules and regulations, tax rate and whether passage is on a state or federal level. We believe that investment in this business will likely be dictated by the regulatory requirements and tax rates set by Washington or on a state-by-state basis (we believe this is more likely). Also the operators’ decision to enter this market may be based on whether there are entry barriers limiting current online gaming operators. However, this opportunity may not be limited to few operators, but companies currently operating online gaming could foray into the market as well by way of partnership or joint venture.
Frank Fantini
Publisher
Fantini’s Gaming Report
Perhaps more than any other time in recent memory, the outlook for gaming stocks heading into the new year will depend on general investor sentiment about the economy.
In part, that is a way of saying the industry has matured and is more likely to trend with other consumer discretionary stocks than ride its past waves of gaming expansion and mega resort development independent of the broader economy.
Quite simply, a state legalizing casinos is no longer enough to move the needle in today’s larger industry.
In addition, the industry has become more crowded. No longer is a new casino a slam dunk to generate huge revenues and transform penny stocks into mid-size entertainment companies.
Indeed, cannibalization has become a theme of gaming expansion. The calculus today is not just how much revenue and return a new casino can generate, but how much business it will take from competitors.
And what applies to individual properties applies to companies. Pinnacle Entertainment, for example, will benefit from its new casino in Baton Rouge, but how much will its Belterra Casino Resort Spa in southeast Indiana be hurt by the opening of Caesars-Rock Gaming’s new Cincinnati casino? Penn National will benefit from its two new Ohio casinos, but how much will Pinnacle’s Baton Rouge casino bite into its nearby Hollywood casino?
Even the international scene suggests growth will slow from the fevered pace of recent years.
Singapore is a gold mine for Las Vegas Sands and Genting, but now that it is open a more measured, ramping up can be expected.
Likewise, Macau growth should slow. And even if future projects drive growth, the law of big numbers says the rate of growth must slow. Put simply: If you have two casinos and build a third, you’ve increased your base by 50 percent. If you have five and build a sixth, you grow just 20 percent.
Still, it’s likely that 2012 will be a year of industry growth. Consider:
• Regional casinos. There will be more capacity as casinos open in Ohio, Maryland and elsewhere. The upshot should be bottom line growth for companies with expansion projects such as Isle of Capri, Penn National and Pinnacle.
• International casino operators will continue to ramp up, but a breakthrough in Japan or Korea or a similar nation legalizing mega resorts may be several years away. And even if some country takes the plunge, it’s another several years from approval to the day doors open.
• Suppliers will benefit from the new casinos, and from the trend of tax-hungry governments to legalize VLTs. Italy is already well on the way to adding 57,000 slot machines and maybe more. Greece looks like a 35,000-machine market. And Illinois should finally begin to roll out VLTs late in the year introducing the first of what should be tens of thousands, though whether that’s closer to 10,000 or 50,000 is the subject of debate.
Suppliers likewise are likely to see more replacement sales as North American slot floors age, though perhaps not the rapid rate of replacements long-expected.
A somewhat offsetting phenomenon is the growing number of competitors in North America as traditional rivals IGT, Bally, WMS and Aristocrat are met by increasingly aggressive smaller competitors—Konami Gaming Inc., Multimedia Games, Aruze, Incredible Technologies, AC Slots and American Gaming Systems among them.
• Table games—the revolution in bringing electronics to table games will continue in all of its aspects: e-tables, hybrids of electronic functions and live dealer, side bets, bonuses, progressives and the kinds of accounting and player tracking systems long familiar on slot machines.
• Internet gaming, sports betting—finally, there is the annual question of whether Congress or individual states will legalize Internet gaming and whether the federal ban on sports betting will fall.
Given that these are contentious political issues, the chances are purely speculative. If we have to make a bet, it’s that both are inevitable, progress will be made on both fronts, but the big decisions will not come until after the 2012 elections.
Bill Lerner
Principal
Union Gaming Group
Las Vegas is set to experience unprecedented occupancy and higher room rates.
The recent strength in YTD (2011) visitation (+ 5.5 percent), air lift (+4.4 percent) and taxi counts (+9.0 percent) at McCarran airport, when coupled with no supply growth in 2012, supports our notion that the Las Vegas Strip is on pace to experience unprecedented occupancy and higher room rates in 2013 and beyond, with 2012 representing a favorable bridge to that timeframe. Year-to-date 2011, visitation growth of 5.5 percent has exceeded historical gains and is pacing near-peak levels—we estimate 39.1 million Vegas visitors for full-year 2011. We assume a resumption of historical visitation growth resulting in record visitation in 2012 at 40.5 million visitors. Layering our visitation forecasts across the probable Las Vegas room base in 2012 tells a very positive story for the Strip corridor. We estimate 84.9 percent occupancy for full-year 2011 (vs. 80.4 percent in 2010), 88.1 percent in 2012 and forecast Las Vegas exceeding peak occupancy in 2013 at 91.1 percent.
Forecasting room pricing (ADRs) is much more difficult than forecasting supply, visitation and occupancy. However, we do have much greater confidence in the directional story. Year-to-date 2011, ADRs are $104.52, +10.7 percent on a 410bps increase in occupancy, and notably greater when including resort fees that most operators charge. Using a crude methodology of percentage change in ADR relative to percentage change in occupancy historically, we arrive at 8 percent ADR growth in each of 2012 and 2013. This translates to revenue per available room (RevPAR) of$99.91 in 2012 and $111.57 in 2013 vs. peak RevPAR of $119.43 in 2007.
What does this mean for casino operators in the Las Vegas Strip corridor? While Strip operators are in better financial shape than several years ago, the improvement in occupancy and ADR should accelerate recovery. Improved operating results, balance sheets and debt compliance will foster an improved customer experience, along with local growth and possible development in new markets for these companies. Assuming that the economic environment in 2012 is comparable to 2011, we believe public equity (stocks) and debt could improve accordingly for companies with significant Las Vegas exposure.
Jim Murren
Chairman and CEO
MGM Resorts International
I was certainly looking forward to turning the calendar page over and welcoming the new year, 2012. Now that we’re here, I believe that the worst of the recession is behind us, and that we have many new business opportunities with seemingly unlimited potential.
Yet because Nevada’s high unemployment and home foreclosure rates persist, the entire nation continues to watch our state very closely for signs of economic recovery.
As MGM Resorts is the dominant host on the Las Vegas Strip with some 40,000 hotel rooms, our company has a responsibility to lead the charge forward to a more successful future. We are doing that. While the economy slowly inches its way back toward health, MGM Resorts is building strength in hotel room occupancies and room rates. Our strategy for the new year is to continue to gain economic momentum.
MGM Resorts has built the foundation needed to benefit from an economic recovery. We’ve become ever more creative in the ways that we attract business. We are highly focused on initiatives such as M life, our customer loyalty program, to further enhance our offerings to our guests.
We realize the value and potential of every single guest, not just those who play at our tables and slot machines. Under the recently introduced new aspects of the M life, our guests can now earn points in our non-gaming venues such as restaurants and retail. This is a very exciting new development and I’m looking forward to seeing significant growth in guest participation this year.
In addition, we are committed to ongoing capital renovations, and several major hotel room renovation projects are well underway. In each, we are drawing from the learnings of the construction of CityCenter and incorporating environmental sustainability into our capital upgrade processes. Several new nightclubs have also just opened at our properties, including Hyde Lounge Bellagio, and 1OAK at The Mirage.
Bookings and current asking rates are up. In fact, the convention business on the Las Vegas Strip is particularly strong. The early fall of last year was one of our highest conventions booking production months ever. I think that this emphasizes the fact that our group business for 2012 and beyond remains quite robust.
The new year will also see more people across the globe become more familiar with the MGM Resorts brand names, as we continue to broaden our international horizons and work toward expanding our reach in such exotic places as Egypt, Vietnam, India and the Middle East.
Also on the international front, MGM Grand Macau saw very healthy growth during 2011, and the Macau landscape will continue to see very prosperous trends throughout this new year. My prediction is that the Macau market will likely double within the next six or seven years, because so many people, especially those living in Asia, have yet to visit this extraordinary destination.
Back here at home, as you know, the U.S. Congress is considering proposals that could lead to the legalization and regulation of online poker. We support this effort, as it clearly would safeguard consumers. In preparation for this potential legislation, we announced an agreement with bwin.party and with Boyd Gaming to jointly offer online poker in the United States. We feel that the technology has matured to a point where Internet poker can be appropriately regulated.
As is made obvious by all of this activity, we are not looking back and we are steadily moving forward.
My hope for people who enjoy traveling is that they will begin to feel more comfortable and secure about the economy, and ultimately more comfortable about traveling and taking longer vacations. Among the things we can do is to encourage thoughtful reforms to international travel visa that would add a potential of 1.3 million jobs in the next eight years, and restore the United States as an international travel destination.
We have together experienced some challenging times. Let’s resolve to make this the year we look ahead to growth by creating the environment in which people and businesses connect for leisure and business.
Anthony Sanfilippo
President and CEO
Pinnacle Entertainment Inc.
