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Introduction
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Part 3
Thomas L. Hoskens
AIA, NCARB, LEED® AP
Principal and Director of Strategic Development
Cuningham Group Architecture Inc.
We forecast 2015 to be the year the industry shows it’s listening to market forces. In 2013, 63 percent of Las Vegas Strip casino revenue derived from non-gaming sources compared with 30 percent in Atlantic City.1 The closures on the East Coast reinforce what we’ve believed all along—it’s not just about games; it’s about amenities. Having the right mix of amenities draws people not only to a particular property, but to cities and regions, making gaming a friendly partner in business and economic development. The gaming industry is healthy and energized and with a U.S. economy trending upward and interest rates remaining low, now is a great time to invest. Now is also the time to plan for a customer base that is getting younger and more tech savvy. The latest surveys tell us the average age of Las Vegas visitors is under 46,2 and 39 percent of 21- to 35-year-olds are visiting casinos.3
As architects and designers, we see movement in the right direction. Casinos have embraced the need to differentiate beyond the gaming floor to satisfy younger customers as well as guests who don’t come for the games at all. The integrated resort is here to stay, and as our firm researches and develops “Casinos of the Future” we realize “Entertainment of the Future” might be more akin to the challenges before us. As competition grows and saturation fears linger, strong amenity programs can create a competitive advantage. There’s also a growing understanding that casinos can become centers of entertainment capable of reshaping neighborhoods, city centers and entertainment districts. On the other hand, the $1.4 billion All Net Arena and Resort that Cuningham Group is designing on the Las Vegas Strip is an example of entertainment taking the lead over gaming. The project does not have a casino, but much like Times Square, LA Live and CityWalk, the mixed-use development is poised to draw massive crowds, and 71 percent of visitors gamble while in Las Vegas.4
Though non-gaming revenue streams are surging, social and mobile gaming are ready to shake up the industry once fully implemented (as regulations catch up to accommodate the inevitability of this new kind of gaming). Technology advances are exciting, but that excitement fades at the prospect of incorporating transformative games into the same old casino environment that baby boomers love. While boomers remain important to the industry and can’t be discounted, they’ll soon be outpaced by a generation that doesn’t know life without the Internet, craves experiences that are personal, mobile and social, and commands $1.3 trillion in consumer spending.5
What does this mean for the casino floor itself? Visit the newest headline-making casino and you’ll encounter the same fundamental gaming experience. Games might be bigger and flashier and the building design trendy and modern, but the overall experience is essentially the same. Outside of new technologies, how do we finally push the design of the casino floor into the future? Our designers are working to connect what technology can do with what it can’t do. We foresee an emphasis on designing for more social interaction. This includes creating immersive lounges and day clubs for multitaskers who want to play and stay connected to others and the outside. Spaces that support multimedia intensity will become the norm. While today’s casinos block everything out—sunlight and fresh air included—future casinos need to let in both the natural and virtual world around it. Multilevel environments, like what’s seen in popular nightclubs, need to replace expansive, single-level casino floors. Similarly, a focus on creating a boutique experience where the floor is carved into smaller areas will help to create a more personal experience. Amenities will no longer be scattered around the outside of the floor but weave together with the games to create an immersive and interconnected atmosphere.
The challenges are many, but we look forward to 2015 being the year the industry listens.
Footnotes:
1. “What Atlantic City can learn from Las Vegas about drawing non-gambling dollars,” by John Brennan, The Record, September 7, 2014.
2. Las Vegas Convention and Visitors Authority’s 2013 Visitor Profile Study.
3. State of the States: The AGA Survey of Casino Entertainment, 2013.
4. Las Vegas Convention and Visitors Authority’s 2013 Visitor Profile Study.
5. Pew Research & Verizon Millennials & Entertainment Report, March 2014.
Dike Bacon
Principal
Hnedak Bobo Group (HBG)
The design segment of the gaming industry has steadily recovered post-recession. One of the most notable impacts of the recession has been greater accountability relative to making the right market-based, customer-focused investment and design decisions. This has been a sea change relative to the kinds of products in type and cost that are delivered in a competitive environment.
Another dramatic impact has been the increased lender-investor demand for early confirmation of project costs and the subsequent aggressive management of project costs through the design and engineering process. It’s not that banks, casino owners and developers have suddenly become more conservative post-recession. They’ve just become much smarter and strategic relative to making the right investments in the right markets while focusing spending on the right areas of a resort to yield the best measurable financial returns. In many instances, the whole notion of how a successful investment must perform and compete in a specific market has been flipped on its ear. When the industry was still in a growth boom, many people spent lots of money and became heroes. You almost couldn’t miss. That’s changed, of course. We’re now in a highly matured and extremely competitive industry and the investment of every single dollar in a facility (new or existing) better be made where it counts and has impact.
The best design firms thoroughly understand how a guest interacts with the facility and what a facility needs to operate efficiently. These firms understand and embrace the opportunities to set a property apart relative to creating unique, memorable guest experiences and creating competitive advantage with other entertainment options beyond gaming. Our philosophy at HBG has always been to consistently deliver a very creative and high design solution that is cost effective, market-based and that supports our client’s business objectives. In order to achieve these results, we think very differently about the entire process. We define client and project success on the front end of a project—not the back end—and we use very specific success drivers that are applied to every project. Old paradigms have to constantly be challenged and changed.
According to economic statistics, consumer spending has stayed relatively flat from a growth standpoint; consumer confidence remains fairly stagnant. Limited discretionary entertainment dollars will continue to be siphoned away from gaming unless the industry as a whole responds with new and unique experiences and products. One of the biggest future challenges for the industry is to maintain relevancy in a culture flooded with entertainment options. As Las Vegas clearly shows, gambling has become part of an entertainment experience, not the primary activity. A lot has been written about the impact of millennials on the industry. By and large, this generational segment is not a gamer and they demand something completely different than a traditional casino experience. Millennials have shown a propensity to spend considerably on non-gaming activities, which can create significant revenue generation opportunities for properties that understand that these non-gaming amenities and products have to be unique and not necessarily value-oriented. This entertainment evolution will be very interesting to watch as it filters into the regional casino industry.
Dick Rizzo
Vice Chairman
Tutor Perini Building Company
It’s been a slow crawl back from the construction boom years. That said, there are glimmers of prosperity on the horizon. Tutor Perini just delivered Marriott’s Grand Chateau in Las Vegas. The 37-story timeshare is the first ground-up vertical construction to occur on the Las Vegas Strip since 2008. Marriott’s success, combined with recent stats, confirms that visitors are once again vacationing and conferencing in Las Vegas, but with a shift in purchasing habits. Spending on gambling and expensive hotel rooms is down while revenues for entertainment and food and beverage are up. Perhaps most significant is that demographics are changing—visitors are getting younger. Forty-five is the new 50, and it’s expected that the average visitor’s age will dip below 40 in the next 10 years. All of these trends could significantly alter the design and construction of the future casino. To compete for the changing face of Las Vegas, casino operators will need to redirect, renovate and reinvent themselves. When this happens, it will have a positive economic impact on the design and construction industry.
Moving across the U.S., Tutor Perini continues to see momentum in Native American gaming. We recently signed construction contracts with the Santa Ynez Band of Chumash Indians for the expansion of Chumash Casino Resort in California and the Gila River Indian Community for the Lone Butte expansion in Arizona. We are also involved in the preconstruction of expansion projects (Native American and commercial) in California, Arizona, Nevada and New York. In addition, Roy Anderson Corp., our sister company, is constructing Scarlet Pearl Casino Resort in Mississippi. Recent activity further strengthens our optimism for the casino market rebound. Although the positive news is tempered by the market shrinkage in New Jersey and stagnation in Nevada, it does indicate casino growth in various regional markets throughout the U.S.
