An invitation to write the cover article for any issue of Casino Enterprise Management is always a privilege and a pleasure. And selecting the focus of such a feature is always an interesting process. Our industry is fascinating from whatever angle you choose to view it—from the corporate offices of the major commercial casino companies to the administrative offices of the world’s largest tribal gaming enterprise, to the wide-ranging variety of suppliers, manufacturers and providers that all comprise the industry of gaming.
As I consciously considered all of the changes, challenges and opportunities that have emerged in our industry over the past year or so, so many interesting executives came to mind. Some were clearly responsible for what could only be defined as heroic efforts to weather the economic strife, keeping the lights on and employees engaged at their various sites, while others could be lauded for their innovative financial structuring and acumen. As I sketched out some ideas for this feature, I came up with a short list of half a dozen names that would no doubt fit CEM’s stringent criteria for a cover article.
Then fate stepped in. I ran into Scott Betts, the chief executive officer of Global Cash Access (GCA) at a gate at McCarran International Airport one morning. We started to talk, and when our conversation veered to data and analysis, core to my own interests, Betts’ true passion shone through as he described some of GCA’s upcoming initiatives. The enthusiasm that I showed seemed to resonate with Betts, because he was clearly interested in talking about the company. Amazing, I thought, that one of the most visible components of the casino system—cash—had not even occurred to me. I offered Betts an invitation to be interviewed, and I was quite surprised and very pleased that he accepted on the spot. I could tell from our conversation that this was a man on a mission, and Betts’ own agenda to make the industry aware of GCA’s innovative and exciting new services coincided with my feature. He immediately saw the fit. Perfect, I thought. As with any interesting topic, I didn’t select it. It selected me.
President and CEO
In preparation for our interview, Betts put me in touch with another Scott at GCA, Executive Vice President of Business Development Scott Dowty. I spent an entire afternoon as Dowty’s student in GCA 101, which included a facility tour, product demonstrations and service discussions, as well as introductions to the vast network of specialists and executives that comprise the company’s robust support team. Once conceptually wrapped around the business model and processes that comprise the core products of GCA, I was ready to move on to learning about the man who, for just over two years, has provided the vision, direction and forward movement that has cemented GCA’s position as the leading provider of cash services to the casino gaming industry.
I met with Scott Betts in his office in late February. As we settled into the interview, Betts shared with me his background, his experiences growing up and the ideals he embraced in his youth that would ultimately become the foundation for his professional philosophy and his unwavering interest in learning.
Betts grew up in Horseheads, a small town in upstate New York with a population just under 20,000. He recalls having the typical middle-class childhood popularized by 1950s and ’60s television shows. He worked hard for his grades and at various jobs, starting with a paper route at age 9 and continuing to work throughout high school and college. In high school, Betts earned money by baling hay, planting trees for the forest service, and at a fast food restaurant, but he does not resent these experiences. “We all have challenges of one sort or another—that’s why they call it growing up,” he noted. “I really respect how lucky I’ve been in life and the fact that other people haven’t been as lucky. I always worked, but I had a lot of fun too.”
From as long as he can remember, Betts always hoped to be an engineer. His dream became a reality when, just after graduation from Rensselaer Polytechnic Institute (RPI), he landed a position at Proctor and Gamble (P&G) in product development. After a decade in the innovation side of the business, Betts spent another 10 years in the marketing department before moving on to managing other business units for P&G, including serving as general manager for the company’s North American division of paper.
After 24 years with P&G, the thought of moving to another industry was intriguing and exciting for Betts. He credits his love of learning, and the enjoyment that he finds in creating and being a part of new experiences, in fostering his willingness to dive into a new, niche industry. Betts didn’t specifically target the payment processing industry, but it turned out to be the opportunity that intrigued him the most. In 2001, he received a recruiting call from the CEO of First Data Corporation (FDC); Betts accepted the offer and has never looked back.
At FDC, Betts was responsible for all payment, merchant and debit services, along with stored value businesses for the United States. His early experiences with FDC gave him a broad spectrum of exposure to the payment business, and in mid-2002, he became responsible for oversight of one of FDC’s then joint venture companies, Global Cash Access. About a year and a half after leaving FDC, Betts was asked to take the top spot at GCA. On Nov. 1, 2007, he assumed his current position as president and CEO in the company, which was now independent of FDC. Betts took the helm with the goal of innovation, creating products and a vision for the future, and emphasizing an environment where GCA could support its customers’ marketing objectives.