2011 was a successful year for Pinnacle and our team members from both an operational and financial perspective. Much of this success was driven by a company-wide commitment to foster a culture where team members can thrive, create memorable experiences for our guests, and leverage best practices that drive operational excellence. During the year, we also expanded our growth pipeline with two very promising projects. We are now entering 2012 with high expectations for another year of strong performance across our seven properties and looking forward to the planned summer opening of our newest property, L’Auberge Casino & Hotel Baton Rouge.
Cultivating an environment where every team member can succeed and grow is the foundation of our approach to creating memorable experiences for our guests. As such, we focus on offering appropriate training, support and tools to create a workplace where our team members can flourish and where there is trust, honesty, equality and integrity in all we do.
While the timing and pace of an economic recovery is unpredictable, we believe—with a high level of conviction—that as a result of our team members’ daily execution on strategies aimed at providing enhanced entertainment experiences for our guests, our properties will continue to be distinguished as destinations of choice for casino entertainment consumers in their respective markets.
Relaunched in 2011, our mychoice guest loyalty program was a standout success based on the many new and innovative benefits it offers our guests. We designed a unique set of rewards that ensure our guests always think of Pinnacle casinos as their preferred place to play, be entertained and enjoy quality food, beverage, hotel and resort offerings. Since its launch last April, the mychoice program has delivered on our goals of increasing play consolidation at our properties, attracting new in-market customers and generating continued yield improvements on our marketing spend.
In 2012, we anticipate that our mychoice program will again be a primary driver of our ability to deliver enhanced guest experiences and growth, particularly as we expect the rational marketing and promotional environment in our markets to continue in the year ahead.
Our goal is to deliver the highest quality gaming entertainment offerings in our markets, and as such, we will continue to reinvest in our properties to provide valued guest experiences that consider specific market needs. For example, over the last year we rebranded restaurants at several properties, added a new poker room and beach entertainment area at L’Auberge Lake Charles, relocated the poker and high-limit rooms at River City, and fine-tuned the mix of slot machines at our properties to address guest preferences. This approach will continue in 2012 as we have planned a range of enhancements across our portfolio to ensure that our casino properties remain the entertainment destinations of choice in our markets.
Pinnacle will also make meaningful progress with several new development and casino expansion projects in 2012. Most immediate will be the summer opening of L’Auberge Casino & Hotel Baton Rouge. The property features a 206-guestroom hotel, covered parking garage, 1,450 slot machines, 50 table games and seven poker tables in the casino, a multi-purpose event center and unique dining and entertainment venues overlooking the river. Given the project’s scope, attractive location and high-quality amenities, I am confident that this facility will become the premier gaming entertainment option in the city and prove equally attractive to potential guests across a wider region.
Throughout 2012, we will further our progress on other growth projects that will provide benefits in 2013 and beyond. At River City, we’ll begin a property enhancement project that will add a 200-room hotel, 1,700-space covered parking structure and 10,000-square-foot multi-purpose event center that will extend the property’s market-distinct guest amenities and entertainment offerings. And, we’re hopeful that at some point in 2012 we’ll be in position to move forward with the redevelopment of River Downs Racetrack in Cincinnati into a premier racing and gaming entertainment destination with up to 2,500 video lottery terminals.
The year ahead will also bring substantial development of a project that will mark Pinnacle’s entry into the Southeast Asian gaming market through our investment in Asian Coast Development (Canada) Ltd. (ACDL). ACDL is the owner and developer of the Ho Tram Strip beachfront complex of destination integrated resorts and residential developments located approximately 80 miles southeast of Ho Chi Minh City in southern Vietnam. The Southeast Asian gaming market, and the Ho Tram Strip project in particular, are very attractive opportunities and we’re excited to be establishing a foothold in this fast-growing region.
There are no shortages of opportunities for Pinnacle over the next 12 months to make meaningful progress against our goal of being the best casino entertainment company in the world. To achieve this, we’ll continue to focus on running our own race, remain committed to creating a workplace where our team members can flourish and offer our guests experiences that are memorable and unique. I’m looking forward to 2012 being another year of progress and prosperity for our company.
Glenn Wichinsky
President and General Counsel
Cole Kepro International
We began positioning ourselves for global market expansion during the depth of the recession period. Our business philosophy is that when the market is soft, that is when you need to fully gear up your marketing efforts so that you may be in a prime position to meet the needs and demands of an expanded marketplace once the economy begins to stabilize. Now that the global economy is slowly improving, we are taking advantage of our efforts and increasing our visibility and product deployment domestically and in Europe, Asia and Latin America. We will be exhibiting our products this year at SAGSE in Buenos Aires, the ICE Expo in London and at G2E Asia in Macau, in addition to the major domestic gaming exhibitions in the United States.
We are designing and manufacturing new and modern products that will complement and expand our existing product line. With design, fabrication and assembly facilities in the United States and Asia, we are able to meet the global and strategic needs of our customers worldwide.
We anticipate a growing market segment for our product in the global marketplace. We are experiencing greater visibility in the global gaming markets based upon the quality of our products, competitive pricing, new and modern cabinet designs and the diligent and reliable support provided by the dedicated Cole Kepro International team.
Internet gaming will enhance and greatly supplement gaming revenues, but there will still be a great need and desire for expansion of traditional casino gaming venues. As a hardware fabricator, we are here for our customers to meet any hardware design or fabrication requirements that they may require in entering any market sector.
Many of our customers are taking advantage of high-definition graphics, and we make certain that we are offering the latest technology that is available. Additionally, the audio experience that a player seeks when playing a gaming device is becoming more important to that player than ever before. To address this player expectation, we have widened our variety of sound systems to meet every need of our customers.
Our company has transformed from a private family business to a global corporation in 2012, comprised of domestic and international partners, which continues to provide quality product in an expanded global marketplace. Although the organization has realized some positive growing pains that come with any business and organizational expansion, Cole Kepro maintains its industry recognized commitment to its customers to provide for the quality and reliability of our manufactured products, and dependability for the diligent product support and service provided by the management, staff and employees of our company.
Sim Bielak
VP of Sales & Business Development, Global Casino Gaming
Crane Payment Solutions
The first half of this year was looking fairly positive, while more recently with the concerns over the European debt and the U.S. economy, I think that has had some effect on some people’s planned expenditures in the second half of the year here.
Hopefully we’ll see some improved stabilization in the economy as we move into 2012.
That being said, we do see growth in different geographical regions. In the U.S. we’re going to continue to see different states legalizing gaming to offset some of the tax shortfalls. We’re seeing that in Massachusetts and a few other states that are looking to change the regulations to expand the casino allocation.
Globally we’re looking in marketplaces like Latin America, which remains a strong market, and South Africa, where the market remains fairly stable. As we look at the APAC region, there’s growth in Macau and the Asian region. There are several projects underway that I think will continue to facilitate the growth of the Asian region.
From a company standpoint, we’re feeling good about where we are. We acquired Money Controls in December 2010, and we’ve fully integrated Money Controls into the Crane Payment Solutions business. It’s had a significant impact on our ability to provide our customers with a much more significant product range and excellent service support within their local region.
As we look into 2012, we’re really leading in the marketplace, mainly with our CashCode one™ bill validator, along with our product extension such as our oneCheck™, which was developed with input from many operators. It allows operators to not only have a cash management system, but also a performance management system for both the printer and the bill validator on the floor. It also produces performance reports, and a player dispute report that allows them to identify the last five bills or tickets that had been inserted into the slot machine.
The integration and functionality of oneCheck is now supported by all leading printer manufacturers including FutureLogic and TransAct, which we are pretty excited about.
We feel like we have a strong product offering, with some good differentiators such as the oneCheck system, which gives operators all of that functionality at no additional cost. It helps to drive that efficiency that is going to remain a reality as we move forward over the years. I think the operators are going to continue to see how they can drive a more efficient floor in terms of how they’re operating the slots to ensure they are maximizing their revenues.
From an Internet gaming standpoint, I think the reality is that it exists today to an extent. The government is looking to potentially approve and regulate it, but I don’t believe that that’s going to have a significant impact on brick-and-mortar operations. It’s a different clientele base, and if you look at different areas in the industry where they try to stop or prevent gaming, our experience tells us that the best thing to do is to regulate and tax it. I think then it can very successfully co-exist with the current brick-and-mortar casinos.
Nick Micalizzi
VP of Sales and Marketing, North America
FutureLogic Inc.
2011 has proven to be a year of growth for FutureLogic, helping us solidify our position as being a gaming-based technology company. Two innovative technologies that exemplify our forward-looking approach are the GEN3 Evolution® printer and our PromoNet® promotional couponing solution.
We see promotional couponing as the next major evolution in gaming. With this in mind, the GEN3 Evolution printer was developed to be the first gaming printer equipped with integrated yet separate processing environments for TITO and promotional couponing. With the use of this integrated PromoNet Adapter approach, the GEN3 Evolution printer is the only gaming printer to offer true grayscale printing, enabling operators to issue eye-catching, photographic-quality coupons from any electronic game or slot machine.This advanced peripheral doubles the print speed and offers more than twice the ticket storage capacity of other gaming printers. With a standard capacity of 450 tickets, the GEN3 Evolution printer can save operators up to 30 refills per printer, per year, and its print speed of eight inches per second allows it to deliver a ticket in less than one second.
