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Server-Based Gaming: Caveat Emptor?

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Krista Reiner
Publish Date
September 30, 2008
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Krista Reiner

Server-based gaming is all the rage! Server-based gaming will change the way we operate our casino floors! Server-based gaming is the future! Say any of these phrases—or the hundreds like them—and most gaming industry executives will roll their eyes, contort their face and make a mad dash for the door. And who can blame them? Everywhere we turn—bustling show floors, product specs and conference agendas, the pages of industry trade magazines like this one—server-based gaming is at the forefront of conversation. It is a buzzword (well, buzzwords) at its zenith, and everyone who’s anyone is so sick of talking about it already, they’d rather streak the IGT booth at G2E.

OK, so that reaction might be a bit hyperbolic. But honestly, so is the truth about server-based gaming (SBG). Strip away the glossy sales pitches and marketing mayhem, and what do we really know about this technology? While everyone in our industry can probably agree that SBG is “the next big thing,” what does that even mean? How big is big? How soon is next? And what can it really do, anyway? With as much lip service as we can pay to SBG, there are just as many questions that must be answered before we all get swept up in the hype—or left out as late adopters.

Unfortunately, one of the most difficult questions to tackle is the simplest: What is SBG? From a “game program [that] resides on a discrete server that is networked to each player interface device” to “the ability to communicate and control various aspects of a slot machine from a remote location,” the definitions are varied, even among top industry executives. (See sidebar.) Even Bruce Rowe, VP of strategy and business development at Bally Technologies, is reluctant to pin it down too specifically: “SBG is a way computers talk to each other. It is not one product. It does not have one price. There is not one catalytic application. It will never be done.”

Each and every one of us defines SBG differently, adding in our own experiences and changing the definition to reflect what the technology means for our organization, our customers, and ourselves. Perhaps this subjectivity is the beauty of SBG? Or perhaps through this subjectivity, it is possible to find common ground in our definitions: With server-based gaming, each operator would have the ability to create a more personalized and profound impact on customers. Likewise, each operator would be able to differentiate itself from the competition. Each machine could become a portal into the player’s personality. For most of us, our definition of server-based gaming provides business opportunities that other industries have enjoyed for years.

So now the question becomes why haven’t we adopted it already? Some will say this is because of our strict regulatory environment; others will blame the manufacturers for their resistance to work toward industry standards. Maybe it’s the slow replacement cycle of our casino floors or the (relatively) recent legalization of gambling. I don’t think we’ll ever decide for sure, but because regulators are now ready, the Gaming Standards Association has universalized its protocols, and many casino floors are due for an upgrade anyway, the Why not until now? doesn’t matter so much as the Now what?

According to John Acres, CEO of Acres-Fiore, the key to server-based gaming is the ability to entice the next generation of players with new and exciting gaming experiences. “To do that,” he says, “we’ll have to innovate as quickly as other competitive industries do. Regulations will have to be streamlined. Standards must replace proprietary protocols, and we all have to think a lot more about player enjoyment.”

Robert Allen, corporate vice president of slot operations for Grand Casinos in Minnesota, agrees that today’s players are technologically savvy, and what excites them should be the driving force behind our technological innovations. “Slot players today are no longer novices to the gaming experience,” he said. “Most are very computer literate and have seamlessly integrated the use of technology in their daily lives. There is a higher expectation now, and the gaming industry needs to step up and deliver. In slots, a networked floor will pave the way for this.”

As Javier Saenz, vice president of IGT’s sb product management and marketing, will tell you, we may be behind other industries when it comes to technology, but the tools behind server-based gaming are not exactly “bleeding edge.”

“Servers and networks are low risk, widely available and have been used for years in other industries,” he explained. “What’s revolutionary is the impact this technology will have on the gaming industry, and this level of development clearly demands an investment of time and resources. That said, there is no better time than now for manufacturers and operators alike to jump the curve and embrace emerging technology, whether that’s on a smaller scale, such as a bank-by-bank solution, or a floor-wide implementation.”

