Last week’s mass shooting in Las Vegas occurred the night before the opening of Global Gaming Expo (G2E). While the crime cast a pall over all Las Vegas, the American Gaming Association was hard hit because it occurred at a property of one of its most important members, MGM Resorts. But determined not to allow one insane person to change the way we live, the American Gaming Association determined to go on with the show.
With the help of CDC Reports and almost a dozen reporters present at the show, we present a recap of some of the major points of G2E 2017. To read the entire volumes of CDC reporting, visit CDCGamingReports.com.
Freeman Expresses Gratitude, Stresses Security At Opening Of G2E
AGA President and CEO Geoff Freeman led a moment of silence Tuesday morning to honor those killed and injured in Sunday night’s mass shooting and praised the gaming industry for coming together.
Freeman bypassed his traditional State of the Industry address during the opening of the trade show portion of the 2017 Global Gaming Expo at the Sands Convention Center. Instead, he conducted a brief Q&A with former Boston Police Department Commissioner Ed Davis in the wake of the mass shooting on the South Strip in Las Vegas Sunday night that left 59 dead and more than 500 injured.
“We gather in the wake of a senseless and despicable event,” Freeman said. “While we sit here, all of us safe, hundreds of others are recovering or battling for their lives or in mourning. There are no words that can accurately express our sorrow and how we feel about this event. I certainly have no wisdom to offer when something like this happens.”
Freeman expressed his gratitude to the first responders “who often rush in while all of us are rushing out” and expressed gratitude for the medical professionals that have saved so many lives this week. He also said he has gratitude for the acts of heroism “we are all reading about that took place on that evening.”
“It’s that gratitude that keeps us all going,” Freeman said. “I am grateful to the operators on the Strip. I think you saw an incredible security presence and incredible implementation of their security plan and the industry rose to the occasion.”
Freeman pointed out substantial contributions the industry, including the AGA, has made toward a fund to help the victims. He said it will be a long recovery.
“I’m grateful to each of you,” Freeman said. “I’m grateful each of you are here. Our industry is strongest when we come together, and our industry will be strong this week. We will be strongest when we have the opportunity to share each other’s company and share our stories and talk about where we need to take this industry in the weeks ahead.”
Freeman also expressed gratitude to the Las Vegas Sands for the safety and security they have provided, and gratitude to the AGA’s partner, Reed Exhibitions, for their work they have done in setting up for the event.
“I am incredibly grateful to my team at the AGA,” Freeman said. “You can only imagine how incredibly nimble our team needs to be in a situation like this to make sure we are adapting and we are making sure everyone’s needs are met and that this event has the appropriate tone and tenor and obviously and the safety and security that all of you together.”
Davis, who served as commissioner during the Boston Marathon bombing, is part of the AGA’s illegal gambling advisory board. He’s also a member of the American Sports Betting Coalition.
Davis praised the efforts in setting up the fund to help victims and praised how law enforcement and first responders handled themselves. He said the ordeal brought back memories of the Boston Marathon bombing and has faith people will respond the same way as Boston.
“People are afraid,” Davis said. “They are afraid across the country. We saw that in Boston. To put that back together and make the community right again requires leadership on the part of public officials, and requires preparation and planning for what may happen in the future.” — Buck Wargo
Magic Johnson Wows Audience in G2E Keynote
Former NBA superstar Earvin “Magic” Johnson said it’s unbelievable how the landscape between Las Vegas and professional sports has changed, with the city recently getting two professional sports franchises, and hinted nationwide sports wagering will be part of the future.
Johnson, co-owner of the Los Angeles Dodgers and president of basketball operations with the Los Angeles Lakers, gave a keynote address and answered questions from AGA President and CEO Geoff Freeman on the final day of the Global Gaming Expo.
