A recently filed patent infringement lawsuit covering cashless wagering technology is giving gaming industry equipment sector experts flashbacks to more than a decade ago when intellectual property disputes over slot machine innovations flooded federal courtrooms.
Multiple analysts, in interviews with The Nevada Independent, said it’s yet to be determined whether the legal tussle between Sightline Payments and Everi Holdings will erupt into a battle similar to the slot machine dispute that spawned dozens of lawsuits involving International Game Technology, Bally Technologies and other major manufacturers over the ownership of gaming features now common throughout casinos worldwide.
Las Vegas-based Sightline filed its lawsuit in federal court in Texas on Sept. 30, alleging that Everi infringed on five of the company’s patents related to cashless gaming, including technology that allows a player to transfer funds from their financial account to a digital wallet for gaming play.
Major gaming equipment providers earlier this month displayed a multitude of new cashless gaming and digital payment products during the Global Gaming Expo in Las Vegas. The technology, including mobile wallets — smartphone apps that store payment cards and other information in a digital format – is being heralded as a transition for one of the last cash-dependent industries.
“I think this could be similar,” Todd Eilers, a principal in advisory firm Eilers & Krejcik Gaming, said in evaluating the technology associated with both cashless wagering and slot machines.
An analyst before launching his Southern California-based company, Eilers said there is a comparison to be made between digital payment technology advancements with the secondary bonus systems and server-based gaming platforms that came into play prior to 2010.
“Cashless is something everyone is focused on,” Eilers said. “I suspect that you will see a lot of intellectual property lawsuits going forward.”
Macquarie Securities gaming analyst Chad Beynon said representatives from most of the privately held gaming equipment companies he spoke with during G2E mentioned how many patents they controlled for cashless gaming.
“They believe they have something the others don’t have,” Beynon said.
Competing mobile wallets
Privately held Sightline, which secured almost $350 million in outside financing this year, said in the lawsuit it holds 35 issued patents and has 23 additional patent applications pending with the U.S. Patent & Trademark Office covering its mobile wallet and the transfer of funds.
Sightline was one of five gaming technology providers involved in the rollout of cashless gaming capabilities for Resorts World Las Vegas when the Strip property opened in June. Sightline, in partnership with Aristocrat Technologies, is also part of Boyd Gaming’s cashless wagering rollout in the company’s casinos in Las Vegas and regionally.
Everi, which has corporate offices in Las Vegas but maintains its payment division headquarters in Austin, Texas, provides cashless gaming capabilities through mobile wallet technology at nearly a dozen casinos in four states. Those numbers are expected to increase through a partnership with regional casino operator Penn National Gaming.
Sightline said in the patent infringement lawsuit that its intellectual property counsel reviewed Everi’s mobile wallet for potential patent infringements and claimed to have found five violations.
“The asserted patents involve technologies that allow for cashless transactions used in casino gaming offerings and non-gaming spend,” attorneys wrote in the lawsuit. “These inventions were originally developed by Kirk Sanford, Thomas Sears, and Omer Sattar — all co-founders of Sightline. The inventors of the asserted patents recognized that the field could benefit from improved systems and methods for cashless wagering and redemption.”
Sightline Chief Legal Officer Jennifer Carleton in a statement described the company as “an innovator within the gaming industry,” which she said is “clear” through its “extensive patent portfolio.”
“We will vigorously defend our intellectual property against any infringements,” Carleton said.
Everi’s general counsel, Kate Lowenhar-Fisher, called Sightline’s claims “without merit.”
“We will vigorously defend Everi against these baseless claims,” Lowenhar-Fisher said. “Additionally, we plan to mount a number of claims of our own against Sightline.”
Slot machine innovations
Patent infringement lawsuits were common among slot machine manufacturers in the early 2000s, mostly associated with IGT’s “Wheel of Fortune” slot machine. At the time, the company offered dozens of games with different titles utilizing the same platform. Once a pay level is reached and certain symbols align, a gambler spins a bonus wheel for additional jackpots.
One gaming industry insider, who worked for a rival slot machine company, said IGT “would slap a patent” on anything that applied to a slot machine.
Former Bally CEO Richard Haddrill said that peace between the companies was finally reached when the courts ruled a slot machine developer “couldn’t put a patent on a wheel.”
At that point, it was more conducive to the bottom lines of the manufacturing sector to work together and license the technology.
Haddrill, who helped engineer the $5.1 billion buyout of Bally by Scientific Games in 2014, said in a telephone interview Thursday he didn’t believe there would be another explosion in intellectual property infringement lawsuits among gaming companies in the payments area, “unless you have a unique or justifiably defensible patent”
“I believe the manufacturers are much better now at collaboration,” he said.
Others noted that courts have become more rigid over the years as to what qualifies as innovative and what was already publicly known or available, in whole or in part, before the filing of a patent – often referred to as “prior art.”
Beynon said it’s unclear whether other patent infringement lawsuits will surface as cashless payments systems become more developed and widespread within casinos.
Investors in Everi, he said, weren’t concerned by the lawsuit. Shares in Everi, traded on the New York Stock Exchange, closed at $23.91 on Friday, roughly the same price the day the lawsuit was filed more than two weeks ago.
Eilers said he was hopeful payment companies would “agree to cross-license intellectual property as I think it will support the adoption and everyone benefits.”
He added, however, “that typically doesn’t happen at first.”
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The word that was ubiquitous throughout the three-day Global Gaming Expo in Las Vegas was optimism.
Omnichannel and cashless were not far behind. Omnichannel describes the gaming industry’s content flowing through multiple outlets – traditional casinos, social gaming, and online gaming. Cashless is how gaming consumers pay using new technology.
“We believe (the omnichannel) integration will become more important,” Macquarie Securities gaming analyst Chad Beynon wrote in a post-G2E research note describing his meetings with representatives from more than 30 public and private gaming companies.
“The theme is finally gaining steam and deployments are growing,” Beynon said.
But the gaming industry’s top executives largely were focused on finishing 2021 on a high note, and moving toward more normalized operations in 2022 after many months of COVID-19-related business disruptions.
Just ask two of the CEOs who participated in G2E’s keynote panel on Wednesday.
“I've never been more excited about the future of Las Vegas,” Wynn Resorts’ Matt Maddox said. “Our demographics have shifted so much. We've seen a 200 percent growth in people, 18 to 35, coming into our properties and actually gambling. I'm a big believer in Las Vegas in 2022. For us it's encouraging.”
MGM Resorts’ top executive, Bill Hornbuckle, echoed his competitor’s remarks.
“Millennials have shown up,” he said, noting that many older people are still somewhat hesitant about venturing out. He credited gaming’s manufacturing sector with addressing the changing market.
“The product is becoming more and more relevant, but it can always be better and I'm going to continue to challenge them,” Hornbuckle said. “As we stabilize, we are really excited about the future.”
At the outset of G2E, the American Gaming Association (AGA) released a “CEO Outlook,” in which the Washington, D.C.-based trade organization surveyed roughly 70 percent of the CEOs from casino companies and gaming equipment suppliers about their attitudes heading into 2022.
Forty-eight percent of those surveyed said they expect a better business situation over the next six months. Another 43 percent think the business atmosphere will remain unchanged. Fewer than 10 percent expect the business situation to worsen.
Roughly 71 percent of gaming industry CEOs said they expected a better-than-normal hiring pace over the next six months, and nearly half expect to increase capital investments over the next months, including improvements to hotel and restaurant operations and purchasing new gaming equipment.
David Forman, senior director of research for the AGA, said the survey provides a benchmark for the industry moving forward. He expects the organization to conduct follow-up surveys to gauge the confidence of the gaming industry as businesses nationwide attempt to move past COVID-19.
“We want to use this to talk about where the industry is headed,” Forman said.
On Monday, G2E organizers said the 2021 tradeshow and conference at the Venetian Expo and Conference Center (renamed recently from Sands Expo and Conference Center) attracted more than 13,000 attendees, less than half of the 27,000 who attended the 2019 event. The 2020 G2E was canceled because of the pandemic, but show organizers held a virtual event.
