PAUL'S POINTERS: GLOBAL GAMING EXPO 2016: PROGRESS OR PUFFERY?
by Paul Wilson
BJI contributing writer Paul Wilson is a quasi-Renaissance man and graduate of Millsaps College. Some of his interests and hobbies include finance, consulting, travel, photography, and rock music. He's an avid baseball fan. Paul has done freelance writing and editing for gaming publications and takes blackjack, video poker, and sports betting very seriously. As we learned in the November 2014 issue, he also might have a "thing" for Wonder Woman.
In this month's Paul's Pointer's, I'm going to discuss my experience at the recent Global Gaming Expo (G2E) held at the Sands Expo Hall in Las Vegas. In that context I'm going to focus primarily on two central themes that dominated the agenda and conversation throughout the event. Whether it was in sessions I chose to attend, roaming the exhibit hall floor, or just talking to strangers, these topics were front and center or hidden just beneath the perceived surface if one was to look deeply enough. Let's get started.
SPORTS BETTING: HEADS IN THE SAND OR LAY THE FAVORITE
I've been a sports fan since I was a little kid. I played all the major sports growing up; having more success in some than in others, but gaining an understanding and working knowledge of each of them, in addition to gaining some valuable insight on life along the way. I suppose it was only natural that I'd be drawn to sports betting at some point. I made my first legal sports bet over 25 years ago. I've gained an increased knowledge of sports and the sports betting world during that time. I can't tell you how many wagers I've made along the way, but to give you an example, my record in Major League Baseball's recently concluded regular season was 338-339-12, enough of the "right" wins to carve out a small profit. That's a lot of decisions and a whole lot of hours studying and watching baseball.
In the past 25 years I've seen sports betting grow in popularity like kudzu on the side of a Mississippi state highway. It's no longer a back alley pastime for mobsters, thugs, and gambling degenerates. There's a lot of reasons for this including technology in the form of cable television and the internet, as well as, fantasy football leagues. Does anyone even remember that fantasy baseball existed long before fantasy football? People have been betting on sports in the United States and around the world pretty much since there were games being played. Due to a number of reasons - including right-wing politics and a flawed sense of societal morality - we the people of the United States have chosen to hide our collective heads in the sand on this issue. While we've been doing this, the AGA estimates that at least $150 billion was bet in the United States last year on the sports betting "black market," primarily comprised of unregulated offshore bookmaking companies (and neighborhood bookies). Many believe this estimate is very conservative.
The legalization of sports betting was put on center stage on the last morning of this year's G2E when former National Basketball Association (NBA) Commissioner Emeritus David J. Stern and American Gaming Association (AGA) President and CEO Geoff Freeman discussed the future of sports betting and its impact on major professional sports. Stern touched on the relationship between the gaming industry and major sporting leagues and how they can learn from each other in the future. Stern was the NBA commissioner from 1984 until 2014. Under his leadership, professional basketball grew into a financial behemoth in pretty much any way you can display the data - television deals, player salaries, soaring franchise values, and profits for investors and ownership groups. Under Stern's leadership and some help from Larry Bird and Magic Johnson, the NBA went from a league where the broadcasts of the championship series games were shown via tape delay on CBS after the late news to a global brand led by a shooting guard from North Carolina named Michael Jordan. In case there is any doubt, that late-night tape delay story is true, folks. I watched them all that summer (1980 I believe it was). Does anyone remember Gerald Henderson?
"Over time I've come to accept the notion that a properly run gambling operation is protective," Stern said. "I didn't want junior to leave the arena unhappy because even though the home team had won, they didn't cover. That was basically the last objection I voiced to betting on basketball." Stern said that if the sports leagues and the gaming industry could work together then a "serious regulatory backdrop" could be formed to protect the integrity of the game. He went on to add that fantasy sports should be classified as sports betting. "That way it would be easier for everyone to deal with."