“Remember all of the sports leagues were saying we’re staying away from Las Vegas and no way,” Johnson said. “The whole thing of betting and this and that, and they wanted us to stay away from all of that. Now you have two teams coming to this great city, and the fans want it. It’s great for the NFL and it’s great for the NHL and great for the fans. The narrative is changing. The landscape is changing. A lot of things are changing around Las Vegas – sports and the major leagues. I think… you are going to see it moving towards something really good for all of us. All these regulations will change.”
Freeman responded that sports wagering is a “big priority” for the AGA and said the industry is working closely NBA Commissioner Adam Silver.
“We’re working closely with other leagues to do the right thing here,” Freemans said. “We’ve seen that comfort as well. Increasingly there is a relationship with our industries – sports and live entertainment – and we think we have a great opportunity and it sound like you agree. — Buck Wargo
Dave & Buster’s CEO Offers Advice for Casinos
When you think about it, the primary difference between a Dave & Buster’s and a Las Vegas casino is that patrons of Dave & Buster’s walk out with headphones, sweatshirts or playing cards instead of cash.
And Dave & Buster’s sees a need to balance gaming with food and beverage revenues.
So it made sense that Dave & Buster’s CEO Stephen King would have thoughts running parallel to the gaming industry to share with G2E patrons, which he did at a keynote session during a discussion with business expert Carol Roth.
And many argue that Dave and Buster’s serves as a model for the integrated resort experience where guests eat, drink and play.
“They’re all games of skill,” King joked after a questioner warmly said that Dave & Buster’s is ‘a casino for 15-year-olds.’
King took over the company in 2006 after spending 22 years with Carlson Restaurants Worldwide, the parent of TGIFriday’s.
As Roth said in the opening, entertainment is the epicenter of driving new revenue streams.
Relevant thoughts included:
Quick fixes: “There were a number of things I saw on the food and beverage side that were no-brainers, such as kitchen display systems, theoretical food costs and other mundane things,” King said.
Money, content and pricing: “There were three things that were absolutely clear to me. 1.) We had people lining up to give us their money to get the card; we should cut down the time people have to wait to give us their money. You want that as fast as possible. So we employed kiosks. 2.) Content was really important, so we continued to buy content. 3.) We looked at the rate card—the top buyer, if you will was $25 and it was second most popular and $20 was most popular. We figured, another side to that bell curve.” So the company offered $35 and $50 cards. Those moves bought him some time and improved EBITDA.
Entryway is vital: King said he walked into stores and saw maybe 12 billiard tables right away. “I thought that was low-energy, and also low revenue—a bad combination—so we changed everything,” he said. They tried to make it look more like a Vegas sports book. “Changing that really transformed the brand and made us relevant to our target audience,” he said.
Balance: Dave & Buster’s views the integrated experiences as being critical to the success of the brand. “Across time there have been a lot of straight up arcades that have really failed,” he said. Customers now spend about half the time on the gaming side, and the other half on food and beverage or watching games. About 56 percent of revenues is on the amusement side, he said.
“That’s been a pretty conscious shift, to say we’re going to invest in entertainment,” he said. “The shift when we started from ‘We’re a restaurant, with some other stuff’ to ‘We’re really an entertainment brand that has great food and beverages.’”
Eyeing what’s next: King said if you walk around the G2E floor you see there are all kinds of new products. “New, new, new is what people want to see,” he said.
Advice: “I think what I got out of D&B was to shoot bigger,” he said. “Shoot big, and skate to where you think the puck is going.” —Nick Sortal
Industry Eyes SCOTUS Ruling on New Jersey Sports Betting
New Jersey’s attempt to legalize sports betting has failed at every level of the U.S. federal court system.
But experts who have followed the ins and outs of the nearly seven-year-old case said the previous results don’t necessarily mean the state is doomed when the nine justices of the U.S. Supreme Court take up the matter sometime before the current term ends.
“None of us really believe the court would have taken the case just to tell the Third Circuit ‘good job,’” Florida-based attorney Daniel Wallach said of the most recent loss New Jersey suffered. Wallach, an expert on gaming law and sports law, has closely monitored New Jersey’s efforts.