Trade show booths — representing 233 companies — were noticeably smaller in size and scope from prior events. Show producers did not provide a figure for the number of 2019 exhibitors. Gaming manufacturer representatives said their booth sizes averaged 25 percent to 33 percent smaller than previous G2Es.
Still, G2E officials touted gaming’s largest in-person event in nearly two years.
“After the hardest year in our history, G2E provided a robust marketplace to drive the global gaming industry’s recovery forward,” Aristocrat Technologies CEO Trevor Croker said in a statement. Croker is the current chairman of the AGA board.
Jim Allen: Hard Rock/Seminoles interested in Las Vegas, but not Planet Hollywood
Scratch Planet Hollywood Las Vegas from Seminole Gaming’s shopping list.
The Florida-based tribe has owned Hard Rock Entertainment, including intellectual property rights for affiliated restaurant and entertainment trademarks and website domain names, for 14 years. That portfolio used to include Hard Rock Hotel Casino Las Vegas, which has since been sold and rebranded as Virgin Hotels Las Vegas.
Seminole Gaming CEO Jim Allen, who is also Hard Rock’s chairman, said at the Global Gaming Expo last week the tribe has an interest in landing a location on the Strip but is not eyeing the Caesars Entertainment-owned Planet Hollywood.
“We recognize Las Vegas is the entertainment capital,” Allen said during a CEO keynote panel at the gaming industry tradeshow and conference. “If the opportunity comes up, yes, we would be interested.”
Caesars CEO Tom Reeg has said the company, which operates eight resorts on or near the Strip, wants to sell at least one of the casinos. Analysts speculated Planet Hollywood might be on the market.
Allen wouldn’t say if he had met with anyone from Caesars.
“That property (Planet Hollywood) will not be interesting to us,” Allen said after being asked about Caesars’ plans to divest itself from at least one Strip resort. He did not provide any reasons for rejecting the casino.
Hard Rock had lent its name and brand to an off-Strip property that went through several management changes over the course of more than two decades. The property has since been rebranded as Virgin Hotels Las Vegas.
Allen visited the property and was impressed with the changes and said it was “great to see some real capital dollars are working on that property, and hopefully they can do well.”
Hard Rock announced it acquired the naming rights along with the former property’s music memorabilia, signage and merchandise.
Titus tells industry that pushing gaming issues in Congress is tricky
Rep. Dina Titus (D-NV) said the gaming industry walks a delicate tightrope in engaging members of Congress.
For years, the primary mission of the American Gaming Association was to keep any hint of federal oversight away from the nation's commercial casino industry, which has grown to 25 states. On Capitol Hill, that growth led to the creation of the Congressional Gaming Caucus, which Titus co-chairs. The Las Vegas Democrat said the group has roughly 35 members across both parties.
While speaking at the Global Gaming Expo last week, Titus, whose district includes the Las Vegas Strip, said she is often approached by fellow members of Congress about gaming matters in their own districts.
“It’s a very complex world, not only how it works, but how it's financed, how it's regulated and how it's governed,” Titus said in a talk moderated by AGA CEO Bill Miller. “All of those are very complicated and if you have just one riverboat (casino) in your district, you don't delve into all the details. People tend to come to me to ask for advice and that's a role I like to play.”
But pushing gaming matters in Washington, D.C., can be a “double-edged sword,” Titus said. “We don’t want a Congress that is getting too engaged … More regulation possibly means more taxation.”
Titus said the Congressional Gaming Caucus has successfully navigated several key issues that benefitted the industry, including the inclusion of small casinos and operations that support gaming in the CARES Act last year. Rep. Mark Amodei, the only Republican in the Nevada delegation, used his connection with then-White House Chief of Staff Mark Meadows in the effort.
“We got that with a big thanks to the caucus’s efforts,” Titus said. “So you want to advocate to educate, but not to aggravate.”
Titus said she continues to back the elimination of the handle tax, an antiquated 0.25 percent federal excise tax placed on all sports wagers. The fee was put into place in the 1950s to combat illegal gambling activities, yet the tax only penalizes legal sports betting operators. She said the IRS doesn’t even track the funds.
Also, Titus continues to push for a change in the IRS jackpot reporting minimum, which has been set at $1,200 for federal income tax purposes since the 1970s. Titus and the gaming industry are seeking an increase to $5,000.
Advisory firm says slot machine routes will expand to another state next year
Advisory firm Eilers & Krejcik Gaming offered several predictions for 2022 during the Southern California-based company’s annual G2E presentation on the conference’s opening day.
Phil Bernard, who follows gaming equipment and technology for the firm, suggested a business with roots in Nevada – slot machine route operations – will continue to expand. Bernard said at least one new state will launch next year.
Slot machine route operators manage games for a non-casino location for either a fee to lease space or have a revenue sharing agreement with the location’s owner.
Eight states – Nevada; Illinois, except for the Chicago area; Louisiana; Montana; Oregon; South Dakota; West Virginia and Pennsylvania – allow slot machines or video gaming terminals in non-casino businesses, including restaurants, bars, taverns, convenience stores, truck stops and other locations that sell alcohol.
As of July 21, Nevada had 2,000 restricted gaming locations with 17,870 slot machines.
“Suppliers have an obvious interest, traditional casino operators are now intimately involved, and state governments may be looking ahead to tap existing illegal markets for funds,” Bernard said at the presentation.
Nevada is at the center of the pending merger between Illinois-based Accel Entertainment and Century Gaming, the state’s No. 2 route operator, with nearly 400 locations and more than 2,400 games.
Analyst Chris Grove offered up several predictions for the sports betting market for next year. He expects FanDuel, DraftKings and BetMGM to continue to slug it out for the top tier, but Caesars Sports and Bally Bet could start gaining ground.
Grove also looked ahead to 2026, when he estimates 44 states will offer sports betting, 16 more than the current 28. Of the four most populous states, he predicts New York, which offers just retail sportsbooks, will add online sports betting. Florida, which doesn’t have the activity, will legalize sports betting at its tribal casinos. California and Texas, he said, will still be on the sidelines.
Grove also believes online casino gaming, now in five states (six counting Nevada’s poker-only business), will operate in 14 states by 2026. But none of the four major states will be included.
“In 2026, we project that sports betting, both retail and online, and online casino and poker will generate combined gross gaming revenue of $22.8 billion,” he said.
Non-smoking casino group brings its advocacy efforts to G2E
More than 20 states have either banned or limited smoking inside casinos with some of the actions taking place last year when COVID-19 health and safety guidelines were commonplace in the gaming industry.
A smoking ban never happened in Nevada, although MGM Resorts International prohibited smoking inside Park MGM on the Strip when the company reopened the resort in September 2020. The ban remains in place and Park MGM is the only smoke-free casino on the Strip.
Americans for Nonsmokers’ Rights hopes Park MGM will have company.
The advocacy group brought its efforts to the Global Expo Gaming and enlisted several employees from the MGM Resorts-owned Borgata in Atlantic City to help. The casino workers, who are advocating for a smoke-free casino environment in the East Coast gaming market, want their peers in Las Vegas to join the effort.
Following a press briefing at the Venetian Expo and Convention Center, the employee group headed out to the Strip to meet with their fellow MGM Resorts workers.
“We’re trying to build a grassroots effort here,” Cynthia Hallett, CEO of Americans for Nonsmokers Rights said in an interview with The Nevada Independent. “We know it’s a battle and we’re pushing that big stone up the hill. But we don’t believe that hill is that steep anymore.”
Atlantic City casinos operated under a temporary smoking ban to mitigate the spread of COVID-19, but that ban ended during the Fourth of July holiday this year.
“I don't think there's ever been a governor that said that before,” Hallett said. “The challenge is the Senate president. There's a lot of work being done and honestly there are thousands (of casino workers) that are speaking out. They're going to push this across.”
Hallett is hopeful that if smoking is permanently banned inside Atlantic City casinos, Nevada might follow suit, though so far there has not been any push beyond Park MGM.
Hallett suggested MGM Resorts, which already operates state-mandated smoke-free casinos in Massachusetts (MGM Springfield) and Maryland (MGM National Harbor), could help lead a change in Nevada if it converted all its Strip properties into smoke-free casinos.
