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Christopher Foster
VP of Sales and Marketing
COST of Wisconsin Inc.
A short time into the recession, we all quickly realized that no market sector was truly recession proof, including gaming. While customer spending remains down, casino operators continue to look for new and innovative ways to keep their properties fresh, but now within tighter budgets. The recent focus has been on maximizing value, or more specifically, providing a quality environment at affordable construction costs. Most gaming projects we have undertaken in 2010 and 2011 involve renovations and smaller ground-up casinos. This is in contrast to the new, larger-scale casino resort properties constructed in the last decade. Oftentimes, renovations and facelifts can renew customer interest with smaller construction budgets that are more amenable during an extended economic downturn. These improvements also increase branding opportunities, offer new guest experiences and differentiate one facility from another.
Delivering unique customer experiences within smaller budgets may seem like a challenge to some, but for consultants, designers, architects and contractors who take the initiative to research more economical ways of delivering entertaining gaming experiences, it can be a tremendous opportunity. This can be done by renovating gaming areas, providing new and exciting bars and lounges, or by simply adding artistry throughout the property. Even smaller venues and renovation projects can usually introduce some artistic flair to enhance the casino’s appearance, while maintaining a reasonable construction budget.
Our goal has always been to maximize deliverables within even the smallest of budgets, and this objective has been even more critical over the past few years. We have positioned ourselves to better meet this trend by offering numerous materials and methodologies to construct thematic features and specialty elements. Because we work in several mediums, there is no prescription for a simple one-size-fits-all approach. Our clients, including architects, owners and contractors, have been even more interested in our input when determining the perfect combination of thematic appeal, artistry, lighting and even water to deliver theme focal points within the respective budget.
As we look longer term at this industry, we are seeing a couple of trends. The first trend involves shifting to more green building alternatives. Constructing artistic features that consume less energy will be a necessity as gaming operators look to reduce costly operational expenses. Accents, such as a center bar art piece, are being designed with LED fixtures that consume far less energy than standard lighting fixtures. Even water features are being developed to reduce water evaporation through reduced flow rates. Water features are designed with high efficiency, variable speed pumps, cistern tanks that reclaim rain water, and other green initiatives. All of these ideas will reduce energy and resource consumption, in turn, saving owner’s precious dollars over the years. Secondly, in addition to resort amenities, we foresee a growing need for supplementary activities and attractions at established casino and resort properties. Water parks, family entertainment centers, convention halls, meeting space, retail centers, etc., will provide true destinations for casino patrons seeking more than gaming.
The past few years have posed challenges to the gaming industry, but our business innovations and entrepreneurial spirit are resilient in the U.S. There is already an increase in large-scale gaming projects in the early planning and later design phases. We believe this trend will continue as consumers see increases in their discretionary spending. I am optimistic about the future of gaming and excited to see the upcoming changes and transformations in our industry.
Tom Hoskens, AIA, LEED AP
Principal
Cuningham Group Architecture
As 2011 fades away, and despite continued volatility in the marketplace, we in the design industry believe there are reasons to be exceptionally optimistic in 2012 and anticipate the following for gaming design and construction.
We think collaboration is here to stay and being realistic is the new black—or rather, being realistic is helping clients stay in the black. Developers need realistic development plans in order to succeed, and ROI is king. With the economy creeping along its slow road to recovery, the scrutiny turns to positive returns on investment and keeping close tabs on the bottom line. While clients might be more willing and able to spend money on facilities (as evidenced by an increase in the project inquiries index), they are more mindful of real dollars spent. This “keeping it real” approach has fostered new teams of feasibility experts, design builders, program managers and cost estimators with architects and developers.
Designers, developers and contractors especially are collaborating more than ever at the outset of a project. Projects these days simply can’t afford to blow the budget. While all the preplanning and precautions in the world won’t eliminate value engineering or changes, a realistic approach from the beginning can lead to a more profitable project in the end.
Rest assured, being realistic isn’t holding back the desire for innovation and creativity in the evolution of the gaming resort experience. We see the expansion of branded resorts in 2012. And, most importantly, we see resorts that radiate entertainment and tell a good story.
Resorts are looking to brand their experience. Branded resorts give developers confidence they will attract the desired clientele. The brand can be the initial draw, but it is critical to back it up with authentic experiences that enhance the overall guest experience.
Cuningham Group is currently designing two Margaritaville resorts in the Gulf Coast states. We believe Every Building Tells a Story™, and few tell a story like Jimmy Buffett. Margaritaville has high brand recognition, but the key is to tell a seamless story that is recognized with the brand while also being over the top in some imaginative and memorable ways.
Beyond the overall brand, properties are expanding the experience with restaurants, nightclubs, shows and retail. For instance, Golden Nugget is capitalizing on the re-energizing effect it had on downtown Las Vegas, and owner Landry’s Inc. is taking on Atlantic City. Cuningham Group is working with Landry’s to rebrand the former Trump Marina Hotel and Casino into a Golden Nugget resort destination. The resort, which will be completed in early 2012, features a number of Landry’s award-winning restaurant concepts along with new concepts designed by our firm. Consumer spending on non-essential items is on the rise and statistics show that Americans plan to spend more on entertainment than any other form of discretionary spending. Like Golden Nugget, gaming resorts need to offer a variety of amenities in 2012 to create a hub of entertainment and increase non-gaming revenue.
And we have not forgotten about green. From central plants and energy-efficient systems to renewable materials and green roofs, gaming clients are more and more appreciative of the benefits of sustainable choices, especially when they positively impact that crucial bottom line. We continue to educate clients on the benefits of sustainable design. Internally, we created a green tracking form called Project GREENCard that tracks each project’s green goals, statistics and stories. We expect the information gathered and our experience implementing more intense elements such as photovoltaics, geothermal and wind generators on other projects will inspire our gaming clients to strive for sustainability firsts during 2012 and beyond.
What we see for the industry we are already experiencing at Cuningham Group. On the heels of two HOSPY awards in 2011, we are excited about other award-worthy projects that will open in the coming year. Golden Nugget and Margaritaville are moving quickly toward their 2012 openings, while the completion of Harrah’s Cherokee Casino & Hotel will culminate a five-year journey of designing one of the southeast’s premier destinations. We’re also following in the footsteps of our other entertainment-based work and now have an office in Beijing. This, along with our Seoul office, sets us up to compete nicely as gaming continues to evolve and grow in Asia.
So the successful formula for 2012 is: Be visionary, have a sound pro forma, team with an innovative operator, and secure accurate cost estimating and a reliable contractor. And when you find or create a great brand, be consistent, and most importantly, tell an unbelievably entertaining story.
Rick Gardner, AIA
Senior Partner
Hnedak Bobo Group
We feel encouraged that momentum from 2011 will continue into 2012. There is continuing investment strength for renovations to existing properties, and in the right markets with the right market conditions, there will continue to be new green field development taking place.
To generate loyalty and get customers in the door, many owners have been focusing their capital improvement budgets to freshen their current facilities and add new high-impact, market-specific amenities to their mix.
For example, we recently assisted Sycuan Casino in completely reconfiguring an existing layout to help them remain viable in their San Diego market. The casino had seen multiple additions without a plan in place to guide graceful expansion. The renovation opened up the casino to enhance the gaming experience and encourage greater access to revenue generating amenities.
We are also helping owners identify and maximize their unique market opportunities to create high ROI amenities. For example, the Kalispel Tribe outside of Spokane, Wash., has capitalized on their sovereign status to become one of the last bastions of public smoking in Washington. Northern Quest Casino’s “Legends of Fire” cigar bar is the area’s only exclusive high-end cigar lounge, making it a favorite regional hotspot.
Amenities are continuing to be added and renovated in most markets. For example, there’s a growing demand nationwide for more economical food and beverage options. F&B is trending toward more casual and less fine dining. We have been facilitating more conversions of former four-star amenities to accommodate the need for a three-star F&B price point.
Properties are always looking for ways to differentiate themselves, but current conditions don’t diminish the importance of having a long-term plan and strategy for graceful expansion. Scrutiny of new investments makes a well-conceived plan as important as ever. Master planning is one of the best steps a property can take in ensuring facility growth makes logical fiscal and operational sense. At Hnedak Bobo Group, we are developing master plans for full site build-outs—as large as or larger than prior to the economic downturn—but because of market conditions, phase one construction projects are tending to be much smaller. Lenders and investors want to ensure that future expansion plans consider and don’t impact the current investment, and that their interests are protected when plans move forward.
As owners renovate, it’s also a perfect time to consider sustainable design strategies that will help reduce long-term operational costs. Many of our clients want to integrate sustainable strategies, but are challenged with understanding their return on investment. We’re helping to identify budget-neutral solutions to incorporate eco-friendly material usage, energy savings and operational efficiencies into casino and resort properties, not necessarily with the end goal being LEED certification. Some sustainable concepts come at no cost to the owner, but rather require thought and creativity to be effective. For example, the way a building is sited on a property can produce immediate results in reducing energy costs. We are helping our clients over that first hurdle to sustainable design by determining ways we can do this without ramping up costs, and without sacrificing quality, function or aesthetics.
Owners are really drilling into their bottom-line return on investment to determine project feasibility. If an investment opportunity arises that is prudent and viable, this is an excellent time to consider taking advantage of construction labor pricing and lower materials costs to get those much-needed improvement projects started.
JCJ Architecture
The JCJ Hospitality Team
Brian Davis, Design Principal
Lalaine Tanaka, Design Principal
Richard Blackman, Principal
Joe Baruffaldi, Senior Project Manager
Jeff Wynkoop, Senior Project Manager
Despite the shifting economic environment, JCJ Architecture has commanded a beneficial vantage point from which to view the hospitality and gaming industry.
Since our entry into the gaming world at Foxwoods 20 years ago, JCJ has been fortunate to establish a leading position in the industry, designing top-of-the-line hospitality, gaming and entertainment facilities throughout the country and abroad. Gaming has become assimilated into our DNA, and is a core focus of our practice. Our hospitality team is passionately committed to providing the highest levels of design, execution and service, continuously and vigorously honing our skills and knowledge to better serve our client base. Along the way, we’ve gained a great depth of experience and perspective into these evolving and exciting times within our industry.
Regional Destination Properties
A key focus and strength of JCJ’s practice is the regional destination property. We are seeing many of the characteristics traditionally specific to this market emerge as new criteria for other gaming markets now and for the foreseeable future. We’ve been very busy with both new-build and expansion projects of this type, including properties that have weathered the downturn and remained strong in the face of increased competition.
To understand what makes this market unique, we think it’s important to look at it through the eyes of the regional patron who will be experiencing it. In doing this, we discover that the regional gamer is seeking entertainment, convenience, variety and, most importantly, escape from the ordinary. Unlike patrons of the past, today’s guests are seeking entertainment opportunities in environments with sufficient excitement and flair to fulfill their need to “get away”—but not necessarily the over-the-top opulence and flashiness often associated with traditional casinos.
Economy and the Marketplace
The industry has certainly experienced hardship as a result of the economic climate in recent years, with significant impact on the planning and design process. Changes such as these challenge designers to be fully cognizant of the reduced margins and budgets of our clients, and to approach projects with heightened creativity and budgetary awareness.
