LAS VEGAS–(BUSINESS WIRE)–Steelman Partners proudly announces the addition of new corporate entities to their portfolio of companies.
Steelman Partners LLP is an established and respected company that provides entertainment architecture and master planning services to an international client base. Their new ownership group includes Paul Steelman, CEO and Ethan Nelson, President.
The Steelman Partners ownership group is also involved in Dalton, Steelman, Arias & Associates LLC, a newly formed interior design affiliate whose team members will continue to specialize in creating profitable and inspired global designs. Other owners include Nicole Dalton, Michael Arias, and Steve Anderson.
shop12 LLC was formed along with newly appointed President, Jon Champelli, and is dedicated to the creation of cutting-edge lighting, attractions and theatrical spaces for entertainment venues around the world.
Additionally, all of the affiliates’ owners and officers take part in Steelman Properties LLC, a real estate investment company that purchases, renovates, constructs, and manages projects and is represented by its President and equity holder Casey Spanish.
Finally, Inviro Studios LLC was created to provide advanced animation, 3D graphics, scriptwriting and character development for episodic, television, web-based, and film productions.
About the Steelman Partners Organization
Steelman Partners and its affiliates, Dalton, Steelman, Arias & Associates, and shop12, based in Las Vegas, Nevada, are international architecture, interior design and lighting design firms specializing in the multi-disciplinary facets of entertainment architecture, interior design, graphic design, planning, theater design, 3D design and lighting. The Steelman Partners organization has offices in Santa Monica, Zhuhai, Macau, Manila, Ho Chi Minh City and Amsterdam.
Established in 1987, the company and its affiliates have positioned themselves as the premier touchstone in entertainment architecture. The firm is well-known within the gaming industry with a client list that includes Venetian/Las Vegas Sands, MGM, Harrah’s, Swiss Casinos, Sheraton, Hyatt, Plaza/El-Ad, SDJM, Melco, Caesars plus many others. The company has grown in size from $155,000 in revenue with 4 employees in 1987, to now $59,000,000 USD in revenue with approximately 300 employees.
Richard Marcus is the world’s greatest casino cheat. Richard Marcus could hurt your casino, but Richard Marcus wants to help you.
Casino Rankings recently had the chance to speak with Richard Marcus, the man considered the greatest cheater in the history of legalized gaming. He has since retired and has a new career on the other side of the fence, working as a casinos consultant in the area of game protection. CR spoke with him about how he was able to cheat casinos, beat surveillance systems for more than 25 years without being caught, and how casino staffs can better protect their tables from the likes of him.
Casino Rankings: Simply put, Mr. Marcus, what did it take to become the world’s greatest casino cheat?
Richard Marcus: It was a combination of three things: courage, brains and a lack of greed. First and foremost, you have to overcome whatever fear you may have of getting caught. Then you have to be intelligent enough to design and carry out creative cheating moves that work. Third, you have to know when to stop — in other words, don’t be greedy. The old saying about going to the well too many times applies to casino cheating as much as anything else.
CR: Is it hard to find people with all three prerequisites?
RM: Very. Some people out there have tremendous courage, and some have rocket scientist brains, but few have both. Some have courage for many things, but not for casino cheating, where many different people, including surveillance cameras, watch your every move. A funny thing occurred back in Atlantic City one night after a big heavyweight fight. I was standing next to a New York wiseguy, watching my partner do a Blackjack pastpost move, which is switching in higher denomination chips after the bet wins. It so happened that this wiseguy was an acquaintance of my partner. He had nothing to do with our casino cheating operation, however, after witnessing the move and my partner’s coolness under pressure, the wiseguy whispered: “You got guts kid. I’d sooner fight Mike Tyson than try that!” And, believe me, he would’ve given Mike Tyson a good fight. Guts and courage are only part of what’s required to be a good cheat. Skill is an even more important requisite. Not everyone has both.
CR: How hard was it to know when to stop?
RM: That depends on the person. For someone level-headed, as I’ve always considered myself to be, it was just a matter of surveying a casino after I finished a cheating move. If the move was absolutely clean with none of the casino personnel having been bothered, then I would go right back and do it again and again, as long as no one was picking up on what I was doing. But once a little heat started coming down, I would just cash out and go to another casino, even another gambling town if it got hot enough. Some cheaters keep working under adverse conditions, until they’re taking tons of heat. This is imprudent and often leads to getting caught. I had the attitude that the casinos were always there for the taking, so if conditions were not right, I’d just let them hold on to “my” money until the next time. Schedules vary and staffing varies, especially in large casinos, so with a little patience I would wait until I found the weak links and then make my moves. But if I sensed any pressure or heat at shift change, I would simply cash out and leave.
CR: What was your cheating specialty?
RM: I was a chip (check) manipulator. Either I pastposted bets after they won, or did the opposite: greatly decreased the size of my bets when they lost, which is called dragging or pinching.
CR: The first part about pastposting I understand. But what about decreasing the size of your bets after you lost? How was that possible? Once you lost, didn’t the dealer take the chips?
[Marcus chuckles at this.]
RM: Yes, they did. But it’s actually a dragging move that I’m most famous for — or, should I say, “infamous?” I came up with a Roulette move where I bet a $5,000 chip underneath a red $5 chip on outside Roulette bets. When the bet won, I collected five or 10 grand, depending on whether it was an even-money or 2-to-1 bet. When the play lost, I would only lose 10 bucks. I named the move “Savannah” after a stripper I knew at the time. This move is widely considered by the upper echelon surveillance people as the best casino cheating move ever — I surely agree with them. I demonstrated it at the recent World Game Protection Conference (WGPC) in Las Vegas, and the audience, which consisted of key casino personnel from all over the world, was quite impressed.
CR: How did you do such a move without getting caught?
[Marcus chuckles again.]
RM: The key was I placed the $5,000 chip underneath the $5 chip in such a way that it was hidden from the dealer. In other words, the dealer knew there were two chips there, but couldn’t make out the denomination of the bottom chip, and, therefore, assumed it was another $5 chip. When the bet lost, I raked it off the layout before the dealer could sweep it. If I was caught, I’d go into a drunken routine and claim, in slurred words, that I didn’t realize the ball had dropped. Then I would put back two $5 chips I had palmed in my hand. Because the dealer believed my original bet was just that — two $5 chips — there was never much of a problem.
CR: What happened when the bet won, especially if the dealer didn’t know the $5,000 chip was there?
RM: I immediately started ranting and raving with joy, pointing to the bet, screaming, “There’s my $5,000 winning chip!” The beauty of it was that when they went to surveillance to verify it was a legitimate bet and not pastposted, the cameras backed me up every time. The move sounds ridiculous, right? Well, maybe so, but it made millions, and the casinos never figured it out until I wrote about it in my memoir, American Roulette.
CR: So, you’re no longer a casino cheat. Are you actually helping casinos now?
RM: I retired from cheating seven years ago and have since written four books, the first of which, American Roulette, is being made into a feature film. I’m not ready to completely retire, so what better way for me to stay busy than by being a casino consultant? Gaming is the only thing I know in life, so that’s what I’m doing to keep occupied.
CR: How exactly can you help casinos protect their games?
