Foretelling ’07

Dec 25, 2006 7:23 AM

By David Stratton

New technology designed to enhance slot and table game play, and the exportation of gaming to far-away places will likely dominate the news headlines in 2007.

From server-based games to RFID tracking technology to wireless gaming devices to Internet gaming, emerging technology is expected to change the way customers enjoy casino gaming and the way operators conduct business.

Casino execs need to understand, however, that the new technologies on the gaming floor will not be adopted and accepted by players unless they can offer an improved experience for the customer.

"With server-based gaming, we’re moving from a stand-alone (slot machine) environment to a network environment," said T.J. Matthews, CEO of IGT. "New technologies such as this need to take into account what customers are looking for and how this new environment can deliver an improved entertainment experience."

Server-based gaming will begin to trickle into casinos on a limited basis next year. Often called "downloadable slots," the system allows players to choose from a large number of games in a variety of denominations, which are stored by the hundred on a



central server (computer) system.

Casinos like the idea of server-based gaming because it gives them the opportunity of better communication with their players. With servers, the casino can instantly award bonus points or comps, conduct a free contest, send important messages to club members, and so forth.

Also coming next year are wireless mobile gaming devices. These will range from the size of a handheld cell phone to a laptop computer.

The mobile gaming units will initially find application in Nevada sports books and poker rooms. They lend themselves to play when the customer is otherwise involved in another activity that isn’t so intense that he can’t play a "side" game.

Mobile units will also contain electronic slot games and electronic versions of other games such as roulette, Three Card Poker and more.

Casinos also will see more "communal" gaming systems such as multi-player slot machines added to the casino floor.

"Community games are much more than just an experiment," said Paul Paul Oneile, CEO of Aristocrat Technologies. "We’re already seeing more community involvement in general, and I expect that will continue."

New technology also is changing the way table games are played, according to Mark Yoseloff, CEO and chairman of Shuffle Master. He expects table games to experience explosive growth in the coming years, from 47,000 legal gaming tables today to 66,000 five years from now around the world.

While new electronic and interactive table game products now on the market have not yet seen widespread adoption in the U.S., Yoseloff said that both the Australian and Asian gaming markets have embraced them.

Particularly in Macau, which experts predict will gain approximately 8,000 tables in the next few years, electronic table games could help to ease the enormous staffing needs the added tables will create, he said.

In addition to electronic poker tables such as the PokerPro from PokerTek, new devices will feature electronic betting mechanisms to go along with traditional games, such as Rapid Roulette, Rapid Craps and Rapid Baccarat.

The poker segment of the gaming industry should continue to blossom, although its growth rate may be peaking.

The task for poker room managers has now become, how do we get new customers in the door and how to keep ongoing customers.

One method that should be expanded is the daily tournament. Players who learn about poker on TV like the idea of playing in a tournament, which often features a lucrative prize pool and a single, fixed entry price.

Legal sports books and race books in Nevada will deal with the changing regulatory environment. Next year, the repeal of Regulation 6A takes effect, which will affect the way large transactions ($10,000 and more) are handled.

Essentially, sports books will still have to use CTRs (cash transaction reports), as outlined in federal banking laws.

Race book managers are hoping they can finally start offering interstate account wagering on horses and dogs.

The enabling legislation was passed two years ago and Nevada regulators have been fine-tuning the standards and operating procedures. The process would allow Nevada books to offer pari-mutuel betting to players outside of Nevada, but those players would have to use phone accounts to place their bets or some type of closed loops system.

Nevada regulators have said they won’t allow any gambling over the Internet.

The legislation to curb Internet gambling could have an indirect effect on bricks-and-mortar poker rooms. The World Series, for instance, might experience for the first time a drop-off in contestants because two-thirds of their players won their seats through online poker rooms.

The drying up of some Internet poker sites to American players may also affect the growth of the industry, but it would be hard to quantify.

Many key American gaming operators would like to see Internet gambling legal and regulated so their companies could participate.

After pointing out the contradictions in the Unlawful Internet Gambling Enforcement Act of 2006, which was signed into law by President Bush in October 2006, MGM Mirage CEO Terry Lanni added that regulated Internet gambling might actually have positive implications for problem gamblers.

"We will probably be better able to identify problem gamblers online because of the registration and identification processes," he said. "It’s harder to identify these people at properties because they can move to different machines."

Finally, the spreading of casinos across the globe will continue next year. Besides Macau — which last week reported it had surpassed Las Vegas in gaming revenue — new venues will be coming on line throughout Asia and beyond.

When asked how the international expansion of gaming will affect the U.S. market, Lanni offered positive news.

"I think international expansion is going to add to our industry here," he said. "As the industry becomes more global, we’re going to see an increasing number of international visitors here at home."

Frank Fahrenkopf, president of the American Gaming Association, pointed to Britain’s approval for its first "super casino" in the country as an example of the international expansion currently under way.

According to Peter Dean, CBE, chairman of the British Gambling Commission, the U.K. has created a panel to determine where the new casino will be built; the panel’s decision will be reported in January.

Once the location has been decided, a competition will be held to determine what operator will be selected to build and run the property.

Continuing trends

”¡ More and more race tracks will add slots and shift to a "racino" format

”¡ Continued development of luxury residential housing and/or timeshares in conjunction with or adjacent to major casino resorts.

”¡ More and more gaming companies taking a hands-on roll (such as an entertainment director) in providing casino entertainment.

”¡ Greater penetration of retail venues into gaming venues, as well as the marriage of retailing and casino loyalty/rewards programs.

”¡ Expansion of tribal gaming into state-sanctioned gaming jurisdictions, and the tribal gaming operators seeking management contracts with other tribal casinos.