In 2011, we were excited to see our PromoNet solution gain acceptance in the gaming industry. This couponing solution has been evaluated and approved by the Nevada Gaming Control Board, GLI and BMM, and has recently been installed in two Las Vegas casinos—South Point and Casino MonteLago. Our customers are finding that the PromoNet solution overcomes an obstacle that has always confronted casino operators: identifying their most valuable players—including anonymous “non-carded” players. With its unique ability to link game-play metrics and slot promotions directly to player behavior, the PromoNet solution enables casinos to boost player club sign-up, extend game play and increase slot revenues. The PromoNet solution can be installed as a closed-loop, stand-alone issuance and redemption system, and can be used across the casino floor at slots, registration desks, restaurants, shops, shows, hotels and other venues. Alternatively, the PromoNet solution can be used as an integrated solution with other system applications and to print W2G tax forms.
In 2011, we expanded FutureLogic’s worldwide presence with new sales support in Australia, Latin America and in the Eastern European and CIS markets and enhanced our industry presence by launching a Facebook page.
Over the past year, many casinos have selected our GEN2 Universal™ printer as their printer of choice. The GEN2 Universal printer is one of the industry’s most decorated printers, winning 13 technology awards since 2003. Other recent product introductions range from the CouponXpress® cash desk solution for ticket purchase and redemption, to the TableXchange® printer/scanner, which connects table games to a casino’s existing TITO network by scanning and printing TITO vouchers.
Since we first entered the TITO gaming printer market in 1999, FutureLogic Inc. has developed many of the TITO features and functions that have become today’s industry standards. We regularly conduct numerous studies around player behavior, looking for ways to enhance the gaming experience and increase our value to our customers, and our reputation for world class technical support and customer service gives us an important advantage in a very competitive industry.
Today, FutureLogic has shipped more than 1.5 million TITO printers worldwide. We’re confident that 2012 offers significant opportunities as we focus on providing future-proof solutions that our customers need to compete in this challenging economy.
Damien Connelly
Marketing Manager
Gaming Support
“May you live in interesting times”—a most appropriate phrase for what we’re witnessing in our global industry, and what we will witness during 2012 and beyond.
The trends I’ll broadly comment on below are not so much short term as term-assured. The major question for most of these trends, especially in North American and European markets, includes: When will the assured term end? Will it be 2012? Will it be 2015? Or maybe sometime in the next decade? Just imagine what our global market would look like in 2020 if the current situation were to remain unchanged for the next nine years! Brrr … just thinking about that gives me goosebumps. And within that 2020 vision, what would be the then-market conditions facing each company in each region?
For periods of time since about 2002, we’ve been witnessing the following: unbalanced market growth in each region around the world, which affects both positively and negatively the levels of investment within each state/country in that region; asynchronous economies and markets whose circumstances range from deflation, stagflation, inflation, through “business as usual,” to buoyant and even rampant growth; freer and wider competition that is affecting operators’ traditional business models; an inexorable move toward channel neutrality—the “Martini Effect;” growing pressure on the big suppliers as the “old guard” heavyweights see their nimbler competitors cherry-pick more and more of what used to be “their bread and butter” business; a shortening of the product life cycle leading to more varied and exciting new product development—with the associated greater tendency to take risks in the future than is apparent in today’s average casino/table/slot managers (who, in my opinion, are surprisingly conservative); increasing limitations on operators’ capital expenditure in certain markets that will constrain the rate of innovation, investment and growth for operators in those markets—with the knock-on effect such operator capital expenditure weakness has on their associated suppliers; more and more focus on service marketing and less on product marketing, as it’s the touchy-feely soft side of service that allows for effective brand and property differentiation versus the more clearly defined, harder product side that is increasingly commoditized (“My casino has Sex and the City, your casino has Sex and the City … so what?”); and consumers (gambling and non-gambling) who have to be much more selective regarding where and how they dispose of their income—they will be continually demanding ever more forever less equal, today’s focus on “entertain me” has to be broadened (vertically and horizontally) for those operators and suppliers who will be successful in tomorrow’s world.
Looking to 2012 and beyond, I see hugely exciting and challenging opportunities. Will there be tough periods that need to be overcome? Absolutely. Will there be periods of relative stability? Of course. Will we see “hot streak” periods? Now and again. Just the same as gambling consumers all over the world on occasions lose, on other occasions come out even, and sometimes win, so too will our industry experience the same lose-draw-win outcomes—the same balanced outcomes.
Turning to balanced outcomes—is it just me, or are we hearing so much negative news time after time after time that such a constant barrage of negativity endangers our speed of commercial recovery? It’s known, but not yet in everyday practice, that a well-designed and fun environment during your post-operative hospital stay will speed up your recovery time—it’s even been on Oprah, so it must be gospel, right? Too much of what we’re hearing is negative—with some good justification, it has to be said. I think we, in the gambling industry, should be counter-balancing the apparently pervasive “Misery Index” with our own “Funtertainment Index®.” That would get the attention of the bean counters in the likes of Wall Street, The City and Pudong—maybe even simultaneously improve the reputation of our industry!
Another really interesting question—to me at least—that I could forecast is who will be the winners and losers in each market on both the operator and supplier sides. One point of detail I will forecast as an absolute certainty—M&A activity will significantly increase. If you’ve got the cash and/or can leverage your assets to get more money, buying volume and value share in a depressed market is low hanging fruit to gain long-term market power/supremacy.
The final point that I should mention—these are my own personal opinions and are not to be construed as the official views of Gaming Support or its management and directors. If I’m wrong, you can shout at me. And if I’m right, you can buy me a bottle of single malt whisky!
Bob Yabroff and Sue Yabroff
Chair Man and “The Big Boss”
Gary Platt Manufacturing
Technology will have a great impact on Gary Platt Manufacturing in the coming year. New games from Aristocrat, Bally, IGT and SPIELO feature interactive chairs created by Gary Platt.
Since the G2E show in October, we have had great interest from other slot machine manufacturers asking for their own custom interactive chairs.
We believe that in the years to come, the interactive chair will dominate casino floors. They sing, they shake, and, according to many, they rock. We are the vendor of choice for the interactive chair, which is great for our business. These chairs are going to be excellent for our customers. They’re going to be comfortable, their sound is great, and I think the customers will be getting an exciting experience. By collaborating with the slot manufacturers, the comfort and quality of the interactive chairs outdo any seating designed for the gaming industry in the last 20 years. When they have a need, the manufacturers come to us. We work together in a satisfying collaboration.
Our business for more traditional chairs has also remained solid. The first-ever model with arms is now available at the request of customers. The Designer Series also remains a strong seller. The Vue, Empire, Truckee, Bleu and the Regal are designer driven chairs. They bring an edgy, sleek look to the casino floor. The Ohio Royale has been upgraded to be included in the X-Tended Play line. X-Tended Play chairs are designed to maximize time on device through features including molded high-density foam, ergonomic lumbar support, waterfall seat design and steel spring back support.
We are enthused and extremely optimistic for the coming year. 2012 looks positive internationally for Gary Platt Manufacturing. We have shipped the first order of chairs to the Marina Bay Sands Casino in Singapore and this will open other opportunities in the Asian market.
During 2011, Skip Davis was promoted to president of Gary Platt Manufacturing after being with the company for 7.624 years. Davis has put in new initiatives that will help Gary Platt moved forward aggressively in the years to come. One of the initiatives is adding sales representatives in new jurisdictions, so we will be actively involved in several new jurisdictions in 2012. We will also be revamping our advertising campaign and website to give it a fresh new look.
We predict that the future will fly by the seat of the interactive chairs. Interactive chairs were a huge part of 2011 and we think it will be more of the same for the year 2012.
Mark Gasser
President
Gasser Chair Co.
There’s no question that the overall downturn in casino gaming affected our sales volume. However, I’m a big believer in this industry, and we envision a stronger recovery in 2012. And we’ll be prepared since we intend to solidify our position as the leader of seating solutions through proactive, sound business practices such as investing in ourselves during this economic downturn.
We will continue dazzling existing and potential clients!
By strengthening our existing relationships by continuing to listen to our customers and providing solutions to their problems, in good times and bad, we’ll stay a leader in the seating manufacturing industry. For example, many casinos were opting to make do with their 5-to-7-year-old gaming furniture on the floor. Our answer was the Proven Solutions program, a selection of seating products acquired by Gasser Chair Co. from satisfied repeat customers, which are factory re-manufactured in a “frame off” restoration process to our high quality standards. The result is a product that looks and performs as new! We have the technology and expertise to not only repurpose the product back into the mainstream, but we are also able to offer a Gasser quality product at a savings of 20 to 30 percent or more.