With limitations on capital expenditures and altered patron behaviors, it is ever more critical to drive the design trends that will reduce implementation costs and still elevate the guest experience. Our expertise in this industry allows us to create designs that deliver experiences that today’s patrons truly appreciate and remember, as well as generate ROI for the owner.
Design Responses and Trends
Today’s design trends include subtle differences in interpreting the planning process, with greater flexibility and overall vision at the forefront of the design. Using an “incremental growth” model takes into account the ability to expand in multiple directions as the market changes and evolves, which is crucial during a time when the economy and marketplace continue to remain uncertain. Temporary structures, such as our Fire Rock Casino for the Navajo Nation, are an example of how staged growth can allow for advanced speed to market and early cash flow prior to permanent construction.
An additional design trend that we are effectively incorporating into our recent work is the use of advanced lighting and video technologies. As the cost of such features continues to decrease and the benefits expand enormously, using creative lighting applications to replace exotic and expensive finishes helps to energize the guest experience. Our newest project to come on line, Resorts World New York City, takes advantage of this new technology and provides guests with dynamic, ever-changing visuals.
Conclusions
While the economy has strongly impacted the planning and design process, it has also provided great opportunity. JCJ continues to be active in the racing and gaming market, where we are currently working on Saratoga Casino & Raceway and a gaming resort at Monticello, and we are also involved in emerging markets that are currently responding to legislative changes, including Massachusetts, New York, Pennsylvania and Ohio. We are also engaged in projects serving our oldest partners and going back to the roots of our practice—Native American nations—especially in Oklahoma, California, New York and throughout the Southwest. Lastly, our presence in the international markets continues to grow, with Panama the latest venue for our casino designs.
Though economic forecasts are yet far from bright, JCJ is experiencing growth via intelligent design and development of regional markets. We’re creating opportunities for innovative, distinctive and inspiring design, profitability and most importantly, enjoyable and lasting guest experiences.
Jeff Ehret
President
The PENTA Building Group
As a Las Vegas-based construction manager and general contractor whose core competency is hotel and casino-related construction, PENTA had one of the front seats on the rocketship that was the Las Vegas construction scene four years ago. At that time, business development for us more or less just consisted of answering the phone. We rode that rocketship until it crashed, and it crashed hard.
Guess what? PENTA survived. A couple of clichés come to mind, which would describe our past few years: “Necessity is the mother of invention” and “What doesn’t kill you makes you stronger.”
PENTA has emerged as a much smarter company, much more diversified, and I believe with a much broader understanding and vision of how to best serve our existing and potential client base.
Four years ago PENTA was very Las Vegas-centric, with only one key relationship in Indian country. We have significantly increased our reach in Indian country, where we have ongoing or recently completed projects for nine different tribes throughout the western U.S. We are a very relationship-driven company, and Indian country work is a natural fit for us. It is one of our better stories coming out of the recession.
We see both differences and similarities between the Las Vegas casino market and the Indian country casino market. We believe that we have adapted and positioned our firm to give clients maximum value in both markets in this changed economy.
In Las Vegas, we think it will be a “zero sum” game for several years, meaning that there will be no additional hotel rooms, gaming space, food and beverage venues, etc., of any “real” significance, unless an owner believes that they have a truly unique concept that has a “hook.” We believe that hotel casino-related remodel and renovation projects will be the norm for several years.
Fortunately, hotel casino-related remodel, renovation and expansion projects have been a strong niche for us in Las Vegas since our inception. However, since there is now a higher percentage of third-party money on the Strip now under ground lease deals, compared to years past when it was the major Strip owners capitalizing virtually all projects, our business development reach has had to get broader. In addition, and to further appeal to the needs of the new breed of owner, PENTA now offers full design build, and even turnkey services for these projects, in addition to our typical CM at Risk (CMAR) services. We have also established a Special Projects Group within the company in Las Vegas that focuses on very small “quick hit” projects at Strip properties, where design-build or turnkey services are often the norm.
In Indian country, there are several areas in the western U.S. where there is demand for ground up or substantial expansion projects, albeit typically on a smaller scale than in Las Vegas. Again, here PENTA is suited to provide design-build or CMAR services. As with Las Vegas projects, we are almost invariably involved with projects while they are still fairly early in the design phase, providing full pre-construction services. Also, we often assist tribes, or at least participate heavily, with their operations group, and in other areas of program management. We also look for strategic alliances or partnerships when approaching work in Indian country, if we believe it brings added value to the owner.
Regardless of whether it is in Las Vegas or Indian country, the gestation period for project development is now typically much longer and painfully arduous, where we typically jump through hoops to assist our clients in their quest to nail down both the equity and lending portions of project financing. Lenders now often require an early commitment to a GMP contract amount, as a condition of obtaining the first nickel of financing. It is not unusual for PENTA now to commit to a GMP contract amount when the design is in the mid-design development phase, wherein it becomes crucial for us to keep the design between the financed GMP budget bumpers for the remainder of the design phase.
Finally, we have significantly sharpened our skills in driving every ounce of value out of every project dollar. The good news is that projects today have to meet much more rigorous pro forma criteria than the projects of four or five years ago. This means that there should be a higher survival rate, and more longevity, for today’s projects, which is good for owners, good for a more stable economy and good for the planet.
Dick Rizzo
Vice Chairman
Perini Building Co.
As states grapple with mounting bills and a sluggish economy, there is a renewed interest in gaming. Job creation and interstate competition for dollars have also fueled the fire. In fact, a recent article in the Boston Globe stated that more than $900 million leaves Massachusetts every year to Connecticut and Rhode Island for gaming. With the state’s recent legislation allowing gambling, Massachusetts hopes to stop the bleeding and keep its dollars in state. Massachusetts isn’t alone. A number of other states, including Maryland, Ohio, Florida, New Hampshire, Maine and New York are either proposing or building gaming facilities.
Perini just completed the first phase of Resorts World New York, the city’s first racino at Aqueduct Racetrack. Developed by Genting Group, the company is also in the midst of planning a massive billion-dollar-plus gaming project in Miami. In the southeast, there is potential gaming opportunity as the movement from Riverboat to land-based casinos continues to grow in light of recurrent natural disasters.
Perini has also seen a renewed interest from Native American tribes who are taking a fresh look at shelved projects as the gaming revenues start to climb. Native American gaming continues to evolve, grow and compete with non-tribal casinos. In addition to newly proposed projects, many tribes who own casinos have significant plans to upgrade existing properties with more lavish amenities, including branded restaurants, upscale shops and golf courses. A recent article in the Las Vegas Review Journal highlights just how successful tribal gaming is. According to the article, tribal gaming revenues nationwide topped $26 billion. By comparison, all non-Indian gaming in Nevada generated $10.4 billion in revenues in 2010, according to the state gaming control board. There also appears to be some activity regarding trust lands regulated by the Department of the Interior and Native American tribes that currently don’t have land but are seeking to acquire property for gaming as well as other business ventures.
We don’t anticipate much new construction in the southwest, namely Nevada, but properties across the country will need to aggressively renovate and refresh existing properties to contend with new competition, which will employ a lot of different companies.
With all that is going on, Perini is optimistic about the gaming industry. As a national company, Perini is uniquely positioned to work anywhere and recently opened an office in New York City. We are ready.
Barry Thalden, AIA
Partner
Thalden • Boyd • Emery Architects
An ancient Chinese proverb says: “May you live in interesting times.” The past three years of economic instability have been both interesting and challenging. The year ahead, 2012, will be less challenging and, hopefully, even more interesting.
To overcome the recession, our philosophy of focusing on the casino floor has helped our clients increase revenue while competitors languish. It wasn’t that long ago that it was all about the gaming floor that drove nearly all the business (and huge profit margins). Unfortunately, that focus shifted to low-margin businesses—shows, restaurants, retail, spas and night clubs—diminishing profits. It is time to get back to gambling.
Focusing on Generating More Profitable Revenue
Our firm has been revolutionizing the gaming floor with new ideas and a refocus. Utilizing a strategy we call casino performance design, we are bridging the gap between casino design and casino financial performance. We have been able to make the casino floor the most exciting place in the property. It’s a place that is more fun and more focused on customer enjoyment. As technology has allowed for server-based gaming, a wider variety of gaming display devices, including mobile gaming, are changing the gaming experience. We are actually creating exciting new environments (like an iPad™ gaming lounge), where customers can play with mobile devices in comfortable seating. The casino floor is changing. With this new mobile technology, we will see gaming on mobile devices in hotel rooms and restaurants this year. As this technology sweeps the country, I predict that gaming devices will change so radically that the term “slot machine” will disappear, as discussed in my recent articles for Casino Enterprise Management, “Does your Casino Floor Suck?” and “Thoughts on the Casino of the Future.” This is the dawn of the new vision for gaming.
Opportunity for Those with Vision
Although financing remains difficult, the time to build is now! There will never be a better time to get competitive construction costs and be ready to open as the economic expansion blooms.
“People are ready to stop worrying and start enjoying themselves.”
The good news regarding the economy is the continued positive growth. Being an architect, not an economist, media commentator or a politician, I can only express the facts:
• GDP, the primary measure of the economy, has increased for 28 straight months, surpassing its record high 2007, and is currently at the highest it has been in the history of the U.S.
• The stock market has recovered to within 90 percent of its all-time high.
• Retail sales in the U.S. are the highest ever in history.
• Corporations are profitable and have huge cash reserves.
• Total U.S. gaming revenue is increasing, and as I predicted last year, will reach an all-time record high in 2012, exceeding $63 billion.
Unfortunately, the media and the politicians continue to promote “fear,” putting a drag on the economy. Throughout this election year, we will hear politicians on both sides complain: “We are in awful trouble, largely because of my opponent.” I call it “the 12 months of myth.” As I stated while speaking on the economy at G2E, “In my opinion the only ‘double dip’ we will see will be at Baskin-Robbins.”
In 2011, Thalden • Boyd • Emery Architects celebrated its 40th anniversary. We are grateful that even during this challenging period of the past three years, we have steadily remained quite busy. We are fortunate to have been selected as architects to design many of the first of the “recovery wave” of casino expansions and new casino properties in the U.S., and we have opened associated offices in Singapore and Guangzhou, China, to meet the growing opportunities in Asia.
Those projects recently completed or under construction include: Renovations at Planet Hollywood, Caesars Palace and Paris in Las Vegas; Wildhorse Resort & Casino expansion in Pendleton, Ore.; and Commerce Casino in Los Angeles, plus Hotels for FireKeepers Casino in Battle Creek, Mich.; and Chitimacha Casino in Louisiana; a new casino for the Easter Shawnee in Oklahoma; and an indoor waterpark resort for the Chippewas at Soaring Eagle in Mt. Pleasant, Mich. We also have numerous substantial projects on the drawing boards in both Indian country and commercial gaming.
End of the World?
The year 2012 is the end of the Mayan calendar. Some people believe this will bring huge worldwide turmoil and change. While some may fear this possibility, I look forward to it. I predict a shift in consciousness in which people will relate to one another in a new and better way. I see a possibility of a new economy that will not be built on greed, manipulation and win-lose. This new global economy will hopefully be built on integrity, truth, respect, responsibility and cooperation. It will have a broader bottom line than just financial profit. We will see the bigger picture, recognizing how what we are doing affects other people and the planet. “You may say I’m a dreamer,” in the words of John Lennon’s song, “but I’m not the only one.”