While the U.S. economy seems to be on a gradual incline, those who hold the construction purse strings are still reluctant to spend, pending consumer demand. Fortunately as a large, diversified corporation, Tutor Perini has been able prosper in the past couple of years by building in other vertical markets. Like many major Las Vegas gaming corporations, we have followed the projects and business wherever it takes us. A major advantage is that we have been able to retain our skilled professional staff, so when gaming construction does gain momentum, we are poised and ready for business.
The sheer ferocity of building casinos in rapid succession, at least for now, is a bygone era. Waning demand for casino gambling, market saturation and competition from other types of gaming, mainly the Internet, have affected the industry. For us this equates to change and seizing new opportunities. Among the many lessons we learned from the recession is that regardless of your size, you need to be nimble, able and willing to change. We are ready to work with our brick-and-mortar clients to strategize, reinvent and reclaim the casino industry, be it slow and gradual or at full throttle.
Doug Worth
Chairman/CEO
WORTHGROUP Architects & Designers
Bryan Hamlin
Partner/Vice President of Design
WORTHGROUP Architects & Designers
Our primary market segment, Native American casinos and resorts, has held its own in the recent economy; however, the design industry serving that market still suffers from overcapacity. Too many firms are competing for a reduced number of projects. That has been the case for several years now. Although we are seeing signs that attrition and pockets of economic recovery are finally changing the dynamic, the domestic market will never return to the type of growth we experienced before the recession. Fortunately, the desire for personalized, unique design remains. Our clients realize that creating a memorable and entertaining experience is more important than ever. Cookie-cutter solutions no longer produce the necessary results. Market saturation, an evolving customer demographic and new technologies require more creativity and less mimicry. Existing facilities, many a product of years of ad hoc expansion, see that renovation and rebranding are essential to success and survival. Our current project at Dakota Magic Casino and Resort is a good example. The initial phase involves new restaurants, entertainment and a complete redesign of the casino to improve circulation and differentiate the gaming floor. The master plan will result in a comprehensive, phased transformation of the 20-year-old property, reflecting our unique approach to materials, color and stylization.
Firms like ours that grew along with the Native American casino sector can no longer survive solely as specialists. Over the last few years, we’ve diversified to a point where less than 50 percent of our revenue is derived from tribal casino projects. We remain committed to interpretive design and have found that our approach extends beyond the entertainment and gaming world. Happily, this also applies to our Native American clients as they expand on the types of project they’re considering. Our experience working with more than 60 Native American nations across the country has often included projects other than gaming, but now these complementary projects are becoming more common and important.
Perhaps this is the reason that precise, long-range planning is more widely accepted as a crucial initial step. Smart design must be supported by realistic market analysis, clear goals and a commitment to promotion and customer service. We are often participating in focused planning efforts and analysis before any lines are drawn. A recent example from our portfolio is the work we performed for the Ak-Chin Indian community, which included both a casino resort master plan for the Harrah’s Ak-Chin Casino and a long range plan for their entire community. We see this trend increasing, as we have several other tribal planning efforts underway. These projects often involve thousands of acres of tribal lands with a variety of uses such as cultural centers and museums, health and educational facilities, housing, government services, travel centers and convenience stores, mixed use and retail and entertainment features. More Native American communities are applying the economic benefits of casinos to develop a holistic, generational approach for their lands with a diversified approach to the guest experience and investment in the identity and services available to their community.
Marcus Prater
Executive Director
Association of Gaming Equipment Manufacturers (AGEM)
The new year marks the dawn of a new era for casino entertainment. While 2014, from a gaming suppliers’ perspective, will go down as the year of consolidation, 2015 is poised to be the year when casino players will enjoy a completely new level of fun and entertainment.
It’s not a secret that casino revenues, slots in particular, have generally been declining in the U.S. for a variety of reasons, one of which is that younger players have very little interest in playing slots. Using our biggest U.S. market as an example, recently released 2013 Las Vegas Visitor Profile Study information and the gaming abstract revealed:
• In 2004, 87 percent of adult visitors gambled at least a little; in 2013, only 71 percent did
• In 2004, 29 percent of those surveyed were under 40; in 2013, 42 percent were under 40
• In 2009, 11 percent of visitors to Las Vegas were ages 21-29; in 2013, 15 percent were in that age range
• In 2009, 16 percent of visitors to Las Vegas were ages 30-39; in 2013, 27 percent were in that age range
• In May 2008, statewide slot revenue was $647 million; in May 2014, statewide slot revenue was $556 million
You can see visitors are trending younger and gambling less in Las Vegas, a pattern present in many other markets as well. So what needs to be done to reverse this trend? Well, one idea came from Nevada Gov. Brian Sandoval, who initiated the formation of the Nevada Committee to Conduct an Interim Study Concerning the Impact of Technology Upon Gaming. While the committee name is long-winded and somewhat confusing, its mission ultimately was clear: Make recommendations for the Nevada Legislature to consider so that Nevada focuses on retaining its position as the gaming technology center of the world.
The committee met multiple times from early 2014 into mid-year, and one recommendation now being forwarded to the Nevada Legislature involves a simple, yet radical, idea pushed by the Association of Gaming Equipment Manufacturers (AGEM) and its members: Change the state law to allow for variable payback percentages on slot machines.
Currently, slot machines have a fixed payback percentage offered to every person playing that machine at a particular time. Under AGEM’s proposal, slots could have wide swing in the payback offered so that skill-based elements and arcade-style features could be incorporated into the slot experience. For example, a slot game may offer a base 88 percent payback for all players, but if you’re particularly good at shooting down enemy planes during the bonus round, you could boost your payback to, say, 96 percent. Just like arcade games that make it difficult to advance past all of the different levels, these slot games will have different challenges that will prompt players to try and beat the machine or compete head-to-head with their friends. Ultimately, the blended slot percentage will offer a fair payback and will be determined by a variety of factors, including the selection of the appropriate range by the operators.
If a younger player whose entertainment experience has been shaped by iPad apps and Xbox-style games realizes he or she can ultimately win more money by challenging these new slots, then that’s what you call a true game-changer.
Advocates agree adding skill elements will attract younger players who are accustomed to challenging the outcome during their video gaming experience. One of those advocates is the state of New Jersey, which has announced it can offer skill-based slots without any changes to existing laws or regulations. With New Jersey now accepting these types of game submissions and Nevada poised to change its law to do the same, can other jurisdictions be far behind in their desire to offer their players an entirely new gaming experience?
Valerie Spicer
Executive Director
Arizona Indian Gaming Association
We pause to reflect over the current year, while realizing that, in fact, every year that tribal gaming exists and provides for communities among the 22 tribes in Arizona is truly a good year. Gaming has been an unparalleled economic phenomena for all Arizonans, albeit directly or indirectly. This year, the Arizona tribes achieved a milestone of $1 billion in shared revenues with the state for education, trauma and ER, tourism and conservation, all of which have become heavily reliant on these funds as the economy ebbs and flows.
The recession bounce back was a challenge to say the least. Our state was hit very hard, experiencing a failing housing market and high unemployment. Our recovery from that impact has taken longer than most states. Compound that with one of the potentially largest budget deficits for this upcoming year and concern clouds our forecast.
Arizona has elected a new governor who will take office in the midst of an extraordinary budget deficit, looming at more than $1 billion. When there are significant budget concerns, the tribes have concerns about where and how that funding will be made up. Will it come by way of cuts to programs that are still trying to recover from the impacts of sequestration and the recession? Or will it come in unproven offers and promises for revenue sharing from expanded gaming that eradicates the exclusivity of the tribal state compacts? In either case the tribes, the state and our association have our work cut out for us.