The cancellations of more than 2,000 flights by Southwest Airlines last weekend caught the attention of Deutsche Bank gaming analyst Carlo Santarelli. Southwest is McCarran International Airport’s largest air carrier by volume, accounting for nearly 37 percent of all arriving and departing passengers during August, and almost 36 percent of the airport’s total for the first eight months of 2021. “Despite the relative importance of Southwest as a carrier to Las Vegas, we do not believe this situation is likely to have a material impact on the market,” Santarelli told investors in a brief research note.
Las Vegas hosted the heavyweight championship fight between Tyson Fury and Deontay Wilder, on Saturday and an NFL game between the Las Vegas Raiders and Chicago Bears on Sunday. Santarelli said visitors experienced “little to no issues with arrivals, though departures were likely to be a bit more challenged.”
He said inbound airline passengers account for roughly 55 percent of Las Vegas Strip pedestrian volume on most normal weekends.
Golden Entertainment announced an agreement with Dallas-based Flite Golf & Entertainment to bring Atomic Range, a $70 million, 92,000-square-foot golf entertainment attraction, to The STRAT Hotel, Casino & SkyPod.
The four-story facility will be built on seven acres of a vacant 15-acre parcel owned by Golden that is next to The STRAT. The land was once designated as a potential convention and meeting expansion.
The new Atomic Range will be located on Las Vegas Boulevard. Golden, which has invested $100 million into The STRAT since acquiring the resort in 2017, will contribute the real estate to Flite Golf and will share in the revenue generated by the golf attraction under a lease arrangement. Flite Golf will be responsible for all Atomic Range development and operating costs. The company is partnering with Century Golf, which has managed more than 500 golf facilities worldwide, to operate Atomic Range.
The project is expected to begin construction in the second quarter of 2022, with completion slated for the end of 2023.
Clark County Commissioners, by a 6-1 vote, gave Station Casinos approval to move forward on a new hotel-casino in southwestern Las Vegas. The property, dubbed, “Durango, A Station Casinos Resort,” will be built on 71 acres near the 215 Beltway and Durango Drive.
The company has not disclosed a cost for the new resort, which will feature 200 rooms, an 83,000-square-foot casino, four restaurants and additional amenities.
The company is expected to provide additional details during its third-quarter earnings conference call on Nov. 2.
Culinary Workers Local 226, which has been in a decades-long dispute with Station Casinos, expressed opposition to the development, questioning the proximity of the property to neighborhoods and an elementary school. The union also raised questions about why the company would open a new resort when three of its casinos have remained closed since the shutdown order in March 2020 at the outset of the pandemic. Commissioner Richard “Tick” Segerblom, a longtime Culinary supporter, was the lone no vote against the property.
The Association of Gaming Equipment Manufacturers (AGEM) said during G2E that Daron Dorsey will take over as the trade organization’s executive director on March 1, 2022. Dorsey, currently general counsel at Ainsworth Game Technology, will take over from Marcus Prater, who announced earlier this year that he was retiring after more than a decade overseeing the group that includes manufacturers and suppliers of gaming products, systems and services to the casino industry.
“Daron’s broad knowledge base, diverse skill set, and experience will be tremendous assets as he assumes this new role,” said AGEM President David Lucchese, who is the executive vice president of sales, marketing and digital for Everi Holdings. “While we’re sad to see Marcus step away, Daron’s manufacturer background and familiarity with AGEM make him a perfect fit to step in.” Dorsey has been an officer and general counsel for AGEM since 2016. Prior to joining Ainsworth, Dorsey served as general counsel for William Hill US and worked for two law firms, Snell & Wilmer and Jolley Urga Wirth & Woodbury.
On the Friday before the NFL’s third weekend slate of games, veteran sportscaster Trey Wingo offered his analysis on the matchups and the point spreads.
Wingo gave the Kansas City Chiefs — the defending AFC champion — the nod in their game against the Los Angeles Chargers. He surmised that the Chiefs, who opened as a 6.5-point favorite and had won 12 of the last 13 games against the Chargers, were a lock for bettors despite their first loss of the season the prior week.
“Do you really think he’s going to drop two in a row?” Wingo asked, referring to the Chiefs’ superstar quarterback, Patrick Mahomes.
Turns out, he was wrong. The Chargers won the game, 30-24.
Wingo’s humorous comments and irreverent style made him a fan favorite at ESPN, where he spent more than two decades covering a variety of sports but was most closely associated with the network’s NFL programming.
His NFL analysis is now broadcast on various channels controlled by Las Vegas-based Caesars Sportsbook, the sports betting arm of casino giant Caesars Entertainment.
Wingo, who was named Caesars Sportsbook’s chief trend officer and brand ambassador in August, produces his weekly “Trey’s Trends” broadcast for the company’s social media platforms on Facebook, Twitter, YouTube and other sites.
In September, Caesars brought aboard another longtime ESPN broadcaster, Kenny Mayne, as a content contributor and brand ambassador, who will also produce content for the company’s social media channels.
“At the end of the day, it’s all about building our social following and brand awareness,” said Sharon Otterman, chief marketing officer for Caesars Sportsbook. “Trey is taking our sports betting information and putting it out there in an entertaining way. He’s helping our customers and our potential customers learn in an engaging way.”
The moves made by Caesars highlight a broader shift: The growing sports betting universe has increased the competition, forcing operators to zero in on attracting new customers. Sports betting is legal in 28 states and Washington, D.C., and many markets have more than a dozen wagering providers. So operators have stepped up their messaging game, leaning on programming, sometimes featuring well-known analysts or personalities, to hook sports enthusiasts and potential bettors.
Eilers & Krejcik gaming analyst Chris Grove, who follows the sports betting sector, said it’s historically challenging for betting companies to produce their own media.
“This’s not to say operators won't try, and that's not to say that some operators won't find success with media,” Grove said. “But it's a very different business than running a sportsbook, and the economics of it change when you bring it in house.”
Brian Musburger, CEO and founder of Vegas Sports Information Network (VSiN), chuckles somewhat at how sports betting operators are pushing their own digital channels in a way to communicate with customers.
He launched VSiN in Las Vegas in 2017, operating out of a studio next to the South Point Casino sportsbook, a year before the U.S. Supreme Court struck down a federal law prohibiting sports betting outside of Nevada. The network has long been considered a “CNBC-type network” that serves as a resource for the sports betting community and sports fans interested in the activity.
Prior to the acquisition, VSiN opened a second studio at Circa Casino Resort, overlooking the downtown property’s massive race and sportsbook.
Musburger said sports betting companies are creating their own channels primarily for self-promotion.
“There's some great entertainers that can drive brand awareness and that's wonderful,” Musburger said. “Those deals make sense.”
Musburger said VSiN and advertising channels “are two different business models.”
The airwaves are becoming flooded with traditional advertising messages from the major sports betting providers. Caesars Sportsbook ads feature comedian J.B. Smoove as Caesar.
Chris Holdren, co-president of Caesars Digital, which oversees Caesars Sportsbook, said the advertising messages and company-controlled media channels are needed to help set the operation apart from the crowded universe. He equated it to traditional casino advertising.
“Every casino you walk into on the Strip or downtown has the exact same slot machines and same table games,” Holdren said. “But then we differentiate what our offering is by the experience we build around that. So this is a way we’re differentiating what our sportsbooks stand for to the consumer. And part of that is who you have on your team, who's providing the insights and representing you.”
Spending money to find customers
In some ways, Caesars was late to the game.
The company announced the renaming of its sports betting division in early August, three months after acquiring sports betting giant William Hill for nearly $4 billion. The transaction gave Caesars full ownership of the United Kingdom-based operator’s U.S. operations.
Caesars CEO Tom Reeg said in August the company would spend $1 billion over the next year and a half on customer acquisition, including advertising and promotion by the former ESPN anchors.
The company has made other marketing moves as well, signing a 20-year naming rights deal to brand the Superdome sports venue in New Orleans as the Caesars Superdome. The company took over ownership of the sportsbook at the Capital One Arena in Washington, D.C., through the William Hill deal and is building a sportsbook at Chase Field in Phoenix. Caesars will also place its logo on jerseys worn by the NHL Washington Capitals next season.