We’re also positioning ourselves to take advantage of new markets by investing in a new brand and award-winning advertising campaign. One disadvantage to having been in this business 65 years is that many customers take for granted that they know all about our product and capabilities. The campaign is very much in its infancy but has already served us well. While some companies get quiet during a downturn, we’ve come out screaming to capture the attention of the veterans in the industry and those who may not be as familiar with Gasser and know very little about our products and capabilities. To date, the campaign has been successful in introducing several new products and garnering qualified favorable responses at trade shows.
We look forward to being able to provide these same high-quality products to our new customers and exceed their expectations. One of the new ways we surpass expectations is through the use of our new in-house powder coating station that not only offers an impressive array of colors, but more importantly, gives us the ability to strictly enforce quality control standards and achieve greater efficiencies with the manufacturing process.
When looking at new opportunities for 2012, we have slowly been surrounded by expanding casino gaming in other areas such as Indiana, West Virginia, Pennsylvania, New York, Ontario and Illinois. Our home state of Ohio has licensed its first casinos and expects the properties to begin opening in 2012. You can bet we’re going after that business and hope to forge some new partnerships while strengthening existing ones in the surrounding areas.
Moving forward, we anticipate several new partnerships and product introductions as well as some new patents. It is an exciting time to be a part of this vibrant and growing industry. We believe the time is right for a major reinvestment in our business because of optimistic and positive developments in the gaming industry. Whether it’s technology, engineering, education or advertising, our investments are a statement about our confidence in the business and about being a true leader for seating solutions for the gaming industry. Customers can absolutely expect to hear more from Gasser Chair Co. in 2012.
Tom Nieman
VP of Marketing
JCM Global
In this forecast last year, we announced a strategic technology partnership with IGT, and that IGT had named our award-winning iVIZION® its default product in all of its devices, globally. Now if 2012 is anything close to what 2011 was for JCM Global, we can expect a terrific year. We were extremely fortunate in 2011 to ride a near unprecedented wave of success. Our iVIZION won every RFP it competed for and won exclusive installations at new openings and won replacement installations.
Our single largest installation is at Resorts World New York at Aqueduct, where both our bill validators and our award-winning PayCheck 4® printer were highly tested with tremendous volume. We congratulate Genting on absolutely exceeding their expectations, bringing in more than $14 million in just 10 days, and we are proud to say our bill validators and printers met the challenge with winning results.
Several corporate-wide deals were signed for iVIZION, and operators of all sizes learned that iVIZION is truly the most advanced product on the market.
As we look to 2012, we see nothing but opportunity as an aging population of WBAs moves toward their natural end-of-life, and as iVIZION continues to gain momentum and a proven track record of success that is unsurpassed.
2012 will also mark the official launch of our new iPRO® bill validator. iPRO is a new secure and flexible way to increased profitability because it comes with one of the most sophisticated sensing and anti-fishing packages we have ever created. iPRO’s modular design means it can quickly and easily replace an existing WBA or UBA head. We anticipate the iPRO will be very well received across Europe, where it will make its official debut at ICE, and in Latin America because of its superior software upgrades that enable it to quickly adapt to the region’s varying currencies.
We are also excited about the potential for near-field-communication (NFC) technology that we are developing with our partner TechFirm. At G2E 2011, we showed a preview of the NFC technology in our Mobile Wager Wallet™, where a player can transfer credits from his/her NFC-enabled smartphone directly to the gaming device. Then, credits can be transferred directly back to the smartphone—quickly, easily, securely. We were thrilled with the tremendous response we received from operators, suppliers, regulators and members of the press from around the world. We can forecast continuing development in this exciting arena throughout 2012, and we will update you as progress is made.
We are also forecasting continuing development on our joint venture with Leap Forward Gaming, whose SaffariNet® project is one of the most exciting innovations being developed in the industry today. It has gained the full attention of both OEM and casino operator alike.
In every jurisdiction where JCM Global operates, we see incredible opportunity ahead, and we are ever grateful to the operators and suppliers who continue to trust JCM and our products to keep their floors safe and protected against cheats and thieves.
From all of us at JCM Global, our best wishes for a very happy new year.
Tom Nugent
Gaming & Retail President
MEI
The new norm—that’s a phrase that scares a lot of us. Is it possible the demand that is being created from the gaming industry in 2011 is what we can come to expect in the future? Will we refer to the past as the glory days?
As we begin to look at 2012, we have to grapple with these difficult questions. The macro-economic factors that drive demand will be assessed by other contributors. We can debate the impact of technology in creating demand. And, surely, projected growth in the Philippines and other Asian opportunities, new U.S. jurisdictions, potential opportunities in Greece, continued growth in Panama and Chile and the expansions of VLT networks provide reason for optimism.
Personally, I think the better question is: What we can we do, as industry drivers, to ensure we look forward by creating products and services that improve operators’ profitability and the gaming experience for consumers?
Although 2012 brings many uncertainties, MEI promises to deliver products and services that continue to redefine the role of automated payment systems in the industry. Our products have shown the value of a note validator by proving the importance of its three main purposes: to accept, to validate and to secure notes. Focusing on the basics provides clarity.
And in these times of uncertainty, clarity is a worthy pursuit. Next year will mark the introduction of SC Advance, MEI’s next generation note acceptor. This is an evolution. We have applied new technology and market knowledge to make a great product even better. And, in doing so, we have rewarded past investment in MEI products. Enhancements to SC Advance are localized to the acceptor head allowing it to work hand-in-hand with legacy CASHFLOW SC units already in the field. Existing MEI products will still yield tremendous returns, and future investments leverage new technology to highlight our expertise and market knowledge.
I think that is a worthy ambition for all of us. The application of what we know—what has made our industry great—will serve us well in the future. That would be true if demand were to return to previous levels or if this truly is the new norm.
Investment decisions should be based on the long-term value a product or service can provide. We are seemingly in a dangerous time when financial pressures are inducing others to consider only the present—proposing incentive-laden deals that may be attractive in the short term, but sidetrack us from creating value that is sustainable over the long haul.
MEI remains steadfast in its commitment to compete on the value we provide. SC Advance is an example of progress, as was EASITRAX Soft Count, which is creating newfound efficiencies in cash management and maintenance practices in the 70,000 games it is utilized worldwide since being introduced merely three years ago.
We believe in the future of gaming. MEI’s ever expanding portfolio of products is the result of investing about 10 percent of annual revenue in R&D. That, in our opinion, is a much better use of capital than incentives to win the next big contract.
This is an industry that has used technology as a vehicle for progress. And, in doing so, has created demand from sophisticated audience that understands how to best serve its customer base. Are current levels the new norm? Maybe it is. But my faith in our industry’s ability to move forward leaves me confident that there is plenty of growth for innovators that continue to add value.
Growing revenues, and the resulting uptick in investment for new equipment, that occurred in 2011 is a positive sign. Expansion in Asia, new jurisdictional openings and available capital to drive reinvestment are all reasons for optimism. While we all strive for a return to the demand in 2006-2007, it is important we compete with an eye toward the future as opposed to living on in the current or longing for the days of old.
Tom Mitchell
Managing Director of Special Projects
Slot-Tickets
Slot-Tickets™ Worldwide is the global technology leader supplying ticket-in/ticket-out cashout tickets to a growing gaming market place.
Slot-Tickets is the original first manufacturer of what was originally marketed as EZ-Pay by IGT. Today, ticket-in/ticket-out, or as the majority of the world identifies it, TITO, is the dominate currency handling/cashout technology.
Over almost 12 years of TITO, several new technologies have come and gone, but tickets have held steadfast as the most cost-effective, customer acceptance method of play. We have introduced card-based methods as alternatives, but all have failed, primarily due to the simplicity of tickets and its have become universally accepted across all nations and gaming manufacturers.
The coming year is expected to remain soft with moderate growth in tickets sales. While some growth is expected, the continuing world economic slow down has delayed new gaming property openings and reduced play. Macau remains strong, but is very dependent upon governmental mainland visas.
Across all of Asia and Australia, we do see ticket growth as more machines are moving from simple ticket out to TITO. South America has remained in a slow growth for some time as well as southern Africa.
The Caribbean and Bahamas have remained strong with little recession effect on ticket consumption. But the cruise ship usage is markedly down.
Growth in Italy has, in particular, added to the European ticket consumption and there is continued growth in varied widely scattered western EU properties.
Tickets do not always follow published gaming win-loss numbers because the ticket is value independent. In many cases, we have seen gaming revenues drop, but ticket usage increased as players gamble with smaller actual cash but are prone to more frequent cashout activity.
Online gaming will have a minimal effect on ticket consumption simply because online games are notably table games and do not affect slot play. While online may, in some instances, reduce head count at some properties, that online gaming person does not avidly pay slots at a casino.
The new technologies for 2012 may be the renewed interest in promotional ticketing. With new and improved systems, promotional ticketing will add modestly to total annual ticket sales.
Our new Pull2Win ticket concept shown at G2E in Las Vegas has gained traction internationally through our exclusive partner, Eurocoin, in London. This product has a novel method to print on-demand individualized hidden messages or instantly redeemable prizes. In the U.S., the concept is utilized as a gaming tab commonly known as a pull tab or jar tab.
We are always on the lookout for that next, next new thing that may enhance our product line and we are always ready, willing and able to work with gaming designers.