The Arizona Indian Gaming Association will continue to outreach and educate about the benefits of tribal gaming. Moreover, we are working hard to distinguish the tribal in tribal gaming that we feel is the distinct difference about our industry. As such, we will not deter from sharing our story and will support other tribes throughout Indian country as they do the same.
As tribal governments strengthen their ability to provide for their communities, to fill a void that was centuries in the making, they do so with immense widespread impact. In the case of rural communities, tribes, in many cases, are the largest employer in small towns dotted across our state. Most importantly, Arizona’s tribes, through the gaming compact, have provided a mechanism for machine transfers and revenue opportunity for tribes who would not otherwise have a means to benefit from tribal gaming due to their location.
The forecast may seem a bit turbulent but we will batten down the hatches and continue to operate smart. There is too much at stake and too many who rely on the continued success of tribal gaming.
Balancing struggles and opportunities, tribes in Arizona have long endured and persevered. Arizona Indian Gaming Association member tribes will continue to protect tribal gaming exclusivity that has promoted improvements and economic growth in both tribal and non-tribal communities statewide. Looking forward, we are always mindful that the success and continuation of tribal gaming in our state is great for tribes and great for Arizona.
Daniel J. Tucker
Chairman
California Nations Indian Gaming Association (CNIGA)
Tribal gaming is an important component of our governmental relationships with the larger California community. Through our gaming operations, California’s tribal governments contribute to the state and local economy and create good-paying jobs.
The California Nations Indian Gaming Association (CNIGA) commissioned Beacon Economics to conduct a study examining the impact of tribal government gaming on the California economy. The study demonstrates the growing strength of tribal government gaming as a force for economic development.
The study finds that tribal government gaming is a valuable contributor to the larger California economy—generating $8 billion of economic output in 2012. Of that $8 billion total, $2.9 billion represents earnings by California workers—wages that go toward buying a home or putting kids through college.
If that sounds like a large number, it certainly is, but it shouldn’t be surprising. According to Beacon’s analysis, California tribal gaming operations generate 56,000 jobs across the state, and non-gaming operations generate another 15,000.
Casino jobs provide an economic ladder of opportunity, from entry-level to skilled-management positions. They pay good wages and include excellent medical, dental and life insurance plans, and offer access to 401(k) retirement plans. More than 90 percent of casino employees are non-tribal members.
When local residents go back to work at jobs that pay well and provide steady benefits, it’s a boon for the entire community. Higher wages mean more income to invest in housing or cars, to eat at local restaurants or to spend at local retail stores. It means supporting communities on the path back to economic stability and creating a lasting bond between the tribes and our neighbors.
The benefits extend beyond gaming tribes, with gaming revenues going to support non-gaming tribes and allowing them to fund a variety of essential services from education to healthcare and housing. Revenue sharing that gaming tribes provide—including annual contributions of $2 million annually from San Manuel and Morongo, and more than $1 million for Cabazon—to non-gaming tribes, generated more than $100 million in economic output for California and supported 433 jobs statewide in 2012.
The study also demonstrates that California tribes are also some of the state’s most active philanthropists. In 2012 alone, gaming tribes and their casinos gave nearly $37 million to community charities such as the San Bernardino County Homeless Education Program and the Barbara Sinatra Children’s Center in Riverside County.
California’s gaming tribes have increasingly taken responsibility for providing essential public safety, health and education services that support not just tribal members but the surrounding communities.
In 2012, Sycuan Casino supported Mama’s Kitchen, a charity that delivers healthy meals at no cost to San Diego men, women and children affected by HIV/AIDS or cancer. Meanwhile, the Bear River Band of the Rohnerville Rancheria funded a full-time deputy sheriff in Humboldt County. Besides preventing crime, this type of support for public safety reduces community need for government funding at a time when the state’s budget is stretched thin.
California’s tribal governments are becoming self-sufficient—creating strong, sustainable economies. With that self-sufficiency, however, we understand that we have a responsibility to our neighbors with whom we live and work.
From north to south, tribal nations will continue to hire local workers and support local businesses in our communities. We will also continue investing in services and projects that support safer, healthier communities for all of us—tribal members and non-members alike.
Tribal self-sufficiency benefits California, and we are excited to keep working side-by-side with our neighbors to ensure we are making this state a better place to live today and for generations to come.
Mike Smith
President and CEO
Casino Association of Indiana
Challenging and encouraging are the best ways to describe the gaming industry environment in Indiana. The Casino Association of Indiana, along with our members and partners, has done a respectable job of explaining our challenges to our elected leaders. We are encouraged that we will be working together in 2015 to improve the economic climate of our industry and the fiscal outlook for our state.
Our major challenges are competition from surrounding states and an economy still sputtering toward a full recovery. These have been well-chronicled over the last few years, and, now more than ever, it seems that our leaders and the industry understand that we must work together to overcome them.
During a recent round of interim legislative meetings of our Public Policy Committee, both experts in the industry and concerned legislators sought ways to become more competitive, bringing forth a series of recommendations that could become legislation in 2015.
One recommendation is to come to an agreement allowing the state’s riverboats to move off the water and onto their adjacent footprint on land. This would allow for replacement of outdated, 20-year-old gaming areas on boats that no longer leave their docks.
Another recommendation is to allow live table games at the two Indiana racinos. The proposal would limit the number of table games with live dealers to the current number of electronic table games, already at the racinos, for a two-year period. Afterward, the racinos could seek approval to increase the number of live dealers from the Indiana Gaming Commission.
The committee also wants to continue monitoring recent Free Play changes from a 2013 law allowing a promotional play tax deduction and extending that law two years to 2018.
It encourages working with the Legislature’s fiscal leaders to explore removal of the riverboat admissions tax, which provides local funding, in a manner that could replace that lost revenue.
The committee also wants the Legislature to find ways to encourage investment by casinos into new construction, repairs and other infrastructure improvements—an idea that has been considered in the past.
Finally, the panel recommended assistance to the historic southern Indiana destination of French Lick Resort and Casino, where an economic rebirth has occurred over the last few years because of renovations and the draw of the gaming facility.
The recommendations made by the interim committee will be considered by the General Assembly beginning Jan. 6, 2015. Perhaps not all will be adopted, but any that are passed could help to protect the 13,000 Hoosiers employed in the industry as well as the many small businesses that thrive in the industry’s supply chain. They could also enhance the state’s third largest revenue source, responsible for $1 billion to local governments every year and more than $12 billion since the inception of gaming in 1995.
Like any other industry, gaming has every right to protect itself from competition. We are looking for ways to reinvent and evolve—not trying to expand gaming, but wanting to expand a better gaming experience.
We are grateful that the Indiana General Assembly, starting with Public Policy Committee members, is looking carefully at how to allow us to compete.
Peter DeRaedt
President
Gaming Standards Association (GSA)
It’s no secret that the gaming industry is in the midst of sea change. New commercial forces and mergers combined with rapid changes in technology and exponential innovations are bringing unique opportunities at lightning speed. And while these factors put smiles and profits into the pockets of entrepreneurs and well-managed companies, if care is not taken, the gaming industry risks seeing chaos and disruption—and perhaps even public backlash—due to gaps between regulation, public policy and commercial inertia.
I recently attended the annual IAGR (International Association of Gaming Regulators) conference in Pennsylvania. Seeing the rapid growth of this important association, it is clear that regulators are well aware of the challenges that lay ahead and are seeking consensus guidance through collaboration. More to the point, they are grappling with how to reconcile good public policy in a volatile industry without stifling the very business they regulate.