That's some pretty heady stuff from the former commissioner and in my eyes (or ears) gives the conversation another plank of legitimacy. In addition to Stern's comments, Dr. David Forrest and Rick Parry, two leading experts within the United Kingdom sports betting world, releaseda report that details how the United States must adopt an approach similar to that in the U.K. to allow legal, regulated sports betting in an open and transparent market. At the Mobile Sports Betting seminar, AGA's Senior Vice President of Public Affairs Sara Rayme predicted that three to five years is a realistic timeline for nationwide legalization. She's not alone. Less than a week ago, U.S. Rep. Frank Pallone Jr. (Dem, N.J.) announced that his congressional committee will conduct a review of the federal laws that mostly prohibit sports gambling. Pallone called them "obsolete" and "in desperate need of updating." He told ESPN's David Purdum that new legislation is needed that would create a fair playing field for all types of gambling, both online and offline, including sports betting and daily fantasy sports. The Congressman also added that any new laws must create an "environment of integrity and accountability, and include strong consumer protections."
iGAMING: "PASS" ON THE CONTROLLER OR THE FUTURE IS NOW
How to engage Millennials in the casino experience has been a source of constant conversation in recent G2E's and throughout the gaming industry. Apparently, data shows that young people aren't gambling enough and this doesn't bode well for the casino industry going forward. I've offered to answer this question for a modest fee more than once to anyone that could write me a check or pay cash.
Many senior leaders in the gaming industry seem to have forgotten the concept of disposable income, or maybe they don't teach that in business school these days. Anyway, many Millennials and Gen-Xers choose to spend their Vegas weekends waiting for hours in long lines outside the latest hot nightclub for a chance to pay a $30-$50 cover charge to gain entrance to hear a celebrity DJ spin the latest (or remix old classics) electronic dance music hits. While doing so they have the privilege of imbibing on $12-$18 beverages. Those that do have the means often spring for bottle service and a VIP booth with a personal waitress with Playboy-quality good looks. This can lead to a bill with a comma and zeros. Ouch! That's a lot of time and money not spent on the blackjack tables and playing the slot machines. When I was younger, we used to pay $5 cover charges to listen to live rock bands or dance music in Las Vegas and complain about waiting in line more than ten minutes to get into a nightspot. (Remember the Shark Club, the Drink, and the Palladium, anyone?) Drinks were in the $3-$5 range. Let's face it, the girls were better looking, the music rocked harder, the beer was colder, and we still had plenty of time to gamble on the good games offered in those days. Maybe I exaggerate just a bit, but many of you remember. Some of you were there; and a few of you were with me! There's no way I could "Do Vegas" in those days with today's prices.
Younger people today aren't as stupid as we think they are. They want some experience and something for their money. Thanks to the internet and keyboarding skills acquired at the finest public schools across the land, they can read Blackjack Insider and study strategy charts and odds and realize that the poor games offered by many casinos now aren't what their forefathers used to play. Gambling when you have half a chance can be fun; when the odds are so rigged against you, it's no fun anymore. Enter technology and a potential brand new casino frontier.
To piggyback on the first topic above, young people like sports betting and fantasy sports. They also grew up playing video games and many learned the concept of teamwork, not on a playing field with a ball, but in their living room with a controller and a bag of Cheetos in their hands. Interactive gaming and skill-based gaming very well might be the answer to "on-board" a whole new generation of casino goers. Skill-based games dominated the exhibit hall floor this year, with a virtual reality experience from Gamblit Gaming, Beat Square from Konami, Lucky's Quest from IGT and many more. Literally everywhere I turned, I saw a company introducing some form of software with interactive capabilities that allow the player to make decisions as part of the game. These were often slot machine derivatives with bonus rounds that allow the player to be a part of the action through an avatar and quick hand-eye coordination.