Betts Bets on GCA
Betts felt that GCA needed to grow up as a company. There is a certain amount of discipline, sophistication and operational integrity that is required to do this, and he felt these attributes needed to be brought to GCA. He believed these philosophical and operational changes needed to happen not only because GCA was a public company, but also because the “shareholders and customers demand and expect it.” GCA’s customers were getting bigger, more sophisticated, and because of competition and the economy, under more pressure. From this perspective, Betts identified GCA’s positioning: “lead the industry and lead in our value proposition to our customers.”
The company’s operating philosophy changed since Betts joined GCA. Diversity of experience, sophistication and background in the management team enable GCA to define its philosophy as delivering exceptional service, driving innovation and supporting its customers’ needs. Betts touts GCA’s management team, which includes professionals who have experience in casino operations, marketing, payments and banking, as well as with the intricacies involved in international jurisdictions.
Betts acknowledges that the GCA that operated before he arrived was very successful and capitalized on that success by maintaining a singular focus on gaming customers and their needs. GCA’s core cash access products (ATMs, full-service kiosks, credit/debit and check cashing, and the specialized Central Credit product) have been out in the marketplace for quite some time, and currently comprise more than 90 percent of GCA’s revenues. Now, under Betts’ direction, the company is integrating new products and services that will support revenue growth for GCA as well as its customers, thereby redefining how the company is viewed by those customers, the gaming industry and Wall Street. While Betts admits that there have been some missteps and misguided efforts in the past, he feels that those challenges have been overcome. “There are many players in the payments processing industry,” he said. “However, we have the resources, capabilities and experience to solely focus on providing these services to gaming industry customers, and because of that we are uniquely positioned to help our customers in a way that no other vendor can.”
In addition to its core cash access products, GCA has also added to its success through its acquisition strategy. Since 2007, the company has completed the acquisitions of Certegy Gaming Services Inc. and Cash Systems Inc., and it recently announced its third acquisition, Western Money Systems, which is expected to close by the third quarter of this year. Betts views these acquisitions as particularly significant to the company because they take its full-service approach to the next level. “These acquisitions really gave us the ability to continue on our strategy, to continue to make the investments we needed in our strategy in terms of innovation, partnerships and people, and they’ve given us more scope and the ability to see more data, which is so critical to our value propositions and our new products,” he noted. “We have the same high expectations for our Western Money acquisition.”
To Betts’ credit, GCA’s revenues are up 11 percent from when he started with the company in 2007, which was during the peak revenue period for the industry. He links GCA’s leadership position to two fundamental principles: being solely focused on providing services to gaming customers and having customer-driven innovation. Even with its acquisitions over the last two years, which materially helped grow that position, Betts feels that GCA is rewarded because it has quality products and services and meets customer needs better than anybody else. GCA’s scope gives the company the ability to solely focus on customers’ unique needs, which is viewed by management as a key advantage. “I think, for our continued success,” Betts said, “it is really important to make sure that we deliver our vision of how payment providers interact and help customers in the future. We’re really driven by that vision, and that vision works globally.”
When asked what he sees happening in the company’s future, Betts pinpointed four trends that he believes are inevitable and that are key to driving GCA’s business. The first trend is one that he acknowledges has been going on for some time: the increasing network and connectivity of slot systems, gaming floors and property management systems, and the interoperability and the completeness of those integrations. Betts believes that these enhancements will continue to be more and more sophisticated over time, and GCA, as well as other industry providers, needs to understand how they fit within this sophistication.
Next, Betts points to the two years of significant revenue declines in the industry. “These difficult years have been further complicated by the addition of more properties overall, and by more properties in new jurisdictions that are just opening up. Because of lower levels of consumer spending, coupled with less frequent casino visitation, casinos are competing for a piece of a smaller pie,” he noted. “This second trend translates into more pressure on gaming operators to be more successful. Ultimately the casinos will become more efficient and effective marketers, because it takes increased ability when the industry shifts from growing at 10 percent annually, and then you wake up and find out how hard you need to work just to maintain market share.”