But while manufacturers believe there’s no time like the present (and you would, too, if you’d invested millions on R&D), most operators are still not convinced. Now might be the right time to ask what’s the big deal? Why aren’t we all jumping at the opportunity to bring this “tried-and-true” technology to our casino floors? Because, like with any other major purchase we make, it’s hard not to heed that voice in our head that whispers caveat emptor.

Ryan Tors, Peppermill Reno’s director of slot operations, for one, isn’t ready to take his chances. “There are too many unknowns for SBG to be fully embraced by the majority of operators at this point,” he said. “If we become convinced our customers will accept the platform and technology, we will surely act on it, but until there is more information to sink our teeth into, we will stand by and observe.”

Tors isn’t the only operator that’s skeptical of the promises behind SBG. A director of slot operations at a large Midwest casino, who wished to remain anonymous, is also cautious of SBG’s potential. “Right now game content is on the machine. If a game has a failure, it affects one machine. You can imagine what would happen if your server goes down—and it will go down. Right now on a busy day, we may change the program on 30 games. If we have a problem with a few programs, it’s no big deal. But imagine it’s a busy Saturday night and some bright new slot manager sees that the show just let out and his dollar machines are all full. So he decides he needs more dollars machines and fast. He runs to his SBG terminal and punches in 100 denomination changes. In his haste, he realizes he punched in 1,000 and instead of a denomination change—he told the system that every penny of coin-in was worth a dollar. The casino loses millions, the manager is fired and the casino decides to sue. Who is to blame for this? The game manufacturer who designed the program? The regulatory body who said if they want to lose money, let them? The manager that did the change? The casino who hired him? Or the guest who accepted the over credit? The idea of the ability to make instant changes sounds good, but in reality it’s just not practical or prudent.”

More good questions. But with manufacturers pushing the advantages of remote downloads and configurations, quicker payouts, and more personalized bonusing, it’s easy to see why SBG has the industry intrigued—and at least a few operators coming onboard.

Barona Valley Ranch Resort & Casino decided to take a step forward with the technology and became a test bed almost three years ago for IGT’s sb products. Barona recently added WMS’ WAGE-NET 1.0 to its system, and although less than 5 percent of its floor is network enabled, Vice President of Slot Operations Chuck Hickey says they are preparing for the Networked Floor of the Future now. “One advantage for the operator and guest will be that we can roll out a popular new title to more machines more quickly than we currently do with standalone slots,” Hickey said. “It might not encourage players to stay longer, but it does give them more chances to play a popular new machine.”

Another potential benefit may be SBG’s ability to be a one-stop spot for customer information. “For operators, SBG centralizes all the information they require to successfully run their operation,” says Gareth Phillips, CTO of Aristocrat. “It is their use of this information that will ultimately decide whether the investment in IT infrastructure was worth it. Eventually players will see game content that makes use of this IT infrastructure. Whether such games capture the imagination of the player resulting in increased cash box, we will have to wait and see. There is a ‘killer application’ out there somewhere—I’m just not too sure yet what it is.”

Even peripheral companies are starting to join in on the action. “As more and more casinos utilize the technology, more players will understand the benefits,” said Tracey Chernay, TransAct Technologies’ senior vice president of sales and marketing. “While there are many benefits for the casinos in regards to controlling or lowering business costs, we believe the benefits to the slot machine player will be rewarding or offering real-time coupons, promotions and feedback.” TransAct believes it will be technologies like its Epic 950 printer with dual port technology that will help enhance the functionality of a networked floor.

Many more functions are starting to emerge, and perhaps the most intriguing to industry consultant Andy Ingram is the oft-touted ability for operators to personalize the player experience. “The open network will allow for centralized administration of the slot floor, but more importantly, operators will be able to deliver players a richer set of offers and services in a way that is personalized for the player and branded by the operator,” he said. “Players will experience more convenience, more personal touches, more excitement, more choices, and ultimately, a more personally rewarding experience. By enhancing the player experience, operators will have the ability to imprint their unique brand on the player experience and differentiate their offering from the competition and ultimately make more revenues and profits.”