GSA has a very comprehensive yet focused approach to bridging the mission gaps between technology companies and regulators. The technical standards our members have created not only meet the needs of virtually every gaming manufacturer and operator, but they also are especially designed to inherently make compliance and verification as simple and transparent as possible for both operators and regulators.
In 2015, GSA will be devoting additional focus and resources into our outreach, education and collaboration between regulators and our members in an effort to ensure a compliant as well as a rich journey into the next phase of our industry’s growth.
Wes Ehrecke
President & CEO
Iowa Gaming Association
Any semblance of a forecast for 2014 got blown up by a January and February that taught us about polar vortexes and saw record snow, ice and brutal cold for several weekends, causing usual peak patron attendance to significantly decline. That lost revenue just couldn’t be made up throughout the year, especially when more wet weather and another round of snow and cold hit in November.
So doing a forecast for Iowa’s commercial casino industry in 2015 starts with cautious optimism that we will not experience another extreme winter pattern. Weather factors aside, perhaps it is economic uncertainty or a changing behavior among casino patrons on how they budget for their discretionary entertainment dollars; the general mindset is that overall revenues will remain flat again in 2015. Plus for the several casinos located on the eastern border of Iowa, they must also contend with the significant uncharted growth of video gaming terminals (VGTs) that are sprouting in numerous bars and other locations across the river in Illinois.
The good news is that, while not seeing a lot of growth in 2015, Iowa’s gaming industry will continue to be stable and strong. There is a continued commitment by the 18 casino locations to enhance their properties with upgrades and amenities to be their area’s premier entertainment destination.
It is expected that organic growth should help somewhat to increase gaming revenue with a new land-based casino that replaced a riverboat in mid-2014, and another casino license was granted and expected to open in the third quarter of 2015. The trend is for a few more facilities to also move from their present riverboats to larger land-based footprints by 2016. Each of these results in offering improved concert and convention meeting space, hotel rooms, additional dining options and other features in addition to providing a more exciting gaming floor area.
When the Legislature convenes in January, the industry does not envision any legislation passed to cause adverse impact. There will likely be bills of interest introduced to consider a credit on casinos being taxed to offer promotional play, authorize fantasy sports and clarify allowing nonprofit organizations being able to offer raffles and gaming-themed events in the casino’s convention space.
J. Kelly Duncan
Partner
Jones Walker LLP
Immediate Past President—International Masters of Gaming Law
2015 will see continued growth in gaming as governments around the world strive to address budget shortfalls in the least painful way.
In the United States, while New Jersey and Mississippi have seen significant casino closures in 2014, the voters of Massachusetts in the November midterm elections soundly rejected a proposed ban on casino gaming thereby allowing several major casino projects there to move forward in the coming year. Additionally, new casinos will be opened in 2015 in New York and Maryland.
The wild card is what effect the mid-term elections will have on online gaming in the U.S. As a result of the elections, the Republican Party now has control of both the House and the Senate. The question is whether this will breathe life into the push by Sheldon Adelson, a major contributor to the Republican Party, to adopt federal legislation banning online gaming.
In the meantime, consolidation of global publicly traded gaming manufacturers, some with lottery companies, continues to be the order of the day while some casino companies consider creative financial engineering, such as real estate investment trusts, to increase shareholder value.
Finally, social gaming is growing exponentially and whether some should be regulated (and if so, how) will be of increasing interest worldwide. Because of all of this, the role of the International Masters of Gaming Law (IMGL) as the leader in educating the world of gaming will continue to be of particular importance.
The IMGL is a nonprofit association of prominent gaming attorneys, regulators, educators, executives and consultants from around the world who are dedicated to education and the exchange of professional information concerning all aspects of gaming law.
The organization’s membership is by invitation only, after a strict vetting process, to those who have truly distinguished themselves in the gaming industry. As gaming has expanded worldwide so has the membership of IMGL with membership almost doubling since May 2008 with a total now of 354 members from 41 countries.
Given its global membership of distinguished members who focus on gaming education, one or more IMGL members regularly participate as speakers at prominent gaming conferences around the world. Each year, the IMGL produces two of the preeminent gaming conferences in the world, one in North America and one outside of North America. Additionally, the IMGL is creating a substantive body of gaming law work with its four magazines—Casino Lawyer, Canadian Gaming Lawyer, European Gaming Lawyer and La Ley del Juego, its casino law and loose-leaf service and its sponsorship of the UNLV Gaming Law Journal and the Gaming Law Review and Economics publications.
IMGL, at the invitation of the International Association of Gaming Regulators (IAGR), will co-locate its 2015 Autumn Conference with the IAGR Annual Conference in Lima, Peru. The conference will build upon advances in finding solutions to time consuming and expensive licensure and investigation issues addresses at the joint conference of the IMGL and IAGR in Oslo in 2013. Furthermore, following up on the success of its inaugural Masterclass at ICE in London in 2014, IMGL offered three additional Masterclasses in 2014 in the Philippines, Sofia and on the Isle of Man and will be back at ICE in the first week of February 2015.
The open networking and collective experience of IMGL members makes the IMGL an integral and effective tool for the dissemination of gaming law and developments worldwide. Because of this, IMGL members will be a significant resource for helping to shape the development of online and land-based gaming and the convergence of same, mobile gaming and social gaming in 2015.
Ernie Stevens Jr.
Chairman
National Indian Gaming Association (NIGA)
Indian country moves into 2015 with new challenges and great expectations after landmark election results in 2014. With both the House and Senate now Republican-controlled, Indian country, as always, will rely on our friends from both sides of the political aisle to make 2015 a banner year for Indian economic development.
Tribal gaming continues to put the Great Recession in our rearview mirror, improving lives in Indian country and helping our neighbors make it through tough economic times along the way. The President, the National Indian Gaming Commission (NIGC) and Department of Interior have set an ambitious consultation agenda with Indian country in 2015. For 2015, we expect a Republican Congress to join the federal government in tackling the issues confronting our reservation economies and move Indian country to a sustainable economic recovery.
In 2014, Indian gaming reported our third consecutive increase in gross gaming revenue since the start of the recession. Fiscal year 2013 revenues came in at $27.2 billion, a near 2 percent increase over the previous year. We expect that the 2014 numbers will be just as positive. This will be great news for Indian country as a whole. Despite all of this success, we must always remember that there is still more to do. There are still many unmet needs for our Indian people, and we will continue to strive to improve our economies to meet those challenges.
We realize that, for many tribes, Indian gaming is the primary economic engine. With more than 300,000 direct jobs and more than 650,000 indirect American jobs nationwide, Indian gaming continues to generate thousands of American jobs post-recession.
However, reservation unemployment remains critically high, so Indian country hopes the President and new 114th Congress will work together to push hard for jobs and economic recovery legislation in 2015. First and foremost are economic policies that acknowledge the solemn treaty and trust obligations to provide for the basic health care, education and general welfare services promised to our nations.
In addition to working with Congress to ensure that economic legislation respects tribal sovereignty, NIGA has revamped our gaming seminars and trainings for 2015. NIGA is now going to offer trainings and information to tribal commissioners and regulators about the latest technological advances in gaming, including technologies that improve customer service, management capabilities for tracking game usage/play and tying in promotions and incentives for customers. We understand that the next generation of gaming regulators face new obstacles, whether it’s wagering from mobile devices, social media or other platforms and portals—NIGA will be there to help Indian gaming stay on top of the latest developments.
