Sat, Jan 30, 2010

Competitors claim foul as governor imposes even higher guaranteed payment

Like most  things connected with the bidding process for the slots license at New York City's Aqueduct Racetrack, the winning bid was surprising and controversial.

Aqueduct Entertainment Group, a consortium of seven companies that includes the Navagante Group of Las Vegas, led by former MGM Grand executive Larry Woolf, was the winner, but only after New York Governor David Paterson raised the stakes once again, boosting the up front "buy in" for the license from $200 million to $300 million. That demand forced AEG to match the high offer from Penn National Gaming. Other stipulations inserted at the last minute include a vetting and licensing of all partners.

"After an extensive review of the five remaining bids to operate the video lottery terminals at Aqueduct racetrack, I have chosen and the (legislative) leaders have agreed upon the organization that best fulfills our selection criteria," Paterson said in a statement. "AEG has both the financial viability and ability to pay the required upfront licensing fee."

The AEG choice is purportedly the end of a nearly 10-year process that resulted in two different choices and two disappointments. MGM Mirage was originally chosen as the operator in 2001 but backed out after the company saw effective tax rates in New York rise to more than 75 percent. While the tax rate has been somewhat mitigated over the years, it remains one of the highest in the gaming industry. A second choice in 2007 of Delaware North collapsed when the economy slumped and Delaware North as not able to line up financing for the $370 million deal.

The latest round resulted in six bidders, but did not include Wynn Resorts, which backed out after Paterson inserted the $200 million payment.

"All of the groups have valid proposals, but AEG presented a comprehensive bid that enjoys community support and also offers strong marketing appeal," Paterson said.

In addition to Navegante, the AEG partners include: GreenStar Services Corporation, a New York-based construction contractor; Turner Construction Company, another New York company founding in 1902; Levine Builders, a Queens-based company that provides general contracting and construction management services; the Darman Group, a minority company from New York City that provides consulting and real estate services led by Queens powerbroker, the Rev. Floyd H. Flake; Long Island-based Paulus, Sokolowski and Sartor (PS&S), a architectural firm that will design the project; Siemens AG, an international electronics and engineering firm based in New York City; and Clairvest Group Inc., a Canadian-based merchant bank.

Other bidders for the project included Hard Rock International and SL Green Realty Corp., which included a strategic alliance in the venture with Caribbean CAGE LLC and its owner, Robert L. Johnson, majority owner of the NBA's Charlotte Bobcats and the founder of Black Entertainment Television. Minority developer R. Donahue Peebles was in partnership with MGM Mirage. And Penn National Gaming and Mohegan Sun of Connecticut and Delaware North were the final bidders.

Paterson needed the agreement of the state's important legislative leaders. Originally expected to be decided in October, the long selection process had its ebbs and flows, including the withdrawal of Wynn Resorts. Assembly Speaker Sheldon Silver and Senate Democratic Conference Leader John Sampson weighed in on the choice, with Silver finally being convinced by the added stipulations placed on AEG.

According to Jeffrey Levine, the founder and CEO of Levine Builders and a partner in Aqueduct Entertainment Group, "Aqueduct Entertainment Group is honored to have been selected to operate the video lottery terminals at Aqueduct racetrack. As we have said since day one, Aqueduct Entertainment Group has the best team to design, develop and operate the facility. We know we will be a great partner with the state and the residents of Queens for years to come. We look forward to completing the memorandum of understanding and beginning construction."

But it still may not be over. Penn National Gaming is apparently steamed that its higher guarantee was simply transferred to AEG rather than allow Penn to take the deal. In addition, all partners

We were extremely shocked and dismayed by the governor's announcement given we offered over $100 million more to the state than AEG in our bid," Penn National Gaming said in a statement. "In addition, our proposal complies with the conditions outlined by the (Assembly) Speaker for the winning bidder.

"We remain committed to this project, and will await further details about the selection process before commenting further."

Sampson, the Senate leader, said it was time.

"New Yorkers have waited long enough for the Aqueduct agreement to be reached, and now we have to ensure the real work begins as soon as possible," he said.