Tracey Chernay
Executive Vice President, Sales and Marketing
TransAct Technologies Inc.
2012 will be a year of expanding domestic and global market opportunities for TransAct Technologies, and we are positioned to maximize the revenue growth potential that these market opportunities represent. Whether it is Southeast Asia, Europe, Latin America, Canada, Illinois or Ohio, TransAct has readied the company, our sales force, and our partners to be able to respond.
In domestic markets, we see solid new casino opening and expansion opportunities. We have strengthened our position in the domestic markets by signing exclusive agreements with multiple major casino property operators in 2011 that will deliver 2012 results as those groups either open new properties or expand existing properties. Additionally, we have expanded domestic coverage with a strategic mix of an expanded direct sales force and distribution sales partners.
Internationally, we have continued on our commitment to grow locally while operating globally. Our Latin American team has significantly increased presence and penetration of the Epic 950 into key Latin American TITO markets of Peru, Argentina, Chile and Panama. Additionally, they have been successful in expanding our Latin American distribution capabilities as well as educating the Latin American market about the benefits of the Epicentral™ Print System.
In Southeast Asia, with our most recent win at Galaxy Casino in Macau, we continue to grow the install base of the Epic 950 and to maintain our No. 1 market share position in Macau. Our sales team’s direct presence in Macau is enhanced by our distribution partner Transcity Asia, and both Transcity as well as our direct sales staff led by Rash Suliman continue to be active all over the Asian markets.
Europe continues to be a bright spot for TransAct where, along with our partner Eurocoin, we have been highly successful with the family of Epic printers in casino, VLT and sports-betting markets. We expect to see continued revenues from the Italian VLT market and from new European markets in 2012.
The Epicentral Print System is driving a high degree of consideration, interest and commitment from casinos in all TransAct’s markets. Epicentral allows casinos to create promotional coupons, marketing messages and other player communications and to print them in real time at the gaming device. This elegant, simple and intuitive system enables the casino team to internally develop marketing programs and promotional coupons that print at the slot to drive targeted “on property” player behavior.
Based on the feedback from casino operators around the world, Epicentral is proving to be a major factor in driving our business in 2012 and beyond. Many casino operators are choosing the TransAct Epic 950 today in order to “get ready” for Epicentral. The Epic 950’s flexibility to upgrade and its proven reliability continue to make it the leading TITO printer solution worldwide.
At G2E 2011, we launched several new modules of Epicentral that further enable Epicentral to drive casino revenue growth: Campaign Center including Scheduler, Mobile Host, and Mobile Player. Each of these new modules builds on the Epicentral value proposition—to grow the personalized relationship to the player through direct communication at the game.
As this goes to press, we are working with our next Epicentral installation to create a big splash in their market with the go-live of Epicentral in their casino in early 2012. We’ll be excited to report the real-time results along with our customer as they realize the benefits of Epicentral’s unique capabilities to drive action with their players.
Carol Goodman
Mayor of Las Vegas
Las Vegas continues to capture the world’s imagination as the city where anything is possible. With world-class hotels, five-star restaurants, luxurious spas, fantastic shopping, the finest golf courses and spectacular entertainment, Las Vegas remains one of the most popular destinations in the world.
Las Vegas is also the best place in the world to conduct business, a location in which all the convention space, facilities and technology for a successful business meeting may be held. Las Vegas annually hosts approximately 18,000 meetings, attracts 4.5 million business travelers and draws 40 million visitors a year.
Of course, the economic downturn has had an impact on the city, but Las Vegas is ever-resilient and always reinventing itself. If you are looking for the energy that Las Vegas is famous for on the Las Vegas Strip, it can also be found downtown.
The 18B Arts District and the Fremont East Entertainment District are two areas in which we have seen extraordinary progress and where this new urban energy is building. That energy and excitement can also be felt across the railroad tracks in Symphony Park with the Cleveland Clinic Lou Ruvo Center for Brain Health. In 2012, some truly incredible projects are being readied to launch.
The Mob Museum, the new city hall, the Smith Center for the Performing Arts, the new and expanded Discovery Children’s Museum and the Neon Museum will all be opening their doors in 2012. These are all game-changing projects that are really going to push the city and its core toward a new level.
The vision of the new urban core, along with the work that the city has put into the downtown renaissance, is something that the casino industry has recognized and adopted. We are seeing renovation projects and new life being pumped into the classic downtown hotel-casinos. The El Cortez, the Plaza, the Golden Gate, the Gold Spike, the Golden Nugget, Fitzgerald’s, the Downtown Grand and the Four Queens are just some of the properties that have expanded, remodeled or are planning renovations.
When new attractions like the Smith Center, Mob Museum, Neon Museum and Children’s Museum open in 2012, it will only improve business at our casino properties.
The Smith Center for the Performing Arts is a grand building that will host the world’s greatest performances and cultural experiences. It anchors the city’s Symphony Park development that also includes the Cleveland Clinic Lou Ruvo Center for Brain Health, located in a stunning Frank Gehry-designed structure.
The Mob Museum is going to be a historical journey that traces the story of America and organized crime through to its heyday in Las Vegas and beyond. It will tell the stories of mobsters and the law enforcement agents who brought them to justice as designed by a team of experts who were responsible for the Rock and Roll Hall of Fame in Cleveland, Ohio, and the International Spy Museum in Washington, D.C.
The Neon Museum is already a hit around the world and has not even officially opened its doors. The museum celebrates Las Vegas’ native art form of neon and is the home of the Boneyard, where the city’s famous, vintage neon signs are on display.
The new Discovery Children’s Museum will be located at the Donald W. Reynolds Discovery Center, adjacent to the Smith Center. The new museum will expand to three stories and 58,000 square feet, and will feature nine new interactive exhibition galleries.
This is a very exciting time in the city of Las Vegas, and having projects of this magnitude opening is something that the private sector and visitors can’t help but notice. I am confident that we will soon see more major investments in downtown Las Vegas.
One of the private sector businesses that is already ahead of the game is Zappos.com. Zappos will be moving its headquarters into downtown Las Vegas next year, taking up residence in the city’s former city hall building.
Zappos is already bringing its employees and creativity to our downtown, and that is only going to grow once their headquarters is here. You can already see their imprint on many of the new ideas and expansion to Fremont East and the popular First Friday event. They are the first, but they will not be the last, to contribute to the renaissance.
So, while 2012 is going to be an exciting year where we will see some of these dream projects start to come to fruition, it is also really just the beginning of what downtown Las Vegas is going to become.
Honorable Lorenzo T. Langford
Mayor of Atlantic City
In 2012, Atlantic City will continue to face many challenges. The proliferation of gaming in nearby jurisdictions, as well as a sluggish national economy, contribute to a shrinking bottom line for Atlantic City’s casino industry. Casino operators are faced with having to step up marketing efforts and work harder to attract more patrons and provide a unique entertainment experience for visitors.
The realization that Atlantic City must reinvent and promote itself as a destination resort is strategically happening on many levels. The city is in the process of being re-branded. Casino operators, government and the business community are all working together. We understand the necessity of collectively marketing Atlantic City as a unique, urban marketplace with more to offer than gaming. We’re all committed to providing visitors with an enjoyable entertainment experience.
Currently, Atlantic City is being transformed. The spring of 2012 will mark the grand opening of Revel, a $2.5 billion casino hotel resort. Located on the Boardwalk next to Showboat, Revel is building a “destination”—the largest lifestyle resort on the eastern seaboard. The 20-acre, 6.3 million-square-foot resort will open with 1,090 hotel rooms, 12 restaurants with world-class chefs, 40 retail shops, a 31,500-square-foot spa and two theaters, a 5,000-seat amphitheater and a 450-seat theatre concept, an indoor/outdoor lobby that embraces the ocean, and multiple clubs and bars. Revel will employ 5,500 people. I recently had the opportunity to tour the Revel project with a delegation from China, and I was thoroughly impressed. With Revel’s opening, the Atlantic City market will shift to a younger demographic, an untapped market of more than 40 million people who live within a four-hour drive of Atlantic City.
Furthermore, Hard Rock has applied for permits to develop a boutique casino property in Atlantic City, part of which would be built on the beach. Golden Nugget purchased the former Trump Marina and is currently investing $150 million to upgrade the facility. ACH, (formerly Atlantic City Hilton), plans to rebrand their property this year. Tanger Outlets, one of the nation’s leading shopping mall operators, recently completed its purchase of The Walk, Atlantic City’s highly successful shopping outlet. Tanger Outlets’ significant investment combined with their commitment, expertise and financial capacity will positively impact Atlantic City’s future.
The City of Atlantic City continues to showcase major events. In 2011, Atlantic City hosted the Dave Mathews Band Caravan at Bader Field, a 142-acre parcel of land owned by the city. More than 75,000 people attended the three-day concert, which received rave reviews. With several inquiries from major national and international promoters, 2012 promises to bring more top name entertainment to Atlantic City.
Additionally, the Atlantic City Alliance was recently formed in agreement with the state of New Jersey to provide $30 million annually to promote the city that’s “always turned on!” This boost will increase our marketing efforts and allow us to target different audiences and gain market share.