Regardless of economics and politics, people will always value entertainment, and we are the ones that can bring it to them. People are ready to stop worrying and start enjoying themselves. By 2013, the casino industry will again be thriving. Yes, we are living in interesting times.
Frank J. Fahrenkopf Jr.
President and CEO
American Gaming Association
As the voice of the commercial casino industry in Washington, the AGA pays closer attention than most to the political climate and agenda on Capitol Hill, and the coming year is set to be an exciting one that likely will be dominated by the upcoming election.
The presidential election will get most of the media coverage, and while it is unlikely to have much impact on gaming-specific topics, it will make a difference on issues that affect the entire business community—taxes, health care, immigration, regulation and budget reform—and greatly impact how gaming companies operate. On the Hill, the AGA will continue to represent the commercial casino industry on gaming-specific issues such as online poker, off-reservation gaming and other issues that affect the industry.
In addition to the significant work the AGA has planned on the political front for 2012, the AGA will continue its work of telling the story of the modern commercial casino industry. On the heels of the release of a major study of the economic impact of the gaming industry at the end of 2011, the AGA will focus on the industry’s community and philanthropic impact in the new year. The first half of 2012 will see the release of a report on industry giving, volunteerism and environmental stewardship. The AGA will coordinate industry volunteerism efforts by leveraging national events like National Volunteer Week and National Days of Service, and will work to highlight the various philanthropic activities of its member companies in a dedicated corporate social responsibility section of the AGA website.
As part of the AGA’s focus on corporate social responsibility, the organization will continue its work to promote diversity in the gaming industry, including the expansion of its new Global Gaming Women (GGW) initiative. Launched last fall, GGW was created to nurture emerging female leaders in the international gaming industry. By fostering stronger relationships between top female executives and promising managers, GGW will create an opportunity for women in the industry to learn from each other, share ideas and take advantage of mentorship opportunities. Also on the diversity front in 2012, the AGA plans to conduct and release a new edition of its semiannual employment diversity snapshot, last conducted in 2008, to measure diversity in hiring by gaming companies.
As always, responsible gaming will be another focus of the AGA’s corporate social responsibility activities in 2012, including the 15th annual Responsible Gaming Education Week, and the ongoing activities of the AGA’s affiliated charity, the National Center for Responsible Gaming (NCRG). Through outreach and unique learning opportunities like treatment provider workshops and webinars, the NCRG will continue to advance public education about gambling disorders and responsible gaming through the translation and application of scientific, peer-reviewed research on the topic.
Through the Global Gaming Expo (G2E) family of events, the AGA also will continue to create business opportunities for the gaming industry worldwide. In 2012, G2E Asia will move two weeks earlier than last year’s event, settling into its permanent date pattern in late May. G2E Las Vegas, the flagship G2E event, will continue in its early October date pattern and return to the Sands Expo and Convention Center for the second year.
The AGA also will continue to engage stakeholders in the social media space through its Twitter feed (@AGAUpdate), Facebook page (www.facebook.com/americangaming) and the premiere of its new blog. These are all great ways to keep up on not only AGA activities, but news from around the industry.
The coming year looks to be a busy one not only in Washington and at the AGA, but for the entire gaming industry, and we look forward to being a part of another year that drives the gaming industry forward.
Valerie Spicer
Acting Director
Arizona Indian Gaming Association
The passage of IGRA in 1988 was intended to strengthen tribal governments, help stimulate self-sufficiency and establish a regulatory structure for gaming. Since that landmark legislation was enacted, many tribes have been successful in doing all three. IGRA is fundamentally about enabling tribes to have gaming on their land, but the driving force behind the law was to provide tribes with an economic engine to ignite self-reliance. In other words, gaming was designed to be a means to an end. The end point was always to work toward self-sufficiency.
Over the years, many tribes have understood that the path to self-sufficiency is paved by diversification. Not surprisingly, diversification has proven to be good for everyone. Diversification strategies have paid huge dividends in Arizona, for tribes and for local and state governments and all those who live here. The state has been in a long and extended economic slump, due mostly to the over-reliance on a real estate-driven economy. When the country tumbled into recession, Arizona fell into a black hole. As the economy reached all-time lows and development stalled, there has been one consistent beacon of light: tribal gaming.
Despite the recession, tribal projects have continued to present big and lucrative opportunities as some tribes have grown their business. They’ve built casinos, opened resorts and joint ventured on hotels. Some tribes have launched seriously important non-gaming related businesses. Salt River Fields at Talking Stick, which is owned and operated by the Salt River Pima-Maricopa Indian Community, brought employment opportunities for thousands of people and pumped millions of dollars into the Arizona economy, in addition to providing a new source of tribal revenue. During 2010 and 2011, it was the biggest construction project in the southwest.
As tribes have diversified, some are achieving self-sufficiency. This brings another important benefit into play as it allows those tribes to decrease or even end their dependence on government programs. Achieving self-sufficiency is an even more important goal as lawmakers continue to look at where they can cut government spending.
Looking ahead to 2012, what’s clear is that economic diversification is no longer an option. It’s a necessity for tribal governments because gaming is no longer a safe haven for tribes. Across the country, states are looking to gaming as a revenue source to plug the deep holes in their budgets. Everything is on the table—racinos, state-sponsored gaming and Internet gaming. While no one can predict what will happen to these gaming proposals, it’s a good bet that tribes stand to lose as more competition will flood the market.
Doing nothing is not an option. Tribes need to look at 2012 as the year to secure their operations in their markets, strengthen their resolve and commitment to diversify their business opportunities, and reconsider their debt structure to ensure that their debt is not more costly than necessary. If tribes make one resolution for the new year, it should be to secure their market share. Casino operators should honestly evaluate their customer service. Is the casino providing a positive experience for its customers? Most people know they are going to lose money at a casino. What they want is to know if they’ll have a good time doing it. That’s where amenities come into play. Is the quality of food as good as it should be? Is the casino inviting? Are the employees friendly and helpful? If the tribe runs a resort or hotel in conjunction with the casino, are the beds comfortable and is the place inviting and clean?
It’s also important to look around at the neighboring communities. Is the casino a good neighbor? Is it giving back to the community through philanthropy or sponsorships? Do people in the area know of these good deeds? Most tribal casinos are neighborhood destinations and it’s important that locals feel good about the casino and feel valued and welcome there.
None of these ideas are new or revolutionary, but they can make the difference between a marginal and a successful operation. Most importantly, they apply to every operation, whether it’s a luxury property adjacent to a major city or a more rustic facility located in a rural area. Every tribe can vow in 2012 to secure its market position and improve its operations.
In the past, tribes have had the luxury of assuming there was time to get their gaming operations running at an optimum level, and that there would be more time to diversify into non-gaming businesses. What we know today is time is running out. Competing interests for gaming market share are a real and present danger that threatens the core of tribal sovereignty. 2012 needs to be the year tribes recognize this threat and commit to further securing their futures.
Marcus Prater
Executive Director
Association of Gaming Equipment Manufacturers
With a new year upon us, one simple goal would be to make 2012 better than 2011. As gaming suppliers go, consider that done.
While 2011 continued to be hampered by negative economic factors in different markets throughout the world, the gaming suppliers, led by the big slot companies, did not sit on the sidelines waiting for things to improve. No, the emergence of remarkable gaming creativity that began in earnest a few years ago continued unabated in 2011 and will roll smoothly into 2012 and beyond.
The bottom line is gaming suppliers continue to invest hundreds of millions of dollars in research and development during a time when sales and overall revenue are down from historic highs. That bodes well for 2012 as casino operators look to acquire the new technology and games that were on display at the Global Gaming Expo (G2E) trade show in Las Vegas this past October.
The buzz from G2E was once again extremely positive about what the suppliers were displaying, and for the first time since the recession hit, the corresponding buzz among buyers about what they plan on spending in 2012 was positive as well.
From my position as executive director of the Association of Gaming Equipment Manufacturers (AGEM) trade organization, more casino spending will be the reward suppliers are seeking for all of that R&D effort.
AGEM is an international trade association representing manufacturers and suppliers of electronic gaming devices, systems, table games, key components and support products and services for the gaming industry. AGEM works to further the interests of gaming equipment suppliers throughout the world. Through political action, trade show partnerships, educational alliances, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM has assisted regulatory agencies and participated in the legislative process to solve problems and create a business environment where AGEM members can prosper while providing a strong level of support to education and responsible gaming initiatives.
At AGEM, we look forward to another strong year ahead as well. With membership totaling 112 members as of Dec. 1, our growing influence was clear in 2011 as we tackled issues in complicated markets such as Illinois and Mexico, while helping to initiate needed change in key states such as Nevada, New Jersey and Ohio. In Europe, meanwhile, AGEM hired Tracy Cohen as director of Europe to serve our growing international membership base.
Many of these AGEM efforts will carry over into the new year as optimism runs high and global gaming suppliers prepare to shine.
Daniel J. Tucker
Chairman
California Nations Indian Gaming Association
The California Nations Indian Gaming Association (CNIGA) is entering into the new year with a keen eye on the future. As CNIGA’s membership continues to grow, California’s tribal governments are unifying around the association’s mission to preserve and protect our inherent sovereign rights to have gaming on our lands.
This year, tribal governments will face issues such as Internet gaming, taxation and tribal-state gaming compacts. CNIGA is committed to following these issues on both the state and federal levels and will make sure the voices of our member tribes are heard.
For several months, CNIGA has been hosting a series of meetings for all California tribes to discuss the California tribal-state gaming compacts. We expect these meetings to continue well into 2012, where we can work to find consensus on issues facing tribes in the compacting process. In 1999, CNIGA organized California tribes for the purpose of negotiating a tribal-state gaming compact. At the end of those meetings, 61 tribes entered into historic tribal-state gaming compacts with the state of California. At that time it was clear—together the tribes are a powerful voice.
It is in this vein that CNIGA is working to strengthen tribal unity and build consensus among our member tribes. This work is not easy and will not happen overnight. Each member tribe is its own sovereign government faced with unique problems and important issues. Just as California itself is a diverse state, so too are our tribal governments. From the Tolowa Dee-ni, Pit River, Wintu and Yana people of the north to the Luiseño, Kumeyaay and Cahuilla people of the south, our culture, our language and our environments differ; however we all have the same fundamental goals—to protect our inherent sovereign governmental rights and provide a better future for the next seven generations.
It is critical for tribal leadership to recognize and respect the differences of our tribal brothers and sisters and use that knowledge to find common ground as we move forward. We must never forget the awesome power that comes from a unified group of tribes. We must never turn our back on protecting our sovereign rights. We must learn from the past and apply it to the future, wherever that may take us.
From Jan. 31-Feb. 2, 2012, CNIGA will be hosting our 17th Annual Western Indian Gaming Conference (WIGC). There will be seminar topics for everyone, from tribal leadership to regulators, to general managers. This is the don’t-miss show of the year. For the second year, the Morongo Band of Mission Indians has stepped up as the title sponsor of the WIGC. CNIGA is looking forward to returning to the Morongo Resort, Casino & Spa for the conference. It is a beautiful venue with a phenomenal staff. I would also like to thank the Rincon Band of Luiseño Indians and IGT who have both signed up as gold sponsors for the conference. The support of our sponsors helps CNIGA complete our important work all year long. For additional information on the conference and how to become a sponsor, please visit the WIGC website at www.wigc2012.com. I look forward to seeing everyone at the WIGC as well as throughout the year.