RM: I offer complete game protection training for floor staffs and surveillance departments, including everyone from dealers to cage employees. I teach dealers how to be less vulnerable to cheaters and what methods they can employ to sharpen their defenses. I actually give them a mental checklist to perform before each deal of cards, roll of dice or spin of Roulette. I teach floor people how to spot the scams — even the ones their own dealers might be involved in. I teach the surveillance department to recognize things the cameras show that are not always evident.
CR: What do you find to be casinos’ major weaknesses against cheaters?
RM: On the floor, it’s mainly that dealers, floor personnel and pit bosses are all far too dependent on the cameras. They figure that, because every square inch of casino space is taped 24/7, they don’t have to be on their toes. Not so. I like to say, “Remember, a camera is not going to tap a pit boss on the shoulder and say, ‘The guy on Blackjack table number four just made a move.’” It has to work the other way. The people on the floor have to know what they are looking for, as well as looking at. Cameras are just like computers; if you don’t give them proper input, you don’t get proper output. I teach not only the scams, but also the subtleties that indicate a scam might be in the works. It is a different type of educational approach, and casino staffs really enjoy it.
CR: Are high-level surveillance people comfortable with learning from the world’s greatest casino cheat? I mean, is there ever reluctance on their part?
RM: If so, it dissipates quickly once they listen to me. After all, who is better able to teach this stuff than someone who has spent most of his adult life doing it? Practically anyone who teaches casinos about game protection has never actually been out in the field like I have. They’ve never been cheaters, so there is a limit on their knowledge. In fact, at the WGPC in Las Vegas, two surveillance directors from major Las Vegas casinos told me they came to the conference only to see my presentation. Both admitted they were enlightened by what I had to say. I certainly appreciated those comments. I really do enjoy teaching casino people the tricks of the trade, and I do guarantee prospective casino clients that my services will save them thousands and thousands of dollars each year.
CR: Do you ever miss it — the thrills of cheating, getting one over on the casinos and all their multimillion-dollar surveillance equipment?
RM: I guess that’s like asking a retired athlete if he misses the spotlight. You know, sometimes I think about those days and say: “Boy, I had fun. I made good money, and I never got caught or arrested.” But, as long as I stay busy now, I don’t really miss it. I do, however, love telling war stories about some of my greatest cheating experiences.
CR: Would you tell me one?
RM: No, Steve, for that you have to read my book!
Jump to:
Introduction
Gold
Silver
Bronze
3M Touch Systems
Website: www.3m.com/g2e
G2E Booth Number: 1236
AMD
Website: www.amd.com
Advantech-Innocore
Website: www.advantech-innocore.com
G2E Booth Number: 3850
Arrow International Inc.
Website: www.arrowinternational.com
G2E Booth Number: 3842
Atrient
Website: www.atrient.com
G2E Booth Number: 3111
BBIN
Website: www.bb-in.com
British Group Interactive (BGI)
Website: www.brightgroup.ca
Brown and Brown Insurance of Nevada
Website: www.bbnevada.com
Camryn Industries
Website: www.camryngroup.net
Carmanah Signs
Website: www.carmanahsigns.com
G2E Booth Number: 3209
Casino Enterprise Management
Website: www.casinoenterprisemanagement.com
G2E Booth Number: 3113
Cooper Levenson
Website: www.gaminglawyers.com
G2E Booth Number: 2537
CyberTEC Gaming Systems Inc.
Website: www.cybertecgaming.com
Daktronics
Website: www.daktronics.com
Digital Instinct LLC
Website: www.virtualroster.net
G2E Booth Number: 1737
DiTronics Financial Services
Website: www.ditronics.com
G2E Booth Number: 3617
DynaGraphic Printing
Website: www.dynagraphicprinting.com
Eastsign International Limited
Website: www.eastsign.com
G2E Booth Number: 3410
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Elite Gaming Technology
Website: www.elitegamingtech.com
G2E Booth Number: 3217
Esterline-Gamesman
Website: www.gamesman.co.uk
G2E Booth Number: 1324
Eurocoin
Website: www.eurocoin.co.uk
Flextronics
Website: www.flextronics.com
Fox Rothschild LLP
Website: www.foxrothschild.com
FutureLogic, Inc.
Website: www.futurelogic-inc.com
G2E Booth Number: 4041C
Gaming Capital Group
Website: www.gamingcapitalgroup.com
G2E Booth Number: 2937
Gary Platt Manufacturing LLC
Website: www. garyplatt.com
G2E Booth Number: 2832
Gemaco Inc.
Website: wwwgemacocards.com
Genesis Gaming Solutions/Genesis Interactive Technologies
Website: www.genesisgaming.com and www.genesis-interactive.com
G2E Booth Number: 2631
GeoComply USA Inc.
Website: www.geocomply.com
Global Experience Specialists (GES)
Website: www.ges.com
Global Gaming Group Inc (G3)
Website: www.glogame.com
Grand Products Nevada LLC (GPN)
Website: gp-nv.com
Greenberg Traurig LLP
Website: www.gtlaw.com
Hanco Technologies
Website: www.hancotech.com
Howard & Howard Attorneys PLLC
Website: www. howardandhoward.com
IDX inc.
Website: www.idxinc.com
Impact Display Solutions
Website: www.impactdisplaysolutions.com
G2E Booth Number: 2613
INAG inc.
Website: www.inag11.com
G2E Booth Number: 4200
Intel
Website: www.inte.com/go/embededgaming
Industrial Polishing Services Inc. (IPS)
Website: www.ipsfinishing.com
James Industries
Website: www.jamesindustriesinc.com
JCS Technologies Inc.
Website: www.jcstechnologiesinc.com
KEY-BAK
Website: www.keybak.com
G2E Booth Number: 3912
Kontron
Website: www.kontron.com
G2E Booth Number: 1227
Leap Forward Gaming
Website: www.leapforwardgaming.com
G2E Booth Number: 3632
Lewis Brisbois Bisgaard & Smith LLP
Website: www.lewisbrisbois.com
G2E Booth Number: 3612
Lewis Roca Rothgerber
Website: www.LRLaw.com
Lincoln Industries
Website: www.lincolnindustries.com
Litemax Technology Inc.
Website: www.litemaxusa.com
Metalcraft Inc.
Website: www.metalcraftidaho.com
Outpost Creative
Website: www.outpostcreative.com
Portwell
Website: www.portwell.com
Proforma GPS
Website: www.proforma.com/gps1
Rainmaker
Website: www.LetItRain.com
Reel TV
Website: www.reeltv.com
Regulatory Management Counselors P.C. (RMC)
Website: www.rmclegal.com
G2E Booth Number: 2931
Renewable Creative
Website: www.renewablecreative.com
Rye Park Gaming
Website: www.ryeparkgaming.com
G2E Booth Number: 3224
SCA Gaming
Website: www.scagaming.com
G2E Booth Number: 1219
Southwest Manufacturing Solutions
Website: www.SouthwestMS.com
Spin Games LLC
Website: www.spingames.net
G2E Booth Number: 2624
Strategy9
Website: www.strategy9.com
G2E Booth Number: 2241 (IGT’s booth)
Stylgame SRL/StylGame USA LLC
Website: www.royalstool.com
G2E Booth Number: 2224
Talent Associates
Website: www.talentassociates.com
The Bright Group
Website: www.brightgroup.net
G2E Booth Number: 3033
Tournament One Corp.