Fri, Jan 29, 2010

IGE 2010 was not your father's casino show

Last week's International Gaming Expo at London's Earls Court venue may go down as a pivotal event in three areas.

First, there were the existing casino operators, who were reportedly beginning to buy again after taking an enforced pause for the last couple of years. Their actions signaled if not an end to the recession then at least a coming to economic terms with the new normal.

Second, exhibitors were showcasing a lot of market-ready examples of the technologies and designs that have occupied their development teams for the last couple of years. What had been only promises for an unspecified future were now fully realized products ready for purchase.

Third, the often-vague imaginings of a merging of land-based and online gaming suddenly became reality. A number of recent business deals between major players in the two, often-combative sectors combined with the appearance of numerous devices designed specifically or peripherally to bring online gaming to a commercial location near you.

And suddenly, gaming was getting interesting. Again.

The return of the reluctant customer was best exemplified by the actions of an operator of multiple casinos in one of Germany's notoriously high-tax jurisdictions.

"I'm buying new roulette display systems, some new wheels and slot machines," the operator said. "I have not bought much of anything for the last two years, but now it is necessary if I want to keep up. I know of a lot of people, we are all in the same position."

How widespread the phenomenon will turn out to be, the suppliers themselves will be able to judge.

On the product level, almost any slot machine making its debut at the show was either SBG/internet-ready or capable of being modified to function as such with a simple add-on. Even peripherals had received the i-treatment, like an ATM from ecash that is ready to allow players to tap their online accounts for ready cash-as soon as the laws allow.

For non-internet related appliances, it was hard to top a patented gaming table with a pop-up, refrigerated, multi-level tray rising on command from its center, loaded with champagne and hors d'oeuvres.

But it was the continued rise and diversification of the online gaming industry itself-and the apparent realization by traditional land-based gaming that the online phenomenon is here to stay-that truly set IGE 2010 apart from any previous show. Coming on the heels of the Scientific Games/Playtech announcement, the online section of the show, known as ICEi, was packed with visitors that included land-based operators looking to get involved.

There was plenty of choice on offer, from the big industry names with their mainstream online products, to quirky companies offering devices to bring the online world to a commercial venue and keep it all just this side of legal.

The expo floor was divided into four main sections: land-based casino, online gaming, sports betting, and last-but-certainly-not-least, the amusement or street market. This last-named sector now features slot machines and peripherals that would have been way beyond state of the art for casinos when the ICE casino show first began to grow within the then-dominant ATEI amusement show, in the early 1990s.

Now, with casino suppliers dominating the show, the original organizer of the amusement show has split off and started their own show across town. A good part of the impetus behind the move is thought to be anger in the sector at having been in effect pushed out of its own show by the casino world.

Watching the steady growth of ICEi over the past few years, and the drawing power of its exhibitors, one wonders what IGE will look like 10 years down the road. It would appear a lot of land-based operators and suppliers have finally come to grips with that question themselves.

Also last week, it was announced that the International Gaming Exposition in London will continue to be held at EC&O Venues' Earls Court for another five years at least.

Julian Graves, managing director of Clarion Events Gaming Exhibitions, said, "Following consultation with the industry it has become clear that this is where the industry wants to stay. We've been aware of the speculation surrounding the venue at a time when the industry wants stability, certainty and confidence in the future."

The "speculation" Graves referred to were recent media reports that had the owner of the exposition center, EC&O Venues parent CapCo, prepared to redevelop the site upon which Earls Court stands. A press release from Clarion also said that "elements of the industry" were "seeking to undermine confidence in the future of IGE."

Nigel Nathan, MD of EC&O Venues, said, "CapCo has made no secret of their desire to redevelop the Earls Court site, however this is an enormously complex project, one with significant implications for London. Because of the scale of the proposed project it has been required to be submitted as part of the London Development Plan, a 15-year strategic vision for London which was launched in January 2010. The project is in the early stages of consultation, requires political support, at local, regional and national level and then requires full planning permission and funding."