“The court will make a ruling. I think that’s pretty clear,” Wallach added.
New Jersey is challenging the 25-year-old Professional and Amateur Sports Protection Act (PASPA), which limits legal sports wagering to four states. Nevada is the only state with full-scale sports books and a sports gambling industry that took in a record $4.5 billion in legal wagers in 2016.
What might happen after the Supreme Court rules inspires a variety of opinions. Most observers believe the justices will loosen PASPA in some manner, but not completely throw out the law.
“I do not believe the Supreme Court will give an all-or-nothing decision,” said sports betting journalist David Purdum, who has closely covered the New Jersey case for ESPN.com. “I would be equally surprised if they completely struck down PASPA and allowed any state to legalize sports betting as I would be if PASPA was kept fully intact. I expect a nuanced decision that everyone will have to be ready to review and react.”
Interest in New Jersey’s case has increased. The American Gaming Association filed a brief in support of New Jersey’s efforts. More than 20 states have thrown their support behind New Jersey. Several of those states have also begun the process of drafting legislation to allow sports betting, should PASPA end.
The National Indian Gaming Association has also tossed its weight behind New Jersey’s efforts.
“A lot of states have been willing to let New Jersey carry their water,” Wallach said.
“From our viewpoint, the hope is the court will carve out some middle ground that allows us to move forward,” said AGA President Freeman. “We’re hoping there will be a reasonable work-around that will give all the parties some clarity.”
Freeman said a favorable ruling for New Jersey, even if PASPA remains, could allow the state’s Monmouth Park Racetrack at the Meadowlands to offer sports betting.
No matter what happens, however, all sides believe Congress will make a final decision regarding PASPA.
“Any ruling is going to spur some type of Congressional action,” Freeman said.
The major professional sports leagues and the NCAA have challenged New Jersey’s efforts, but several of the leagues have softened opposition to legal sports betting since the case began in 2011.
NBA Commissioner Adam Silver voiced support of legal sports betting in a 2014 New York Times op-ed piece. The NFL voted 31-1 in March of this year to allow the Oakland Raiders to move to Las Vegas. The opening of the NHL season in October will feature the expansion Vegas Golden Knights. The walls are slowly crumbling.
According to research from GamblingCompliance.com, the Supreme Court has twice mentioned PASPA—in a gambling advertising case in 1999 and a 2013 voting rights case. In both cases, the justices were not favorable toward PASPA.
Purdum believes the sports leagues would “almost immediately” begin lobbying for a federal regulatory framework governing sports betting if PASPA is tossed.
“The leagues would attempt to gain ownership over the data that comes out of the games,” Purdum said.
The journalist also said New Jersey has another hand to play should PASPA remain – lawmakers could repeal all the state’s laws addressing sports betting if the Supreme Court rules that is the only option.
The AGA says legal sports betting would all but end a $150 billion illegal gambling market. The new industry would support up to 152,000 jobs, create $26 billion in economic output, and generate to $5.3 billion in tax revenue nationwide, according to research from Oxford Economics. —Howard Stutz
Skill-Based Games Will Take Some Time To Develop
Skill-based games are still just a tiny piece of the casino pie, but each year, they are becoming a larger part of the conversation.
Moderator Howard Stutz noted the growth when introducing a panel of experts at a session for media attending G2E.
“It started with talk, then a couple of companies came in,” he said. “This year, it looks like everybody has some skill based game.”
Blaine Graboyes, CEO of GameCo, Inc., and Darion Lowenstein, chief marketing officer for Gamblit, said this year their games have started to creep onto casino floors. GameCo has 60 games on the floor and expects 250 by the end of the year, in New Jersey, Connecticut, North Carolina, on cruise ships and elsewhere.
Lowenstein, whose games went live in March, said Gamblit has purposely been very gradual in its rollout, citing the need for multiple software upgrades. Gamblit games are at MGM Grand and other Vegas hotels, as well as southern California.