Bill Rutsey
President and CEO
Canadian Gaming Association
The Canadian gaming industry overall, and especially the casino sector, weathered the economic recession better than the U.S. casino industry, experiencing just a single-year decline. However, the Canadian casino sector is still 1.7 percent off its historic 2009 high.
Over the past 15 years, gaming in Canada has grown exponentially, almost tripling in size to more than $15 billion Canadian dollars annually. In fact, gaming is the largest single component of Canada’s entertainment sector. As such, it has evolved from an industry that grew annually no matter what the state of the economy was to a more mature plateau reflective of overall economic conditions. Consequently, the industry did contract in 2010 by 2.3 percent and is estimated to have grown marginally by 1.3 percent in 2011. A complete picture is contained in our recently published 2010 Economic Impact of the Canadian Gaming Industry report, available on our website at www.canadiangaming.ca.
Gaming in Canada is generally regarded as having matured from a terrestrial perspective, with future growth dependent on the refinement and renewal of existing properties, including the development of enhanced hospitality and entertainment customer experience facilities, the replacement and modernization of existing gaming products, and new server-based, online and mobile delivery channels.
With provincial governments responsible for a significant and sometimes exclusive operational role, the introduction of new products is more often a political rather than business decision. With multiple provincial elections out of the way, the path may be somewhat cleared.
Significant opportunities include: VLT replacement/modernization initiatives in Quebec, Alberta, Manitoba, Saskatchewan and Nova Scotia; the continued expansion of Internet gaming in British Columbia and Quebec; and the introduction of Internet gaming in Ontario. Also of note is that the British Columbia Lottery Corp. announced that it intends to deliver its online gaming products via mobile devices, and expects to launch in the spring.
Finally, the legalization of single-event sports wagering may finally come to fruition, as there is currently a bill before Parliament to so enact. If passed, single-event wagering will almost certainly be offered online by the provinces operating in the space, and it will be a significant attractor for casinos, especially border communities as there are 100 million Americans within a six-hour drive of a Canadian casino.
Overall, the near-term growth estimates for the Canadian economy does not support the expectation of strong growth in gaming win for the next few years. Growth will come for those most creative and able to develop and penetrate the new demand channels.
The Canadian Gaming Association will continue to be an important voice for gaming in Canada by representing the industry on important issues and opportunities that arise. We are planning the biggest, most content-rich Canadian Gaming Summit ever, to be held at the Niagara Falls Convention Center June 11-13. The summit brings together more than 1,000 Canadian gaming executives for the country’s only trade show and conference. Mark the date and plan to join us.
Lois A. Rice
CAE, Executive Director
Colorado Gaming Association
Colorado’s casino and gaming industry has had marginal growth through late 2010 and 2011 due to the continuing economic recession, the residual impact of the 2008 casino-wide smoking ban and a market saturation in the three gaming towns that has resulted in cannibalization of existing markets rather than growth of new gaming patrons. There has been some slight growth in the Black Hawk and Central City markets, due to new casinos opening in Central City and Ameristar’s Hotel and Spa; however, the Cripple Creek market has been flat since 2002, and the Wildwood Casino’s opening in 2009 did not increase the Cripple Creek gaming market as originally anticipated.
Since CY 2008, the industry has experienced an average of $11 million in collective losses; however, since the industry is taxed on gross revenues rather than net revenues, the industry continues to honor its commitment to the recipients of gaming tax revenues, such as the state’s historic preservation program and the community college network, which continue to receive significant revenues. These gaming tax revenues help bolster their budgets and maintain their commitments to preserving Colorado landmarks as well as assuring students a quality higher education. The gaming tax also continues to fund the entire tourism promotion budget for the Colorado Tourism Office, which in previous years has been an average of $15 million, but most recently has been reduced to $12 million due to the state’s budget shortfall.
For the fiscal year ending in June 2011, Colorado casino adjusted gross proceeds (AGP), which is defined as the amount wagered by bettors less payout from the casinos, were $754,115,371 and gaming taxes paid to the state were $104,794,878. This reflects a decrease of 5.4 percent in AGP over the fiscal year 2010 AGP of $794,876,870, and a 2.7 percent decrease in gaming taxes over the fiscal year 2010 taxes of $107,667,716.
Black Hawk continues to dominate the Colorado casino sector with 18 casinos, approximately 8,600 gaming devices, and about 73 percent of the industry’s AGP. Cripple Creek has 14 casinos and approximately 4,000 gaming devices and 18 percent of AGP, while Central City has eight casinos, 2,400 devices and about 9 percent of AGP.
While the gaming industry experiences a very modest recovery from the recession, it remains threatened by the Colorado legislature’s continued attempts to expand gaming to the Front Range of Colorado, either by authorizing video lottery terminals, keno machines or instant racing machines at racetracks and other locations. In addition, the U.S. Department of the Interior has relaxed its rules regarding off-reservation gaming, which may generate interest among tribes without recognized reservations in Colorado to “reservation shop” for casino ventures in Colorado. The industry’s annual polling on these types of gaming expansion continues to reflect that 75 percent of state voters oppose casinos located outside the historic towns of Black Hawk, Central City and Cripple Creek. The unfortunate side effect of these continued expansion attempts is that our industry must put its resources into political battles rather than make reinvestments in a long-established gaming industry, which makes significant economic development contributions to the state and provides 9,000 direct and 18,000 indirect jobs for Coloradans.
J. Kelly Duncan
President
International Masters of Gaming Law
As it begins its 11th year, the International Masters of Gaming Law (IMGL) now has more than 260 members from 35 countries, as well as members in 32 states and the District of Columbia in the United States. The IMGL, which is a membership-based organization, is recognized as the leading gaming law education network worldwide. This has been achieved by bringing together from around the world the most distinguished gaming law practitioners, consultants, educators, accountants, compliance officers and in-house counsel of companies in the gaming industry who are dedicated to education and the exchange of professional information concerning all aspects of gaming law.
With its focus on gaming education, it is indeed a rare conference anywhere in the world where one or more IMGL members do not participate as speakers. Additionally, IMGL produces two yearly conferences that serve as important vehicles for the exchange of the leading issues in gaming worldwide. The IMGL Spring Conference will be held in Scottsdale, Ariz., April 15-17, 2012, and the IMGL Fall Conference will be held in London in October 2012. This leading role in such conferences is a function of the truly international makeup of the membership of IMGL and the prestige of this worldwide organization of distinguished gaming lawyers and affiliate members. Additionally, each year IMGL has member receptions around the world during ICE in London, G2E Asia in May, and G2E Las Vegas and European iGaming Expo (EiG) in October. IMGL also will exhibit at ICE, G2E Asia and G2E Las Vegas in 2012.
The substantive body of gaming law work that the IMGL is creating is found not only by the significant involvement of its members in the two yearly conferences produced by the IMGL and industry sponsored conferences throughout the world, but also in its four magazines: Casino Lawyer, Canadian Gaming Lawyer, European Gaming Lawyer and La Ley del Juego, as well as its Casino Law and Looseleaf Service, sponsorship of the UNLV Gaming Law Journal and its important partnership with Gaming Law Review and Economics, an official publication of the IMGL.
What is clear to the members of IMGL is that common issues exist for gaming law practitioners throughout the world. This has been most recently apparent in connection with the consideration of legalized Internet gaming in the United States. 2012 indeed will be an important year for Internet gaming in the United States. Anticipated expansion of Internet gaming presents the greatest challenges in the United States relative to educating legislators and veteran gaming regulators about technology and regulation designed to ensure the integrity of Internet gaming activities and address the social issues associated with same. The sharing of information by IMGL members who are integrally involved in Internet gaming in other parts of the world will continue to be a significant resource for IMGL members in the United States to help shape the development here of this segment of gaming and the law associated with same.
Furthermore, with substantial pressure on state governments to generate revenue without raising taxes and bring in businesses that create jobs, brick-and-mortar casinos will continue to be the focus of many states—whether they already have casino gaming or are considering legalizing it. This is apparent by two significant projects underway in more mature gaming jurisdictions like Louisiana, as well as in new gaming jurisdictions such as Ohio. Significantly, subject to the adoption of enabling legislation, Malaysia’s Genting Group is proposing the world’s largest casino to be built in Miami. Irrespective of what happens in Florida, it is clear that states with struggling economies have come to better understand the regulatory environment in which such casinos operate and the fact that proper regulation of such casinos and enforcement of the gaming regulations can ensure that there is public confidence and trust that gaming activities are conducted in a socially responsible manner, free from criminal and corruptive elements.
As a truly international organization of distinguished practitioners, the members of the IMGL will continue to play a leading role in helping shape regulatory regimes to ensure that same are both effective and reasonable so that the gaming industry can be financially successful while providing substantial economic benefits to the jurisdictions where gaming exists. In 2012, as legislators and regulators in the United States consider the implementation of Internet gaming, there is no doubt that the members of the IMGL will be on the cutting edge of such developments as they continue to be with respect to brick-and-mortar casinos.
Wes Ehrecke
President and CEO
Iowa Gaming Association
Iowa now has 18 state-regulated commercial casino licenses in the state since another property opened in mid-2011. The additional revenue from this new location was enough to help provide a slightly better overall revenue result than the year prior, reflecting that the economy and consumer’s confidence has not completely come around. There is optimism that the next year will result in a slight uptick in admissions and revenue compared to previous numbers, as Iowa has not experienced as severe a downturn as other states. A positive sign is there are ongoing initiatives by properties to upgrade their facilities to be premier entertainment destinations. A few examples include building new hotels and meeting space, amphitheaters for concerts and a golf course.
Looking ahead to the 2012 legislative session, we anticipate no changes to the tax structure. This was not the case in the 2011 session, when a proposed 63 percent tax increase was introduced and not foreseen. It did not get any consideration and was an excellent opportunity to educate the governor’s office, legislators and public about the damaging impact any tax increase would cause to Iowa’s gaming industry with a loss of casino jobs, charitable contributions and capitol reinvestment. It was a good opportunity to also emphasize that several properties likely would not survive versus trying to thrive in the current challenging economic environment.
We also do not see any change to removing the current smoking ban exemption on the gaming floor. Since the commercial casinos are collectively Iowa’s largest tourism attraction with more than 22 million visitors annually, the member properties continue to be proactive in their efforts such as to voluntarily offer non-smoking sections on their gaming floor. Additionally, they continue to explore improved filtration and ventilation systems to accommodate both smokers and non-smokers, providing an acceptable indoor air quality environment for the patrons and employees. A large percentage of these entertainment complexes are also smoke-free off of the gaming floor area such as in the bars, restaurants, meeting spaces, spas, etc.
In this year’s legislative session, there is anticipated to be discussion regarding authorization to allow online intrastate poker to be played via casino portals. The Iowa Racing and Gaming Commission (IRGC) was requested by the legislature to prepare a non-partisan report to research how an online gaming system could work, requirements of the hub operator, suggestions on how it would be regulated and whether minors could successfully be kept from playing. The report also required a socio-impact section that was prepared by the Iowa Gambling Treatment Program. This report can be read on the IRGC website at www.iowa.gov/irgc.