NIGA and our sister organizations such as NCAI, will continue to work with our regional organizations to actively weigh in on the new 114th Congress’ various legislative proposals that impact Indian country. We will ensure that NIGA’s principles of respect for tribal sovereignty and self-government will be included in any legislation impacting tribes that moves through Congress.
Moving from a national to a regional perspective, Oklahoma and the southeast continue to outperform other gaming markets. The final two quarters of 2014 appear to be periods of strong economic growth, which should help all regions of Indian gaming as 2014 concluded. Accordingly, Indian tribes and industry leaders are focused on targeted marketing, improved efficiency, cost containment and finding innovative ways to attract customers.
2015 is sure to bring political and economic change, for the better, we hope. NIGA will maintain its core focus on urging tribes to use gaming revenues to help diversify their economies. We are hopeful that in the near term, tribal economies will continue to build upon those aspects that make Indian country unique by utilizing dollars to provide the most effective governmental services such as housing, education, health care and social services. This includes continued diversification into cultural and environmental tourism.
We have a lot of work ahead of us, whether it is in maintaining the strength of our existing operations or working with tribes that are still seeking to find economic sustainability.
Sheila Morago
Executive Director
Oklahoma Indian Gaming Association (OIGA)
It’s no secret that much of the nation suffered deeply from the recent recession from which it continues to recover. Oklahoma, however, fared well throughout, with a low unemployment rate compared with many of its neighbors. The state’s economy continues to be stable.
Over the past year, gaming in Oklahoma has continued to grow and thrive, adding seven new operations and generating a 4.5 percent revenue increase, according to the National Indian Gaming Commission. This continues the upward trajectory of Oklahoma gaming from the past few years. We’ve seen revenue increases as high as 14.4 percent since 2009, at the height of the recession. That tells me Oklahoma Tribal Government Gaming is doing something right, that we’re filling an entertainment and economic need for our residents and surrounding states.
The hard work and vision of the Oklahoma tribes to set the groundwork for casino-style gaming here means we get to count the revenue generated in the billions—that’s right, with a “B.” This is wealth shared within the tribes, but also with the surrounding communities. As tribal gaming continues to grow in our state, that means the local communities add both well-paid jobs and sales tax revenues. The tribes continue to demonstrate their willingness to invest in Oklahoma communities by building new operations and renovating older ones, as well as increasing services for their members, such as health clinics and outreach programs. The benefits of these programs extend beyond the tribes and continue the swelling tide of prosperity in Oklahoma.
Most importantly, public education benefits directly from the continued prosperity of tribal gaming in Oklahoma. By the second quarter of the 2015 fiscal year, contributions to state of Oklahoma from the tribal exclusivity fee will have reached $1 billion since the gaming compact took effect in 2004. Tribal gaming routinely generates double from the exclusivity fee than what was projected.
2015 will be a year of continued growth for both tribes and the state of Oklahoma. Tribes will continue to reinvest in our state by reinvesting in our communities and our businesses. Shared revenue to the state from Oklahoma Tribal Government Gaming will reach the $1 billion mark by the second quarter of 2015, so as I said before—Oklahoma Tribal Government Gaming is doing something right.
José Luis Benavides
Attorney at Law
Benavides & Asociados, S.C.
As we predicted last year, President Enrique Peña Nieto pushed Congressmen to move forward on a comprehensive new gaming law. The bill was drafted by the Minister of the Interior (SEGOB) and the Gaming Committee in charge of this legislative effort.
Mexico’s Deputy Chamber voted on Dec. 2 to pass the new gaming bill. At press time, the Senate hadn’t yet taken up the bill but was expected to vote on the bill around mid-December. If the Senate also approves the bill, it was to be sent to President Nieto, who would likely sign it into law by Dec. 31.
If you are thinking about a future investment or ready to place your bets now in Mexico, this is advance notice of the most important topics to be discussed. These cover important aspects you must to know before making any decision about getting into the game.
1) Foreign investment is allowed at 100 percent by incorporating as a Mexican corporation.
2) Casinos, one location per application, business plan and finance capabilities are required by Mexican Government.
3) License expiration, 12 years initially and renewable for 10 year periods thereafter.
4) Land-based, on-line and mobile licenses would be granted by the Gaming Regulatory body in 2015.
5) In addition, Internet digital platform and mobile services could be operated with or without a land based casino related operation.
6) Full array of Class III machine games, all live table games, poker, bingo and sports-book wagering are allowed in any facility.
7) Certification and homologation of equipment, systems and casino employees.
8) Casino development throughout the country is open.
9) Advertising is allowed on mainstream, social media, broadcasting and et cetera.
10) Gaming Regulatory Body will be headed by a gaming expert in several operational areas, such as compliance, money laundering, finance, legal/regulatory, advertising and taxation among others.
Editor’s Note: Benavides will have a full report on the new law in CEM’s February issue.
Robert W. Stocker II
Member
Dickinson Wright PLLC
In large measure, commercial and Indian country gambling activity in the United States market in 2015 will be a déjà vu repeat of 2014: Continued stalemate of any federal action (either way—up or down) on Internet gambling legislation; gradual opening of new commercial casinos in newly emerging gaming states while the current commercial gaming states by and large experience a repeat of 2014 numbers; continued consolidation of the gaming supplier industry; continued pressure on the New Jersey land-based casinos as more East Coast casinos open and/or expand operations; cautionary expansion of intrastate Internet gambling; continued expansion of social gaming and fantasy sports; and pushing the envelope on the distinction between non-gaming and gaming regulated activity in the social gaming and fantasy sports arenas. Still to be determined: Will there be a blockbuster bankruptcy reorganization in 2015? If it occurs, a few United States-based and at least one international-based casino operator will have a significant opportunity to expand their worldwide presence on a selective basis.
The first half of 2015 will likely see the continuation of a soft market in Macau. However, this market is set to turn around commencing in the third quarter of 2015 as the current expansion projects start coming on line, assuming that Beijing’s anti-corruption campaign has run its course. A cautious market environment will likely continue to exist in Singapore (where the government does not view the gambling business as a linchpin of the economy). On the other hand, the Philippines is set to expand its market presence as new projects come on line in 2015. The Philippines has positioned itself to become the third largest gaming market in the world and could ultimately pass Singapore into second place. In addition, Cambodia and Vietnam, while secondary markets, are taking hard looks at ways to effectively expand their gaming markets. Korea is also a focal point. While there continues to be a lot of talk about Japan and Taiwan, the governments in these two countries have consistently failed to meet expectations and, notwithstanding some of the current focus on these countries, there is little reason to expect anything other than more of the same disappointments in 2015.
By and large, the gaming market in Western Europe is stable, dull and boring. Internet gaming has been less than spectacular. The major Internet gaming providers and the software companies that are developing Internet gaming software, social gaming software and fantasy sports systems are all looking to the Americas and placing themselves in strong positions to take advantage of the popularity of social gaming and fantasy sports in North America and their eventual morphing into Internet gaming as the barriers to Internet gaming continue to fall in North America.
The Eastern European market is interesting, but plagued by concerns about government stability in the face of the threat of the expansionist policies of Russia and a continuation of less than robust economic development. One of the more interesting countries is Bulgaria—a strong tourist destination that has recently enacted gaming legislation that recognizes the economic power of the Internet. This fact, combined with elections that appear to have brought a pro-western, pro-business government into power bodes well for Eastern Europe gaming activity to be kick-started in a positive direction.
Finally, there is the supplier market. 2015 will see more European and Asian companies seeking to enter the Americas market—particularly North America. While many will focus on the traditional entry route—Nevada and New Jersey—some of the Asia-based suppliers will most likely start making their presence felt first in the Indian country market, which represents approximately 45 percent of the United States land-based gambling market. The United States continues to be the market in which to have a footprint, and more European and Asian companies are going to be entering this market in 2015 and beyond.