Media partnerships are also in the mix. Caesars agreed last month to provide sports betting content to NOLA.com, a website that publishes The Advocate and Times-Picayune, Louisiana’s largest newspapers.
“We are very specific about who we partner with to make sure that it's not just a logo on a building or a logo on a jersey, but it really has a lot more meaning,” Otterman said. “Those are really extensive partnerships in markets that made sense to us because of the consumer engagement opportunities.”
Caesars is not alone. In May, FanDuel became the official odds provider of the Associated Press. Caesars and DraftKings have similar arrangements with ESPN.
But are the advertising and marketing dollars working?
Wells Fargo gaming analyst Daniel Politzer evaluated the app data for five companies – DraftKings, FanDuel, BetMGM, Caesars and Penn National Gaming’s Barstool app. He said downloads skyrocketed from August to September, up by more than 300 percent,, with BetMGM and Caesars seeing the largest upward trends.
“While we were not surprised by the sequential uptick in app usage given the start of football season, we note that the sequential uptick in time spent on app has been more pronounced this year for most platforms,” Politzer wrote in a research note.
It’s good to be the king
BetMGM, the sports betting operation for MGM Resorts International, has been using Oscar-winning actor Jamie Foxx as the “King of Sportsbooks” for more than a year in its paid advertising campaign.
During the opening weekend of the NFL season, DraftKings featured ads headlined by actor Martin Lawrence. Wynn Resorts’ WynnBet aired a commercial directed by Oscar nominee Ben Affleck, who also starred in the spot with basketball superstar Shaquille O’Neal. FanDuel produced ads starring golfer Jordan Spieth.
The New York Times reported that gaming companies spent $7.4 million on advertisements for the first Thursday, Sunday and Monday prime-time games of the season – 9 percent more than a year ago, according to estimates from EDO, a TV ad measurement platform.
DraftKings and FanDuel, which along with Caesars are the official sports betting partners of the NFL, are given certain promotional rights during the national broadcasts.
Regional casino operator Bally’s Corp. is in the process of launching Bally Bet, the company’s sports betting spin-off. The product is currently available in two states, Colorado and Iowa; however, a naming rights deal last year with Sinclair Broadcast Group is bringing the Bally’s brand to 21 regional sports betting networks across the U.S., even in states where sports betting isn’t yet legal, such as California, Texas and Florida.
But the messages could fall on deaf ears in some states where the companies don’t operate.
For example, neither DraftKings nor FanDuel are licensed in Las Vegas. DraftKings is in the process of acquiring Golden Nugget Online Gaming for $1.56 billion, a move that could lead to the company operating the sportsbooks at the Golden Nugget casinos in Las Vegas and Laughlin. Boyd Gaming, meanwhile, has a 5 percent ownership stake in FanDuel, which operates sportsbooks for the company’s regional casinos outside of Nevada.
How much is too much?
At last week’s Global Gaming Expo in Las Vegas, red flags were raised about the large amount of sports betting ads appearing on U.S. television. The NFL is not the only advertising vehicle for sports betting. Operators are placing ads on networks broadcasting the current Major League Baseball playoffs.
Concerns were raised about attracting regulatory overview that could lead to limits on the amount of advertising, advertising bans and a potential slowdown to sports betting industry expansion.
American Gaming Association CEO Bill Miller, in his opening remarks at the tradeshow’s outset, said many European countries are putting the brakes on sports betting advertising. For instance, Italy banned sports betting ads completely. Spain banned sponsorships between teams and sports betting companies and limits advertising to early morning hours. Miller said two-thirds of adults in the United Kingdom support a total advertising ban on sports betting.
“We’ve seen what happens when it goes wrong,” Miller said. “Scrutiny from state regulators and the media is increasing around advertising saturation and aggressive promotions. And we have to get this right. When you get the attention of politicians, it's typically a bad thing.”
He suggested partners in sports — including the leagues, teams and media companies — need to be a part of the solution.
“The gaming industry can’t and shouldn’t be doing this alone,” Miller said.
Arizona Cardinals owner Michael Bidwill agreed. Even with the NFL team expected to launch a retail sportsbook at its State Farm Stadium next year in partnership with BetMGM and the Gila River Indian Gaming community, he expressed a growing discomfort with the increasing number of sports betting ads during games.
“It’s overwhelming, especially in a place like Washington, D.C., where I have lots of friends,” Bidwell said. “All they're hearing about is sports betting, and that can backfire on you. We all know that in an instant, things can flip.”
In 2015, FanDuel and DraftKings spent millions of dollars advertising daily fantasy sports in an effort to gain customers. But it backfired when gaming regulators began questioning the activity and then deemed daily fantasy sports as sports betting. When the operators were required to be licensed, they all withdrew from the state.
Joe Asher, president of sports betting for International Game Technology, said he is also concerned fans are getting inundated with sports betting ads.
“I’m worried about the regulatory backlash,” Asher told The Nevada Independent. “There are just too many commercials and it’s a real problem.”
Musburger said VSiN’s role in the sports betting world has become increasingly important “as a credible source of information for people who are putting their money at risk on the games.”
He said the need for what VSiN offers existed long before legal sports betting began its rapid expansion.
“When we would look around, it was hard to find good data that you could trust,” Musburger said. “And a lot of it was coming from offshore sites where the unregulated markets always made me uneasy.”
That reason is why Grove and a group of partners created Props.com. He said the site was designed for sports bettors who are seeking news, trends and analysis. Props.com will incorporate information from multiple operators.
“Independence is a hurdle that sportsbook operators face when running their own media,” Grove said. “How will consumers perceive that content? Will they trust it? Will it seem credible? There are certainly some topics, some content, some resources that can only come from third-party sources.”
Former Las Vegas and Macau gaming executive Gamal Aziz is facing years in federal prison after being convicted in federal court Friday for his role in a nationwide college admissions scandal.
Aziz, who spent more than 20 years overseeing foreign and U.S. casino expansion for MGM Resorts International and Wynn Resorts, was convicted on two counts of conspiracy by a jury in a Boston courtroom after prosecutors said he paid $300,000 in bribes during 2018 to get his daughter enrolled into the University of Southern California as a basketball player.
Aziz left the gaming industry in September 2016 when he resigned his position as president of Wynn Macau. He spent three years with Wynn Resorts as the president of development, overseeing foreign and domestic expansion opportunities.
Prior to joining Wynn, Aziz spent 18 years with MGM Resorts International, including 13 years as president of MGM Grand Las Vegas and five years as president of MGM Hospitality, where he oversaw the company’s non-gaming international expansion.
Aziz was alleged to have bribed a senior associate athletic director at USC in order to help his daughter get recruited by the USC basketball team and facilitate her admission to the university.
He is alleged to have paid a $300,000 donation to USC’s gift account for the Galen Center, the arena for USC’s basketball and volleyball programs, and $20,000 per month in payments to the senior associate athletic director.
Aziz, a native of Egypt, is currently listed as chairman and CEO of Legacy Hospitality Group, according to his LinkedIn page.
The trial was the first stemming from the bribery scandal that was uncovered in 2019. Prosecutors and federal law enforcement officials filed hundreds of charges against 57 parents, including Hollywood celebrities and wealthy financial executives, alleging they had conspired with California college admissions consultant William "Rick" Singer to fraudulently secure college placement for their children.
Forty-seven of the 57 defendants, including actresses Lori Loughlin and Felicity Huffman, have pleaded guilty to reduced charges, paying fines with minimal jail time. The longest sentence any parent pleading guilty has received was nine months. Aziz was found guilty along with private equity firm founder John Wilson.
Gov. Steve Sisolak appointed former Nevada District Court Judge Jennifer Togliatti and former state Sen. Ben Kieckhefer to the Nevada Gaming Commission on Friday, filling the body's two vacant seats.
Togliatti, who retired from the bench in 2019 after three decades of service as a judge and Clark County deputy district attorney, was nominated for a federal judgeship during the Trump administration but never received a confirmation vote in the Senate. Kieckhefer, who was first elected to the state Senate in 2010, was termed out of his legislative seat but announced his resignation from the Legislature on Thursday.