Website: www.tournament1.com
Tovis Co. Ltd.
Website: www.tovism.com
G2E Booth Number: 3626
TransAct Technologies
Website: www.transact-tech.com
G2E Booth Number: 2617
Union Gaming Group
Website: www.uniongaminggroup.com
Veridocs Inc.
Website: www.veridocs.com
G2E Booth Number: 2836
Wrex Products Inc.
Website: www.wrexproducts.com
Young Electric Sign Company (YESCO)
Website: www.yesco.com
G2E Booth Number: 3605
My father was also a publisher based in Minnesota, and I started with him in 1981 as an intern in college and eventually worked my way up to be his vice president of business development. My job was to research new publishing opportunities. Our specialty was textiles and gourmet specialty foods—all handled from the business-to-business vantage point.
My first introduction to the gaming industry came in 1992, several years after Minnesota had successfully negotiated Class III gaming compacts. It started slowly, but by 1991 two governors had negotiated four such compacts. For me, the writing was on the wall and I suggested that we vigorously move ahead with three publications. The first was a B2B for Class III gaming. The second was a B2B for charitable gaming and bingo. The third was a regional consumer tabloid for casino enthusiasts. The timing was right, and we enjoyed a nice business trajectory for many years.
As with any economic change, there are winners and losers. The paper-bingo product suppliers lost market share to video bingo. Charitable gaming lost market share to Indian casinos. My father’s small niche gaming publications eventually lost market share to large publishing conglomerates and investment groups anxious to take a stake in the growing casino business. And the list goes on.
Over the last 30 years, large and small changes have come and gone in waves. Each ripple has had its share of winners and losers. There are three ways to look at each change. 1) If you lost out, you likely view it as a bad thing. 2) If you were the winner, you likely view it as a good thing.
3) If you can remove yourself from the change outcome emotionally, you view it as a necessary change in the evolutionary process of the economy. However you choose to look at it, change is inevitable.
This year at G2E we will see an assortment of various positions on the latest and greatest technological rollouts destined to revolutionize the future of gaming. Server-based gaming, which seemed to have a drum roll that lasted for more than a decade, may have lost its window of opportunity to be the game changer it was once touted to be. It’s unlikely that a closed system will be what’s used to deliver gaming content in the long run. Instead, I believe we’ll see the Internet and its various incarnations dominate in that space. Play-denomination adjustment, hold percentage, accounting, CRM, marketing, promotions, compliance, player clubs and even signage across the casino resort and back office will be delivered wirelessly. IP game content will be securely delivered to servers, and games will be delivered to electronic gaming machines and mobile gaming devices via a wireless network and the Internet.
In the future, game content (regardless of device type or proximity), business-intelligence analytics solutions and casino management solutions will undoubtedly be managed via a secure encrypted cloud server. These services will be sold through subscription fees and made available on an à la carte basis. With this dramatic shift in the transactional landscape, there will be a new set of winners and losers, but rest assured, change is coming and at a pace far quicker than ever seen before.
It is also likely that we will see public enthusiasm in pure gaming increase and reach an entirely new demographic because its delivery platform will appeal to an entirely new demographic. Starting in the 1990s and up to present day, casino gaming lost its dominating relevance in casino resorts, yielding to other forms of entertainment such as dining, retail shopping, posh nightclubs, spas and golf. While it’s difficult to predict, I believe we’ll see the revenue pendulum swing back the other way.
So my recommendation for your time at G2E this year is this: Look for the most forward-thinking visionary ideas presented by folks who are completely divorced from the dogma of the old way of gaming entertainment. It’s going to be a new world, and some of the winners and losers will be on the floor at G2E.
Peter Mead
Publisher
Casino Enterprise Management
For more than 60 years, the iconic Vegas Vic has been standing guard over Las Vegas’ downtown area, watching as attempts to boost downtown’s visitorship have had varying levels of success and failure.
While Glitter Gulch was once the gaming capital’s shining star, the Las Vegas Strip took over that claim in the late 1980s and early 1990s, as new megaresorts captured headlines and the lion’s share of tourist traffic. The $70 million Fremont Street Experience, which closed a 5-block stretch of the street to traffic in 1994 and added its overhead light show in 1995, helped downtown casinos survive and in many cases thrive, bringing in tourists drawn to the impressive light show. But another venture, Neonopolis, which opened in 2002 amid great hopes that it would spur downtown redevelopment, never really delivered on its initial promise.
Today, however, there is much hope for downtown Las Vegas, amid Zappos CEO Tony Hsieh’s investments, most notably the relocation of the online retailer’s headquarters downtown. In addition, Hsieh and others have invested significantly ($350 million) to aid in the revitalization of downtown Las Vegas.
Casino operators are making convincing investments in their properties. For example, the Downtown Grand opened last month, replacing the timeworn Lady Luck casino-hotel, while last year’s rebranding of Fitzgerald’s into the D created a more modern, hip presence. Count the Golden Nugget and the Plaza among the properties that are offering more than ever in order to bring people downtown. The Fremont East Entertainment District (located east of Fremont Street Experience) and The Mob Museum also have added more reasons to head downtown. Las Vegas’ oldest hotel, the Golden Gate, built in 1906, has reinvented itself as a historic boutique hotel, and even Neonopolis is showing more signs of success as the headquarters of Telemundo and several new tenants. Adding to the area’s vibrancy are the nearby Las Vegas Premium Outlets and the stunning Smith Center for the Performing Arts.
Recent data suggests these investments are working. A 2012 Las Vegas Convention and Visitors Authority visitor profile showed some 36 percent of visitors who come to Las Vegas make their way downtown—a marked increase from the previous year. Union Gaming Group (UGG) noted that this revitalized interest in the area has flown somewhat under Wall Street’s radar.
“While Downtown may still be thought of as a place for $0.99 shrimp cocktails and cheap frozen margaritas, a walk down Fremont Street East reveals a far different story,” UGG noted in a June report. “On a typical Friday night, you will observe lines at popular bars that rival those of Strip nightlife options. On the restaurant front, the market is also undergoing a renaissance,” including the recently opened La Comida by noted restaurateur Michael Morton.
Downtown has seen “an influx of a new, younger demographic who come for the nightlife and may not necessarily gamble,” UGG added. “The casino properties have a balancing act of appealing to this group, but not alienating its core customer base, which is comprised of generally older slot players.”
Most recently, the Las Vegas City Council approved development plans to transform the old downtown bus transit center into a multilevel shopping and dining complex.
Downtown casinos are more gaming-centered than Strip properties, but they are adding amenities and sprucing up. And there is a vibe that can’t be denied. For many, being able to stroll the casino-lined pedestrian mall, replete with its overhead light show and zip-line, is enjoyable, and downtown Las Vegas feels much more like the real Las Vegas experience than the megaresorts a few miles south.
Don’t bet against downtown Las Vegas. Take the underdog. After all, downtown endures, a survivor standing tall, much like Vegas Vic.