The annual casino and gaming exposition has been held at Earls Court in January for over 15 years. Originally known as ICE-International Casino Exhibition-the current incarnation also features online gaming and sports betting providers and operators.

Said Graves, "We have made a five year contractual agreement to provide that continuity and enable the industry, Clarion Events and EC&O to focus firmly on continuing to develop IGE as the leading international exhibition for the gaming industry."

Fri, Jan 29, 2010

State rep who once opposed gaming leads the charge for up to seven casinos

A proposal to build five to seven mega-casinos on oceanfront property in South Florida could signal an explosion of gaming in the state, which has struggled in recent years to negotiate a satisfactory compact with the Seminole Indians and also create more favorable conditions for parimutuels.  

Las Vegas casino titan Sheldon Adelson, backed by Fort Lauderdale Republican Rep. Ellyn Bogdanoff, have floated a plan for up to seven Las Vegas-style gaming resorts on South Florida's beaches. Ironically, Bogdanoff campaigned on an anti-gaming platform, and in 2006 supported a burdensome 50 percent tax rate on slots. She was also an outspoken opponent of Governor Charlie Crist's compacts with the Seminole tribe, both of which have gone down to defeat.

But now, with gaming on the rise in the state, Bogdanoff says it's time for full-scale state-regulated casinos, which would prevent a Seminole monopoly. Bogdanoff said the state must "create competition to an industry that is not going away." She is joined in her support for the idea by two other prominent conservatives. Reps. Alan Hays and Carlos Lopez-Cantera also say they are open to bringing full casinos to Florida.

Adelson wants to be the first to break ground. The Las Vegas Sands CEO told the Miami Herald he is ready to invest in a sprawling $3 billion casino hotel and entertainment complex, probably in Miami or Fort Lauderdale, which are beachfront communities with easy access to airports. Adelson said he'd also consider sites in Tampa Bay and Orlando.

"We're not interested in putting up slot parlors or a gambling den," Adelson told the Herald. "We want destinations and integrated resorts."

Just one resort could bring 7,000 jobs to the region and mean more money for the state than the Seminoles promised in the two compacts, Adelson says.

Under the plan, voters would first have to approve the casinos in community referendums. Applicants could range from big Vegas operators to parimutuels.

Though Crist is still lobbying for the Seminole deal, he said he finds the Bogdanoff plan "intriguing." But House Speaker Larry Cretul says destination casinos may not be in the cards for Florida at the moment.

While Adelson and Bogdanoff have "amped up" the debate, "and there might be some who think that there's an opening," Cretul said, "I'm not so sure the opening is there.''

Adelson, for his part, has engaged a Tallahassee lobbyist to stump for the plan and also contributed $19,000 to Crist's Senate campaign.

A hearing in the House is set for February.

Meanwhile, Florida's Senate panel last week passed two gaming bills that will permit VLTs at 18 parimutuels in South Florida, and add roulette and craps to other Class III games at the Seminole tribe's seven casinos. Crist has "tentatively" endorsed the plan, which could bring in up to $1 billion a year in revenue for the state, according to the News-Press of Fort Myers.

A House version of the bill would bar blackjack at the Seminole casinos. It has not yet been voted on.

Fri, Jan 29, 2010

Randall Fine is one of the main developers of the Total Rewards program, the Harrah's loyalty card that is the gold standard for loyalty programs in the gaming industry. Since leaving the company, he has developed programs for other casinos that are not only completely different than Total Rewards but at least as successful. And when Fine Point's management group took the Greektown Casino in Detroit, they brought new recognition-and increased market share-to what had been the least successful of the Detroit metro area gaming halls. Now, the company is on the verge of some major developments in 2010. Fine spoke with Global Gaming Business Publisher Roger Gros at G2E in Las Vegas in November, prior to the lapsing of the company's contract to run Greektown.

Sun, Jan 31, 2010

The three-year term of National Indian Gaming Commission Vice Chairman Norm DesRosiers came to an end last week, cutting the last link to the commission controlled by Phil Hogen, who stepped down as chairman last October. Hogen's term was controversial in that he attempted to define the difference between Class II and Class III slot machines with a "bright line," an effort many tribes oppossed.