“We have to remember how early this is,” Graboyes said. “Slots are perfectly optimized games that have been improved for 120 years.” “You could add another slot game that moves money around the floor and meets the floor average. But if you want new games and new revenue, there’s this whole new type of game, with new dollars to be had.”
Konami’s bread and butter is in slots, but is eager to grow business with skill-based games, said Steve Walther, senior director of marketing and product management for Konami.
“We’re trying to answer, ‘How do you create the experience for people who want to do something different?’” he said. “We have to maintain our existing business but we have to grow.”
Lowenstein said 6,500 exit surveys across 18 locations show the average skill-based game player is 36 and a good number said they would not have participated in traditional gaming.
“Most are seeing it as incremental revenue,” he said. — Nick Sortal
eSports Requires Authenticity and Experimentation
The eSports community has been around for decades, but has experienced explosive growth in the past five years. Tournaments such as the International Dota 2 tournament—with its $23 million prize pool—exceed, in total prize money, the PGA Masters.
However, these large tournaments are few and far between. Blaine Graboyes, CEO of GameCo, mentioned Thursday at an eSports seminar at G2E that many casinos come to him expecting to host large tournaments and make their revenue from ticket sales. The data, though, shows that only 9 percent of global eSports revenue in 2017 is from ticket sales. On the other hand, sponsorship and advertising make up more than half.
As Downtown Grand CEO Seth Schorr emphasized, the casino industry is well positioned to generate revenue from the eSports community. Rather than a few large tournaments however, casinos need to make their casinos a 365-day destination for eSports fans and participants.
As food and beverage sales recently eclipsed slot revenue, casinos continue to try to figure out ways to diversify their customer base and revenue.
The key is to create an authentic environment that specializes itself to the different eSports communities, such as how businesses may specialize in golf or football fans. Since launching eSports at the Downtown Grand in 2016, the casino has constantly tweaked its revenue generation, whether it’s optimizing food that gamers prefer, to focusing on a specific game’s community or communities. While some games such as League of Legends may attract gamers that are willing to pay a higher entry fee for a higher prize pool, other game communities, such as the fighting game community, prefer a lower entry fee.
However, according to the data Schorr analyzed, the fighting game community outperformed all others in beverage revenue. This kind of granular understanding of the various game communities can contribute to the strategies casinos adopt in integrating these events and physical spaces into their casino. —Cory Roberts
ETGs Will Grow in Casinos’ Low-Limit Offerings
Electronic table gaming has quickly proven its value with strong performance in its first years of existence, according to a G2E panel featuring two suppliers, an operator and a regulator.
Connelly said the most promising area for ETGs is in replacing low-limit tables that have live dealers.
“If you want to play in front of a person, it’s going to cost you a $25 minimum bet,” said John Connelly, Global CEO of Interblock Gaming, a supplier of ETGs.
“Five dollar and $10 tables don’t make money; they lose money,” because of labor and security costs. “You need to have (those games) but you’re not making any money.”
Connelly was part of panel discussion titled “Riding the ETG Wave: A New Generation of Games for a Changing Floor.” Other panelists were Gabe Baron, general manager and senior director of ETG Product Development for Scientific Games; Susan Hensel, licensing director for the Pennsylvania Gaming Control Board; and Jay Jabczynski, vice president of Rush Street Gaming, operator of two Pennsylvania casinos.
Baron explained the two types of ETGs: one uses a random number generator for games such as roulette; the other is a hybrid in which a dealer oversees a game hooked to multiple betting terminals.
The Las Vegas Sands and the Venetian were among the first commercial U.S. casinos to install electronic table games. Connelly said ETGs account for about 15 percent of casino floor space in Asia and Europe.
Baron said ETGs could deal $3 blackjack or $5 roulette without the need for a dealer or chip movement.
