Crime and plentitude at G2E

Internet gambling having been temporarily moved to a back burner, thanks to Sheldon Adelson, the American Gaming Association has turned its attention at Global Gaming Expo imagesto organized crime, which continues to be a shadowy partner to gambling, at least in those jurisdictions where gambling is illegal. Reported Casino Journal, “in 2014 alone, 80 operators in 23 states were convicted of running illegal gambling businesses.” As AGA President Geoff Freeman said, “Illegal gambling siphons critical tax revenue from communities and is void of any of the consumer protections provided by regulated gaming.”

Although extortion and racketeering are a far cry from today’s casino industry, money laundering has raised its ugly head of late, underscoring the need for vigilance. Freeman estimated that the illegal-gambling industry was as much as three times the size of the regulated one. The AGA has also lent guidance to legitimate casinos, in the form of a ‘best practices’ treatise with regard to money laundering.

* Freeman’s ‘big tent’ approach to AGA membership has brought it a powerful, new, tribal member: Mohegan Tribal Gaming Authority. Also newly on board is Neil Bluhm‘s Rush Street Gaming, a significant up-and-comer in the industry. Freeman’s no dummy and recognizes there’s more to be gamed by having tribal and private-sector gaming working the same side of the street.

* Among those chatting up operators and manufacturers at G2E was J.P. Morgan analyst Joseph Greff, who found “an abundance of caution” toward Macao and “general optimism” regarding revenue growth on the Las Vegas Strip. What a Resorts World LVturnaround. Seven years ago, who would have thought MGM Resorts International would be lauded for its heavy Strip presence and limited Macanese exposure? Quite the opposite. Resorts World Las Vegas, by the way, may not open until 2019 — unsurprising, given its lack of activity. Amongst manufacturers, Greff thought Scientific Games‘ product offerings to be outstanding. Predicting low single-digit growth in 2016, Greff concluded that he “would characterize sentiment as cautiously optimistic as the larger manufacturers look to dispel integration concerns/hiccups and regain confidence from casino operators.”

As for the (over)anticipation of skill-based games — remember, they have only just been approved in Nevada — Greff wrote, “While the time will eventually come for a skill-based product, the industry is not there yet as the Nevada Gaming Control Board promulgates rules; we believe testing of skill-based products won’t commence until 6-8 months after the rules are clarified.” He thought the important slot enhancements he saw at G2E were more in the nature of 3-D and hand-motion sensors.

Penn National Gaming gave Greff a tour of the Tropicana Las Vegas, which he found to be “in better shape than we thought.” (Guess he doesn’t get out here too much.) Penn TROPICANA VIEW 1B_LO 042010currently makes less from the Trop than from its Maine racino — less competition up there, mind you — and hopes to capture 15% of Vegas visitors’ gambling wallet in the future. The relative paucity of restaurants (four) may also be a handicap. However, Penn “wants to further learn the intricacies of the LV market/property” before making a substantial capex investment in the Trop.

Half the Trop’s current guest base is derived from the likes of Orbitz, and Penn would like to oust those customers in favor of Plainridgeones already enrolled in its loyalty program. Elsewhere, Plainridge Park has ditched its controversial electronic table games in favor of more video poker and high-limit product. The latter is a strategic addition as the average Plainridge player makes an average of $100,000 a year … 20% higher than other Penn properties. I don’t think it’s too early to call Penn’s Massachusetts venture a home run.

* It’s been a good G2E for MGM, which won three awards from Gambling Insider magazine, more than any other company and including an exacta on “Best Land-Based Operator,” where MGM won the top spot and joint venture Borgata was runner-up.

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