The members of the Iowa Gaming Association (IGA) will be closely involved if any bill begins to move through the legislative process. The IGA will be watching with interest the emerging proposals and discussion in other states and Congress to consider variations of Internet gambling legislation and what future trends there might be for online poker. Our state was the first to authorize and start riverboat gaming more than 20 years ago; there are some who think Iowa could be the first state in the country to pass a provision to allow an intrastate poker network and have it get implemented. But, that crystal ball is not yet entirely clear to predict the outcome!
Wade Duty
Executive Director
Louisiana Casino Association
Louisiana’s gaming industry begins 2012 in much the manner it ended 2011, with slight gains in revenue statewide over the prior year and continued pressure from other gaming markets. Since the national recession “arrived” about 11 months later than the rest of the country, it is expected the state will see a slower return to pre-recession revenue levels. Fortunately, Louisiana and Texas had less reliance on durable goods manufacturing, resulting in less of a loss than gaming operations in manufacturing states. At the time of this writing, statewide revenue is up 2.5 percent from 2011 year-to-date comparisons with 2010, though the continued impact of Oklahoma Native American casinos on northwest Louisiana gaming markets negate any greater positive gains. That segment of the Louisiana market has seen static to slightly declining revenues since the explosion of Oklahoma gaming in 2005.
The industry’s response to this pressure will be to continue to educate legislators and other policymakers on the need to protect the gaming tax revenue to which the state has become so accustomed. Additionally, we will seek out regulatory efficiencies and new opportunities that do not require broaching the “expansion of gaming” issue. Specific initiatives will include further streamlining regulatory requirements that have no impact on the integrity of gaming operations, yet continue to cost operators such as reducing the utilization of third-party entities for new games being placed in service or repaired games being returned to service.
The association will also explore regulatory tolerance for off-floor promotional tournaments to drive customers to our facilities in a cost-effective manner. This should not require any legislative changes, but rather the surmounting of a decades-long regulatory resistance to such events based upon concerns that they may not be in compliance with the ban on unlicensed gambling or will conflict with charitable gaming activities.
Other anticipated challenges are expected with the start of the legislative session in March 2012, including another attempt to repeal the exemption that allows smoking in bars in casinos within the state. For the last four years, the industry has successfully opposed the repeal of this exemption citing the immediate loss of revenue and jobs that have accompanied every other smoking ban in each gaming state to impose a ban. We have noted during the lull between legislative sessions the activities of tobacco-free advocates in municipalities around the state.
Utilizing continued funding from the tobacco settlement of the 1980s, some $8.7 million was spent in 2010 in Louisiana by various groups on smoking education and suppression efforts. These groups have now turned their attention to cities and parishes that have no casino gaming presence and thus little organized opposition. Here they have been successful in obtaining ordinances against smoking in bars and video poker venues. This piece-by-piece approach to secure smoking bans may be a reflection of their lack of success to achieve a single step, statewide ban and may indicate the opening of a second front in addition to their annual legislative efforts.
It remains to be seen what the effect of a large number of freshmen legislators in 2012 will be relative to the overall legislature’s attitude toward the industry. With 18 years of operation within the state, have we now reached cultural and political acceptance as a vital part of Louisiana economic and employment engine, or do we remain a political football for some and a maintenance-free cash cow for others?
Michael Winter
Executive Director
Missouri Gaming Association
As we look toward the end of 2011 and into the 2012 legislative year in Missouri, we, like most states, see budget concerns as the overriding issue. While state revenues are up slightly during this fiscal year, the discussion on the 2013 fiscal year will undoubtedly focus on spending reductions or revenue increases to plug anticipated budget holes.
As many would expect, additional revenue is the least favorite option. Education funding and other entities that receive either tax or admission fee revenue will undoubtedly be pushing for more revenue in the coming year. The Missouri Gaming Association and its members are preparing for some of these discussions during 2012.
An exciting development in Missouri is the construction of the state’s 13th casino in Cape Girardeau by the Isle of Capri. The development is well underway and moving toward completion. With its opening, this will complete the allowed number of casinos that can operate in the state.
The industry continues to be a very viable part of the economic picture in Missouri. We saw again last year significant tax revenues provided by the industry to support elementary and secondary education, veteran organizations, early childhood development and a number of other causes. The industry continues to play a significant role in job retention and ongoing support of community endeavors in their home dock communities.
2012 will also bring an election year where all but one of our statewide offices are up for election. In addition, all members of the House of Representatives and half of the state Senate will also stand for election. In this era of term limits, we continue to see significant turnover each election cycle. We look forward to working with our current office holders and new candidates on the importance and significance of the industry to the state.
Ernest L. Stevens Jr.
Chairman
National Indian Gaming Association
For the Indian gaming industry, 2011 was a year of great challenges and great successes. The National Indian Gaming Commission (NIGC) set an ambitious consultation agenda, an initiative Indian country had requested for years. We saw other major developments at the Department of the Interior and, of course, Internet gaming legislation remains a hot topic throughout our industry. Since 2012 is an election year, we can expect a busy year legislatively as Congress looks to balance the budget. NIGA will track and monitor all the developments for the coming year, including the following points.
Internet Gaming Legislation
NIGA and our member tribes are actively monitoring the various legislative proposals to legalize Internet gambling. In response to these developments, NIGA and its member tribes developed the following principles of respect for tribal sovereignty and self-government, which must be included in any Internet gaming legislation:
1. Indian tribes are sovereign governments with a right to operate, regulate, tax and license Internet gaming, and those rights must not be subordinated to any non-federal authority;
2. Internet gaming authorized by Indian tribes must be available to customers in any locale where Internet gaming is not criminally prohibited; and
3. Consistent with long-held federal law and policy, tribal revenues must not be subject to tax;
4. Existing tribal government rights under tribal-state compacts and the Indian Gaming Regulatory Act (IGRA) must be respected;
5. The legislation must not open up the IGRA for amendments; and
6. Federal legalization of Internet gaming must provide positive economic benefits for Indian country.
Indian tribes are simply asking to be able to compete on an equal footing. To protect tribal sovereignty, and to ensure equal access to the market, any Internet gaming legislation should be subjected to the full legislative process including hearings and markups in both the Senate and the House of Representatives.
Jobs and Economic Recovery
Our country continues to face some of the most trying and unsettling economic times since the Great Depression. The Indian gaming industry has weathered the storm well with revenue unchanged from 2009 to 2010 at $26.5 billion. The revenue numbers for 2011 are not in yet, but our industry has been resilient through this crisis. At 9 percent, unemployment remains critically high, so the president and Congress must push hard for jobs and economic recovery legislation in 2012 to accelerate the rate of economic recovery. Indian country is engaging Congress on this issue, and our message is clear: Tribal governments are ready and willing to help return this country to sound economic footing.
The NIGC and Regulatory Consultation
In January 2011, the NIGC published a notice of inquiry in the Federal Register asking for public comments on existing NIGC regulations and potential new regulations that implement IGRA. That process has proceeded throughout the year and will conclude in February 2012. The Indian gaming industry has been receptive to the NIGC’s new and open approach to consulting with tribes. We view the NIGC’s recent efforts as a positive reflection of the new NIGC leadership’s commitment to working with tribes on a meaningful government-to-government basis. In 2012, we can expect to see the results of their work and it could bring clarity and efficiency to a number of issues such as MICS, notice of violations and facility licensing regulations.
In general, Indian gaming has fared better than other forms of commercial gaming and pari-mutuel wagering, yet we expect that Indian gaming revenues to remain stable or improve slightly when compared to 2010. In Oklahoma and a few other markets, Indian gaming continues to outperform prior years, yet the housing market and credit crunch facing Americans remains a key factor influencing consumer spending. Accordingly, Indian tribes and industry leaders are focused on targeted marketing, improved efficiency and cost containment, and staying up in down markets.
While we expect America to improve overall economically in 2012, NIGA will continue to focus on urging tribes to use gaming revenues to help diversify their economies. We are hopeful that in the long term, tribal economies will continue to build upon those aspects that make Indian country unique. This includes continued diversification into cultural and environmental tourism. Native American casinos offer entertainment that cannot be experienced anywhere else. There are very few places in America that people can visit and experience the top names in entertainment, while learning about the culture, traditions and history of America’s first people.
We have a lot of work ahead of us, whether it is with maintaining the strength of our existing operations or working with tribes that are still working to find economic sustainability. In 2012, NIGA will continue to work as a united front with tribal leaders and other national Indian organizations to advance the lives of Indian people economically, socially and politically.
Sheila Morago
Executive Director
Oklahoma Indian Gaming Association
To quote Frank Sinatra, 2011 in Oklahoma “was a very good year.” Our tribal leaders deserve credit for their wisdom and commitment to tribal government gaming, but we must also credit our great state. Oklahoma is blessed with a talented pool of workers with a strong work ethic along with plentiful oil and gas resources that power cars and heat homes throughout the country. Oklahoma tribes have built a diversified rural economy, which, paired with urban economies, is keeping our state strong. So it’s safe to say that Oklahoma expects 2012 to be another good year.
I’m going out on a limb to make my next forecast. I’m betting that in 2012, we will congratulate the National Indian Gaming Commission (NIGC) Tribal Advisory Committee (TAC) on the excellent job it did providing advice on the Class II Technical Standards and Class II and III Minimum Internal Control Standard (MICS). In October, Tracie Stevens, chairwoman of the NIGC, announced that the NIGC received 55 nominations from tribal governments. It selected a diverse group of 15 people for the TAC. The TAC’s mission is to protect Indian gaming and ensure that tribes are the primary beneficiaries of their gaming operation; Chairwoman Stevens anticipates that the committee will complete its work by March 31, 2012.
I believe the recommendations will be on point and that NIGC will break with tradition and take them to heart. I say “break with tradition” because this hasn’t happened in the past. Other commissioners have promulgated their own rules, regardless of the advice they have received. I understand that NIGC is required only to consider the recommendations and isn’t bound to accept them, but perhaps failing to fully consider past TAC recommendations explains why this exercise has been repeated so many times. And why, despite the efforts of so many smart and committed TAC appointees, rules like the MICS are still in need of updating.
Call me an optimist, but I predict that these issues will be finalized once and for all in 2012. I’m hopeful because we have a woman who is a tribal member and has worked in the industry now chairing NIGC. The chairwoman, along with Vice Chairperson Steffani Cochran, and Associate Commissioner Daniel Little are well versed in the needs of tribal people and brings a fresh viewpoint to the proceedings. They understand it’s critical to preserve the health of Class II gaming and they recognize that Class II gaming is the foundation upon which we built our industry. Class II must remain healthy so that our industry can grow.
Why am I so concerned about the TAC? Because, in addition to needing updated regulations, every time a committee is formed to review and make its recommendations, the process takes time and money away from other issues that concern us all, issues like health care, education and housing. These directly impact our lives and that of our relatives, friends and colleagues. Yet, as long as gaming regulatory issues remain on the table, these issues suffer. Gaming is not just the elephant in the room; it’s an entire herd. We’re doing ourselves a disservice if we don’t put this to bed once and for all.
