Scientific Game

Life Changer

Wide area networks are set to spread across Asia, predicts Weike Gaming Technology CEO David Kinsman

Friday, 07 January 2011 16:43
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What sum would constitute a truly ‘life changing’ jackpot in Macau?

On 20th November, the winner of Macau’s biggest ever 20¢ Hyperlink-progressive jackpot walked away with over HK$7 million (US$897,436 million) in cash. Considering property prices in southern China and Hong Kong—the prevailing source markets for Macau casino patrons—that sum may be regarded more as mortgage relief than life changing.

Indisputably life changing is the minimum US$10 million wide area progressive jackpot paid out by any one of the hundreds of Megabucks slot machines operated across Nevada by International Game Technology (IGT). The largest ever Megabucks jackpot was US$39.7 million, awarded in 2003 at a machine in The Excalibur Hotel and Casino.

In Nevada, Megabucks and Aristocrat’s Millioni$er slot machines offer jackpots that accrue over hundreds of machines located across multiple properties. The machines are also owned and operated on a participation basis by their respective manufacturers. In Macau, there are no wide area jackpots operating between any of the 33 casinos or the handful of small but popular slot clubs, and the slot manufacturers have thus far not been able to operate their machines on a participation basis in the city.

Although Macau’s six casino operators are unlikely to cooperate to offer a joint wide area jackpot, some of the operators could offer significantly more life changing jackpots simply by linking up their own properties; notably, SJM, which provides the licenses for twenty of the casinos, Melco-Crown Entertainment, which operates not only three casinos but also half a dozen Mocha Clubs slot venues, and Sands China, which runs three casinos, including the mass-market gaming meccas of Sands and Venetian Macao.

Linking multiple sites requires no additional infrastructure, and can be done reliably via the standard telecoms infrastructure available in all Asian countries. “Any country that has ATMs is a country where you can run wide area networks without any problem,” explains David Kinsman, CEO of Singapore-based gaming machine and systems provider, Weike Gaming Technology. Although a wide area jackpot can be “extremely motivating,” according to Mr Kinsman, it must be “properly marketed and well strategised.”

Megabucks created a sensation following its launch in 1986, owing largely to IGT’s supporting PR efforts. The game’s popularity has waned in recent years, however, as players realise it offers a significantly lower RTP (return to player) than most other machines. Part of the reason for that is the Megabucks machines are operated on a participation basis, necessitating a significant portion of the proceeds to go to IGT. Mr Kinsman points out that if a casino or slot venue operator runs its own wide area jackpot, it can return more to players.

Wider benefits

Wide Area Systems can do much more than offer life-changing jackpots. “They cover everything from player tracking, monitoring, accounting, player rewards, TITO, etc,” explains Mr Kinsman. “So they run everything on a wide area basis. The benefit of that is, take someone like SJM in Macau, or Pagcor [the Philippine Amusement and Gaming Corporation] in the Philippines—it means one card can be utilised across their entire network.”

Weike has not only developed a complete wide area system, but also has had  it running live without a glitch in Singapore since 1st December 2009, linking the five sites run by NTUC, the city-state’s largest slot club operating group. Singapore’s slot clubs, which are limited to a maximum 40 machines per venue, have seen revenues plunge following the recent opening of the sprawling integrated resorts, Resorts World Sentosa and Marina Bay Sands. Mr Kinsman argues wide area systems offer the clubs a way “to be more competitive against the casinos.” He points out that “since the IRs opened, the clubs using Weike systems have fared much better than the industry average. In other words, they haven’t dropped as much business as the other clubs.”

Asia going wide

Asia has the opportunity to be a pioneer in the adoption of wide area systems. Notably, although Megabucks offers a wide area jackpot across Nevada, none of the properties in Las Vegas utilise full wide area systems, “even though companies like MGM and Harrah’s operate multiple sites, and it would be a perfect opportunity for them,” says Mr Kinsman. “The US is not an early adopter when it comes to available technology in the gaming industry.”

Last month, Weike installed a wide area system across four Singapore clubs run by the Home Team Group. It is also set to supply the first wide area system in Malaysia in the first quarter of 2011.

Although each of Malaysia’s 228 slot clubs is limited to a maximum of 15 machines (which generate a rumoured US$3,000 on average per day), there are large groups in the market that run up to 40 of the clubs, and they could derive significant advantages by linking their various sites. Mr Kinsman points out: “At the moment, Malaysian clubs are most probably the most aggressive promoters in all of Asia—extremely aggressive. They’re constantly chasing each other with high level promotions and really working hard on it. One of the benefits wide area networks bring is the larger groups will be able to run promotions on a larger basis so you can give away more, and the prizes become bigger and much more substantial. It takes the pressure off single sites. You can still have activities running at single sites, which is linked to the system, but it takes a lot of that pressure away and gives you a focus on large marketing incentives which you can run over wide area networks, which become much more attractive for players.”

Mr Kinsman also anticipates the roll out of wide area networks in Macau and the Philippines. In Macau, “SJM is a perfect example of a good potential wide area operator because they’re in control of their own sites and SJM clubs, like the Canidrome the Jockey Club, etc. They’ve most probably got a couple of thousand machines. They’re in a position where they can run substantial wide area activity, which can make your business very attractive for players.

“Another group that has potential to do this [in Macau] is Mocha. A multiple site operation where they’ve got the ability to start to push their business to the next level by looking at wide area capacity.”

Meanwhile, in the Philippines, slots at Pagcor run sites have fared poorly compared to those at venues run by private VIP club operators and casino licensees—including the recently opened Resorts World Manila. Mr Kinsman believes Pagcor can improve its relative performance by linking up the 5,000 plus machines it operates in various venues across the country.

“The reality is Pagcor is missing out on revenue because their machines are not doing the figures per day that compete with say locations like Resorts World Manila. The reasons for that are they are not running TITO [it’s still coin-in in most places], they’re not running player tracking. What they’ve got to do is be able to offer substantial comparative, or better, promotions and marketing to players, which a wide area network would enable them to do. That ability to take one card and walk from one site to another anywhere across a territory is very attractive to a player. It is the ultimate opportunity to lock in loyalty.”

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