Of course, investing in SBG is a commitment for the brave of heart, and can operators really justify the expense by operational efficiencies alone? Ingram says the true return may be generated by increasing revenues through the use of automation. “The smart operators will use the network to enhance the player experience,” he said. “They will make their players feel like high rollers without incurring high personnel costs. They will make the games more exciting. They will promote all the amenities of the property. They will offer a more entertaining and rewarding experience for their players.”

“Initially these services will automate and enhance player services that exist today: bonusing and progressives, tournaments, money transfer, food and drink ordering, and reservations,” Ingram added. “For operators, SBG will exchange slot techs for network techs and can simplify and lower the risk of the ‘acquisition’ of game conversions. Thus, the benefits will begin to accrue immediately.”

But even with these benefits, how will operators calculate ROI? “This will be totally dependant on the requisite investment,” Ingram said.

New properties will have the advantage of building their networks from the groundup with Cat 6 (or Cat 6a) cables, but older properties must consider switching only sections of their floors at a time.

And that leads to another question: What will the price of the open network be? Vendors have yet to publicly share their pricing or the requisite infrastructure costs, which makes it extremely difficult to calculate the ROI.

After considering the unknown problems, the potential benefits and the unknown ROI, we’re left to consider the most important aspect of SBG: the players. Do they want this? Most vendors have invested heavily in market research and the results are still inconclusive. What is conclusive, however, is that players don’t really care about the technology behind the games (unless it affects their payouts); all they care about is how exciting the games are and the winning experiences they receive while playing them.

“We have done significant research with casino buyers and players,” says Rowe. “The highlights are somewhat simple. There must be a clear value proposition for the operator and player. Most of the things that fall in this category are evolutions of what we have been doing, but will be able to do faster and in more places that we could before.”

As Rowe points out, the most important part of any new technology in our industry is how it affects the players, and there are still so many unknowns with SBG. How will players react in Nevada, where regulations insist games must remain idle for four minutes before any changes can be made and then another four minutes before the game activates again? Will players see a bank of machines go “blue” and automatically assume the casino is “tightening up” the games? Will they understand what’s happening at all?

At least for that last question, David Harris, senior architect for Cadillac Jack, says it doesn’t matter. “Players don’t need to understand the benefits of SBG,” he said. “Instead, they will feel or experience a difference with the game’s personality, playability and benefit from the new features that only SBG can offer. Most of the changes will be subtle to the point where the player will notice that their environment is different but not necessarily understand what the specific changes are.”

Many manufacturers agree. “Players want entertainment and are willing to pay to get it,” said Brian Macsymic, director of product management for Progressive Gaming International Corporation’s Casinolink Enterprise Edition. “Operators will provide the entertainment. In the end, the player only needs to enjoy the experience and SBG should only make it easier, more convenient and more entertaining.”

OK, but do operators really need the server to provide entertainment? And this, I believe, is what we’re really getting down to. If you say yes, maybe it is time to start seeking the answers to more of your server-based questions. If you say no, maybe it isn’t. But what is certain is manufacturers have already bought in to SBG. And with so many of their dollars invested in it, it is likely inevitable that it will arrive on our floors sooner or later, in one form or another.

In the meantime, it certainly won’t hurt to keep asking questions until we’re blue in the face—after all, education is usually the difference between buyer’s remorse and a satisfied customer. Caveat emptor? Always.

Author’s Note: After speaking to well over a dozen gaming industry executives for this month’s feature story, it became apparent that the definition of server-based or networked-based gaming runs the gamut. The following are a few highlights to illustrate just how widely defined server-based gaming is.