This technology is still in its infancy as far as seeing the casino floor. There are still number crunching challenges for developers, regulators, and operators alike. My attempts to find out the latest "for the record" progress from several companies including Aristocrat Technologies and IGT were not well-received. Basically I was handed off from person-to-person until finally reaching someone that would give the official "we can't really comment on that at this time" answer. I actually understand, but for an event like G2E, major players should have had prepared talking papers already printed out to hand out to pesky inquisitors of knowledge like myself.
I mentioned Gamblit Gaming above. There virtual reality (VR) demonstration was one of the most popular "must-sees" I noticed on the floor. Participants were fitted with virtual reality headgear and given a weapon to fight off "bad guys" and progress through various challenges. The view inside the headgear was displayed on monitors for potential players to watch and coin slots were represented allowing players to wager on the VR participants success or failure - kind of like betting pass or don't pass in craps, right? I wasn't able to get a turn with the VR gear, but from a technology aspect it's pretty interesting. From a gambling perspective it certainly has some potential, but I'd have to use a lot of brain-power to figure just how to make it fair and equitable for all involved. There's that regulatory bug again. I see it as one of the greatest obstacles to skill-based gaming. As is so often the case, the technological capabilities are well ahead of the deployable operational capabilities at this point.
I attended a seminar called eSports and Casinos: The Coming Collision. One of the panel members was Seth Schorr, CEO of Fifth Street Gaming, operator of the Downtown Grand in Las Vegas. His company may have the answer to the skill-based question, at least in the short- to medium-term. The Downtown Grand is now home to the first eGaming casino space in Las Vegas. They are hosting video game tournaments with entry fees and bringing new patrons into their property. What a great idea! A tournament format with entry fees is one way casinos and other venues can get into the video gaming market with minimal to no risk. There are already "professional video game" players and big-money competitions backed by corporate sponsorships, many of these in foreign markets. Perhaps this is a way to introduce skill-based gaming to the casino arena, allow others to bet on it as well (ala sports betting), and grow the interactive crowd as well.
PUTTING IT ALL TOGETHER
This month I talked about two key themes from last month's Global Gaming Expo: legalization of sports betting and interactive and skill-based gaming. I didn't mention that I met a Playboy bunny, Eugena Washington, Playboy's Playmate of the Year 2016; or that Vanna "Can I Buy a Vowel" White received the key to the city from Las Vegas Mayor Carolyn Goodman. I didn't mention that I saw Shaquille O'Neal or that I had my picture taken with a couple of Sharknado models advertising a new slot machine.*
(*In case you haven't seen Sharknado Four, an actress friend is in the Stratosphere scenes shot in Las Vegas. I haven't seen the movie, but I have viewed the trailer and she's, err, I mean the movie looks fantastic, err, "captivating!")
With regards to sports betting, the gambling handle is too big to ignore. If lawmakers want to protect us they should legalize sports betting and regulate the industry to make sure customer information and accounts are protected and that winning bets are paid in an accurate and timely manner. Admittedly, there's a danger in involving government regulation into your "living room," but I'd be more than happy to take on an advisory role on the right way to do it if any elected officials are reading this column. Needless to say, the legal sports books of Nevada are a good place to start (with perhaps the exception of one in particular). Let's get our heads out of the sand and acknowledge that sports betting could be the "next frontier" for gaming in the United States.
Technology is the key to enticing more casino gaming involvement from younger potential patrons. VR and software advances are making nearly anything possible from a "gaming" perspective. However, from a regulatory and "gaming" (gambling) perspective there are still many rivers to cross. Video gaming tournaments with cash prizes and entry fees is one way to bridge that gap.
I'll close with this food for thought. When I was kid our version of interactive gaming was going to the local arcade and playing Pac-Man or Galaga. If you played well your quarter lasted a long time and you might even score free games; if you didn't play well, you didn't play very long and burned through your quarters (bankroll). You had a choice - quit playing or earn more quarters and get better. Will people be willing to do that in the post-modern version of casino gaming? The more things change, the more they stay the same.
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