Peter Mead,
Publisher
Casino Enterprise Management
The AGEM Index reported a month-to-month increase for the second consecutive month in August 2013. The composite score was 180.30, up 3.07 points (+1.7 percent) when compared with July of 2013 and up 57.61 points (+46.9 percent) when compared with the same month a year ago. The index has reported month-to-month declines in just two of the past eight months. In the latest reporting period, 10 of the 18 global gaming suppliers reported monthly increases in stock price. Of the eight operators that reported declines, only one was down by more than 10 percent. Note, the AGEM Index now incorporates the performance of Crane Co. (CR), an industrial products manufacturer whose operations also include software, online solutions and gaming payment tools.
The AGEM Index increased in August while broader stock markets did not fare as well, with each witnessing month-to-month declines. NASDAQ reported the least decline among broader indices, falling 1 percent from the end of July to 3,589.87. The S&P 500 fell 3.1 percent to 1,632.97. The Dow Jones Industrial Average witnessed the greatest monthly decline of the three, falling 4.4 percent to 14,810.31.
Selected positive contributors to the August 2013 AGEM Index included the following:
Ainsworth Game Technology (AGI) reported a stock price of AU$4.06, up 12.8 percent, and contributed 1.13 points.
With a stock price of AU$4.52 (+4.2 percent), Aristocrat Technologies (ALL) contributed 0.92 points.
Selected negative contributors included the following:
Crane Co. (CR) contributed negative 1.16 points, due to a 5.7 percent decline in stock price to $57.41.
Intralot S.A. (INLOT) reported a stock price of €1.51, down 12.7 percent, and contributed negative 0.26 points.
A number of gaming equipment manufacturers continued to report positive earnings in the latest reporting period while consolidation has emerged for a few manufacturers. Selected results are noted below.
WMS Industries (WMS) reported net revenues of $202.8 million in its fiscal fourth quarter of 2013, up 3.5 percent from the same period a year ago. The latest performance is primarily attributable to a 32.8-percent increase in gaming operations revenues. However, the increase was offset by a 10.3-percent decline in product sales revenues, which fell to $119.4 million. Although new unit shipments to the U.S. and Canada increased 1.5 percent year-over-year and new unit shipments to international markets increased 39.4 percent, used unit shipments declined 66.2 percent. Total unit shipments fell 12.7 percent to 7,698; the average sales price per new unit fell 3.4 percent to $15,443. WMS Industries is in the process of being acquired by Scientific Games.
Bally Technologies (BYI) reported a 7.6-percent increase in net revenues to $264.4 million during the company’s fiscal fourth quarter of 2013, due to substantial increases in gaming operations and systems revenues. Gaming operations revenues increased 9.7 percent to $102.8 million, due to a 38 percent increase in the installed base of WAP games. Meanwhile, systems revenues increased 31.8 percent to $72.9 million, partially attributable to a 25 percent increase in maintenance revenues. Gaming equipment revenues declined 8.4 percent to $88.7 million, primarily attributable to fewer casino openings. New gaming devices declined 7.7 percent to 4,911, while the new unit average selling price fell 5.6 percent to $16,224.
Net revenues for SHFL entertainment (SHFL) increased 16 percent during the company’s fiscal third quarter of 2013 to $73.5 million. Each revenue source reported increases from the same period a year ago, with electronic table systems revenues reporting the greatest year-over-year increase of 78.8 percent. Electronic gaming machines revenues increased 16.1 percent to $23.2 million due to increases in placements in Asia and the average selling price. Utility revenues witnessed the least year-over-year increase, rising 5.2 percent to $25.6 million. The latest performance is attributable to an 11 percent increase in shuffler sales.
On Aug. 27, 2013, Bally Technologies’ proposed acquisition of SHFL entertainment moved one step closer to completion. The companies announced the completion of the waiting period required under the Hart-Scott-Rodino Antitrust Act of 1976 without the Federal Trade Commission raising any concerns. The transaction is still awaiting approval from SHFL’s shareholders and the necessary regulatory agencies.
Since the infamous Department of Justice (DOJ) interpretation of the Wire Act in December 2011, there has been a flurry of merger and acquisition activity in the U.S. legalized gambling arena, because U.S. land-based casino operators are most likely to be the recipients of online gambling licenses in states where they operate land-based casinos. In fact, most operators are already in partnership discussions or have already partnered with an international online gaming operator or product provider that is able to provide relevant online gambling experience.
This activity represents a scramble by land-based casino companies across the U.S. to begin a process that will lead them to quickly capitalize on the new, potentially robust revenue stream that online gambling is expected to produce. Due to significant unresolved issues between states, at the federal level and from a regulatory perspective, appraising the real potential or even the construct for an equitable online partnership at this point in time could prove to be just short of impossible.
Many believe that online gambling will produce new customers and a precious new revenue stream for land-based operators in the U.S. I agree. But many also believe that online gambling in the U.S. will not be a panacea for most land-based operators. I also agree with that. Unfortunately for the little guy, the biggest brands could overwhelmingly dominate the online gambling space; it may quickly become cost-prohibitive to prosper in the space against the host of powerhouse brands that will be competing for the same customers. “Predatory” won’t even begin to describe it.
Regrettably, “sitting this one out,” as opposed to embarking on the daunting journey, may not be an option either because of the opportunity cost. The use of big data to canvas the Internet for customers ensures that customers will not be exclusive to any one casino. Consider video poker customers: They may not defect entirely, but some customers will eventually divert some money from land-based casinos to the new online gambling option—when they feel like playing video poker but don’t feel like driving. The eventuality is that the little brands will likely become licensed portals that could provide entry to companies that otherwise could not participate in the online gambling industry in the U.S.
To crystallize that point, consider this example: In a market consisting of and limited to 10 operators, only one of which is a big brand, the big brand will likely enjoy something close to a 75 percent market share and the other nine will fight for their fair share of the left over 25 percent. Comparatively, in a market consisting of 10 big brand operators, each would fight to maintain a fair share of 10 percent. There is no gravity model to consider or drive-time analysis to factor in. There is no non-gaming resort-type amenity set to compete with. Customers are the same simple click away from playing the exact game that will be offered by every competitor, and they can choose from a multitude of competitive promotional offers.
One leveling factor may prove to be social media and how social sharing and the online social experience have recently evolved. Stop at a bar and have a beer. It is a social environment. Having a beer at home is not. Social media allows gambling at home to be a very social experience. The online social platform giant is Facebook. It hosts millions of communities and allows gambling at home to be as social as one wishes.
So how will Facebook ultimately affect your online revenues? Is it a key factor? What do you think the ultimate role of Facebook is within the online gambling space? Will Facebook become a major competitor, or will it be satisfied with being a platform provider for you and your conventional competitors? Could Facebook monopolize the social gambling space? What are the fee caps? There is not much gambling on Twitter or YouTube these days. Who’s ready to compete using big data and real social media against social media experts for online gamers? Many still undervalue the potential of social media or do not completely understand the cost against its benefits—it is where a majority of the battle will be fought. And it will all happen on a smartphone. You will be able to gamble anywhere: at a bar with friends, in the tub or from a car with someone else driving—although timing out on a winning poker hand due to a dropped signal could become a problem for someone.
Lotteries will be an evolving online gambling alternative for gamblers. Who knows what online lottery games will ultimately look like to a consumer in a just a few short years? How will those games vary on a state-by-state basis? How will pricing, licensing, regulatory and tax structures compare with conventional online gaming companies? Could lottery games potentially compete with casino-style games in form or format? Or could online lottery games develop into a feeder market serving up new customers to big online casino dragnets?