The third trend that Betts characterized comes from a demographic standpoint. He notes that the next generation of casino players grew up as “digital natives.” They range in age from 21 to 35, and because of their electronic, digital and wireless upbringing, how and to what extent their behavior is influenced is in direct correlation to their digital savvy. Betts says that the people in this age range know what they want from games—they want their behaviors and preferences to be known, recognized and addressed. From its research, GCA knows that this demographic wants access to money in any way, shape or electronic form desired. “Fulfilling that need has to be a part of every aspect of the gaming industry,” Betts said.
The fourth trend, according to Betts, is something that is inevitable and is already occurring worldwide: gaming floors are becoming cashless. Betts pointed to the broader payments industry as an example. “The movement from cash to electronic payments has continued to move at double digit rates, and has continued to do so for the last couple of decades,” he explained. “Cash now represents the minority of payments in the general market. Stored value, mobile payments, tap-and-go payments in quick service restaurants all point to the efficiency of cashless transactions, and all of those are driven by the demographics of the younger digital native and through a continuing progress in the growth and capabilities of electronic payments.”
GCA sees that there is an opportunity for enhancing operational efficiencies for the casino because, as Betts says, “cash costs a lot of money to deal with.”
Targeting Innovation
Pondering the impact of those four trends on the industry, our conversation transitioned from the niceties of Betts’ background and history-of-the-company fodder to the crux of what Betts really wanted to talk about: GCA’s strategy in the marketplace. To an observer, GCA seems to have a fairly robust slate of innovations and products that it is going to be bringing to the marketplace over next 18 months or so. First out of the box will be a product called Casino Share Intelligence (CSI), the result of a partnership with DiamondStream, a data analytics firm based in Seattle.
CSI leverages GCA’s tremendous database, which represents more than two-thirds of the monetary activity in the gaming industry, both in reported geographies and in the non-reported geographies, such as tribal gaming. CSI is an extremely strong diagnostic tool used to assess the effectiveness of all marketing programs for a casino. GCA has the ability to look at and understand the data, and is able to provide for its casino customers a web-based tool that includes the diagnostics that they’ve never been able to get: true share of the marketplace, true share of patrons and true share of wallet. GCA calls it “true share” because the results are inclusive of the portion of customer spend that the casino knows about through its player tracking system as well as the cash access funds that, up until now, had been a mystery. “We think that it’s a tremendous tool that demonstrates how our scale is absolutely a value to our customers,” Betts said. “It’s a good thing.”
GCA sees so much of the data that, while its analysis does not reveal actual gaming revenue, its data does have a consistent and extremely high correlation with that revenue. More than two-thirds of gaming revenues for GCA’s customers originate and flow through GCA devices, which according to Betts, means that its dataset is more than statistically representative of actual results. Annually, GCA puts $20 billion to $25 billion in cash on casino floors. “It’s extremely critical for our customers that they can benefit from our data, and it’s a benefit that can only be provided by GCA,” Betts noted.
If a casino in Las Vegas, for example, wants to understand the market share of revenues originating in the various zip codes in Los Angeles, perhaps because its has targeted marketing activities in that area, GCA can provide that information. GCA can also tell a casino the amount of cash that its customers accessed over a specific period of time, and the amount those customers spent at their properties versus other properties (see Graph 1). This depth of data intelligence is, to me, the most fascinating aspect of CSI. When casinos compare the amount of cash that their patrons accessed during a trip versus what the patron spent at their property, the true share of wallet becomes a telling tale. Who wouldn’t like to know that the customer who spent $5,000 at your casino actually accessed $50,000 total in cash on the same trip, translating into a 10 percent loyalty factor? That knowledge alone changes the entire dynamic of casino marketing as we know it today. “Our customers have tremendous marketing organizations and player tracking abilities and data management, but they only know what they know inside their casinos,” Betts said. “With CSI, they will have a full understanding of patron spend behaviors.”
According to Betts, CSI is the first and only tool of its kind available to casinos, and you have to be a customer to get it, as GCA requires that you contribute data to get data. It’s important to note that GCA says it provides this data while respecting the privacy of individuals as well as the competitive marketplace. “CSI is not a marketing tool for casinos to use to poach customer names from one another,” he said. “All of our data is presented in aggregate, and no patron identifying information is ever disclosed.”
In other words, a casino can see its own 10 percent loyalty share, for example, but cannot see the specific properties where the other 90 percent was spent. GCA began offering CSI in April and will position it as a value-add to its casino marketing services.