Greg Gemignani
Attorney
Lionel Sawyer & Collins
My forecast last year could be summarized as predicting that in the new era of gaming, policy makers would focus less on trying to be the toughest gaming jurisdiction and include a focus on being more reasonable with regulation and regulatory actions that are designed to meet current policy goals and issues. My forecast was mostly off, though maybe only in timing. The article, written by Norman DesRosiers, titled “Due Diligence? Or Gotcha? License Background Investigations” in the March issue of Casino Enterprise Management gave me hope that I was on the right track as a well-respected, highly experienced former regulator was echoing similar ideas just a few months later.
This year, I’ll try to be less idealistic. In the short-term, consolidation is likely to continue to occur in the gaming market. While we have seen significant consolidation efforts occur in the manufacturing side of the industry in 2014, a new wave of consolidations in the operating side would not be surprising at some point next year. Domestically, new market growth opportunities are limited, and many market analysts have publicly stated that many existing markets are near, at or beyond the saturation mark for gaming services. Therefore, growth for operators will be limited domestically to a few markets that are opening up or have room for growth, growth through acquisition/consolidation, or growth through opening foreign markets. However, with regard to foreign markets, many desirable foreign markets are looking for a limited number of integrated casino resorts, and there are a small number of operators in the world with a proven track record of successfully financing, completing and operating such complex projects.
For those who don’t know, Nevada’s legislature meets for regular sessions of 120 days every other year. Since 2015 is a legislative year, there is always some risk of significant changes to the gaming laws in Nevada.
In Nevada, restricted gaming is likely to face further challenges in the 2015 Legislature as the state looks for additional revenue sources. In the 2013 session, bills were introduced and retracted last session to change the way slot route operators were taxed, and proposals were floated to change the way taverns and other restricted locations were taxed (or paid fees). Given the budget issues for Nevada in the next biennium, it is likely that proposals like this and others, will be revisited, such as one for slot parlors. While many such proposals may be floated or explored, the 2015 Nevada Legislature has many new members, and early indications are that many of the new members are not proponents of any revision or modernization of the current tax system. However, it is likely to be a topic of significant interest in the next Nevada legislative session.
At this time, there is also speculation that a bill will be introduced to address skill gaming with respect to gaming devices (slot machines). I am unaware of the precise language of such a bill. However, there are a number of interested parties and organizations that are proponents of introducing skill elements or skill-based gaming components into gaming devices. There is also significant interest from some operators and manufacturers who believe adding skill elements or skill gaming to the mix could make gaming products and services more appealing to a younger demographic between the ages of 21 and 40 that was raised with computer-based games. I expect the Nevada Legislature will address this issue in the 2015 session as the concept seems to have broad industry support.
I. Nelson Rose
Professor
Whittier Law School
In 2006, I wrote my first yearly forecast for Casino Enterprise Management. Here’s my record so far.
This one has not yet happened: “Even a game as old as poker is alive with new legal issues, when it is played by people who are linked by phone or computer. In the coming years we might get an answer to the question: Is poker a game of skill?” We have had some interesting court decisions, but nothing definitive.
“Every form of gambling can, and is, being played on a video screen powered by a computer.” I specifically mentioned video lottery terminals and Class II bingo. A month ago I testified in a trial on whether linked bingo machines were actually bingo under Alabama law. The fights, which are over when is a gaming device not a slot machine or lottery, look like they are going to continue into the indefinite future.
“Prohibition 2.0 [the Unlawful Internet Gambling Enforcement Act] is going to create a boom of creativity… inventive ways to run games, including poker tournaments, with a free alternative means of entry; skill games of all sorts… And some land-based casinos will become major players.”
Caesars Entertainment is now bigger than Zynga in the non-gambling online gaming field. The boom in games that look like, but technically are not, gambling, especially poker and slots, is only going to get bigger.
Many forecasts were about the economy. Las Vegas is pulling out of the hole of the Great Recession. But I don’t see any long-term rescue available for Atlantic City. Whatever the politicians and executives in New Jersey come up with, competitors closer to New York and Philadelphia will simply copy and cut off the flow of customers. And there is nothing that can be done about Atlantic City’s weather in winter.
I admit I was overly optimistic about online gaming. It took longer than I thought for the states to get all of their systems in place. And the market has turned out to be smaller than anyone predicted. So small, in fact, that the first operators have announced they are pulling out because they are not making any money.
The problem is fundamental. People in their 20s and 30s, who are the biggest users of online games, actively dislike conventional slot machines. They have far better games on their smartphones. But regulators and, to a lesser extent, operators cannot easily take a game like Candy Crush® and turn it into a game played for money with cash prizes. So casinos are in danger of losing one or two generations of potential customers.
Las Vegas is trying to lure well-off younger visitors with restaurants and nightclubs. But the Cosmopolitan showed that an empty casino still means no profits.
My forecasts often focused on politics and technology, which proved to be where the action did turn out to be, and where it will continue for at least the next few years.
While Sheldon Adelson spends millions in a fruitless effort to stop Internet gambling, operators are already going on to the next new thing. Social gaming on mobile devices is growing faster than any form of true gambling.
I think state lotteries will be ahead of casinos in adopting new games. Unlike casino regulators and operators, state lotteries can turn Candy Crush® into a real-money game.
And those games are going to be played on smartphones and iPads.
Michael J. Dominelli
Vice President
NRT Technology Corp.
Mission Critical Solutions is the classification of products and services NRT Technology provides to its casino customers. As a result of operating in this class for 15 years, we have always made a conscious decision to be committed to our customers and their requirements. Over the last several years we have seen the good and the bad in terms of trends and growth. For the cash access, ticket redemption and cash management segment of the market, these conditions have presented the opportunity to “pull up your socks” and develop compelling value propositions to make a positive difference in the marketplace.
High availability, in this segment competition has never been as fierce as it is today. This has resulted in some of the best opportunities for casino operators to improve their bottom line through aggressive bids for their business. Uniquely established as the only provider that designs, develops, operates and owns its entire payment network, NRT is at the leading edge of the most innovative and complete end-to-end cash access and cash management solutions in the industry. With the past year seeing major input from our customer base, reliability and high availability is at the top of the list for NRT. Our new Active-Active payment processing platform will deliver just that. With two active data centers accompanied by two active databases with real-time synchronization, this cutting-edge technology is what our customers are looking for, and we have built it. We can do this as our customer-centric approach guides us to develop the most relevant, casino-tailored products and services in the world. As casino operators adopt our leading-edge solutions they are going to be experiencing the positive benefits of our complete integration and wide array of new product offerings that come out annually. Receiving such positive feedback on the implementation of these products and services have motivated and encouraged us as we look forward to 2015 and beyond.
There have been more major mergers and acquisitions in the last year than ever in the history of North American gaming. I see this evolving landscape as a reset for the technology and manufacturing providers looking to position themselves for the next chapter in gaming. What an exciting time as we look forward.
Our commitment to service, innovation and transparency is the cornerstone of NRT’s mission to be the sole solution partner of choice for the global casino market. I use the word partner because that is exactly how we view our relationship with our customers going back to the “mission critical” component of our products and services. We don’t just “sell and go.” We implement, integrate and grow with our customer needs and requirements as opportunities emerge.