On the revenue front, I’ve seen dozens of studies about how big the online gambling market in the U.S. actually is—from hundreds of millions to billions. But not many studies, if any, discuss how much real money can actually be made. Infrastructure costs, marketing, taxation, fees and regulations will likely vary from state to state. And although New Jersey, Nevada and Delaware are among the first to offer legalized forms of online gambling and some partnerships have already been formed, the majority of U.S. states have yet to weigh on the opportunity.
According to one prominent U.S. gaming industry leader, New Jersey and Nevada could have a “reciprocity” compact in place by 2014 to address “liquidity,” provided a federal consensus is reached—a major proviso. According to PokerSites.com, “rumors swirl of a renewed push from one state for federal online poker legislation.” This is not necessarily bad, but it may not be inclusive or prioritize the agenda of every state or give equal weight to all agendas, and it would therefore likely be met with resistance from some states.
Constructing an equitable online partnership is severely dependent on at least identifying the unknowns and accurately identifying and forecasting the vortex of where online and land-based revenues meet. It addresses and avoids forecasts that may account for revenues from the same customer. Of note may be that land-based customer defection to the online format will lag well behind the ramp-up of online gambling. But when the biggest brands are ramped up in every state, the revenue produced from the online enterprise will inevitably include revenue from former land-based customers who eventually defect to play online because of convenience and enjoyable social factors. Hopefully it won’t be the 20 percent of the customers who produce the 80 percent of the revenue. Gambling in the U.S. will simply take place in a new way and in a new world—a virtual world to some, although the people who play are very much real and so is the money.
The point to all of this is that land-based operators could agree to a revenue share model today that ultimately may not be equitable. In any event, some amount of land-based gaming revenue loss must be calculated and considered in any partnership discussion, as some land-based revenue will ultimately flow through the online silo.
Unfortunately, as much as the DOJ has essentially cleared the way for legalized online gambling in the U.S., there still remains a variety of very complex issues that the fledgling industry must quickly overcome. The U.S. online gambling industry will be up against regulatory, cost and competitive disparities among states. It will enjoy limited or no initial federal oversight, regulation or governance and comply with restrictive interstate commerce laws and overarching federal supremacy issues, all of which make for a difficult valuation. So appraising the real potential of an online partnership from a land-based operator’s perspective will be no easy task. There is no doubt it will require a severe and detailed analysis, a comprehensive list of key issues to be considered, specialists, lots of insight, lobbyists and lawyers, and a great partner. The assistance of a crystal ball would be nice, too.
Authors’ Note: In this article, we look at tipping points and video poker players, with a new twist on accurate individualized game data. The great challenge in the past has been that we know about players at a location and about the games that are played, but not about which games certain people play. This lack of knowledge has plagued the industry for years, but by applying an intelligent data-matching engine, we have figured it out. Remarkably, this new data set gives us a true calculation of theoretical win for each player.
In the March 2012 issue of CEM1, we wrote about the massive growth in data this century, and this massive growth in data is a profound new lens through which to see the world. This data includes information from sensors, social media and online gaming, and it is interactional in nature in contrast to the big data of last century, which included data from point of sale (POS), daily slot activity and carded sessions. Rough back of the envelope estimates show that big data is 1,000 times greater in size than transactional data, but the value comes from the connection of big data to transactional data.
Big Social Data and Tipping Points
This brings us to quite a different world of marketing today, where word of mouth online and “going viral” are forces that are both out of our direct control and enormously powerful. To understand this social effect, let’s apply some thinking from Malcom Gladwell’s “Tipping Point: How Little Things Can Make a Big Difference” (Back Bay Books, 2002). Gladwell describes a number of marketing programs under which a product “tipped” and became huge and how in this tipping process there are a number of key roles that need to be filled, including the Maven, the Connector and the Salesman.
According to Gladwell: “In a social epidemic, Mavens are data banks. They provide the message. Connectors are social glue: they spread it. But there are a select group of people Salesmen, with the skills to persuade us when we are unconvinced of what we are hearing, and they are as critical to the tipping of word of mouth epidemics as the other two groups.”2
Applying Gladwell’s roles in a gaming context, let’s examine three players: Charley, Mike and Sarah. (See Chart 1.)
Charley is the Connector. He is very active on social media but spends less than $50 per year in the casino.
Mike is the Maven. He is not very active on social media but spends more than $10,000 per year in the casino. Mike is, however, very knowledgeable about gaming, and his opinion is widely trusted. He does not make any effort to persuade people of his option; he is just a recognized expert.
Sarah is the Salesperson. She is a persuader. She is the one who can convince people that a new game or activity is important. She is not very widely connected, but she is very convincing. Furthermore, she knows and trusts Mike and his opinions. Sarah is an average-spend customer who spends about $1,000 per year in the casino.
If we base our marketing activities on a player’s spend per year, the majority of our marketing investment will be focused on Mike, with a mid-sized investment going to Sarah. We would largely ignore Charley. However, according to the Tipping Point strategy, we actually need all three players for a successful marketing initiative. If we target all three correctly, we may be able to bring about hugely effective initiatives that are like “marketing epidemics.”
This tantalizing and elusive prospect of making a dramatic impact with a marketing initiative is worth exploration—and we will explore it—but first we need to think again about big data. The huge media hype around big data is, according to Gartner, at the peak of its hype curve.3 At this point, the realization sets in for businesses that have come on board with big data that the process of gathering and monetizing this data is both difficult and transformational. Before we reach the tipping point for our marketing initiatives, let’s dig into one very important aspect of our data: statistical revenue or, as it is commonly known, theoretical win.
In the February 2013 issue of CEM, we described the fisherman’s analogy and how a fishing experience is in many ways like a gaming experience.4 In short:“If a fisherman catches one fish on average for every six hours of fishing, then the expected value of his total catch is 1/6 of a fish per hour. However, in reality … the fisherman either catches a fish or does not—there is no 1/6 fish. Furthermore, when a fisherman does catch a fish, he is likely to think he is on a run and will continue to fish longer. In other words, catching a fish (winning) affects the amount of hours spent fishing (gambling), which in turn affects the expected catch size (theoretical win).”
Given what seems to be a disconnect between the player experience and the theoretical win, why do we use it at all? The use of theoretical win is in fact very important, as it shows the expected statistical revenue (actually gross profit) to the casino, and for a large number of players, it is a very good way of understanding how much money you are making.5
Multi-Games Destroy Revenue Calculations
Of all the challenges to the theoretical win calculation, the outright error in using the average of the gaming machine is particularly mathematically destructive to the theoretical win calculation. To illustrate this, let’s look at a Game King game that has both keno and poker. The actual keno game has a hold percentage of 10 percent, while the poker has a hold percentage of 1 percent. The slot management system has the box set to a blended rate of 5 percent. Let’s go back to the Charley, Mike and Sarah.
As you can see in Chart 2, there is a sizable difference between the less accurate box theoretical revenue and the more accurate game theoretical revenue. Overall theoretical revenue reduced from $11,050 to $4,100, and at the customer level, the contrast is even greater. Instead of Mike being worth 10 times as much as Sarah, they in fact produce the same theoretical revenue. Now, clearly, before we start trying to make our marketing program go viral, having the correct data is essential.