These other issues matter today because gaming revenues have dropped dramatically, forcing many tribal governments to make do with less. Indian country is already plagued by poverty, so reduced gaming revenues mean tribal government must cut or eliminate needed services. Those tribes that are mired in poverty or located in remote areas suffer the most when governments cannot meet their obligations. Even if tribal gaming revenues begin improving next year, it will take years to approach recovery.
Which is why, I believe, tribes will look at one more pressing issue in 2012: Internet gaming. It doesn’t take a crystal ball to see that our nation is still suffering from financial pneumonia. As long as the economy is sick, local and state governments will continue seeking new sources of money, and one place they’re looking is Internet gaming.
Tribes don’t have to decide immediately on their position regarding this issue. But they should take this time to learn about it so they can make informed decisions that protect their positions. It’s possible that tribes will always prefer the brick-and-mortar facility model. Gaming facilities are employment centers. But new technologies present new opportunities, and tribes that figure out now what will work for them will have an advantage. In the gaming industry, like in tennis, advantage counts. Tribes need every advantage to remain competitive.
José Luis Benavides
Attorney at Law
Benavides & Associates
2012 means the end of President Calderón’s administration and the end of Partido Acción Nacional (PAN) as the head of Mexico’s federal government. PAN had been in charge of gaming guidelines for the past 12 years, and it was a total mess. Seven Ministers of the Interior were in charge of gaming topics in the last two presidential administrations (Vicente Fox 2000–2006 and Calderón 2006–2012), and not a single one had a clue when it came to gaming. And Calderón didn’t care. He had his own agenda and more urgent topics to take on through congress than a totally new gaming framework. I am talking politics, and Calderón and his administration knew that a political discussion about gaming or casinos is not exactly a political asset when it’s likely to explode in a barrage of negative media attention and public outcry.
Of course, the tragedy in Monterrey that occurred when some mobsters decided to burn a “casino” location, murdering 53 innocent people, shone the headlights on the federal government’s passive role in gaming regulation—after many, many years of its doing nothing to improve and support the Mexican gaming industry. Problems, however, persist.
To date, all permit holders and gaming providers—no matter if they are small, medium or large—still have several issues to deal with, such as lack of regulation and security, illegal competition all over the country, and high taxation, among others.
But no matter the problems, casino big dogs worldwide are placing their bets on Mexican gaming for the near future. These corporations know that the Mexican gaming industry is wide open to receive foreign investors, create competition, improve facilities and related services, and make huge profits for their own investors.
In my opinion, most of 2012 looks quiet for the Mexican gaming industry, as the politicians will be very involved in the presidential campaigns leading up to the federal elections on July 1, 2012. I don’t have a crystal ball to predict the results of the elections, but the facts and polls indicate that the Partido Revolucionario Institucional (PRI) is going to win the presidential election as well as the majority of the positions in both chambers of the Mexican Congress.
However, if my predictions are accurate, the seeds of a new Mexican gaming law will be slowed by the new president. That new bill should follow at least these guidelines:
1) Establish a new gaming commission and control board as an administrative body separate from the Ministry of the Interior (SEGOB),
2) Include new gaming regulation for all casino games and online operations,
3) And propose new tourist destinations for gaming investors, offering several tax benefits among other benefits.
If the politics go as I predict, Mexico could finally emerge from its decade-plus debacle of non-reform, hopefully under the guidance of those who are familiar with the international gaming market.
Mexico is an option—think about it!
Lloyd D. Levenson
Chief Executive Officer
Cooper Levenson, Attorneys At Law
The more than 30 years of experience I have in this business has taught me that neither I nor anyone else can prophesy the future. What we can and must do is plan for the future in the most intelligent way possible.
In the casino industry, as in nature, growth is survival. Without growth and change, casinos are not going to prosper in Atlantic City, Las Vegas or any other venues.
Fortunately, New Jersey has recognized these principles and has taken firm steps toward fundamental institutional change. Atlantic City’s first new casino since 2003 will be opening in spring 2012 as Revel, under the leadership of gaming veteran Kevin DeSanctis, completes its new $2.4 billion mega resort on the Boardwalk. The state showed great foresight in assisting this growth, with exemplary leadership at the executive and legislative levels. With the hundreds of thousands of new customers this exciting facility will attract, will come opportunity and growth for other casinos and businesses in the city. As a “rising tide lifts all boats,” the wave of enthusiasm Revel is generating will be bound to elevate everyone’s long-term prospects.
Other casinos, such as Resorts, have “rebranded” themselves, becoming essentially “new and improved” and highly attractive to visitors. Couple this creativity with the efforts of the new Atlantic City Alliance, which has taken over the marketing of the city as a whole, and the prospects for growth seem bright. Under its director, Elizabeth Cartmell, the alliance is poised to spend tens of millions marketing the city and all its casinos and tourist facilities on a scale never before attempted.
A drastic restructuring of the state’s regulatory system, eliminating unnecessary duplication of governmental functions and making it easier to secure investors, is already beginning to pay dividends and will certainly aid in the industry’s growth.
The new state-run tourism district in the city is guaranteed to bring about infrastructure improvements that will benefit the city’s casinos in 2012 and beyond. The Casino Reinvestment Development Authority, under the leadership of Executive Director John F. Palmieri and Deputy Executive Director Susan Ney Thompson, is working hard to prepare a new master plan for that district. They are consulting with community leaders, representatives of labor, local citizens and industry executives for input in preparing this new plan. As a consequence of this and similar initiatives, tourists will enjoy greater security and facilitated access, with a brighter and safer Boardwalk and better roads and connectors.
The new “boutique casino” concept, passed into law this last year, and allowing for smaller casinos, has encouraged Hard Rock to announce plans to open their own hotel and casino in the spring of 2014.
New Jersey citizens embraced growth and change when they approved a ballot measure this past November that would allow for sports gambling in Atlantic City, provided that corresponding legal changes can be made at the federal level. I anticipate litigation and possible legislation on this issue in 2012, hopefully culminating in legalizing this proven revenue source.
To summarize, my prediction is that jurisdictions like New Jersey that are willing to grow, change and modernize will prosper. Standing still is not an option.
Robert W. Stocker II
Member and Gaming Practice Leader
Dickinson Wright PLLC
Calendar year 2012 will present significant opportunities, as well as economic challenges, for the global gaming industry. I emphasize “global” because for all its good and bad ramifications, the Internet is forcing dramatic changes within the gaming industry that will have long-term ramifications for the United States gaming industry.
Economically in the United States, the land-based commercial gaming industry will continue to see a painfully slow recovery in Nevada, increased pressure on the gaming facilities in New Jersey (absent intrastate gaming legislation being enacted into law), expansion of commercial gaming in new state venues such as New York and Massachusetts (resulting in expansion also in the upper New England states) and Illinois and perhaps Kentucky (Can Tennessee be far behind once Kentucky joins the commercial casino industry states?). Indian country casinos are experiencing the same economic challenges faced by the commercial gaming industry, with the attendant slow recovery. New casino and expanded casino operations in both the commercial segment and in Indian country face a skeptical and cautious financing market, which will continue to have a significant impact on expansion efforts except in truly new venues such as New York, Massachusetts, Chicago and Kentucky.
Globally, the focus will continue to be on the expansion of the Internet gaming market. That is where the real action is. It starts next door in Canada, where the provincial governments have been jumping on the Internet gaming bandwagon with carefully thought-out structures. Jumping across the big pond, several European nations have implemented Internet gaming licensure and operational frameworks that have had explosive economic results.
From a land-based perspective, Macau and Singapore will continue to grow. However, by 2014 there will be a third major land-based player in Asia—the Philippines. The PAGCOR multi-casino development in Manila, where cement is already being poured, promises to create a new major land-based casino hub in Asia that presents tremendous potential to become a dominant player in the Asian market.
The impact of the Internet is clearly recognized by the major United States gaming companies, who are partnering with European i-gaming operations in anticipation of the eventual legalization of Internet gaming in the United States. This, of course, focuses on the elephant in the room (no pun intended!). Congress (who knows very little about the gaming business and is even more ignorant regarding the Internet and the expansion of Internet gaming throughout the rest of the world) is pretty much fast asleep on this issue, notwithstanding the bills that have been drafted and placed in the congressional hopper to date. Internet gaming is simply not on the top 20 list as the presidential election cycle moves into full swing.
When and how Internet gaming expands (remember that the horse racing industry already has a limited form of Internet gaming) in the United States remains an open question. The fact that the heat has been turned up is evidenced by the number of new Internet gaming conferences that have been held in 2011. There will be more to come in 2012. However, heat does not automatically turn into action in a congress that is focused on short-term, immediate economic fixes. The Internet gaming questions come down to what will be legalized, how it will be legalized and when it will be legalized—the same questions that have been discussed and debated with great intensity within the gaming industry for the past five years.
There are two approaches to the legalization of Internet gaming in the United States: intrastate Internet gaming and interstate Internet gaming. Which will come first? Nevada, which has an Internet gaming law on the books, has already started licensing procedures in anticipation of the arrival on intrastate Internet gaming. As this projection is being written, it appears that California (through the efforts of the California Online Poker Association) or New Jersey will be the first large population states to adopt some form of intrastate Internet gaming (either poker-based in California or casino-based in New Jersey). These activities will put the pressure on Congress, who is basically fast asleep on this subject notwithstanding the various committee hearings that have been held, to step up to the table to adopt federal legislation. This is a scenario strangely similar to Congress’s enactment of the Indian Gaming Regulatory Act after the Cabazon decision effectively gave Indian country a carte blanche on gaming operations. The major commercial casino operations recognize this and have been taking all the appropriate actions to dominate the playing field. With the exception of the COPA efforts in California and a few individual tribal efforts, Indian country and the National Indian Gaming Commission have been slow to get to the table, as is evident from the legislative formats that have thus far emerged at the federal level.
The year 2012 will be challenging. Challenges create opportunities. Who will effectively best take advantage of the opportunities remains the unanswered question. Stay tuned for a very interesting year!
Stu Hoegner
Barrister & Solicitor
Gaming Counsel Professional Corp.
Canada’s incremental approach to gaming expansion was in evidence throughout 2011, both in land-based and in Internet channels—but especially the latter.
Legislative action on gaming in Canada is generally slow and tentative, as demonstrated this past fall by the reintroduction of a measure to finally legalize single-event sports betting. This proposed change (Bill C-290) was introduced by Joe Comartin, the Member of Parliament for Windsor-Tecumseh. Comartin has tried to get this bill passed before; it’s the verbatim text of Bill C-627 that he introduced during the 40th Parliament. At the time of writing, the bill has passed second reading in the House of Commons and has been sent to committee. This is a private member’s bill, so observers should probably not hope for too much, but it’s possible that provincial support for the change could contribute to its being enacted. Whether its passage will help government sports betting businesses is still unclear.