“I’d like to thank everyone who has helped and supported me over the past decade, particularly my constituents, who trusted me to represent them in their government,” Kieckhefer tweeted Friday morning. “I’m incredibly proud of the work we have done to help move Nevada forward.”
Neither Togliatti nor Kieckhefer responded to requests for comment on Thursday about their appointments.
Sisolak, in a statement, described Togliatti and Kieckhefer as "highly qualified appointments."
“This commission is the gold standard of gaming regulation, and these appointments will continue to honor that," Sisolak said.
Togliatti was a judge on the Eighth Judicial District Court in Clark County, appointed to the bench by former Gov. Kenny Guinn in 2002. She previously worked in the Clark County District Attorney’s Office and served as a justice of the peace with the Las Vegas Justice Court.
Kieckhefer works as director of client relations at the government affairs firm McDonald Carano, which has a large gaming practice. Former Gaming Control Board A.G. Burnett is also a partner at the firm.
In the past, Kieckhefer has served as communications director for Gov. Jim Gibbons and public information officer for the Department of Health and Human Services. He is also a former journalist, working for both the Reno-Gazette Journal and the Associated Press.
The expected appointments, which are made by the governor, to the Gaming Commission would fill two vacant positions left open on the five-member commission following the resignation of Deborah Fuetsch and the departure of John Moran Jr., a Las Vegas attorney and the panel’s longest serving member. Commission members serve four-year terms in a part-time capacity.
The lack of a full membership on the Gaming Commission has led to fears about the potential for split votes of the body. If new members take seats right away, the commission’s meeting scheduled for the end of October would be the body’s first full meeting since May.
The Nevada Gaming Commission oversees gaming regulations in the state and serves as the final stamp of approval on decisions made by the Nevada Gaming Control Board.
Following these two appointments, Gov. Steve Sisolak will have named all eight regulators who oversee the state’s largest industry. Sisolak has appointed three members of the Gaming Commission, Steven Cohen, Ogonna Brown, and Rosa Solis-Rainey, as well as all three members of the Nevada Gaming Control Board — Chairman Brin Gibson and members Brittnie Watkins and Philip Katsaros.
Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.
If a colleague or associate emailed this newsletter to you, please click here to sign up and receive your own copy of Indy Gaming in your inbox. - Howard Stutz
Joe Asher didn’t really expect to be back in the sports betting world so quickly.
He and his family spent the summer in Del Mar, California, hanging out by the beach, reading books and betting on horse races at nearby the Del Mar Thoroughbred Club.
He also found time to call the sixth race during the Elko County Fair in September, reliving his days as the youngest horse race track announcer in North America, calling races at age 18 at Harrington Raceway in Delaware, Foxboro Raceway outside Boston, and Brandywine and Dover Downs in Delaware.
But a little more than five months after departing as CEO of William Hill U.S. following the company's acquisition by Caesars Entertainment, Asher, 54, is already into his first week as the new president of sports betting for International Game Technology (IGT).
One name, Asher said, brought him out of his brief retirement – Enrico Drago, IGT’s CEO for digital and betting. They became acquainted when William U.S. and IGT became partners in managing the sports betting operations in Rhode Island on behalf of the Rhode Island Lottery.
“That's how I got to know Enrico and I always liked him,” Asher told The Nevada Independent. “We talked shortly after I left William Hill. It was more of a 'goodbye, great working with you, we’ll see what the future holds.'”
The discussion over the summer was initially about consulting with IGT, whose PlaySports wagering platform and management system is provided to some 50 sportsbooks operated by 20 different companies across 18 states.
The discussions initially involved some consulting work of IGT because Asher didn’t want to commit to any potentially new job over the summer, at least until his kids were back in school.
“The conversations began to pick up quickly toward the end of August and at some point they morphed from consulting into a full-time position,” he said.
First, however, Asher needed waiving of his non-compete clause in his severance agreement from Caesars, which paid $4 billion for all United Kingdom-based William Hill. In September, Caesars agreed to sell William Hill’s non-U.S. operations to 888 Holdings for $3 billion.
“(Caesars CEO) Tom (Reeg) was very gracious for allowing me this opportunity,” Asher said.
IGT will be a much different role for Asher, who launched Brandywine Bookmaking in Las Vegas in 2008, which operated more than a dozen sportsbooks in Nevada under the brand name Lucky’s Race & Sports. William Hill acquired Brandywine in 2012, which became the basis for William Hill U.S., and Asher was named CEO.
“Both William Hill and Brandywine were both (business-to-business) B2B and (business-to-consumer) B2C companies,” Asher said. IGT offers all the services and tools needed for a casino to manage a sports betting business. “This is pure B2B.”
At this week’s Global Gaming Expo at the Sands Expo and Convention Center, Asher is finding himself planted in the IGT tradeshow floor booth, greeting current and potential customers.
“It’s kind of like drinking from a firehose,” he said.
Still, it’s familiar territory for Asher.
“There is obviously a lot of opportunity in the sports betting world,” Asher said. “Both at William Hill and Brandywine, the relationships with our partners were very important. I think I'm very much focused on making sure you do the best you can to service your customers. And, at the end of the day, you want to create value for shareholders.”
He became one of a handful of gaming and sports betting leaders advocating for the activity’s nationwide legalization in 2017, ahead of the U.S. Supreme Court arguments that year. Ultimately, the justices affirmed New Jersey’s challenge to the Professional and Amateur Sports Protection Act.
Sports betting is legal and regulated in 27 states and Washington D.C.
“We expect continued growth in our PlaySports business, and Joe Asher's knowledge, experience, network and vision for sports betting are key ingredients to boosting our future success," Drago said in a statement announcing Asher’s appointment.
Full House casino proposal for Illinois gets an assist from the Chicago Bears
The potential for a new stadium for the NFL’s Chicago Bears has made Las Vegas-based Full House Resorts the favorite to land a casino project in Waukegan, Illinois.
Full House, which operates five casinos in four states — including the gaming space at the Hyatt Resort in North Lake Tahoe and Stockman’s Casino in Fallon — is bidding to build the $375 million American Place project in the community that is roughly 40 miles north of downtown Chicago and 15 miles south of the Wisconsin state line.
Macquarie Securities gaming analyst Chad Beynon told investors Full House is now the frontrunner in the bidding process after Kentucky-based casino and racetrack operator Churchill Downs withdrew its bid for a Waukegan casino development last week.
The only other bid for the site is a group headed by a former Illinois state senator that includes former Station Casinos gaming executive William Warner and his casino management company.
Both bidders will make presentations to the Illinois Gaming Control Board next week.
“We believe this puts Full House in a strong position,” Beynon told investors. He cited a study conducted for Waukegan by an independent consulting firm that ranked Full House first in three of the four categories – property specifications and location, proposed development description and project team and experience.
“The only other criteria were for financial data, which in our view has massively improved (for Full House) during the last few years,” Beynon said.
A day before telling Illinois gaming regulators it was dropping out of the Waukegan bidding, Churchill Downs announced it was selling the Arlington International Racecourse and its 326 acres in suburban Chicago to the Bears for $197.2 million. The team wants to build a new stadium and abandon aging Soldier Field.
Churchill Downs had been bidding on the Waukegan site in partnership with Illinois-based Rush Street Gaming, which operates Rivers Casino Des Plaines, the state’s largest casino in terms of gaming revenue. TheChicago Sun-Times speculated Rush Street would bid on a planned casino project in downtown Chicago.
But the maneuverings benefitted Full House’s efforts.
Full House, which is headed by CEO Dan Lee, has targeted the Illinois market as a growth vehicle for the company, which also has casinos in Indiana, Colorado and Mississippi. The company is spending $180 million to expand and renovate its casino in Cripple Creek, Colorado, which includes adding a boutique luxury hotel.
The company raised more than $300 million in new debt earlier this year to help pay for the Colorado project, an expansion at its casino in Bay St. Louis, Mississippi, and the Waukegan development.
American Place would include a 75,000-square-foot gaming space with 1,500 slot machines, 60 table games, and a sportsbook. A small hotel with 20 villas would be included and a 150-room hotel is part of the second phase. The property would include live entertainment, restaurants, and other non-gaming amenities.