Jabczynski said Rush Street’s SugarHouse Casino in Philadelphia is taking a “slow and measured” approach to ETGs, but initial results show promise. Just over half the customers using hybrid ETGs at SugarHouse are 40 years old or younger. In addition, 35 percent of the players at the hybrids did not previously have players club cards.
Connelly cited a survey of North American casinos showing that ETGs attract slot players to table games by reducing the “intimidation” factor many feel when trying out table games.
“Those same slot players are coming in more often, their handle is up and they’re staying longer. So it’s not cannibalizing their slot play,” he said. —Mark Gruetze
How Gaming And Non-Gaming Work Together
Non-gaming amenities are playing a larger role in casino operations, and executives are looking to capitalize on it, not only in Las Vegas but across the country.
In a panel discussion, “Hand-in-Hand: How Gaming and Non-Gaming Work Together,” Holly Gagnon, president and CEO of Seneca Gaming Corp., said customer bases have evolved.
“What we saw at one point of being a very gaming-centric market now our customers are looking for the full experience,” Gagnon said. “If you are a destination resort, they are looking for those amenities that are important. We want as much as the gaming piece as we can get, but we understand those amenities can attract people that aren’t gaming centric and that we can get a share of that cash revenue in the door. They are very valuable as well.”
It’s about the retention of gaming guests and satisfying them but also “differentiating ourselves with our competitors” to attract other guests, Gagnon said.
“We’re in Niagara Falls, and we get nine million tourists, and we ask how do we draft people already there and how do we get them to gravitate to our property and get that foot traffic. That’s going through our minds right now.”
Gagnon said when it comes to restaurants and entertainment, it’s important to have brands as partners to have a “halo effect on us” and so that they are aligned with customers.
“You have to make sure whatever we are doing has some brand value,” Gagnon said.
Gagnon went on to say that “sometimes breaking even is OK. It’s about a profitability over a lifetime, and it’s important to invest in the brand.”
“We hosted a KISS concert, and there were 5,000 customers. There was great value to it even if it didn’t show in the short term investment.”
Ramesh Srinivasan, president and CEO of Agilysys, a hospitality software company, said he’s worked in the worlds of gaming and non-gaming both, and it’s clear that non-gaming is becoming more important to resorts and casinos.
“It’s being driven by the millennials, but also people like me,” Srinivasan. “My approach to technology and expectation of entertainment has changed as well. There are people coming not for gaming and making money but for the overall entertainment experience.”
Millennials want casinos to know who they are and what their preferences are, such as what time they have dinner and what allergies they have, Srinivasan said. It’s important casinos have a common platform with a “treasure trove of data, point of sale and property management.” It should even track activities such as golf and helicopter rides, he said.
“We are bridging that work and giving casinos a views of that patron,” Srinivasan said. “We see a lot of potential. We see more and more investment in non-gaming, and becoming more and more important along with the gaming part.”
Gagnon said that hosts and their knowledge of customers made the casino trip an experience, but systems today have that capability to anticipate needs and “really make a great experience for our guests.”
Thomas Soukup, chief systems product officer with Konami Gaming, said the importance of non-gaming depends on whether it’s a local casino or a destination. He said MGM Resorts International gets more than 70 percent of its revenue from non-gaming, but that won’t be the case with a tribal casino that has a hotel and restaurant.
It’s important to track customers because traditionally it was done only for slot play, and casinos didn’t know how much customers were spending in their restaurants and hotel, Soukup said.
“There’s wasn’t a global loyalty program for your entire guests,” Soukup said. “What I see over time are more and more integrated points between food and beverage, and restaurants and hotels. Casinos are packaging offers that entice guests to spend at their properties versus just spending at slots or spending at tables.”
Gagnon said there’s a big difference between casinos in Las Vegas and regional ones where margins are smaller. One size doesn’t fit everyone, and no one can assume non-gaming will drive casinos outside of Southern Nevada, she said.
The panel was moderated by Robert Boughner, Boyd Gaming director and partner in Global Market Advisors. —Buck Wargo
