Fahrenkopf Leaves Strong Mark on Macau and Beyond

Like another Frank, you could say Frank Fahrenkopf Jr. did it his way. And as he left Macau for the final time as president and CEO of the American Gaming Association (AGA), Fahrenkopf had to be pleased with what he helped create.

The G2E Asia trade show and conference at The Venetian set a new record for the size of the exhibition floor, with pre-registration numbers also tracking at a record pace. If you’re in the gaming business, G2E Asia must be on your annual calendar simply because Macau is the gaming capital of the world in terms of generating revenue. Macau owns that title by a wide margin, and with six new mega-projects under construction in the Cotai section of Macau, you ain’t seen nothing yet.

Fahrenkopf, of course, can’t take credit for the projected $44.5 billion in revenue Macau is projected to generate this year. And he’s certainly not solely responsible for the growth of G2E Asia and the way it is smoothly organized. No, the AGA’s partner on the show, Reed Exhibitions, does all of the heavy lifting and seems to have an army of workers who flock to the show from Reed offices in the region.

What is certain, however, is that Fahrenkopf has been the face of this show from the beginning seven years ago, the same way he presided over G2E in Las Vegas every fall. Now, after 18 years, he’s retiring as the only leader the AGA has ever had. You’ll still see him around on the speaking circuit and potentially as part of a Washington, D.C.-based law firm. But when G2E begins in Las Vegas on Sept. 24, 38-year-old Geoff Freeman will welcome the industry, not the 74-year-old Fahrenkopf, in what can only be considered a dramatic changing of the guard at the top of the organization that represents the industry at the federal level in Washington and, to a lesser degree, throughout the world.

Fahrenkopf was well able to keep all of the CEO egos around his board of directors table relatively happy and cooperative over the years. When you’re dealing with the Steve Wynns, Sheldon Adelsons and Gary Lovemans of the gaming world, that’s no easy feat. Fahrenkopf also deserves kudos for embracing the supplier sector. Initially, the AGA essentially consisted of the big casino corporations and IGT, at a time when operators and suppliers were feuding over the concept of participation games. Partly because the AGA needed more dues, partly because the Association of Gaming Equipment Manufacturers (AGEM) became a closer partner on a number of fronts and partly because it simply made good business sense for the entire industry, the AGA ultimately embraced the slot and table companies and the CEOs of both Bally Technologies and IGT have served as chairman of the AGA in recent years.

Another Fahrenkopf success story is the current staff at the AGA, including Judy Patterson, Dorothy Jackson, Holly Wetzel, Keli Elkins, Andrew Smith and Brian Lehman. Fahrenkopf is undoubtedly the face of the AGA, but the work done by his staff is what most people in the industry see on a regular basis.

Unlike last year, when Fahrenkopf was in the middle of a major dispute between SHFL entertainment and LT Game on the trade show floor, G2E Asia this year was smooth and successful by most accounts. The chairman of LT did stir the pot by announcing a new trade show in Macau in November that he claimed would be “totally different” from G2E Asia.

With so much activity in Macau, it’s easy to see why opportunists are targeting the market. Looking forward, attention will continue to focus on the Cotai growth. In order, Galaxy Phase 2, Macau Studio City, Wynn, MGM, Las Vegas Sands’ Parisian and SJM will open over the next five years, creating all sorts of new opportunities for suppliers.

It’s always interesting to review the growth of slot revenue in Macau. Most gaming jurisdictions in the world boast more slot revenue than table revenue, but that couldn’t be further from the truth in Macau. While table revenue still dominates, with baccarat producing 21 times more revenue than slots in 2012, slot revenue is climbing at a substantial pace. For example, in 2009 in Macau, a total of 14,363 machines produced roughly $798 million in U.S. dollars for an average win per day per unit of $152. Fast forward to 2012, and with 16,585 machines in the market, an increase of only 15 percent from 2009, slot revenues grew to roughly $1.6 billion, with a win per day of $268. So, total machines grew only 15 percent from 2009 to 2012, but win per day increased during that period by 76 percent and total slot revenue increased by 104 percent.

This slot growth has been driven by several factors, including the popularity of electronic table game machines, more compelling slot games from the suppliers and more mass market visitation and interest. All of the major suppliers are focusing on content unique to Asia, and players are responding to the more elaborate machines, sign packages and enhanced entertaining themes. While volatile high-jackpot games remain popular, new players are seeking out different kinds of less volatile linked games with mystery pays. Electronic table games remain very popular and new hybrid table varieties such as Fast Action Baccarat are drawing new and different players and generating revenue at a quicker pace than live tables with just one dealer.

The competition among slot makers in Asia is quite intense, with Aristocrat continuing to lead the way and Bally, IGT, WMS, Konami, Aruze, SHFL entertainment, Novomatic, Ainsworth and Interblock all very active as well. Notably, all of these companies are members of AGEM and were out in full force at G2E Asia.

During the annual pre-show press briefing, Fahrenkopf and others saluted the suppliers for the dazzling products on the show floor. We, in turn, now salute Fahrenkopf for a job well done and a uniquely distinguished career.

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