One other federal legislative item proposed in 2011 potentially impacting gaming is Bill C-10, titled the Safe Streets and Communities Act, but colloquially known in Canada as the Omnibus Crime Bill. This bill proposes to either create or amend several pieces of federal legislation. Bill C-10 restricts conditional sentences in the case of, among other things, “criminal organization offenses” under the Criminal Code. (By regulations promulgated in 2010, certain gaming offenses may now be prosecuted in Canada through the serious offense and criminal organization provisions of the code.) However, while the Omnibus Crime Bill expands the exclusions from conditional sentences, it doesn’t affect the treatment of criminal organization offenses—and, thereby, gaming offenses—which are already excluded when they are prosecuted by way of an indictment for which the maximum term of imprisonment is 10 years or more. Of course, persons convicted of gaming offenses and facing custodial sentences will be affected by such items as the Corrections and Conditional Release Act changes, also in the Omnibus Crime Bill. At the time of writing, Bill C-10 has passed second reading in the House, has emerged from committee, and is coming up for third reading. The government has indicated that it wants to pass the bill without substantial amendments by Christmas. It is expected to become law by early 2012.
Some governments are looking to expand brick-and-mortar gaming operations to increase government revenues. For instance, the Kahnawà:ke Mohawk Nation outside of Montreal continues to contemplate a casino in their territory. Kahnawà:ke already regulates Internet gaming and betting from its territory and allows land-based card rooms. However, it is on the Internet gaming side that we have seen the most activity of late. British Columbia and Quebec both have had Internet gaming offerings available to customers for the past year and share an online poker software platform to boost player liquidity. Ontario Lottery and Gaming (OLG) is targeting 2012 for the launch of its Internet gaming offering. (OLG is still considering what that will look like and whether it will join the existing BC–Quebec network.) One should expect more government lotteries in Canada to offer wagering online instead of ignoring the sector as they traditionally have done up to the last couple of years.
Another manifestation of the expansion theme is offshore private gaming operators targeting the Canadian consumer market. Canada has assumed increased importance since the U.S. Department of Justice crackdown on certain U.S.-facing gaming websites in April 2011. More and more operators and marketers have aggressively re-allocated advertising and promotional budgets to the Canadian market. Taking Canadian bets and wagers from offshore is a legal gray area in Canada, but there has been much less emphasis on enforcement here, especially compared to the United States. The result has been increased interest in Canada as a B2C market for foreign casinos, poker rooms and sports books.
This approach will likely continue in 2012. Legislative changes next year, if and when they happen, should be at the margins. Canada’s future in Internet gaming will likely continue to reflect international trends of expansion and regulation of the sector. The incremental moves in Canada mirror the worldwide trends in Internet gaming of, variously, entering new markets and turning online interactive wagering into a normal, regulated part of the overall economy. Expect more of this deliberate and tentative method in Canada in 2012.
Greg Gemignani
Attorney
Lionel Sawyer & Collins
It is clear that a significant large potential market for U.S.-based gaming companies will be online gaming. The two most pressing issues regarding that potential market within the next 18 months are:
1. Whether Congress has the will to compromise to enact online gaming or poker legislation during what is shaping up to be a contentious national election.
2. In the absence of congressional action, and in the event of a change in the federal executive branch, whether the federal Department of Justice will act to prohibit online intrastate wagering as such activities are likely to become authorized under state law on a state-by-state basis.
It is clear that the current patchwork of prohibition statutes and sporadic enforcement has done little to address the significant issues raised by online gaming. Despite federal statutes, state statutes, attorney general opinions and sporadic enforcement efforts, online gaming continues to thrive. While the online market is relatively new, it has already established a cycle of entrance, boom, legal action and vacuum:
For example, the first cycle began early in the last decade, when small foreign operators like Playtech, Party Gaming and 888 Gaming entered the market and grew rapidly into publicly traded companies. In 2006, the Unlawful Internet Gambling Enforcement Act was enacted and such operators pulled out of the U.S. market, leaving a vacuum. The vacuum was quickly filled by then smaller foreign operators such as PokerStars, Full Tilt and Absolute Poker. These operators grew rapidly into multi-billion dollar enterprises until they were named in criminal indictments in the spring of 2011. These operators then ceased U.S.-facing operations, leaving a vacuum. That vacuum is currently being filled by new smaller offshore entrants, thus perpetuating the cycle.
The current system of prohibition rewards foreign operators willing to risk a sporadic enforcement action while ensuring that law-abiding domestic competition is excluded. Additionally, the system essentially leaves consumers with no meaningful protections and domestic governments with enforcement costs.
There is no reason to believe that this cycle and its effects are likely to be altered by anything other than reasonable and comprehensive domestic regulation. Increased enforcement may cause the cycle to turn more rapidly, but it will not curb demand that is fulfilled by foreign operators.
Competition from legitimate domestically licensed operators can enable market forces and regulation to minimize the impact of unlicensed operators while providing consumer safeguards.
However, the solution to developing a comprehensive regulated industry is not simple and will require significant balancing and legislative compromise. Some of the key issues that must be addressed at a minimum are as follows:
• Defining the Regulated Activity – Whether it is poker or certain forms of poker, the regulated game should be well defined in a way to clearly state that the bet occurs both where the bettor is located and where the servers are located.
• Native American Licensing and Taxation – While tribes are clearly sovereigns for activities occurring on Indian lands, any legislation will have to address tribal participation for activities that also occur off of Indian lands.
• Role of Federal and State Regulators – Some states have significant resources, long regulatory histories, long investigative histories and international contacts that should be leveraged in any federal regulatory model.
• Lotteries – Lotteries are subject to strict federal limits on interstate activities due to their nature as being arms of the states. The role of lotteries or other self-regulating extensions of governments in interstate online gaming must be clearly defined.
• Taxation Rates – Balancing incentive to regulate without crippling the regulated industry to the benefit of illegal operators is essential.
• Consumer Protections – Legislation should address patron-dispute, problem gaming and minimum assets for participation to uniformly protect consumers.
• Treatment of Experienced Online Companies – Companies that took bets from U.S. players have significant experience, assets and technologies that will be attractive to U.S. licensees. A clear uniform standard for the participation or exclusion of such companies and their assets must be defined.
In the absence of federal legislation, states are likely to enact laws permitting intrastate online gaming activities. Currently, there is a difference of opinion as to whether federal statutes prohibit such activity. However, the Obama administration has not engaged in any effort to curb such activities. Republican front runners Mitt Romney and Rick Perry have voiced strong opposition to any expansion of gaming and online gaming in particular. Therefore, in the event of a change in our executive branch, there may be renewed interest in engaging in enforcement actions to stop intrastate online gaming.
I. Nelson Rose
Distinguished Senior Professor
Whittier Law School
The immediate future of the gaming industry is, basically, more of the same.
The economy is not going to recover to the glory days of, say, 2006, any time soon. The Republican leadership in Washington and Democratic President Barack Obama have agreed that deficit reduction is the No. 1 economic problem facing the U.S.—even though it is not.
There will be no massive government spending to stimulate consumer demand by creating millions of jobs and reviving the housing market. The stimulus money that saved more than 2 million jobs has run out, leaving 25 million Americans unemployed. Worse, there are now 100 million Americans near or below the poverty line. Few of them are going to be taking vacations to Las Vegas.
The GOP has successfully become the Party of No, so the states can expect no help from the federal government. Even if Obama is re-elected and Democrats regain control of the House of Representatives, Republicans have learned how to kill all bills by merely threatening to filibuster in the Senate. Only if the Democrats somehow got 60 seats in the Senate, which is not about to happen, would there be any federal money to help states balance their budgets.
States are going to continue to turn to legalizing and expanding gambling as a painless tax. This is bad news for many existing operators. Competition will increase, especially for places like Atlantic City, while the economy continues to limp along, at best.
Fortunately, it looks like we are not going to have a steep double-dip recession. Excess supply in places like Las Vegas will slowly be used up. Hotel room prices and amounts wagered will generally rise again. And there will be pockets of growth, like the tribal casinos in Oklahoma, where there is still little competition from nearby states (although Texas Democrats will be voting on a non-binding referendum on casinos).
Republicans are also preventing literally any substantive law from being passed. There is also little chance that Congress will do anything about issues like Internet poker. This means there won’t be any federal licenses for the big Nevada casinos and foreign online gaming companies to get. Instead, they will have to compete against politically powerful local operators in the growing number of states that will be legalizing Internet poker on an intrastate basis.
Once intrastate online poker is established in jurisdictions like Iowa, California, Nevada, New Jersey and the District of Columbia, operators will push for cross-border betting. The U.S. Department of Justice believes the Wire Act prevents states from reaching agreements about online poker, similar to those for multi-state lotteries or interstate off-track betting. Expect lawsuits to be filed, and courts to continue to rule that poker does not fall under the Wire Act. Within five years we will have multi-state Internet poker games.
The most interesting new development is the approval by New Jersey voters in November 2011 of legalized sports betting. This revives the lawsuit brought by Sen. Ray Lesniak, challenging the federal Professional and Amateur Sports Protection Act (PASPA). The PASPA prevents New Jersey, and every other state, from authorizing new sports wagering. But it is clearly unconstitutional, since, through a grandfather clause, it already exempts eight states; more, if you include jai alai. It is legally irrational, like saying only some states can have movies with sound.
What happens when a federal court of appeal throws out the PASPA? Every state that is desperate for more revenue—which means almost everyone—will instantly be looking at legalizing sports betting. And they will be able to take bets online, so long as they are intrastate.
Just as Congress won’t pass a law legalizing Internet poker, it won’t pass a new law outlawing sports betting, if the PASPA is knocked out.
The long-term forecast is spectacular growth: intrastate Internet poker followed by interstate; sports books will open in New Jersey and across the country; intrastate online gambling will include casino games and sports betting.
Technological advances and all this competition will change the way existing casinos operate: They will have to become a lot more fun if they are going to survive.
Bob Magnanti
President
Automated Gaming Technologies Inc. (AGT)
With 2011 coming to a close, we at Automated Gaming Technologies (AGT) are encouraged by the continued improvements of the extended economic situation that has hindered the gaming industry, and we look forward to the encouraging revitalization of the gaming industry as we head into 2012. We have confidence in the industry and its ability to bounce back as we continue to develop and deliver our cutting-edge cash processing and security solutions.
The continued climb back up for the industry will provide a sounder base for operators in all market segments. The industry has faced many challenges over the last several years, but this has created the need to evaluate, adjust and move forward for operators and suppliers alike. While the year was not an overwhelming improvement for this industry, it has provided us the knowledge to further improve and adapt to the new surroundings.
Our market diversity has allowed AGT the ability to overwhelmingly enhance our product scope and capability to meet our diverse customer base, with cutting-edge advancements in our product offerings and the introduction of never-before-realized product solutions that push us to bleeding edge.
When we looked to bring in the most advanced product offerings to this industry, it was easy to determine that the futuristic and advanced Iris Biometric solution was the way to go. We have integrated this product solution into our automated Employee Banking System and now are looking to add it to other product offerings we provide for the most secure access controls available today.
The Iris Biometric solution is virtually endless as it becomes a reality; we believe the need for card-based systems can be virtually eliminated for slots and access controls of properties, both employee and customer. The technology provides the ability to further examine the patron’s activity within a property and with maximum accuracy, as we all know patrons share player cards and access controls are a typical PIN code that can be compromised. The Iris Biometric technology solution offers the first non-evasive and hands-free on-the-move access.