DesRosiers was more interested in other, more basic, details of regulation and oversight of gaming in Indian Country and leaves with a stellar reputation recognized by regulators at all levels of the gaming industry.

DesRosiers provided essential input on most major issues facing the Commission during his tenure. He was responsible for numerous initiatives carried out by the commission including the development and implementation of the Government Performance and Results Act (GPRA) requirements. He also served on the Minimum Internal Control Standards (MICS) Advisory Committee.

DesRosiers joined the NIGC with vast experience, including nine years of law enforcement and on-the-ground-experience in tribal gaming regulation beginning in 1993 when he worked for the Fort McDowell Tribal Gaming Commission. DesRosiers served as commissioner of the Viejas Tribal Gaming Commission
from 1998 until he joined the commission in 2007.

With DesRosiers' departure, the NIGC consists of Acting Chairman George T. Skibine and Vice-Chair Steffani A. Cochran.

Sources tell GGB News that Sheila Morogo, currenty executive director of the Arizona Indian Gaming Association and a member of the Gila River Indian Community, is being seriously considered to replace DesRosiers.

Fri, Jan 29, 2010

British newspaper The Guardian is reporting that former Marks and Spencer executive Carl Leaver is expected to succeed Chris Bell as CEO of betting company Ladbrokes, though according to the IBTimes, no decision has been formally announced.

Other candidates for the position reportedly include Sportingbet head Andy McIver, Coral director Nick Rust and former easyJet CEO Andy Harrison. John O'Reilly, head of Ladbrokes' online gaming department, is also allegedly up for the position.

Bell announced his resignation more than a year ago, though the company's debt reportedly contributed to his departure after more than 20 years of heading Ladbrokes.

"Ladbrokes is a great company," Bell said. "I have been privileged to be its chief executive for nine years and I am proud of all that we have achieved in that time. I look forward to doing all I can to support the company during this period of transition."

Ladbrokes Chairman Peter Erskine will be appointing the new CEO.

Fri, Jan 29, 2010

Law firm president Tom Foley was recently appointed to the board of directors of Four Corners, Inc. Foley's firm, Foley Law Group PLC, is a Minnesota-based firm specializing in gaming law.

"We are very pleased with Tom's addition to the board," said John Schreiber, the company's president, CEO and chairman of the board. "He brings an impeccable reputation, tremendous knowledge of the gaming and casino markets and is a well respected legal adviser. We look forward to his future contributions to the company.

"As we study long term strategic opportunities, including expansion into other gaming markets and the launch of new casino products from our Eclipse subsidiary, we're confident we've assembled a strong board and management team to guide and run the company."

Foley served as commissioner, vice-chairman and acting chairman of the National Indian Gaming Commission from 1995 to 1998, and was elected to the International Masters of Gaming Law Association.

Fri, Jan 29, 2010

Alabama Governor Bob Riley has chosen Mobile County District Attorney John Tyson to replace David Barber as head of his anti-gambling task force. Barber stepped down as director of the task force after disclosing he had won $2,300 at a Choctaw Indian casino in Mississippi.

The appointment does not come without controversy. The Associated Press reported that Milton McGregor, owner of the Victoryland casino, might have been obstructing justice when he hired a detective to trail Barber.

McGregor, angry about the threat of raids on Victoryland and other electronic bingo parlors, said citizens have a right to monitor activities going on around them.

Tyson himself said he gambled about $15 or $20 at a Mississippi casino when gambling first became legal in that state. He said that is all he has every gambled anywhere.

Like the governor, Tyson believes electronic bingo games in Alabama are illegal slot machines and should be shut down.

Fri, Jan 29, 2010

Pending state approval, the bankrupt Twin River slot parlor in Rhode Island announced a new three-member board of directors to oversee the property when it emerges from bankruptcy later this year.