Full House told Waukegan leaders the company would operate a temporary casino while the permanent facility is constructed.
Beynon had a similar view, telling investors the projected revenues and cash flow would be “a transformational amount for Full House.” The company’s stock price shot up more than 9.5 percent at the end of last week.
Eilers & Krejcik: Dominance in Nevada sports betting is a three-company race
According to Eilers & Krejcik Gaming, J.B Smoove, Jamie Foxx and Derek Stevens had a better sports betting month in Nevada than Matt Cutshall and Shaquille O'Neal.
Statewide, sports betting revenue figures and wagering totals during August were both down from a year ago. The advisory firm described August 2020 as a “COVID-impacted, on-steroids calendar” that tracked well-above the month’s historical totals.
Still, with eight months completed, Nevada sports gamblers have wagered $4.2 billion while sportsbooks have collected $255 million in revenues, the Nevada Gaming Control Board said last week. Both figures are well ahead of 2019’s record-setting year of $5.3 billion in wagers and $329.1 million in revenues.
Caesars Entertainment, through Caesars Sportsbook, and Circa Sports, which is operated by downtown Las Vegas casino owner Derek Stevens, trended up in their shares of Nevada’s sports betting market for 2021.
The difference in market share was striking, however. Caesars is the state’s leader, according to Eilers & Krejcik, with almost 60 percent of sports betting revenue in the state through August. In April, Caesars completed its acquisition of William Hill U.S. and added the company’s Nevada locations.
Circa has five locations including Stevens’ three downtown casinos, the off-Strip Tuscany and The Pass Casino in Henderson, It accounted for just 2.6 percent of the overall revenues.
The results from BetMGM during August, which is operated by MGM Resorts International, was viewed as flat by the firm. Still, BetMGM is considered Nevada’s No. 2 operator, with more than 15 percent of the market.
Several operations experienced a decreasing trend, according to the firm, including Wynn Resorts, which operates just a retail sportsbook on the Strip. The company has yet to launch its mobile WynnBet in Nevada.
Station Casinos’ STN Sports, despite having the state’s third highest market percentage — almost 11 percent — fell under the declining trend, according to the firm.
Eliers & Krejcik Gaming analysts Chris Grove and Chris Krafcik said Nevada is mirroring other sports betting states where three brands have control of the market.
“(Caesars) massive retail footprint (80-plus locations) remains its key structural advantage in Nevada, where in-person registration is required for online sports betting,” the analysts wrote in a research report. “The recent share gains at BetMGM reflect a big increase in BetMGM’s Nevada’s app download activity.”
Eilers & Krejcik cautioned that it used information from different data providers and “proprietary assumptions” and it “regards these estimates as low-to-medium confidence” because of the state’s lack of transparency into gaming revenues.
Meanwhile, sports betting operators are flooding the airwaves to push their products.
Caesars told investors in August it will spend more than $1 billion over the next two years nationally to promote its Caesars Sportsbook, including ads featuring Smoove as Caesar. The comedian grew a following through the TV show “Curb Your Enthusiasm.” BetMGM was one of the first sports betting operators with a national advertising presence through Foxx, an Academy Award-winning actor, as the “King of Sportsbooks.”
Meanwhile, retired NBA superstar O’Neal is a brand ambassador for WynnBet and appeared in an online television ad for the product that starred Oscar winner Ben Affleck, who also directed the spot.
Station Casinos has been running an advertising campaign on Las Vegas airwaves for its STN Sports app featuring Cutshall, an Instagram comedian.
Other items of interest:
DraftKings isn’t licensed in Nevada, but that could happen through the sports betting operator’s pending acquisition of Golden Nugget Online Gaming. For now, the Boston-based company is establishing a significant presence in Southern Nevada. DraftKings announced Monday it is taking 90,000-square-feet of office space inside the UnCommons complex in southwest Las Vegas to create a “technology hub” that will employ more than 1,000 workers.
The space will be the company’s second largest behind its corporate headquarters in Boston. DraftKings North America President Matt Kalish said the Las Vegas expansion “exemplifies'' the company’s “investment in its employees and the future of the company, as well as the local community.” The location is expected to open in early 2022.
UnCommons is located just south of the 215 Beltway off Durango Avenue. DraftKings said its Las Vegas presence has grown 400 percent since its first office opening in January 2020 at Town Square complex at the south end of Las Vegas Boulevard.
Bally’s Corp., which is awaiting regulatory approval on its purchase of Tropicana Las Vegas operations, has closed its $2.8 billion acquisition of Gamesys Group, a UK-based online gaming operator. Rhode Island-based Bally’s also announced that it was changing out CEOs as part of the transaction. Former Gamesys CEO Lee Fenton is now Bally's CEO. Former Bally's CEO George Papanier will become president of Bally's land-based casino business, which includes 14 casinos in 10 states. Bally’s also owns MontBleu Casino Resort in South Lake Tahoe, which will be renamed Bally’s Tahoe. The company is buying the Strip casino in partnership with Gaming and Leisure Properties in a deal valued at $308 million.
Alan Feldman’s long career as a gaming industry spokesman and his interest in responsible gaming were honored this week at the Global Gaming Expo. The Association of Gaming Equipment Manufacturers said Feldman was the winner of the 2021 Peter Mead Memorial Award Honoring Excellence in Gaming Media & Communications.
Feldman, 62, was the longtime corporate spokesman for Mirage Resorts and MGM Resorts International. In addition to overseeing the communications strategies for the openings of numerous Strip resorts, he was called upon as a gaming industry spokesman during numerous crises, including labor and customer issues, economic downturns and the effects of 9/11 and the Las Vegas mass shooting on Oct. 1, 2017.
Feldman serves as chairman of the International Center for Responsible Gaming and as a distinguished fellow in responsible gaming for the UNLV International Gaming Institute. AGEM also named electronic gaming machine salesman Sebastian Salat as the recipient of the 2021 Jens Halle Memorial Award Honoring Excellence in Commercial Gaming Professionalism.
Casinos in Macau reported the year’s second-lowest gaming revenue month during September, according to Macau’s Gaming Inspection and Coordination Bureau. The $764 million in gaming revenue represented a 73 percent decline compared to pre-pandemic September 2019. New COVID-19 cases in Macau led to increased visitation restrictions from Mainland China into the Special Administrative Region, which drove down the monthly results for the six gaming license holders, including Las Vegas Sands, Wynn Resorts and MGM Resorts International.
The restriction remained in place as of last Friday, the start of Golden Week, one of Macau’s most lucrative holidays. Stifel Financial gaming analyst Steven Wieczynski told investors not to expect much from Golden Week. “We believe investors just have to write off 2021 and start to focus on 2022. With additional virus lockdowns potentially in play, we believe any material recovery is now a 2022 story,” Wieczynski said in a research note.
Through the first nine months of 2021, Macau gaming revenues are down 69 percent compared to 2019 when the market reported $36.6 billion in gaming revenue. Macau collected $7.56 billion in gaming revenue during pandemic-ravaged 2020, its lowest single-year total since 2006.
Nevada’s gaming industry is “missing a significant opportunity for growth” amid reluctance to legalize online casino gaming, the CEO of MGM Resorts International said Sunday.
Bill Hornbuckle, who has headed up the state’s largest casino operator since March 2020 and has been with the company since 1998, said he recognizes “there’s a whole contingent of folks who own a lot of brick and mortar (casinos) in this state” that don’t favor legalizing internet casino gaming.
“If you look at what the opportunity could be, I look forward to just talking more about all of it,” Hornbuckle said during a panel discussion at IndyFest, The Nevada Independent’s annual conference centered on political and policy issues.
“It could be significant not only for the state, but for the industry and nationally, and potentially even on a global basis,” Hornbuckle said.
MGM Resorts, through its BetMGM online gaming platform for sports betting and casino gaming, operates online casinos in the five states where the activity is legal — New Jersey, Michigan, Pennsylvania, Delaware and West Virginia.
Hornbuckle said MGM Resorts expects to take in “a billion dollars in net gaming revenue next year” through the company’s sports betting and Internet gaming platform.
“It has not taken from our brick-and-mortar business,” Hornbuckle said.