The quest for capturing the “millennial” consumer is real. Whether that be through land-based or digital environments, interactive is the future, and we are all heading down this path together, both operators and solution providers. We are committed to understanding the challenges ahead and acting on them in a way in which we stay relevant in term of solution offerings and remain flexible. This is the key to driving forward on the road ahead of us. NRT’s philosophy has always been to understand and serve the customer better than anyone else, deliver on your word and operate with integrity, honesty and perseverance. Through innovation, reliability and customer service, we hold ourselves to a very high standard and will continue to stay positioned as a market leader that meets its valued customer’s expectations. For 2015, you will see more Innovation. Delivered.
Valerie Red-Horse Mohl
President/Owner
Red-Horse Financial Group
Founder—White Earth Mission Trip
The finance sector of the gaming industry (both tribal and commercial) has definitely been in recovery mode, albeit slowly and cautiously.
Our firm experienced tremendous growth/improvement in 2014 with added clients, financing mandates and new investors/lenders related to the gaming sector.
Wynn Resorts Chairman Steve Wynn’s advice to operators at the 2014 Global Gaming Expo about focusing on amenities resonates as we are financing several non-gaming ancillary and related projects. In 2015, we will be assisting many gaming clients with financing for workforce housing, travel centers, hotels, various expansions, restaurants and infrastructure needs. For our tribal clients we are also financing tribal housing, medical facilities and non-gaming enterprises such as oil, gas, mining, etc.
In our view, the forecast for the next few years is definitely growth and expansion but with caution and thoughtfulness. Most of our clients had to wait through the market crash and then build their gaming revenue back up before they could consider any new projects. We see most of our tribal clients cautiously seeking new technology solutions to stay relevant and competitive—no gaming operator wants to fall behind again, so the hunger for new products and efficiency is strong.
Finally, at Red-Horse Financial Group, our passion is for giving back and serving through the mission trip we founded on the White Earth and Leech Lake Reservations and the economic improvement of our industry is thankfully also evident in the increase in gaming-related companies getting involved with sponsorship, participation and general donations. This is truly a beautiful model. To see an increase in both business and philanthropy demonstrates functionalism and rich blessings for all.
Brooke Dunn
Consultant
I believe the decline in slot revenue will bottom out. The reason for this is operators will react to the diminishing demand by doing what every retailer evidentially does when they lose business, reduce prices.
The simple law of supply and demand will force operators (and, of course, slot manufacturers) to provide a lower cost gaming experience. To increase player demand, the operators will lower the hold on slot games.
Players do feel the pain of tight games. If players don’t immediately realize that the games are tighter, the casinos provide them with a couple simple measurement tools that reinforce their bad experiences.
They see it when they put their player’s cards in the machine and get fewer and fewer points for the same amount of money played. They have fewer W2G forms (if any) to report to the IRS. They see that they don’t qualify for comps like they did in the old days. They figure it out.
The manufacturers provide instant feedback as well. They design games that celebrate with music, animations and sound effects for a BIG WIN when the game pays as little as $10. If $10 is a BIG WIN, well, the player realizes that she doesn’t have a chance.
There is a reason that there are no clocks inside casinos. If the players don’t realize what time it is, they will keep playing. I’m not recommending that casinos put in clocks. In fact, just the opposite; if there were clocks, players would be able to better measure how short their gaming experiences have become.
Think about it. Just 10 years ago a player could sit down at a slot machine and play $3 a pull with a chance to win $1,000 on a 3-reel slot machine and lose about 10 cents a pull. They could pull the handle about 10 times a minute. They lost about $60 an hour. And they would earn about 1,800 points. And they had fun.
Today, they play the same $3 a pull on a penny machine with a chance to win $500 and lose about 45 cents a pull. Plus, they can play about 15 or 20 times a minute. They now lose their $60 in less than 10 minutes. And they earn about 1,200 points. And they don’t have any fun.
Adding insult to injury, it takes more points to qualify for comp food (buffet prices are way higher than 10 years ago), rooms and shows (have you looked the price of a show ticket lately?).
It is surprising that people are going to casinos at all. I guess they must really like to gamble.
Imagine how much more often they would go to casinos if they were having fun.
Michael Buckham-White
Senior Vice President of Sales & Marketing
Agilysys
The economy is starting to move forward, and gaming customers are beginning to spend money on software solutions that can help them tighten operations, secure guest information and enhance guest service. Interestingly, many of these customers are also seeking ways to better align themselves with the revenue being generated through non-gaming activities, such as food and beverage, shows and events. So, the challenge—and the opportunity—for software providers is to deliver solutions that address multiple aspects of the guest lifecycle, not just one area of the business or another.
We see five major technology trends shaping the gaming industry—cloud, security, mobility, analytics and guest self-service. Hotels and casinos are looking to software-as-a-service (SaaS) solutions to reduce their on-premise technology footprint and save the time and expense required to manage in-house systems; however, releasing “control” to true cloud-based services is counterintuitive for many in the industry. Although it’s scary for some, it’s a necessary step in the evolution of hospitality technology. Security is another top concern for gaming operators, as they seek ways not only to protect guests’ financial data but also to minimize their own operational risk. At the same time, there’s an increasing demand for mobility solutions that enable staff to provide faster and more efficient service while improving interaction with guests. Gaming operators also want analytics technology that allows them to make more data-driven business decisions. Finally, hotels and casinos continue to embrace self-service solutions that enable guests to take control of their own hospitality experience—from selecting rooms and making dinner reservations to viewing their folios at any time during their stay.
Addressing these trends in order, we offer several applications in an above-premise delivery model. We also have an innovative payment gateway solution for our property management and point-of-sale products that includes robust tokenization, PCI-validated point-to-point encryption, a payment information proxy based on HTNG standards and a full range of fixed and mobile EMV-ready payment devices. We’ve improved our mobility strategy with the introduction of InfoGenesis™ Flex, a mobile deployment of our InfoGenesis POS system, and Insight Mobile Manager, a mobile dashboard solution that allows hotel managers to view property information from a variety of tablet and mobile devices. In addition, we continue to build on our analytics product with a solution that offers enhanced data analysis and performance metrics to help managers gain the “big picture” perspective they need to make more informed business decisions. We also offer self-service solutions, such as the Guest Express kiosk, that not only allow guests to control their hospitality experience but also enable properties to utilize staff more effectively.
Across the gaming industry, operators are seeking to deliver more than merely a satisfactory transactional experience with guests. They want to manage and enhance the guest lifecycle from arrival through departure. We will align our products and services so that we continue to support traditional needs while also arming customers with technology that helps them advance further into non-gaming activities and guest-controlled interactions.
I’m enthusiastic about the coming year. The future of gaming is exciting, with many opportunities to offer enhanced service to guests. With the right technology, the industry will be positioned to leverage key trends to capture greater wallet share and earn more value from the market, both in 2015 and beyond.
George J. Levine
Executive Director, Sales & Marketing
Casino Data Imaging
Now entering our 14th year of serving the casino industry, Casino Data Imaging’s core values remain true (and successful), providing casino analysis solutions that are easy to use and maintain, a continuous stream of improvements and advancements, a powerful platform that allows more synergy with interfaces and integration, fast turnaround and customer and product focus.
CDI’s platform breakthrough with GlobalSuite allows us to continue to extend the capabilities of the 2D/3D visualization, interactive dashboard and reporting components that complements and advances CDI’s product development path. This includes utilizing tools available in Excel, including Power Pivot, Power Query, Power View and Power Map, along with the data mining add-ins and browser features to further BI for individual and team analysis.
Customer feedback plus insight based upon empirical evidence allows our team to question and challenge ourselves to continuously improve and respond to changing user requirements. We found that nurturing strategic partnerships with leading technology companies keeps us moving forward while staying focused and creative.