Indeed, Atlantic City is open for business. And we believe in the old adage, “If you build it, they will come.” As such, given what’s on the horizon, I believe 2012 will be a very good year for Atlantic City … and personally, I am excited and energized!
Brian Sandoval
Governor of Nevada
There can be no doubt that Nevada has a long history of leadership in gaming. In fact, in Nevada’s early frontier days, gambling—as it was then more commonly known—was an unregulated and sometimes unruly enterprise. Ironically, participating in any game of chance was initially prohibited when Nevada became a state.
But that all changed in 1931. Eighty years ago, Gov. Fred Balzar signed the law legalizing gaming. Nevada led the way in legitimizing what had once been regarded as a largely criminal activity. Even so, in the first phase of gaming history in the Silver State, Nevada provided only limited regulation of the industry. Licensure was a local—not state—concern.
This began to change at the end of World War II, as Las Vegas grew and pioneered the first hotel-casinos, giving birth to the idea of a state license.
The second phase of gaming regulation really began in the 1950s with the advent of first, the gaming control board and second, the gaming commission. When Gov. Grant Sawyer perfected the initial framework established by Gov. Charles Russell, gaming regulation, as we know it, came to be. Once again, Nevada led the nation in ensuring that criminal activity would not tarnish the reputation of our state, or the concept of entertainment through games of chance. Our leadership in this area has continued to be central to our success as a state—and it has shaped the modern industry.
By 1967, Nevada opened the door to corporate gaming and the modern era of gaming arrived. The explosion of gaming entertainment in the last 40 years cemented Nevada’s position as the gold standard in gaming.
Passing through these three phases of regulatory history, we’ve arrived at today’s gaming environment. Nevada derives hundreds of millions of dollars each year from gaming taxes. Tourism and entertainment, sponsored by world-class gaming companies, provide jobs to tens of thousands of Nevadans. In addition, our construction industry boomed as gaming grew and created the remarkable infrastructure of the Las Vegas Strip. Our economy and community well-being are now forever linked to this critical industry.
So where does that leave us today? As Nevada adjusts to the challenges of the new economic reality, we face the dawn of perhaps a fourth era in the history of gaming.
I have long believed that Internet poker will, among the many technological advances sure to arrive in the coming years, be the most profound. It is this belief that led me to hold the first hearings on Internet gaming in 2001, when I served as chairman of the gaming commission. And it is why, with great anticipation, I signed Assembly Bill 258 during the last legislative session. The bill calls upon the commission to adopt regulations governing the licensing and operation of Internet gaming.
The bill establishes a licensure scheme rooted in the success Nevada has experienced, but provides for the flexibility required in the global economy. Together with another bill (SB218), Nevada now allows for offsite “hosting centers” and “service providers” to facilitate the delivery of Internet poker.
These centers and providers are likely to become central features of an industry-wide effort aimed at capturing what has been estimated as a $5 billion market.
This opportunity is unprecedented—operators will have access to an untapped market, consumers will be delivered enhanced services, and the competition to facilitate Internet gaming will be fierce. Indeed, the drive to meet the technological demands of Internet poker could result in innovation reaching far beyond the needs of operators, potentially meeting the demands of other industries and creating more economic growth. The situation, to say the least, is dynamic.
We’ve already begun the process of establishing regulations and technical standards aimed at ensuring the safety and fairness of the games, guarding against fraud and underage gambling and providing for the accountability of those who operate Internet poker. And as policymakers, we will continue to examine issues ranging from specific technological devices to the impact we may someday see on our tax policy and infrastructure from a changed cyber-economy in which gamers will not necessarily need to be on the casino floor.
I look forward to the work of we have ahead and the technological advances 2012 will bring.
Robin Le Prevost
Director of eCommerce Development
Government of Alderney
One of the features of Internet gaming is the impression that while we are in a fascinating and dynamic industry, the regulatory landscape barely seems to move at all. It is only with the benefit of hindsight that is it possible to see that progress has indeed been made. For this reason alone, forecasting should be easier as we could just say that we will make slow but steady progress toward more regulation coupled with the opening of new markets. But can we be more specific in that regard?
The U.S. has been on the point of embracing online gambling for many years now and activity in this area has been no less frenetic during 2011 than any other year, but there is a sense that we are not quite on the threshold of a quantum leap yet. 2012, being a presidential election year, would seem to relegate the issue from the main agenda, and I believe we will only see more jockeying for position and preparatory work during the coming year. It is very possible that some states will pass legislation, but I don’t see them actually opening up for business in any meaningful way. Our friends in Nevada are more advanced than anyone in the work that they are doing to prepare the way, even inviting applications for licenses, but it will all have to wait until the federal government can settle down to normal business in 2013. I acknowledge that Nevada probably has a better grasp than many, but there is still a huge amount of work to be done in establishing standards, frameworks and the thorny issue of taxes.
In Europe, matters are somewhat different. Countries in the EU are falling over themselves to establish their regimes and start raking in the taxes to bolster broken economies, and there is nothing like a recession to hasten these issues along. Spain, Denmark, Belgium and others will all open their market in the coming months. Germany will be desperate to follow suit as fast as possible, although they are starting from a difficult position and have almost too many interests to satisfy.
I expect, in common with almost every country to date, the announcement to open up and regulate will be made amidst fanfares, colored smoke and flashing lights, to be followed by a long and tedious process of change and compromise with probably a legal challenge or two thrown in for good measure creating much delay. Greece did the same thing earlier this year, but will have to make many changes to their proposed legislation (and they will because they can’t afford not to) in order to join the party. In other areas, I think we can be optimistic that the EU will do much to bring the various regimes to a point where they can share common standards and application processes making it easier, but not much cheaper, to participate in multiple markets across Europe. A single license for the whole EU is further away now than at any time and will never see the light of day for a generation at least.
In other parts of the globe, the Far East will remain a little on the wild side, but I expect to see movement through acquisition by some of the massive operators based there venturing west and some of the household names in Europe are extremely vulnerable, carrying such large amounts of debt as they do.
New markets such as South America will continue to grow in prominence as their population accrues technology, payment methods and crucially disposable wealth. There is no doubt that the same will happen in Russia and India. India is particularly interesting due to their strong presence in software development, and I expect that the balance of power as far as software is concerned will move from the current centers of excellence of the Nordic/Baltic countries and Israel to the sweat laboratories of Mumbai.
In summary, 2012 will be much of the same, but be prepared to be astonished when you look back; it might feel glacial, but it definitely is moving.
Martin Storm
Global President and CEO
BMM Compliance
BMM celebrated its 30th anniversary this past November and has embarked on a year-long series of events that will continue into 2012. As we celebrate this significant milestone, BMM will continue to uphold its core values: integrity, quality, productivity, responsiveness and accountability, all thread together in the context of delivering world-class testing and certification services with predictable consistency.
At BMM, we remain cautiously optimistic about early signs of recovery we see for the gaming industry in 2012. However, much has changed over the last three years, and the landscape for manufacturers is far more crowded and competitive. Five years ago, five major gaming manufacturers were competing for 130,000 slot machine sales. Today, 20 manufacturers compete for 65,000 slot machine sales. This means more pricing pressure for manufacturers and a greater burden on R&D to develop exciting, attractive and high-performance games. The new market engagement by smaller manufacturers, the emergence of new content businesses supplying games for manufacturers, and the impressive growth of AGEM are strong supporting metrics for this new competitiveness in our industry. This new competition also means the share of the gaming floor is changing with operators having more choices and more purchasing power. Manufacturers and operators are both looking critically for a performance edge to grow their businesses.
Growth is emerging in a number of ways. While many jobs have disappeared in the industry in the last three years, BMM has welcomed 23 new staff members to the Las Vegas team over the last 12 months. With the advent of a real, competitive market for independent test labs in Nevada, BMM has the opportunity to at least double or even triple its Las Vegas engineering staff, potentially offering new employment to more than 100-150 technology professionals. Access to those few remaining gaming jurisdictions that remain exclusive to one test lab (about 3 percent of jurisdictions in the U.S.) will ensure this growth in employment. The opening of new gaming jurisdictions and properties will also employ thousands of professional staff in Ohio, New York and Massachusetts. Similarly, new technologies offered in the areas of online gaming, cloud gaming, mobile gaming and sports betting will drive industry growth in 2012.
We read daily of continued discussions in Washington, D.C., regarding online gaming. One recent news article said: “While the voices in opposition are few and far between, and the arguments in favor seemed compelling, there is still a lingering sense that Congress is in no hurry to pass legislation to bring legalized online gaming back to the states.”
Regardless the pace of legislation, a positive outcome appears imminent (6-24 months?). From experiences in international jurisdictions, it seems unlikely that online gaming will lead to any land-based operators failing, but there is likely to be pockets of short-term revenue leveling for some operators. In response, all operators will have to re-examine their marketing efforts to maintain and grow their businesses.