The new board consists of Glenn Carlin, senior managing director of Americas Investment Banking for CBRE Capital Advisors, Inc.; John McLaughlin, an independent gaming industry consultant; and John E. Taylor Jr., president and CEO of GameLogic of Boston, which is focused on Internet-based games and marketing platforms for the gaming industry.

The new board will assume responsibility for Twin River's "overall strategic management, financial performance and supervision of operations," said Twin River spokeswoman Patti Doyle.

The timing of the appointments is "critical" as Massachusetts is poised to authorize full casino gaming, Doyle said. "By selecting board members who have realized unqualified success in their chosen and related careers, we believe that we have taken the necessary steps to protect Rhode Island's third largest source of funding."

Twin River filed for Chapter 11 bankruptcy protection from creditors last June, citing debts of about $590 million.

Fri, Jan 29, 2010

CityCenter Land LLC recently announced that SK+G Advertising will be the creative agency of record for CityCenter, as well as Aria Resort & Casino, Vdara Hotel & Spa and Crystals retail complex.

"SK+G has crafted and cultivated many successful brands for us throughout the years and we knew it was imperative to choose an agency for CityCenter that we trust, and one that truly understands our business and our vision to the core," says Aria Resort & Casino President and COO Bill McBeath.

The Las Vegas-based firm will oversee branding and advertising for the recently opened meta resort, developing name recognition for CityCenter as a whole as well as Aria, Vdara and Crystals independently.

"CityCenter has entirely changed the Las Vegas landscape and we are honored to have been chosen as the brand architects for such a groundbreaking destination," says John Schadler, a managing partner at SK+G. "Having recently developed the CityCenter website, we understand the brand's distinct personality and positioning as well as its individual resorts and offerings."

Fri, Jan 29, 2010

International Game Technology saw a profit increase of 20 percent in its first fiscal quarter due to aggressive cost-cutting efforts. The company raked in $73.3 million this quarter, compared to $61.2 million in the same period last year.

IGT's revenue declined this quarter due to weak slot machine sales, from $601.6 million last year to $515.7 million this year, but the company cut its costs by 25 percent, and those efforts paid off with profit.

"The work is never done and you can count on us to remain focused," IGT CFO Pat Cavanaugh recently told analysts. "The revenue number is not something we are overly proud of."

Domestic shipments dropped in the first quarter, but the company made up for it with increased international business.

"Our first quarter results reflect measured progress in numerous aspects of our business, despite continued challenges in the broader marketplace," IGT CEO Patti Hart said in the company's earnings report. "During the first quarter, historically the slowest of the year, we shipped more North American replacement units than the prior year quarter . . . and achieved our highest operating margin in six quarters."

IGT recently scored big with the installment of server-based slots at CityCenter's Aria, which opened last month.

"We're getting good feedback from the Aria folks," Hart told analysts.

Fri, Jan 29, 2010

Leading slot manufacturer International Game Technology announced that it has signed its first Scandinavian agreement to install its sbX Experience Management System at Grand Casino Helsinki in Finland.

The sbX solution is a completely networked system to control and manage a slot floor. It will be integrated with Grand Casino Helsinki's existing IGT Casinolink system to allow for additional functionality such as the single entry of a game's settings through the sbX interface and the availability of player messages via  IGT's award-winning Service Window interface at the machines.

"As one of the leading casinos in the region, Grand Casino Helsinki is thrilled to become Scandinavia's first to adopt the sbX system," said Heikki Rinta-Panttila, casino general manager for Grand Casino Helsinki. "We firmly believe that sbX will enable us to better serve our customers and that it will enrich the value of our gaming entertainment offerings."

"Grand Casino Helsinki and IGT have enjoyed a successful longstanding relationship, added Ali Civile, sales director for IGT Europe. "The casino currently utilizes our IGT Casinolink management system and EZ Pay ticketing solution as well as a good number of premium products. Its latest addition of IGT's sbX Floor Manager and sbX Analytics modules will soon allow Grand Casino Helsinki to further enhance its slot floor operations by making insightful game offers and the right configuration decisions as often as the management feels is needed to maintain optimal machine performance."