“Server-based gaming in its purest form is where the actual game program resides on a discrete server that is networked to each player interface device (i.e., the lottery).†There are however, many variations of this concept. In its simplest form, the server could merely possess parameter settings that can be downloaded to all devices on the network (i.e., software updates).” –Anonymous Slot Director, Large Midwest Casino

“Server-based gaming is the ability to communicate and control various aspects of a slot machine from a remote location. The problem with SBG is that it never really had a definition and as such it has evolved from the foundation of ‘download and configuration’ necessities to a possible communication tool with the guests, machines, CRM solution and all the other applications within the operations. The devil is in the details. Communication expands to include the guest, applications (including accounting, CRM, ticketing, database marketing, players club, etc.), as well as the definition of ‘aspects’ and ‘control.’ As the vision of what SBG could do has grown, so has the definition.” –Chuck Hickey, Vice President of Slot Operations, Barona Valley Ranch Resort & Casino

“True server-based gaming has been around the industry for some time (Class II gaming, for example), where the game outcome is determined at the server itself. In this case the gaming device that the patron interacts with may or may not look like a slot machine; instead it becomes the most convenient method of interacting with the patron given the game content and the circumstance in which it is deployed. For example, Class II games look very much like a slot machine and operate from the server. A peer–to-peer poker system, such as those deployed over the Internet or in a lounge environment, wil__l have a much different looking device than a traditional slot machine. It is important to consider server-based gaming as the industry invents new gaming opportunities for a new generation of gamers. Many of the game preferences of the new targeted demographics do not fit a traditional slot mold. However, operators require the means to leverage their system across them. The most notable is the player loyalty program where the play information of each player is tied to a single loyalty database and more importantly a single player profile.” –Brian Macsymic, Director of Product Management-Casinolink Enterprise Edition, PGIC

“Server-based gaming (SBG) opens†a wide door†to dynamic, highly customizable, delivery of gaming†entertainment. It will allow us to design our floor with many less†barriers to innovation and affect the gaming experience in ways no one can predict.†Some†in the†industry will dive in and others will†wade in, but I’m convinced SBG is inevitable.†If gaming were just being legalized today, SBG is how it would start, instead of the piecemeal hybrid we have today.” –Ryan Tors, Director of Slots, Peppermill Reno

“Server-based gaming is all about the gaming experience, and that’s where the emphasis should be. It’s not about the technology. This is about changing the gaming paradigm to enhance the experience for players, to personalize the experience for players, and to give a casino operator greater control over the player’s experience while the player is playing the game. That, for me, is the essence of server-based gaming.” –Javier Saenz, Vice President of sb Product Management & Marketing, IGT

“Let’s start with what server-based gaming is not. It is not one application that will come at one moment in time, from one vendor, with one price, with one value proposition. What it describes is the industry evolving and migrating to The Networked Floor of the Future, which is the ability to dynamically and bi-directionally interrogate, configure games, and move content or data to and from a digital gaming device, with digital gaming devices defined as gaming devices that use digital infrastructure to deliver and manage content, communications and security. Inherent in the concept is having a high-speed broadband standard computing industry network capable of handling large and complex data movement. Many applications will be available to ensure machine uptime, increase game integrity and security, download various types of content, enable revenue management, and provide marketing offers, promotions and expanded gaming experiences at the point of play. Many of these things are in, or being implemented in, various segments of the gaming industry and are now beginning to migrate to Class III gaming in North America as operators upgrade networks, applications are built, approved and tested, and value propositions are articulated, tested and measured by operators and manufacturers.” –Bruce Rowe, Senior VP of Strategy and Business Development, Bally Technologies

“I do not have a concise understanding of exactly what server-based gaming offers. To me, it is kind of like the offer of ‘change’ in the current presidential election. It is a term that anyone can fill in the blanks to mean what they want it to mean. I have looked at SBG as it is installed in test locations, and I can see no apparent advantages or disadvantages.” –John Acres, CEO, Acres-Fiore

Krista Reiner is the Managing Editor for Casino Enterprise Management. She can be reached at (701)293-7775 or by e-mail at editor1@aceme.org.

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Comments

who's watching out for the player???

can a video slot machine be rigged? players are going to want to know.
if you bite the hand that feeds you ie tha slot player, you better
be ready to find players that like the shell game.

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