As I noted last year, “Innovation thrives in the hands of the driven and ignores economic despair.” While this statement was intended for the manufacturers last year, ever-increasing competition means it also applies to the operators. With regard to testing online gaming solutions, suffice it to say that this is a complex matter. The oversight approach that North American regulators adopt will drive the factors behind speed-to-market, reliability, accountability and audit ability. Certainly, three of these are core components of product integrity. BMM has been a leading test lab for online gaming solutions since the late 1990s outside of the U.S. Like our first set of comprehensive gaming technical standards written in 1992 for land-based gaming, BMM wrote the first fully comprehensive set of online gaming technical standards back in 2000.
BMM will continue to be at the forefront offering advice to all regulatory agencies that seek it.
As I travel throughout the industry and meet with gaming professionals from all corners of the world, I am continuously impressed with the experience level of those I meet. I am reminded that this is still a relatively young and dynamic industry and thirst for knowledge is evident. BMM continues to be a strong proponent of educational efforts for the industry. We applaud the efforts of CEM in particular for the educational programs that it hosts each year. These educational programs continue to raise the professional level of the industry—as the saying goes, “knowledge is strength.” Advanced knowledge will allow regulators, manufacturers and test facilities to have conversations that reach the core issues quicker and with substantive results. This expanded dialogue will be increasingly important as technology deepens its impact on all our lives. We may already have some knowledge of mobile gaming, server-based gaming, cashless gaming and online gaming, but these technologies have yet to reach all of the jurisdictions, and equally not all manufacturers are utilizing these features. There will remain a deep learning curve for much of the industry, particularly as manufacturers develop new, high-tech products. With the inevitable drive to incorporate these new technologies, the role of the independent test lab to help craft new rules and evaluate products will be as important as ever.
To all those with whom we work and to those we want to work with, we wish you a prosperous and successful 2012.
Nick Farley
President
Eclipse Compliance Testing
2012 is shaping up to be a year of opportunity. The new year will see new jurisdictions and new forms of gaming emerge. Our home state of Ohio plans to open four casinos and place VLTs in seven racetracks throughout the state, and Illinois is moving ahead with video gaming throughout their state. These new gaming venues all bring opportunity to the gaming industry, and all are planned to take root in 2012. Likewise, states like Massachusetts have recently passed legislation to permit casino gaming, and states like Florida are considering legislation to expand gaming. These are just a few of the jurisdictions employing gaming as an economic growth facilitator; many more jurisdictions are actively pursuing or expanding gaming to close widening budget gaps.
Historically recession-proof, the gaming industry has hit unprecedented hard times with the economic downturn in recent years. To emerge from these trying times, the industry, including gaming regulators, must take a common sense approach to doing business and continue to do more with less. The industry needs to look to innovation for continued growth and prosperity.
Innovation is rooted in competition. As competition heats up, innovation flourishes. To see new gaming jurisdictions emerge with a limit on the number of casinos is essentially creating a monopoly for a captive audience. Limiting jurisdictions to three or four casinos, and defining unique geographical locations for each of these few properties is creating captive markets with no competition, and no incentive for improvement or innovation. This is also true of testing laboratories. Having a jurisdiction limit independent test laboratory services to just one or two providers is stifling competition and innovation. If legislators, regulators and industry professionals continue to support monopolistic, or near-monopolistic, practices, the gaming industry will stagnate and potentially face scandal and loss of public interest, much like we are seeing in the horse racing industry.
I believe that sweepstakes cafes will continue to evolve and flourish in 2012. These controversial promotional and entertainment systems are receiving mixed audiences. Many local jurisdictions are licensing sweepstakes Internet cafes, and subjecting licensees to a regulatory scheme that involves laboratory evaluation of these intricate systems. These jurisdictions are realizing increases in taxable revenue as well as licensing fees. Other jurisdictions, usually at the state level, are moving to ban sweepstakes Internet cafes. I believe 2012 will see the emergence of some very sophisticated regulatory schemes for sweepstakes Internet cafes as legislators realize that these emerging businesses are a great source of taxable revenue to fill state coffers.
Another controversial area that will realize growth in 2012 will be Internet gaming. Washington, D.C., has passed legislation that will allow for Internet gaming within the geographic boundaries of the District of Columbia. D.C. will likely set the benchmark for Internet gaming regulation in the United States. I believe that Nevada will follow closely behind D.C. in its implementation of Internet gaming.
An area that always amazes me with its resiliency and dynamic approach to innovation is Native American gaming. I believe that 2012 will continue to see Native American gaming grow and prosper. Anticipated changes to regulations pertaining to Class II gaming will likely be addressed at the federal level in 2012, which will ultimately keep Class II gaming viable and profitable to Native American tribes. Class II gaming, which has been the pioneer for server-based gaming, continues to set the bar for technological advances in the gaming industry. With tribal sovereignty at the core of Class II gaming, suppliers are constantly developing new and exciting ways to deliver Class II products to patrons. I anticipate that the evolution of Internet gaming will see new Class II innovations as tribes exert their tribal sovereignty to compete in the Internet realm.
2012 will be a defining point in time for the gaming industry. Business as usual will need a thorough examination in order for the industry to continue to grow and thrive. Innovation, as the result of competition, will lead the charge for the gaming industry’s future into 2012 and beyond. Eclipse Compliance Testing continues to be a trusted supplier to the gaming, amusement and lottery industries, and is actively involved in the emerging technologies and innovations that will define the gaming industry in the future. Regulators and gaming device manufacturers who have worked with us have expressed delight with our consulting and testing services.
What the future holds has yet to be determined. We are limited only by our trepidation and imagination. Stay tuned to see what the future holds.
Allen Godfrey
Executive Director
Mississippi Gaming Commission
The economy in 2011 continued to be tough for the gaming industry in Mississippi. The combination of long-term effects of the 2008 recession and increased competition from other states has dealt gaming in Mississippi a difficult hand. However, there is cause for cautious optimism. There are two new casinos under construction, and based on the number of people interested in obtaining site approval, investors continue to show interest in the Mississippi gaming market.
In difficult economic times, businesses often look to technological innovation to increase efficiencies and lower cost to increase revenue. The Mississippi Gaming Commission certainly supports maintaining the vitality of the gaming industry. The Mississippi Gaming Commission welcomes technical innovation, particularly in areas of patron experience, convenience and ease of use, but these technologies must conform to the highest standards of fairness, security, reliability, auditability and safety, not simply as a means of boosting the bottom line.
From time to time, a new technology takes the industry by storm, such as ticket-in/ticket-out and downloadable credits. Generally, the next great technological leap is accomplished through incremental changes and improvements. Several new technologies come to mind, including, but not limited to mobile gaming, “hybrid” games, and last, but not least, server-supported and/or server-based gaming.
Server-supported and/or server-based gaming, though highly touted, is still in its infancy, and though we have some of these systems operating in our casinos, they are still evolving technologically. Their cost and the lack of clear cost/benefit data make casino operators reluctant to switch from the tried and true combination of stand-alone slot machines coupled with traditional slot accounting systems. We anticipate migration to these server-supported and/or server-based systems to be gradual.
Currently, there is much talk about legalizing Internet gaming. Various jurisdictions are seeking additional sources of revenue, while the gaming industry is seeking new sources of growth. The Mississippi Gaming Commission is prepared to deal with any federal guidelines, but we do not currently anticipate a large role in Internet gaming.
Finally, the Mississippi Gaming Commission maintains close ties with fellow regulators, manufacturers, properties, independent test laboratories (ITLs), and keeps abreast of the latest technologies through these channels. Through rigorous product testing in our laboratory and at our licensed ITLs, we ensure that these technologies of interest remain fair, secure, reliable and auditable.
Linda M. Kassekert
Chairwoman
New Jersey Casino Control Commission
The last several years have been extraordinarily challenging for Atlantic City as competition and the economy combined to take a steep toll on the city and its casino industry. Revenues and profits fell, and operators searched for ways to pare their costs. So as I sat down to write, I was searching for the right metaphor to describe how I see Atlantic City’s future, and my thoughts kept coming back to the one about the light at the end of the tunnel. Why? Thanks to a variety of initiatives championed by Gov. Chris Christie, Atlantic City is poised for a rebound.
In the spring, Revel Entertainment will open a brand-new casino hotel with more than 1,100 rooms, a dozen restaurants, shops, showrooms and six different pools. It will be a must-see attraction that not only will expand the market, but will also provide jobs for more than 5,000 people which will be a big boost for the economy of southern New Jersey. Work on the complex had stopped until Gov. Christie helped secure $261 million in tax increment financing for the casino hotel last year, which got the project back on track.
By summer, we expect work will start on a new Hard Rock Casino Hotel—the first “boutique” casino in New Jersey. Gov. Christie signed legislation last year that permitted the Casino Control Commission to issue two licenses for casino hotels with fewer than 500 rooms. Initial plans call for construction of about 208 rooms initially and an additional 642-room tower down the line. The project is expected to create 2,000 construction jobs over the two-year construction period and another 1,500 full-time jobs when it opens.
Legislation signed by the governor in 2011 created a new tourism district and gave the Casino Reinvestment Development Authority (CRDA) sweeping new powers over planning and zoning in much of the city, particularly the casino zones along the Boardwalk and in the Marina District.