The challenge with getting the correct data is that it simply does not exist in most deployed gaming systems. We opine that the reason that the player data is not matched with the detailed gaming data is twofold. First, the detailed gaming data is low quality. Second, the player tracking systems are quite separate from the slot accounting system. Given this near complete lack of precise player game level data and the clear need to have this data to complete accurate marketing, we have to dig into some complex computer science to provide the tools we need in the modern world of big data. The core complex tool that is needed is heuristic data matching.
Heuristic Data Matching 101
Heuristic data matching is an approximation whereby all the information in the data is used to determine who played what game. Think about matching the players Charley, Sarah and Mike to their individual game play. At first glance, it would seem impossible, as we only have daily summary values (most player tracking systems summarize data for each player at each game once a day). However, Mike is going to have much higher coin-in and lower actual win, and it is unusual for poker players (like Mike) to play keno (although it does happen). Sarah has quite different patterns. Given this knowledge, we could deduce that Mike plays poker and Sarah plays keno. This would be especially true if we looked at the data over a longer period of time. Heuristic data matching applies this “human” logic to match data and produce the relationship.
What is the best way to build these models? Well, we need to start with some basic assumptions, such as the ones described in the previous paragraphs (e.g., that poker players tend to have higher coin-in and lower actual win relative to their theoretical win). From there we can build a dataset of players who appear to be poker players and players who appear to be keno players. This data set will also include players who don’t clearly look to be one or the other, and those customers are removed from the set. Then we can build a predictive model that tags all customers of these games as either likely video poker or likely keno players. This model will likely include factors from our original assumptions on coin-in and actual versus theoretical win, but it will now also bring in details like what other boxes video poker players play versus keno players. For example, we may find that the keno players also prefer a certain group of video reel games with big bonuses.
In the end, heuristic data matching not only provides a set of data we can begin working with immediately, but it can also lead to more accurate predictive models that tell us with greater certainty which customers are playing which games on a multi-game box.
Even More Data Sources
Before we can really put our data to work, we also need to answer the question of whether the customer is a Connector, a Maven or a Salesperson. Certainly, to find out, we need to know our customers. Leveraging team members like players club reps, hosts and player development executives is a great start.
However, our customers also use our websites and mobile apps, in addition to third party social media sites. All of the data generated from these activities can be captured and appended to our players’ gaming data. With this data and the first step described in the previous paragraph, one can see a path that leads to a much better picture of our customers’ influence on our business.
Pulling It All Together
So there are two essential, and what seem like very different, parts to this puzzle. The first is that we have to understand our customers on a one-on-one level. This understanding is critical, and in the case of multi-game data, requires some special computer calculation methods and effort to bring the final results together. The second piece of the puzzle is that marketing to customers now requires that we understand different aspects of the customer’s non-gaming personality—basically we need to understand if the customer is a Connector, Mavin or Salesperson. Using this knowledge along with the player’s actual game preference enables us to execute some very special marketing programs.
To bring this down to the casino floor from the ivory towers of computer science and business theory, let’s illustrate how the combination of these two information sets can be used to adjust our marketing.
Charley the Connector
Charley is important, as he is a channel of communication. Using our knowledge that he loves poker, he is the perfect guy to spread the word about a video poker tournament. We could give Charley a bring-a-friend offer that was uncapped in terms of the number of friends but reasonably limited in terms of the size of the offer. Using this offer, Charley might be encouraged to connect with lots of people and bring them together to make for a successful event.
Mike the Maven
We know Mike’s opinion is critical, so we should make sure to ask him to help evaluate new game options and even consult with him about whether a game should be removed. It is crucial that Mike continues to endorse our products.
Sarah the Salesperson
Sarah gives us two options. She is the perfect person to convince others to attend the marketing event and make it successful, so we must make sure that she is invited and excited about it. We can try to grow our keno business via a keno event, or we can introduce Sarah to video poker and run a combined poker and keno event. (And if we choose to focus on just keno with Sarah, we can also look for another video poker Salesperson.)
Conclusion
Big data in the gaming business is no longer about simply tracking the customer play and rewarding them with offers based on theoretical win. We must now tackle numerous other issues, from the simple (yet surprisingly difficult) challenge of correctly tracking each customer’s theoretical win to the new and exciting challenge of creating social tipping points. But one thing is for sure: none of this can be accomplished without embracing big data.
Footnotes
1 See www.casinoenterprisemanagement.com/articles/march-2012/where%E2%80%99s-m….
2 Gladwell, M. (2002), The Tipping Point: How Little Things Can Make a Big Difference, New York: Back Bay Books.
3 See Networkworld.com’s overview of the report at www.networkworld.com/community/blog/big-data-reaching-peak-its-hype-gart…
4 See www.casinoenterprisemanagement.com/articles/february-2013/where%E2%80%99….
5 See www.casinoenterprisemanagement.com/articles/october-2009/who-due-back-part-iii-closer-look-theoretical-win.
For those following the travails of Internet gaming, you are likely aware of the progress Nevada, New Jersey and Delaware have made in getting their acts together somewhat for an intrastate Internet gaming industry. While each state offers limited liquidity based on their populations, hope springs eternal that other states may follow suit to help create a viable and legitimate U.S. Internet gaming market. Despite these advances, the last couple of months have not been kind to those looking for a clear beacon as to the direction of U.S. gaming technology, but some efforts are being made to stem that tide and provide some assistance for brick-and-mortar operations on a state-by-state basis.
For those Internet gaming proponents, dimming prospects in the California legislature on an Internet bill have frustrated industry players who have invested the past few years to the effort. The federal courts have also offered more of the same with the August ruling in U.S. v. DiCristina. Last year, this case saw a 91-year-old maverick federal judge rule that poker was a game of skill, immune from federal prosecution under the Illegal Gambling Business Act. The opinion offered a crack for those hoping to exploit a potential weakness in federal law to pursue Internet poker judicially. The 2nd District Court of Appeals recently threw cold water on his 100-plus page order and reversed it, finding that poker was a game involving skill but predominated by chance due to the randomness of the shuffle and deal of the cards.
The result of the case is essentially a return to the status quo across the country and, absent some act by a state legislature or Congress, poker will remain a game subject to prosecution under federal gambling laws if it is part of a business enterprise. The appeals court did note the legislative history of the federal act, which provided comfort language preventing federal law enforcement from storming the corner home game; those games will remain policed as they are today by local law enforcement. However, the legal scheming around the prospects of this case for Internet poker has concluded due to the continuing prospects of federal enforcement of the act against poker businesses.
In the grand scheme of things, at the federal level this case is a vignette in the broader story about the general dysfunction in Congress, the Department of Justice and the federal courts over exactly what to do with gambling technologies and, specifically, Internet poker. With Nevada, New Jersey and Delaware going live for their residents, it is becoming more and more apparent that some of these licensees will push the envelope in the quest for players and increased liquidity for their Internet games. Pressure is mounting on California advertising companies to allow Nevada-based licensees to advertise to California citizens.