Nevada legalized Internet poker in 2013, but there is just one active site — operated by Caesars Entertainment and based on the World Series of Poker.
In August, a contingent of large and small gaming operators led by Station Casinos voiced opposition to expanding the state’s online gaming regulations, saying any proposed changes should be explored by the governor’s Gaming Policy Committee and ultimately approved by state lawmakers.
The Nevada Gaming Control Board postponed a planned workshop hearing in May to discuss potential regulation changes allowing the state to offer full online casino gaming. Regulators said they decided to wait until after the legislature adjourned in June before holding the workshop. It hasn’t been rescheduled.
Hornbuckle believes online casino expansion in Nevada is necessary because there is “too much (market) saturation” for traditional Las Vegas Strip brick and mortar casinos. He said the $4.3 billion Resorts World Las Vegas, which opened at the end of June, and the unfinished Fontainebleau project, both have “significant infrastructure pieces” already in place.
“The opportunity to build a new casino, a new brick and mortar casino, at any scale, the economics are upside down,” Hornbuckle said. “This has been the capital of the gaming universe for decades, and we are losing. We're not going to see a new brick and mortar casino here for a long, long time.”
The company’s BetMGM business is headquartered in New Jersey and currently employs 700 people. Hornbuckle expects that number to grow to 1,000 in the next six months. He said there are no plans to bring the headquarters to Las Vegas.
He also suggested there are avenues to expand online gaming in Nevada in ways that protect the locals casino market.
“We’re not interested in my mother sitting on her couch in Henderson, gaming,” Hornbuckle said. “That’s not what we're after. We're after a global business and we are going to miss this opportunity if we don't quickly get on board.”
Hornbuckle also expressed support for allowing remote registration for customers wanting to sign up for sports wagering. He called the current system that requires a customer to register in person at a casino “arcane.” Nevada and Illinois are the only states out of 17 with mobile sports wagering that require in-person registration.
“There's a way to protect our industry and still let it grow and do other things,” Hornbuckle said. “Hopefully, the Gaming Commission (will) get us to a different place. “The laws are in place. We need the regulators to put the appropriate regulation in place, to let us go forward. Along the way we can talk about local interests because I get it, it's real.”
American Gaming Association CEO Bill Miller, who also took part in the panel discussion, agreed that in-person registration for sports betting “is very backwards.”
In most states with both retail sportsbooks and online sports wagering, mobile accounts for upward of 80 percent to 90 percent of all wagers. Tennessee, Miller said, is 100 percent mobile sports wagering and does not offer a retail component.
In Nevada more than 69 percent of all sports wagers were placed on mobile apps during August.
“The old way of thinking was the only way we are able to gain customers is to get them on the property,” Miller said. “The reality is you have to create a larger pie which includes different things off property. The brand brings them to property.”
Online casino revenue spikes nationally
Miller said the gaming industry’s nationwide casino shutdown because of COVID-19 for parts of last year led to increased activity on legal internet casino websites, particularly in Pennsylvania and New Jersey. The revenue spike in those states, he said, did not subside as casinos reopened.
According to nationwide revenue figures compiled by the AGA, the five states with online casinos produced nearly $2 billion in revenue in the first seven months of 2021, which has already surpassed 2020’s combined revenues of $1.55 billion.
Meanwhile, commercial casinos in many states are reporting gaming revenue figures near or above pre-pandemic totals from 2019.
Miller said traditional casino operators, who “believed that mobility would kill brick and mortar,” now “recognize that was not the case and that online gaming and traditional casinos “could be complimentary.”
Still, online gaming is just 5 percent of the commercial casino industry’s revenue total.
“It's still small, as it relates to the big pie, nationally, but it is a growing segment with pretty strong margins,” Miller said.
He expects other states – there are 25 states with commercial casinos – to consider Internet casino expansion at some point.
This week, host Joey Lovato interviews Tennille Pereira and Dr. Robert Fielden, two members of the 1 October Memorial Committee, about plans to build a permanent memorial for victims of the 2017 Route 91 Music Festival shooting. Then, co-host and reporter Jacob Solis sits down with Nevada State College President Dr. DeRionne Pollard for a wide-ranging discussion on higher education, budget issues and vaccine mandates for both students and faculty. At the end of the show, Joey is joined by gaming reporter Howard Stutz for the second part of an interview on the long dispute between the Culinary Union and Station Casinos.
0:55 - 1 October memorial
12:00 - Q&A with Nevada State College president
20:30 - The battle between unions and casinos Part 2
Mask mandates to enter Nevada’s casinos, showrooms and other entertainment venues weren’t a detriment to the state’s gaming industry.
Casinos rocketed to their sixth-straight $1 billion gaming revenue month in August and put Nevada on pace to crack the $12 billion annual revenue figure casinos statewide have reached just three times, the last being in 2019.
Even the Las Vegas Strip, which has trailed the state percentage totals for much of 2021, is now just less than 1 percent behind its 2019 figure, thanks to a second-straight month in which gaming revenues were 20 percent above 2019 totals.
“The result was above our estimate,” Deutsche Bank gaming analyst Carlo Santarelli told investors in a research note.
The Gaming Control Board said Thursday gaming revenues statewide topped $1.165 billion during August, a 22.3 percent increase over pre-pandemic August 2019. Analysts are not using comparisons to 2020 after COVID-19 caused a 78-day shutdown of gaming in Nevada and operating restrictions disrupted the gaming industry through much of the year.
The $1 billion per month streak, which began in March, is the state’s second longest in 14 years. Nevada casinos collected $1 billion or more in gaming revenues for eight straight months between November 2006 and May 2007.
The August totals followed a July that brought Nevada’s largest single-month gaming total of all time — $1.36 billion.
On the Strip, casinos recorded nearly $625.7 million in gaming revenue, which trailed July’s single-month record of $793.7 million. Downtown Las Vegas casinos saw nearly $64.2 million in gaming revenues during August, and the area is up 23.2 percent for the calendar year compared to 2019.
Resorts World Las Vegas on the Strip and Circa in downtown Las Vegas were not open in 2019.
Wells Fargo gaming analyst Daniel Politzer said the Strip’s good fortune carried into the Las Vegas locals market, which also gained some “calendar benefit” with August beginning on a Sunday. That allowed slot machine revenues from many casino operators from the last day of July to be counted in the August totals.
Gaming revenues from the neighborhood casino areas in unincorporated Clark County and Henderson are trending ahead of 2019 overall totals.
“We view these results as strong and supportive of our positive view on the fundamentals on the Las Vegas Strip and Las Vegas Locals gaming markets,” Politzer wrote in a research note.
Macquarie Securities gaming analyst Chad Beynon told investors he continues to believe that Strip gaming numbers will continue to trend above 2019 levels. He cited his investor meeting last month with MGM Resorts International Chief Financial Officer Jonathan Halkyard, who said increased group business would provide the market an additional boost.
“We still support our view that Las Vegas Strip revenues can return to (their) prior peak in 2022, benefitting from non-gaming growth,” Beynon said, citing the openings of Allegiant Stadium, new convention space at the Caesars Forum Conference Center and an expansion of meeting space at Wynn Las Vegas.
Gaming Control Board Senior Economic Analyst Michael Lawton credited several special events during August for the gaming figures.
The United States played Mexico in the 2021 CONACAF Gold Cup final on Aug. 1 at Allegiant Stadium, and two Cirque Du Soleil shows returned to the Las Vegas Strip – Michael Jackson One at Mandalay Bay on Aug. 19 and The Beatles Love show at The Mirage on Aug. 26. Manny Pacquiao fought Yordenis Ugás in a welterweight boxing match at T-Mobile Arena on Aug. 21, and rock group Guns N’ Roses performed at Allegiant Stadium on Aug. 27.
“Strong demand across markets, federal stimulus, the continued rebound of leisure travel and the return of special events and entertainment continued to propel gaming past 2019 levels,” Lawton said.
Las Vegas visitation dips
The Las Vegas Convention and Visitors Authority (LVCVA) said visitation to Southern Nevada “receded” from the market’s pandemic-era peak in July because of a spike in COVID-19 cases caused by the Delta variant. Clark County was hit early and hard by the latest wave of the virus.