The authority is developing a master plan for the district, which also includes much of the city’s retail core, Gardner’s Basin and Bader Field. It has also hired as its executive director John Palmieri, a highly experienced economic development professional who helped turn around cities like Boston, Providence, R.I., and Charlotte, N.C.
Importantly, new laws redirected casino reinvestment funds that would have gone to areas outside of Atlantic City and in the northern parts of the state, and concentrated them back in Atlantic City. That gives the CRDA an additional funding stream to implement its new mission.
The new Tourism District also has a law enforcement component headed by retired New Jersey State Police Lt. Col. Tom Gilbert. While the crime rate is a lot lower than it was 20 years ago, Gilbert and a retinue from state police and the attorney general’s office are working closely with the Atlantic City Police Department, other law enforcement agencies and casino security departments to make the district and the entire city as safe as possible.
The new laws also enabled the creation of the Atlantic City Alliance—a non-profit organization set up to market Atlantic City. Shortly after it was formed, the alliance hired a top-flight executive who will oversee a $30 million marketing budget—Elizabeth Cartmel, former group president of ARAMARK’s sports and entertainment division. The money is coming from the casino industry that, thanks to the legislation, no longer must subsidize purses at state racetracks for a similar amount.
Additional legislation also reduced the regulatory burden on casino operators, streamlined the process and redirected regulatory savings to the CRDA. Our commission can now focus its efforts on casino licensing issues while the Division of Gaming Enforcement handles the investigative and day-to-day regulatory and enforcement matters.
Taken together, all of these efforts will combine to create a stronger, healthier Atlantic City and a revitalized casino industry. No other jurisdiction outside of Nevada has the concentration of attractions that you can find in Atlantic City. The increasing number of shops, spas, restaurants, showrooms, nightclubs, hotel rooms and, of course, casinos—along with the expanded efforts of both the public and private sector—will pay off nicely in 2012 and for years to come.
William H. Ryan Jr.
Chairman
Pennsylvania Gaming Control Board
In August 2011, I became the fourth chairman of the Pennsylvania Gaming Control Board (PGCB), an agency dedicated to protecting the public’s interest by providing strict but fair regulatory oversight to the commonwealth’s 5-year-old casino industry.
Notwithstanding our country’s severe economic turmoil, the Pennsylvania gaming market has seen positive growth. With 10 casinos offering both slot machine and table games, Pennsylvania’s gaming industry now ranks first in the United States in the amount of tax revenue generated from commercial casino gaming and second in overall revenue generated. The casinos also employ more than 14,000 persons.
While much of our work now involves the regulation of the operating casinos, the gaming control board’s work in licensing and opening up additional casinos is far from over. The Pennsylvania Gaming Act permits five more casinos to open in the coming years, with three of those yet to be licensed. Therefore, significant job and revenue growth is still expected.
Just in front of us are the openings of two facilities representing a different type of casino from the larger stand-alone or racetrack-based casinos that have opened to date, which will therefore provide a new regulatory challenge to our agency. Dubbed “resort-amenity casinos” since only established resorts with an array of patron amenities and at least 275 guest rooms can apply, these casinos must find economic success with considerably fewer slot machines and table games than allowable at the casinos currently in operation (maximum 600 slots/50 tables compared to 5,000 slots/250 tables). The resort casinos must also adhere to legal restrictions on who can access the gaming floor.
The first of these resort casinos will open in the spring of 2012 at the Valley Forge Convention Center in the heavily populated southeastern portion of the state, while the second license was granted to the Nemacolin Woodlands Resort in the more rural southwestern portion of the state. Its opening is uncertain due to litigation by a losing applicant in the competitive awards process.
Along with these new types of casinos, I believe that while the PGCB must continue to provide strict oversight, it cannot stifle the industry’s endeavors to grow their businesses to stay ahead of expected competition at our borders. That competition includes:
• New York’s placement of a racetrack casino in the shadow of the largest city in the U.S.;
• Four Ohio casinos that will begin opening in 2012, along with movement to legalize racetrack casinos;
• An additional Maryland casino due to open in 2012 and possibly two others in subsequent years.
Toward that end, an important role of our agency is to ensure that Pennsylvania casinos are able to unfurl new games, floor changes and amenities that will keep them ahead of the competitive curve. For example, the PGCB recently approved a series of new regulations designed to strictly oversee the new technology of server-supported systems for slot machine gaming. The approval of this type of gaming system is a continuation of the increased automation on casino floors that has been evolving and will make sure that Pennsylvania casino customers have access to the latest technology and the games they want to play.
In addition to permitting casinos to utilize server-supported systems, it remains essential that the PGCB’s gaming lab continue to turn around approval of new games and machines swiftly, thereby allowing the most popular slot machines to reach the floor as quickly as possible.
Ensuring success in the face of growing competition from neighboring states will also be driven by expansions by Pennsylvania casinos in non-gaming ventures intended to attract patrons to their facilities for longer periods of time. The PGCB expects to see and, where necessary, review plans and provide approvals for the quality and type of table games; new hotels or expansion of existing hotels; multi-purpose facilities for conferences and meetings; higher-end entertainment, including larger venues to facilitate larger crowds; and, possibly additional retail outlets such as the new outlet mall at the Sands Casino Resort in Bethlehem.
Our vision is to be the premier gaming regulator in the United States, and we expect to continue our work toward that goal in the years ahead by both keeping the interests of our citizens at the forefront of our efforts and, at the same time, providing an environment that allows the Pennsylvania casino industry to continue being an significant tax revenue and job generator.
Robert R. Russell
Gaming Analyst
Regulatory Management Counselors PC
Michigan’s casino gaming landscape experienced several additions and changes this past year. Although the state’s overall economy continues to struggle, the automotive sector has begun a slow rebound process. Should this continue to improve in 2012, then the broader economy should also begin to see improvements that will benefit the state’s commercial and Native American casinos.
Commercial Casinos
Michigan’s commercial gaming industry consists of three casinos in downtown Detroit. The three casinos opened in 2000 and were originally located in temporary facilities. Since then, operators have established full-scale, nationally recognized casino facilities that continue to evolve through innovative management efforts.
In September, MotorCity Casino Hotel announced that the property received several industry awards recognizing excellence in hospitality. The property received the AAA Four Diamond, Pinnacle and Meeting Focus Best of MidAmerica Awards for 2011.
Also in September, Greektown Casino announced the completion of an extensive remodeling project that redesigned the gaming floor of the casino. In addition, the Apollo Bar was renamed The Fringe and features a redesigned VIP area and club booth.
In November, Forbes Travel Guide, formerly Mobil Travel Guide, unveiled its 54th annual listing of 539 five-star and four-star hospitality establishments worldwide. MGM Grand Detroit received three four-star awards for its hotel, IMMERSE spa and Bourbon Steak, one of the property’s three signature restaurants.
Native American Casinos
Michigan has entered 11 Class III gaming compacts with federally recognized Indian tribes. These tribes collectively operate 24 casinos across the state.
In February, the Match-E-Be-Nash-She-Wish Band of Potawatomi opened the doors to its Gun Lake Casino to the public. The 76,000 square-foot facility offers 28 table games and 1,450 slot machines, a 40-seat lounge, and multiple dining options.
In March, the Nottawasseppi Huron Band of the Potawatomi, owners of FireKeepers Casino in Battle Creek, Mich., announced plans to expand its FireKeepers Casino facility. The project is expected to start this year with an expected completion in summer, 2012. It will include a new 242-room resort-style hotel complete with an indoor pool, exercise facility, full-service restaurant and business center.
In August, Four Winds Hartford opened its doors to the public. The new casino is approximately 52,000 square feet and is located on Interstate 94 outside of Hartford. The location features 500 slot machines and nine table games. The casino is the 24th tribal casino to open in the state. Additionally, the casino’s parent property in New Buffalo, Four Winds Casino, announced in November that it has partnered with Hard Rock International to build a Hard Rock Cafe. Hard Rock Cafe Four Winds will complement a previously announced expansion at Four Winds New Buffalo that will also be completed in the summer of 2012, including a new 1,600 seat multi-use event center and a new nine-story 250-room hotel tower.
In November of last year, the Bay Mills Tribe opened a Vanderbilt, Mich., gaming facility that held 36 slot machines. The tribe had maintained that it met all state and federal requirements for establishing a new Class III gaming facility. Subsequently, on Thursday, April 14, 2011, a federal judge for the western district of Michigan issued an opinion and order denying the Bay Mills Indian community’s request to reopen its Vanderbilt casino.
Michigan’s gaming industry continues to expand and appears to be well poised to service the demand for gaming in this region of the country.
Persons interested on monitoring developments in Michigan are encouraged to visit www.michigangaming.com.
Jump to:
2012 Gaming Industry Forecast: Introduction
Part 1 (Architecture, Construction & Design; Associations, Attorneys & Law Firms; Cash Handling, Equipment and Access)
Part 3 (Slot and Class II Manufacturers, Slot and Class II Operators; Table Games & Equipment; Trade Shows and Conferences)
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