With the requirements for age verification and geo-location confirmation in the Unlawful Internet Gaming Enforcement Act (UIGEA), it is only a matter of time before the Department of Justice and gaming enforcement officers begin sending cease and desist letters in an effort to keep these businesses within their borders. At some point, a legal challenge will be filed, asserting a host of federal constitutional arguments that have evaded review since the passage of UIGEA. In the wake of the California difficulties and the federal court opinion, the U.S. Internet gaming market will continue to be starved of needed liquidity, which can only be found in the wallets of players in the large states like New York, Florida, California and Texas that are cut off due to inaction at state and federal levels.
As it relates to machine manufacturers and commercial casino technologies, some silver lining may be on the horizon thanks to efforts by the Association of Gaming Equipment Manufacturers (AGEM). Recently, AGEM has been promoting modernization of state rules regulating gaming equipment manufacturers. This effort included drafting best practices guidance for regulators and has led AGEM recently to Florida.
Having created select gaming committees in the House and Senate in 2013, Florida is poised for a dramatic rewrite of its gaming code and a reshaping of its gaming economy. As part of these efforts, I am working with AGEM and its members as they invest in this state to codify some of the best practices that will help progressive gaming technologies find their way to the Sunshine State in a cost-effective manner for manufacturers and casino operators. AGEM is providing data to Spectrum Gaming, which was hired by the Florida Legislature to evaluate Florida’s gaming market, in an attempt to help recommend ways that can improve revenue generated to the state coffers by the various racetrack casinos in Miami-Dade and Broward Counties. There has been a chronicled lack of financial production in Florida, according to various industry sources over the years, due in large part to a burdensome regulatory environment on manufacturers and properties.
Since the change in the governor’s mansion in 2010, Florida has actually begun to ease the regulatory burdens on the industry. Successful rule challenges with which I have been involved on behalf of AGEM members have led to rule repeals, allowing deployment of new technology such as electronic table games. Favorable treatment by the influx of new blood at the state regulator and the legislature gave AGEM an indication that this is a jurisdiction worth pursuing for even greater reforms. It has identified a host of potential changes that are left over from the old anti-gaming policies of prior administrations that cause delays in shipping slot machine parts and software and prevent deployment of wide-area progressive slot machine jackpot networks (WANs) in Florida’s racinos.
Estimates indicate that Florida is losing millions per year due to these policies. Here is a look at a few of them that AGEM is looking to address to help modernize Florida’s regulatory code and allow for modern gaming technologies to be deployed in this budding commercial gaming market.
WAPs
Currently, Florida law authorizes wide-area progressives (WAP) but places a restriction on revenue-sharing arrangements between slot machine manufacturers and racinos. In addition, prior rules promulgated by Florida’s gaming regulator prevent the use of “independent play,” or “buffered play” technology. These combined to be a practical ban on the deployment of robust jackpot networks that are highly sought after by the savvy slots player. Since WAPs are expressly legal under Florida law, but practically disallowed due these impediments, AGEM hopes to educate Florida policymakers on this inherent inconsistency in the hopes of unlocking this market to its membership with WAP product offerings. Industry statistics indicate that this simple tweak could increase revenue by 20 percent to 40 percent on machines tied in to a WAP network, which could result in a nice windfall for the state in additional revenue by merely allowing the practical implementation of technology Florida has previously expressly legalized.
Shipping and Receiving
Florida currently employs dated methods for shipping gaming technologies, their hardware and software. Machine changes on the gaming floor and RAM clears are also burdened by unnecessary regulations. The current approval method, which incorporates various forms provided by the casino regulator, creates an arbitrary delay in machine shipment and installation. This delay creates an inability for a Florida casino to timely receive new products or conduct even basic RAM clears without regulatory oversight (and in the case of some machine repairs, a requirement of literal regulatory oversight is an employee of the regulator must watch the activity take place). This leads to an extended period of loss of game time that impacts the productivity of the machines for both the casinos and the state, as gross gaming revenue is taxed at 35 percent.
The aforementioned regulatory structure imposes a minimum 5-day delay prior to the shipment and installation of any new product, machine or theme. As Florida’s seven casinos will change about 20 percent their slot machines and change themes on 30 percent on the floor each year, an inability to make changes (or a significant delay in making such changes) certainly hampers the casinos’ ability to grow revenue. AGEM is pushing for more modernized shipping rules and hopes to prevail upon Florida’s policymakers so that the integrity of the regulations will be preserved while at the same time maximizing the state’s return on its legal gaming stations.
ETGs
The electronic table game (ETG) market in Florida has grown significantly since the introduction of the first games (SHFL entertainment’s Table Master and Bally Technologies’ Roulette) in 2009, following the successful rule challenge to the arbitrariness of some of the state regulations. Since that time, other manufacturers have come into the marketplace, including Aruze, TCSJOHNHUXLEY and Interblock, with themes including electronic blackjack, roulette, craps, baccarat and sic-bo. Versions of these games are already operating at various south Florida casinos, and indicators suggest that an electronic table game (which under Florida law is required to report each “seat” at the game as an individual slot machine) can generate revenue at a rate in excess of 30 percent higher than floor average.
In previous years, Florida’s gaming regulators have pushed legislation that would require each slot machine to possess an internal random number generator (RNG). Such legislation would effectively ban electronic table games in Florida, and one estimate suggested that tax revenues would decrease by more than seven figures. AGEM is working to educate Florida’s policymakers on the merits of maintaining its vibrant ETG market and allow for its responsible growth and oversight.
All indications suggest that Florida’s 2014 legislative session could mark a line-in-the-sand for Florida’s casino operations. Significant time and expenses have gone into the study conducted by Spectrum Gaming, and the report will be released this month. Regardless of the legislature’s decisions, major issues will certainly be in play in Florida’s state capitol, including authorizing table games, reducing the tax on gross gaming revenues, etc. How a modern regulatory code could stimulate deployment in progressive gaming technologies remains to be seen, but Florida could be the incubator for other states on how to hit a hard reset in their state’s gaming industry.
Whether it’s Internet gaming, gaming technologies or modernizing the regulatory structure governing the industry, much is going on across the country and, unfortunately, not all in the same direction. Until Congress gets its act together, the state-by-state approach seems to be the best way to move the needle for advancing the deployment of progressive gaming technologies, be they web- or brick-and-mortar-based.
Dunbar is a member of the International Association of Gaming Advisors (IAGA). Visit www.theiaga.org to learn more about this prestigious organization.
In many ways, the future of gaming technology is now. As the pace of digital technology and related trends speeds up throughout society, the gaming industry is striving to keep up.
The signs are easy to spot, whether it’s social networking initiatives such as WMS’s Players Life website that allows players to play certain games online and unlock bonuses on the game at the brick-and-mortar casino or International Game Technology’s (IGT) social gaming revenues, which increased by 105 percent in the quarter that ended June 30, and DoubleDown Casino became the top-grossing social casino game on Facebook for that period.
Add the legalization of online poker in Nevada and online gaming in Delaware and New Jersey, and it’s more clear than ever that these, and other changes, are pushing the envelope for innovation on and off the casino floor.