One example of customer feedback concerned dashboards, and the need to avoid overpowering users with too much information. Customers made it known “how much is too much” can vary depending on job roles. We responded by working with a variety of end users to gain a better understanding of their roles and the questions and answers dealt with daily. This resulted in creating more interactive and customizable views. Theme peer group comparisons, distribution utilization and optimization, lease games profitability and model conversion optimization (all with adjustable data grids and trend graphs) are great examples of logical customer feedback and suggestions. Alerts can also be used to call immediate attention to information based on pre-defined criteria set by users. If already using other tools for dashboard analysis, customers can still access our interactive trending collection if desired. The best of both worlds. Also, several clients who invested heavily in CRM tools utilize GlobalSuite for any gaps with their analysis coverage.
In 2015 we will introduce new player data features within the GlobalSuite application. Feedback from early adopters has provided CDI engineers a core specification for version one player data module. One example is providing on-the-fly player information while perusing the casino floor. This includes player search, trip and session histories and identifying what games customers are playing. In addition to the graphical, player information is brought into the application control center dashboard collection (including interactive performance analysis) and report analysis hub for high level and drilldown analysis.
CDI continues to focus and expand our service levels. The best user adoption cases include training that’s designed with a continuing education approach in mind. It’s important to be a strategic partner, not just a supplier competing on cost.
Tammy Farley
Principal
The Rainmaker Group
Before sitting down to write my predictions for 2015, I took a cursory glance at the third quarter 2014 financial reports for 15 of the more recognizable hospitality and real estate investment trust brand names. Based on what I glimpsed, I continue to be optimistic about what lies ahead. Of the 15 enterprises I looked at, all had posted an increase in year-over-year domestic RevPAR, with growth ranging from 5.6 to 12.4 percent.
These types of write-ups are always difficult. Forecasting the future with 100 percent accuracy sits within arm’s length of impossible. Forecasting what is yet to happen assumes the economic and geopolitical forces that shape the business landscape will remain static over the course of the next 12 months. In today’s interconnected global business environment, that’s not dealing with reality.
This much I know with certainty: The winds of change are blowing and always will, no matter how clear the economic skies or how unsettled the above-noted forces may be at any given time.
Which brings me to the subject of group business and total revenue management.
While our industry’s pillar of economic strength in 2014 was principally due to growth in transient revenue, reports continue to suggest group business is on its way back. And with its resurgence, expect to see greater focus and attention on initiatives that can help meet this rising group business demand.
As I wrote last year, hoteliers have already begun placing greater emphasis on managing group business and how best to position their properties for that business. This will hold true even more so in 2015, and here’s why:
1) Group business in North America represents about four in every 10 dollars in hotel revenue, so its significance as a crucial revenue stream cannot be dismissed.
2) Booking windows are shrinking.
3) Room block sizes are smaller.
4) Lengths of stay are shorter.
5) Elaborate meetings are out. Simple is in.
6) Meetings management technology has made it easy for event planners to bombard the inboxes of sales managers with group proposal requests that are too numerous to prioritize and too important to quote prices that rely on manual methodologies and instinct.
7) The first wave of millennials is now hitting its discretionary purchasing stride. Surveys show this emerging generation of consumers, born between 1981 and 1996, enjoys traveling with groups of friends by a percentage double-digits higher than previous generations. In the years ahead, we expect this generational tendency will be among the drivers of stronger group business demand.
Just as total revenue management has helped reroute and strengthen the revenue path of transient business (boosting incremental revenue anywhere from 5 to 15 percent in the 13 years since it was pioneered), so too will a 360-degree, holistic analysis of a complex, interconnected web of definable metrics help to reset how group business is priced.
Metrics used in formulating recommendations will include size of group; length of group stay; group type (corporate, nonprofit, government); competitor properties; booking period (season, day, etc.); ancillary revenue such as catering, meeting room rental, audio-visual, etc.
Using hotel sales and catering systems as the primary data source, next-generation revenue management systems will be automated data-driven tools that take the science of group pricing to a new level, one that will eventually render obsolete legacy pricing methodologies that rely on displacement analysis and gut instinct.
Replacing manual methodologies with automated technology will be ever more critical over the next 12 to 24 months, as group proposal requests continue to light up sales managers’ inboxes. And if surveys showing 70 percent of first responders get the group business are any indication of what’s to come, expect total revenue management automated technology to play a bigger role in how group rooms are priced in 2015 and beyond.
Andrew Cardno
Chief Technology Officer
VizExplorer
In 2014 VizExplorer transformed in many ways, not the least of which, we changed our name from BIS². Our vision is to harness the color of data, bringing a flood of innovation to the industry.
Companies that are growing are valued at higher multiples, acquiring other companies, employing stronger talent and otherwise having fun. The harsh reality of periods of growth is that some players are left behind; those left behind are sometimes left wondering what could or should have happened.
New growth is most often accompanied by innovation to accommodate new customer demand and to seize new opportunities. The four mega influences on growth in the industry are mega vendors, the Caesars Entertainment bankruptcy, global talent and globalization.
Through the acquisitions by GTECH and Scientific Games we are now left with two massive lottery/gaming conglomerates. Both mega vendors are remarkably similar in the product lines they cover; let’s take a moment to consider business areas that will be impacted.
With multiple systems making up the mix at each mega vendor there are clear choices to be made. Will there be a merger of the gaming systems and lotteries systems groups? Will some of the gaming systems be declared end of life?
Imagining how the culture of a lottery company combines with that of a gaming company is both fascinating and a little scary. Done right, it could be just what the gaming industry needs with an injection of innovation and systems experience that will enable the industry to change and adapt to new opportunities.
Gaming vendors can seize the opportunity created by the mergers. Operators are nervous, and while they are driven to innovate, they are forced to look wider for their new ideas and technologies.
I predict that the change and uncertainty will be good for the competing gaming vendors in 2015. These companies will benefit from the mergers, and we will see their ship share and systems share increase. I also predict that by the end of 2015 one of the mega vendors will have aligned their resources and will be looking strong for 2016.
When the largest operator in the country (by size) goes into bankruptcy, it must be felt across the industry. However, to understand the impacts of the Caesars bankruptcy we also take into account current effects and how this massive event has impacted the industry.
My forecast is that the bankruptcy will proceed in the first quarter of 2015, and that Caesars group will be able to hold onto its asset base. Emerging from bankruptcy will be positive for the properties with investment in new games, entertainment and horizontal innovations.
As I predicted in 2013, management teams are globalizing. There is little doubt that this trend will continue. With properties opening in Korean and Japan, the demand for experienced executives will further flatten the industry. In 2015 this flattening will be dramatically accelerated with executives spreading around the globe.
The growth of new properties around the world is nothing short of astounding. The markets are heating up; we are seeing extreme competition in securing new properties from a multitude of operators. Confidence in the size of the market has increased the stakes in an already high stakes game.
At VizExplorer, 2014 was another year of tremendous growth in its customer base and product lines. With nearly 300 properties now touched by VizExplorer technology, we stand as proof of how innovative companies can grow and thrive in the industry.
Hosts drive an enormous proportion of the revenue in many properties. These often talented individuals need tools to manage efficiently. In 2014, VizExplorer delivered these tools aptly named hostViz, and in 2015 we anticipate continued demand for this much-needed new product. In a nutshell, hostViz leverages VizExplorer’s real-time data capabilities to bring a new generation of on property mobile enabled sales force management capabilities. 2015 is lining up to be another wonderful year for VizExplorer. A year where our product range greatly expands our mobility and predictive capabilities. With such a bold innovation plan, 2015 will present its challenges, but VizExplorer is ready, and we are having fun.