Looking further ahead, GCA plans to expand its information services program with innovative diagnostic tools. The company has a product called QCP Express (Express), which will be launched later this year. Express is an upgrade to the QCP system that currently runs in casino cages. It provides for faster transactions, electronically reads patron identification, populates the cashier screens, and has a checklist solution for the deposit of funds. Betts remarked that Express is a noticeable operational improvement for casinos.
Later in the year, GCA expects to debut its first cashless product, QuikTicket, in beta locations. Similar to the ticket-out technology in slot machines, QuikTicket will allow patrons to get a slot ticket from a kiosk. GCA believes that this is really no different than the process that happens after a patron plays the first slot machine; it simply removes the initial dispense of cash and makes the entire transaction more efficient for the casino by reducing the cost of cash handling and limiting the amount of cash the patron needs to carry. The patron will always be provided with a choice of transactions and can select to receive cash or a slot ticket. GCA believes the change will create opportunities for casinos in terms of operational efficiencies, player tracking and the ability to reward its customers. “We can provide this service because of the way that we’re architecting our systems,” Betts said. “We can also communicate with a casino player, not just by being able to complete the patron’s transaction, but also by flowing media back and forth to them at the same time. We will now have the ability to provide players with the casinos’ branded experience at our kiosks, which we believe is going to be very important to casinos.”
The real benefit seems to be the casinos’ new ability to manage the player’s experience at the cash point-of-sale, just like they do with the rewards and incentives that they offer for slot or table play—through messaging. GCA appears to have adopted the mantra that it will grow its revenues as they help their customers grow their revenues too.
GCA is increasingly viewing what it offers to its customers as a paradigm of capability versus product. Products, according to Betts, are very set things, while a good deal of what the company now talks about is the capability to help customers with their various business challenges. GCA has a business development organization that is in charge of understanding the voice of the customer and translating what it hears into actionable goals. The technology development organization, where people do the programming and heavy lifting of actually getting a product built, works with business development as they strive together to translate customer needs into technology initiatives.
Preparing for the Inevitable
Speaking of technology, I had to wonder how rigorous GCA’s efforts were in preparation for what many believe to be the inevitable—Internet gaming. Betts’ response was no surprise: “We keep a very close eye on Internet gaming.”
On a logical basis, the question still remains. Will GCA be a player in Internet gaming? Betts responded, “Of the many companies who provide Internet payment engines, we believe that GCA will be unique in our ability to connect what’s going on in the bricks-and-mortar space with what’s happening online.”
According to Betts, casinos will require a payment system that works in both places; otherwise, they will lose the functionality that allows payment and tracking operability back and forth between virtual site and physical site. “Where we add the value is by providing the connection between the two worlds,” he explained.
Knowing GCA
I asked Betts to point out some things that people should know about GCA, but do not. He was quick to respond that the company has great relationships with many technical partners, which lends creditability and capability to what it’s doing. “We’ve had a long-standing development and co-development relationship with IGT and with the Bally Technologies relationship that was forged with Cash Systems, as well as with many other partners,” he said. “Those are important relationships for people to know that we have, and they are critical success factors for us moving forward. Some things about GCA that are generally not appreciated are the strength and value of the data that we have.”
Betts believes that people don’t fully understand yet how capable GCA’s management team is and its bench-strength, since the management team is new. He added, “We’re a significantly different company now than we were two years ago.”
So while everyone knows GCA—it seems to have been around forever—most still think of GCA as the company who runs the ATMs. “ATMs are part of a very strong foundation that we are growing on,” Betts noted. “There are great opportunities for us to complement a casino’s marketing strategy because of the huge database that we have, the diagnostic tools, and our ability to lead innovation with cashless gaming. All of those things are new to GCA and new to the way that our customers should begin to think about us. It’s also the new way that they should think about cash access providers.”
Betts views GCA as a service company to the gaming industry that just happens to be in payments. But it happens to be about much more, too. “Some think of us as a payment company, some think of us as a casino company, but we really think of ourselves as a service company,” Betts said.
And if Betts has his way, this will be the year that casino companies take notice of GCA, looking at the company and its team in a way that they never have before—as a marketing change agent and as a data source. Sure, everyone knows that GCA puts cash on the floor, and I bet some casino patrons even know that GCA processed their transaction (although GCA does a great job of branding their units for the individual casino). But the GCA of 2010, the one that has wrapped its ideology around data analysis and diagnostic tools, represents the emergence of a whole new outlook and moniker for this long-standing cash provider.