Tribes affected by
casino issues

Apr 9, 2007 6:53 AM

I went hiking in Phoenix. It was hot. And so was the 2007 National Indian Gaming Association (NIGA) conference and trade show.

Ute Mountain and Sky Ute Casinos in Colorado, two Indian owned and operated venues, are directly affected by the proceedings of the major annual NIGA event. All sorts of legislative issues were addressed during this particular conference, including but not exclusive to relevancy of alternative gaming in a state (e.g., if racinos and jai-lai frontons are allowed Class III in Florida, do tribes still have to negotiate a compact?), the role of BIA and NIGC in determining disbursement, and the second to last legal drug, cigarettes.

There is little doubt that the mega-properties of Foxwoods and Mohegan Sun, already major players of East Coast gaming, will benefit from the banning of smoking in Delaware and the 75% smoke free rule being instituted in Atlantic City.

In approximately one year, the Colorado mining town casinos of Black Hawk, Central City, and Cripple Creek may be without pipes, cigars, cigarettes and God willing, dip (chewing tobacco). Due to sovereign land issues, there is little legal rationale to force the Southern Colorado Indian casinos to observe a smoking-ban.

Let’s leave the law up to legislators, lawyers, and other societal undesirables. While still legal in matter, limited stakes is still the defining element of Colorado gaming. The five dollar maximum wager per decision limitation does not seem that it will be altered in the near future. Since both tribal properties have to follow Colorado gaming regulations, they too are partially stymied. The good news is that there were multiple products being demonstrated at the trade show of the NIGA conference that might allow for increased revenue opportunities for the casinos without having to raise wager limits.

The most profound innovation is from International Game Technology (IGT). "Guaranteed Play" on slot machines is an interesting study of price point placement. Patrons play, for example, $40 and are guaranteed 200 games or decisions.

To put this in perspective, assume a player feeds $40 into the bill validator and plays a typical stepper reel such as Double Diamond for a quarter a pull. Assuming he loses every decision, he has had 160 games. If he wins some credits, he might get more than 200 games (assuming he plays through all of his credits).

There are three apparent primary benefits from this type of offering, two for the consumer and one for IGT. Consumers can better handle their respectivebank rolls and obtain (for the recreational player) the holy grail of "time on device."

One often hears, "Oh, I only bring $40 and when it is played, I leave." This system would allow these players to be true to their motive of only playing the set amount.

As far as entertainment value as a derivative of "time on device," when one goes to a movie, one pays $8 for 90 minutes of entertainment; there is an established "trade" of dollars for entertainment "utility." The same economic model applies with this system of guaranteed play.

Don’t cry for IGT, the approximate house hold (the amount the machines will win from the players) is nearly on par with other traditional slot games (i.e., the player can expect to lose about 7% either at a stand alone Double Diamond quarter reel or on the "guaranteed play" model.

The kicker is that if Colorado gamers were allowed to buy in to the guaranteed plays with five dollar increments, the whole gaming experience for the lower denomination games could be increased for the recreational player due to guaranteed time on device.

Finally, while more directly related to increased general revenue opportunities than gaming revenue specific, there are significant bundling opportunities with this system.

For example, for $100 at the Ute Sky Casino, one would receive $40 in guaranteed play, a hotel room and buffet breakfast. Bundling is an efficient way to market to the price-conscious consumer who knows exactly what he or she is willing to spend for a gaming based entertainment experience.

While this just an opinion, the current Indian gaming operations in Colorado are simply not vast enough to truly benefit from the hottest trend in the market — central serve /downloadable gaming. The replacement cost (at present) is too high to substantiate incremental benefit.

Also, merely as an observation, communal gaming is going to continue to grow as a subset of slot gaming, but I am not confident that the inherent nature of slots is not as a solitary endeavor. On of the topic of fun new games that are communal in nature, the WMS Price is Right game is beyond cute. After the little yodeling mountain climber falls off the edge of the mountain, the only thing missing is Bob Barker sexually harassing the Barker Babes.

Beyond all of the various tools of the trade being hawked to make the operational aspects of the casino operate smoother, the second most impressive gaming consumer direct devices were electronic simulations of table games.

Shuffle Master leads the pack with TableMaster devices that, while demanding a large foot print of the gaming floor, are the heir apparent to the Blackjack blitz. Besides allowing bonus and side games like Royal Match or carnival games (e.g., Let it Ride, Caribbean Stud) on the platform, the intuitive feel of being shoulder to shoulder with other players and having a Max Headroom-like "real" dealer facilitate the game allows for as close to a live table gaming experience as possible.

Besides these games allowing for low stakes play (e.g., a dollar a hand and can easily be capped at $5 per wager for the Colorado market), the cost savings potential in substituting machines for live table games in the Indian Colorado casinos are significant.

Although live table games are gaining in popularity in all gaming regions, the staffing and other resources (including floor space, cards, chips, et cetera) required for $5 limited stakes tables makes their presence financially challenging for the casinos.

Finally, among the many informative conference seminars and presentations, many reminded operators to keep the "Indian" in Indian Gaming. The overt sharing by the tribal hosts of these properties is essential to differentiating Indian Gaming from traditional commercial gaming. Getting the message out about what this unique form of entertainment has done and is doing for tribes in terms of health care, education, cultural preservation, and financial independence is essential.

(Founded in 1996, Yarborough Planning, LLC partners with select clientele to better understand and address business process issues. Core competencies include training, providing reliable and valid research, strategic / analytic marketing, and accountable Customer Relationship Management (CRM) development and implementation. David Paster is accepting new clients and may be reached at (702) 813-5062 or [email protected])