“I think it’s a really exciting time to be in the space, for players and casinos and for manufacturers like us,” said Aron Ezra, vice president of mobile for Bally Technologies. “One of the things that is so exciting is we’re now seeing all of the innovations that have been worked on in the mobile and the online world and separately on the casino floor actually begin to overlap so that we’re able to take best practices from each of those formerly separate worlds and kind of bring them together in ways that previously were impossible.”
“On the mobile side, today what we can do is we can actually put games that are sort of miniature versions of the exact games that a visitor would see on the floor of the casino directly on their devices so they can continue to play them,” said Ezra, who is former chief executive officer of MacroView Labs, a leading mobile app developer that Bally purchased in 2011.
“We’re able to do a lot more with being able to give players the ability to see what the experience will be like in the casino when they eventually get there,” he added. “[We can] expand the experience that they’re having with the casino and the relationship they have with the casino and also enhance the experience they are having once they’re in the casino.”
For Aristocrat Americas President Atul Bali, the new level of interconnectedness of platforms and devices signals significant change in the industry.
“Obviously there has been a lot of talk around digital gaming and regulation of online gaming, but of course online gaming has been around for the last 15 or 16 years, so we’re probably in our third generation of platforms with the respect to that,” Bali said. “I think what’s really interesting at the moment from a technological perspective is this ecosystem of connected devices. We’re starting to see so much connectivity between different devices and different platforms, both at the corporate enterprise level as well as the consumer level. And I think the whole face of the Internet—how it’s being promoted, how data is moving around and being utilized—is changing rapidly.”
The pace of innovation is checked by the fact that the gaming industry remains a highly regulated industry. Even so, regulators are showing more openness in considering new technology.
“The technology between the consumer and the device is obviously going to move along at the pace of regulation,” Bali said. “What’s happening is that because of these new technologies [such as i-gaming], because of proliferation of different types of wallets, different ways of verifying data on users, etc., I think regulators are starting to feel more comfortable, and they will continue to feel more comfortable as other jurisdictions have already regulated those things.”
An overarching trend Bali sees is not just about games being enabled through technology, but that new channels are being enabled. “I think we’ll see a lot of new things as we start to use new devices in the gaming environment,” he said.
Aristocrat has found success with its nLive platform to create online for-play casino websites for casino customers, including a highly successful install at Maryland Live!
He noted Aristocrat has significantly enriched that product over the last 12 months and added a development team as well as a digital services team that is providing customers with assistance in terms of presenting nLive’s free-to-play option, as well as enabling them for social and mobile environments and preparing them for wagering where it’s legal.
A Question of Content
When asked where gaming content might come from in the future, Bali responded that it remains an open question. “That’s a fascinating topic. I think many of us have an opinion, and I don’t think any of us have been proved right or wrong in the short term,” he said. “I think it will take a little while, and I think certain nongaming concepts will work and others won’t.”
Bali said he believes some content will come across the casual gaming genre of development. “We will start to see people leveraging some of those well-known brands across different games that are produced from the casual gaming market, and I think features from those games will become part of the bonus features within the traditional casino slot.”
Still, Bali noted, the North American slot player has a number of characteristics and favorites, “and so I think we will continue to see content from those providers that are in the market today who are satisfying the innovation expectations of that customer base.”
When asked if he worries about how to reach out to the younger demographic of players, who cut their teeth on console and casual gaming, Bali said he doesn’t. “Frankly, I don’t stay up at night thinking about that. I do believe that in terms of the nature of the content of games, that will slowly but surely evolve as it needs to,” Bali said. “I don’t see it as being unattractive to the younger generation. We just need to build the right wrapper around it that attracts their attention.”
Ezra noted that “there’s a real misconception that the only people using these types of technology are young people, and that’s been proven again and again not to be the case. In fact, one of the fastest growing groups of mobile gamers are middle-aged women, if you look at who’s buying smartphones.”
In the mobile space, Bally is creating ways to enhance that gaming experience for players.
“We do a lot on the mobile side, [from] enabling users to do things like find where their favorite game is on the floor, rate individual games that they’re playing and give feedback about what they like and don’t like or remember where they parked their car or get tickets to a show, whatever it is that they happen to be interested in doing,” he said. “So when I look forward, I see a very exciting future where not only are we seeing those interesting overlaps and interfaces, but just a whole world of really new technologies, new technologies around banking; new technologies around the displays that people are able to use thinner and thinner displays that can be manipulated in various shapes and forms; more wearable electronics, ranging from smart watches and Google Glass to augmented reality; more cloud-delivered games, streaming-style games allowing people to access a much broader library of content from wherever they happen to be; and more gesture-enabled games. That’s one of the things that’s been a lot of fun to see. We’re starting to see much more interaction with the games in very different ways that previously weren’t possible.”
When asked if players are ready for all these changes, Ezra said, “I think players in many ways are the ones driving it.”
“We are in an age that if you look at the very broad definition of gaming, it is evolving not only around traditional casino gaming, but [also] akin to Angry Birds and some of the things going on across console gaming and mobile platforms, and I think it’s becoming increasingly important for both casinos and manufacturers like ourselves to really capitalize on all of these exciting innovations happening outside the traditional wagering environment and employ those technologies in our world as well. I think that’s what’s going to help keep us cutting edge,” he said.
Another driving factor is that technology is better today than ever, Ezra said. “We have more and more reliable connections with better and better machines. We have got faster connectivity everywhere you go in the world, and it’s opened up a whole host of opportunities for us to be interacting with those folks in very different ways.”
As for casino operators fearful that i-gaming may impact their brick-and-mortar business, operators need to understand the power this can bring to their properties, according to both Bali and Ezra.
“If you look at the convenience, and if you look at the amount of opportunities that people are seeing and utilizing different forms of media, why would you not offer them the online gaming experience, particularly if you could offer it to them on your brand? I think that as long as you’re careful and thoughtful about your offering, I think that these brick-and-mortar casinos will actually grow their presence,” Bali said.
Compared with their counterparts in Europe, he noted, North American casinos have a huge advantage because most have built large player databases. “This is not a European online business where you have a pure online business where people are buying databases and they’re using affiliates to draw players,” he said. “Casinos in North America have longstanding relationships with their customers, and giving that customer increased access points to play what they want, when they want to play, even when they’re not on the property, I think is net upside for those casinos, and I think there’s both a defensive aspect to that as well as a growth aspect to that.”
Ezra predicts online and mobile gaming will augment and support the land-based facilities. “If you look at what’s happening in other industries, more and more industries, especially industries that involve discretionary spending like ours, are recognizing that they need to have a very strong presence on those platforms,” Ezra said.
“Our goal is to enhance, not to replace, and so we look at adding technologies that are going to make the player’s experience more fun, more convenient, but we’re certainly not trying to create an all-digital space that completely lacks the human touch. That’s not what’s going to attract people.”
Keeping that human aspect top of mind is paramount to the future of the brick-and-mortar casino, according to Gregg Solomon, chief executive officer of MotorCity Casino in Detroit.
“It’s a real trick to figure out what that thing is that keeps customers loyal, and it’s getting harder,” he said.
Solomon does not shy away from deploying cutting-edge technology at MotorCity, but not merely for technology’s sake—it’s got to create real value and connection for players.
“With Internet gaming and everything else coming on,” Solomon said, “if we don’t remember that people come to a real casino because there are human beings attached to them, we’re going to be going the way of the buggy whip.”