At AGT, we continue to redefine the way operators manage their day-to-day cash processing demands, with such products as the Revolution™ for a total employee banking till recycling solution, and our Rapid Deposit™(intelligent safes) continue to lead the way for streamlined automated till exchange and revenue deposit. Our product offerings coupled with our proprietary CBMS™ (Currency Banking Management System) suite of products allows web-based applications to process, manage and reconcile the daily operator till management. We recognize the ever-important need for operators to work at the most efficient level thus far, and our automated solutions offer the latest and greatest in this arena.
We are excited to also be introducing our best-of-breed soft count processing equipment, the COBRA™ currency and slot ticket sorter. The COBRA has been utilized for many years by other market segments, but we are proud to introduce the product to the gaming industry.
With its advanced design, it allows operators to incrementally add sorting pockets as they require them, with a four, eight, 12, 16 or even 20-pocket capability to handle any softcount processing requirement. The greatest feature is the patented “Header and Trailer Card” technology, assuring no transaction is comingled in operation. The comprehensive ECM (Enterprise Cash Management) application provides operators the ability to manage the basic functions of operations to the most complex accountability management tools.
The time is now. It is up to us, in partnership with our customers, to implement and recognize the full capability of our cutting-edge technologies. Big cost reductions of operations, bringing our customers further into the 21st century and providing a more pleasant experience for the ever-more important patron is our goal—tomorrow’s technology is here today!
Curtis Hallowell
SVP Product Management
Cummins-Allison
During the last half of 2011, the global gaming industry experienced some gradual gains in momentum that Cummins-Allison believes are signs of strength in the market. One of these gains, which we expect will carry over into 2012, is the improvement in capital expenditures, specifically in the area of technology solutions that help casinos effectively “do more with less.” It’s true that spending levels are not what they were four or five years ago, but savvy casinos have realized that by investing in back-of-the-house technology solutions that are economical—yet more efficient than ever before—they can free up additional funds to spend on the front of the house and continue to improve their patrons’ experience.
Cummins-Allison is committed to developing new products that prove their return on investment quickly, enabling properties to streamline operations and reduce costs. The benefits of our newest currency processing solutions are twofold: Casinos can complete more tasks in less time, and with fewer machines.
For example, we designed our new JetScan iFX™ i100 to promote improved productivity throughout the entire gaming facility by combining multiple processes on a single, compact device that processes currency faster than any desktop product available. We also took into consideration all of the types of media that pass through a gaming facility, resulting in the only device that processes currency, checks and tickets on one machine. The i100 series captures images at 1,200 documents per minute, and these images can be digitally archived to enable fast, easy searches while eliminating the need for costly physical ticket storage. Additionally, the exclusive imaging technology makes it possible to capture serial numbers of every note for tracking and fraud prevention purposes. For the first time, currency can actually be tracked back to the point of entry, be that an individual or a device, and large-value transactions can easily be recorded for Title 31 reporting requirements.
Our recently launched JetScan iFX i400 is another example of truly revolutionary technology, processing and price. The i400 series provides a lower-cost, entry-level platform that makes possible high-speed multi-pocket currency processing at virtually any organization. The device uses breakthrough image technology to provide outstanding read rates while processing currency at 1,000 notes per minute, for throughput that is 39 percent faster than the closest competitive unit. What’s more, its unique, expandable design grows with the casino as its business needs grow.
Up to nine pockets can be used in a space-saving vertical configuration, providing a high-volume, multi-pocket sorter in a footprint only slightly larger than a desktop device.
The i400 series also delivers non-stop processing capabilities with a continuous feed hopper that holds up to 800 notes and can be filled as the machine is running, while its beltless full-access transport path ensures fewer jams and less downtime. In the rare event of a jam, strategically placed doors allow unobtrusive front access. The JetScan iFX i400 delivers economical multi-pocket sorting in a small footprint, allowing any size gaming operation to realize greater processing efficiencies. Cages, count rooms and employee bank environments can quickly and affordably process currency in a single pass—something many could not do prior to the introduction of this product.
Though the global gaming industry will remain in a state of flux in 2012, we feel very optimistic about where the market is headed. We believe the most successful properties in the coming year—and beyond—will be those that challenge themselves to gain a competitive edge by embracing next-generation technology.
Jim Goodwin
Market Segment Director Casinos
Giesecke & Devrient America Inc.
Banknotes and cash center solutions are among Giesecke & Devrient’s core competencies. Casinos, cash-in-transit (CIT) companies, commercial banks and central banks are their customers. Giesecke & Devrient (G&D) delivers solutions ranging from compact banknote processing systems to entire cash center solutions including cash management software, processing systems, material handling and services.
The casino market continues to show improvements in growth and planned expansion in many parts of the world. In view of this ongoing growth and various technical advances, many casinos are looking to introduce processes and efficiencies that enhance their ability to manage the many cash points that accompany these developments.
The casinos that G&D is working with are requesting solutions to improve their processes in several operational areas. Whether they are aiming to enhance procedures in employee satellite cages or increase the accuracy and efficiency of their soft count rooms, these casinos require a provider that understands and offers solutions to meet their continued focus on overall profitability.
As the preferred solution provider for many casinos around the world, G&D continues to enhance its portfolio for this important market, offering the most efficient and accurate soft count solutions and cage automation available today.
The new BPS C4 is part of G&D’s ongoing drive to provide casinos with solutions that meet their increased need for efficiency and accuracy given the many types of counts now performed. The BPS C4 brings one-pass technology with true continuous processing of intermixed currency and tickets to the count room and can be expanded to up to 20 output compartments. Couple this flexibility with G&D sensor technology, and casinos can achieve optimum accuracy and efficiency in their count room operations.
Another casino area that has been receiving a great deal of attention is the satellite cage. With the addition of many non-gaming venues in the casino space—hotels, gift shops and other retail outlets, restaurants, concert halls, and so on—the need for a comprehensive employee bank tracking system has come to the forefront. As these non-gaming venues continue to grow, so do the lines of cashiers waiting to receive or drop off their banks or starting tills. Having identified the need for a solution, G&D now provides a complete bank tracking and electronic bank-out system in the form of Compass Casino and Bank Express. This system helps the casino to eliminate the cashier lines that arise in typical satellite cages by delivering any size of bank to the cashier in an average of seven seconds. In conjunction with the Compass Casino software, Bank
Express provides a complete tracking system that meets the requirements and goals of casinos today.
G&D provides casinos around the world with customized solutions for automated cash processing that meet their special requirements.
Rick Friese
SVP – Sales
Glory (U.S.A.) Inc.
Solutions that focus on productivity, efficiency and security will play a key role for the gaming industry going into 2012 as casino operators look for ways to enhance their bottom line.
Products such as cash dispensers, cash recyclers and currency handling products provide a reduction in time due to fewer steps in the counting process and added security due to less handling of cash by employees.
For close to 60 years, Glory has been providing cash management solutions for financial institutions and retailers worldwide. This experience has enabled us to understand the needs of cash management and provide the ability to utilize our world-renowned design and manufacturing expertise to bring quality, reliable and productive solutions to the U.S. casino and gaming industry.
Glory has been working together with leading cash access providers to provide both small and large casinos with innovative ATM functionality. Together with our SK-100A casino kiosk, this integration will provide casinos with greater flexibility, more options and an even greater selection of cash access providers that best meet their needs without compromise.
Looking forward, we will again concentrate on ways to bring our history of design and innovation to casinos. One new innovation we’re working on focuses on efficient cash dispensing for route operators and casinos. Working with various cage applications, we’re creating a gateway of integration for devices like our PD-600 cash dispenser to add a more secure dispensing process while providing real time reporting and inventory management. In 2012, Glory will also deliver the RBG-300, a new intelligent cash recycler designed for cash rooms, cages and main banks-vaults.
Glory continues to provide a complete and proven solution to solve the challenges of today’s tough business environments. We are committed to working with our casino customers to hear their challenges and build our portfolio of solutions.
Michael Dominelli
VP of Marketing
NRT Technology Corp.
NRT is committed to providing casino operators with the most innovative cash handling solutions in the market. We are constantly working to develop new products and services that simplify cash handling for our customers so they can concentrate on delivering the best possible gaming experience to their patrons. We are a customer-centric organization, and as such, take many of our product development cues from casino operators. For 2012, gaming operators have told us that they want to streamline their cash handling operations and reduce associated costs, expedite and improve patron experiences at ATMs and ticket redemption kiosks, and embrace technology. NRT is committed to delivering solutions that meet these needs.
In order to streamline the cash handling process and reduce costs, NRT is working with Wincor Nixdorf to bring cash recycling technology to the casino floor. The QuickCage™ is an automated teller safe that utilizes cash recycling technology. QuickCage will allow for real-time validation of cash at the cage level and eliminate the need for till and soft counts at the end of a shift. This system will also utilize secure and robust cash cassettes that can be swapped between the cage, ATMs and other cash centers in the casino without the need for counting or refilling. This method of validating and securing cash with real-time reporting and management is very similar to what you see in any major bank today.
In order to expedite the cash withdrawal process and improve the overall gaming experience, NRT plans to print gaming tickets on our ATMs and QuickJack™ ticket redemption kiosks. Gaming operators are excited at the prospect of patrons being able to print a gaming ticket for use in slot machines and other gaming devices right at the ATM or QuickJack, and NRT is intent on making this a reality in 2012. The technology is in place to offer this service today, but we must wait for the requisite payment network, gaming regulatory and slot management system approvals. We are confident that these are not too far off and are excited at the prospect of casino patrons conducting ATM and other financial services transactions on our kiosks and receiving gaming tickets rather than cash.
NRT is also introducing the QuickTable™ product in 2012. This system was designed to address the cumbersome and inefficient cash handling methods currently employed at table games. The QuickTable device is a centrally managed ticket acceptance, validation and monitoring system that allows for the use of TITO tickets at table games. A patron will now be able to use a slot machine TITO ticket to buy in to a table game. When the patron wants to buy out or color-up, they will now have the option to request a TITO ticket, which can then be redeemed at another table game or slot machine. This technology bridges the current gap between slots and tables, allowing players a ubiquitous TITO experience anywhere on the gaming floor. In addition, casinos will know in real time the total amount of money at each table game at any given time, thanks to NRT’s table back office system. Casino operators are truly excited about the accuracy, accountability and cost reductions this new system will bring to their operations.
In addition, NRT is launching our next generation QuickJack model, known as the QuickJack V4™, the latest model of NRT’s industry-leading ticket redemption kiosk. The QuickJack V4 promises to improve on the already robust, reliable and technologically advanced functionality of our award-winning QuickJack line of kiosks. Finally, we have developed the QuickJack 88™ to serve the ticket redemption needs of smaller gaming operators that do not require central management and reporting. The QuickJack 88 is the ideal ticket redemption kiosk for casinos without large slot game operations, where a more sophisticated and centrally managed redemption system is not required.
At NRT, we want to improve the cash handling experience for both casino operators and their patrons. Although we operate in two of the most highly regulated industries in the world—gaming and financial transaction processing—we are intent on staying ahead of the curve by listening to our customers and pushing the boundaries. Cash is still king, but the gaming industry has embraced non-cash gaming mechanisms, and we believe that cashless gaming will continue to expand in the coming years. NRT is well positioned to take advantage of the opportunities this presents and to offer innovative and game-changing technology to meet the cash and cashless needs of our worldwide casino customers in 2012 and beyond.
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