Visitation was just under 3 million for August, according to the LVCVA, a decline of 9.2 percent from July’s 3.3 million visitors and down 16.2 percent from nearly 3.6 million visitors in August 2019.
Still, hotel occupancy hit 72.9 percent for the month with weekend occupancy at 87.1 percent. August’s average daily hotel room rate of $140.32 was down nearly 8 percent from July; the LVCVA said the figure was the second highest monthly mark since the pandemic began in March 2020.
Northern Nevada issues
Lawton said the Caldor Fire, which shut down gaming in South Lake Tahoe over Labor Day weekend, slowed activity in both the North Lake Tahoe and South Lake Tahoe gaming markets toward the end of August. Highway 50 was closed on Aug. 22 because of the fire, which disrupted visitation from the Bay Area and Sacramento in the Tahoe region.
North Lake Tahoe gaming revenues were $2.5 million during the month, a decline of 6 percent compared to August 2019. South Lake Tahoe revenue of $23.7 million was a decline of less than 1 percent, driven primarily by the timing of slot machine revenue collections.
For the calendar year, North Lake Tahoe casino revenues are up 11.2 percent and South Lake Tahoe is up 2.9 percent compared to the first eight months of 2019.
Lawton suggested Washoe County may also have experienced some disruption at the end of August because of the residual smoke and highway’s shutdown. The market, which includes Reno and Sparks, produced $90.5 million in gaming revenue, an increase of just 4.3 percent from August 2019. Visitation in Northern Nevada fell 4.9 percent compared to July, which had one extra weekend.
Other statewide gaming highlights
Baccarat wagering during August didn’t have the impact the game had in July when revenue from the game increased more than 100 percent. Baccarat topped $93.1 million in August, 5.6 percent below the August 2019 total. Wagering on the game was $610.7 million, a decline of 7 percent compared to August 2019.
The state’s sportsbooks collected $14.3 million in revenue and took in more than $427 million in sports wagers during August. Both figures were double-digit declines compared to a year ago,an anomaly because the NBA Finals took place in August 2020 because of the pandemic.
Compared with August 2019, sportsbook revenues were down 23.4 percent and wagers were up 48.5 percent. Lawton said Nevada sportsbooks won just 3.35 percent of all wagers placed during the month.
Meanwhile, for the first eight months of 2021, sports betting revenues are up 57.4 percent and wagers have increased 36.7 percent compared to 2019.
Lawton said more than 69 percent of all Nevada sports wagers were placed on mobile apps in August.
Las Vegas airport traffic slows in August
McCarran International Airport saw more than 3.8 million passengers during August, down 8.3 percent from July. However, the airport’s international passenger total of 79,275 during the month once again showed a steady increase since the pandemic halted direct flights to and from 11 countries.
The passenger count was 14.1 percent below the pre-pandemic 4.4 million passengers in August 2019. For the first eight months of 2021, McCarran has seen almost 23.2 million passengers, 30.1 percent below the same time period of 2019.
The international total, a 76.4 percent drop compared to August 2019, included flights from just Mexico and Canada, but included nearly 15,000 more international travelers compared with July. McCarran saw more than 3.8 million international travelers in 2019, an average of more 316,000 passengers per month.
Analysts have pointed to the lack of direct international visitors into Las Vegas, which has been hampered because of pandemic related travel restrictions, as a missing component to visitation and gaming totals.
A week ago, the White House announced opened travel to the U.S. for all vaccinated foreign nationals starting in early November, including those currently affected by the U.S. travel ban.
Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.
If a colleague or associate emailed this newsletter to you, please click here to sign up and receive your own copy of Indy Gaming in your inbox. - Howard Stutz
Somewhere, Jim Murren is smiling.
In 2008, the then-CEO of MGM Mirage was scrambling to finance the remaining costs to build the massive CityCenter complex, which had a price tag of almost $9 billion. He approached Deutsche Bank with an idea to take the unfinished Cosmopolitan of Las Vegas off the financial institution’s hands. Deutsche Bank had acquired the debt-ridden property out of foreclosure.
MGM and joint venture partner Infinity World would assume control over the Cosmopolitan in exchange for ownership shares in CityCenter. Deutsche Bank would also provide the joint venture with a loan of $1.2 billion to complete CityCenter.
"I thought it was a clever idea," Murren said in a 2009 interview. "Nobody else did."
Deutsche Bank eventually opened the Cosmopolitan in 2010 at a cost of $3.9 billion. New York-based investment firm Blackstone paid $1.73 billion for the hotel-casino in 2014, spending another $500 million on property upgrades, renovating the 3,000 hotel rooms and suites and adding new restaurants and bars.
On Monday, Blackstone said it was selling the Cosmopolitan for $5.68 billion.
A partnership between Stonepeak Partners, Cherng Family Trust (founders of the Panda Restaurant Group that includes the Panda Express chain) and Blackstone’s real estate investment trust is paying $4.055 billion for the 8.7-acre Strip land parcel and the resort complex. MGM Resorts International is paying $1.625 billion to operate the Cosmopolitan and will pay annual rent of $200 million to the new landlords.
"The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio,” MGM Resorts International CEO Bill Hornbuckle said in a statement.
The transaction gives MGM Resorts control of gaming on the west side of the Strip, between Flamingo Road to the north and Russell Road to the south, covering eight resorts.
“While one could argue MGM has enough Las Vegas exposure and management has discussed potential regional expansion, we think the deal makes sense from a strategic perspective,” Truist Securities gaming analyst Barry Jonas said, citing the Cosmopolitan’s strong brand and location adjacent to Bellagio and the City Center complex.
Wells Fargo gaming analyst Daniel Politzer had a similar assessment. He said MGM Resorts’ adjacent properties made the company “the natural owner” for the Cosmopolitan.
“MGM Resorts was likely one of the few companies that could extract meaningful synergies that also had the capital to make the acquisition,” Politzer said.
MGM Resorts said in a statement The Cosmopolitan of Las Vegas generated revenues of $959 million and $316 million in cash flow in the 12 months that ended on Feb. 29, 2020 – all prior to the pandemic. The resort generated $234 million of net revenue and $92 million of cash flow in the quarter that ended June. 30.
Macquarie Securities gaming analyst Chad Beynon said Cosmopolitan is the perfect addition to MGM Resorts portfolio.
“Cosmopolitan carries a younger customer base, which will bode well with MGM’s omnichannel approach of cross-selling database members into its online betting platform,” Beynon said.
The deal won’t close until sometime in the first half of next year.
On Tuesday, MGM Resorts completed its $2.125 billion purchase of the 50 percent stake in the CityCenter complex owned by Infinity World – the investment arm of the United Arab Emirates. The casino operator and the Blackstone REIT closed the $3.89 billion sales and leaseback of the Aria Resort and Vdara non-gaming hotel within the 67-acre CityCenter complex. The Blackstone REIT already owns Bellagio and will be partners in MGM Grand Las Vegas and Mandalay Bay with VICI once the company’s $17.2 billion acquisition of rival REIT MGM Growth Partners is finalized.
Murren, who resigned as CEO of MGM Resorts in March 2020, said in the 2009 interview his idea was to make Cosmopolitan part of the second phase of CityCenter.
It took 13 years, but it appears Murren’s original idea is finally becoming a reality.
Rodio is the new CEO at Great Canadian Gaming, but is it a prelude to a Las Vegas return?
Former Caesars Entertainment CEO Tony Rodio is now managing Canada’s largest casino operator.
But could this new position be a short-term stint for the veteran gaming operator, whose 40-year career includes overseeing corporate raider Carl Icahn’s former casino holdings in Las Vegas and Atlantic City?
Private equity giant Apollo Global Management last week hired Rodio as CEO of Great Canadian Gaming, a Toronto-based company that the firm took private in a $2.48 billion buyout. Great Canadian has 25 casinos in four provinces, including flagship resorts near Toronto and Vancouver that feature hotels and concert venues.
Apollo, which once owned Caesars Entertainment, is in the process of buying the operating company for the Las Vegas Strip operations of Las Vegas Sands – Venetian, Palazzo and Sands Expo and Convention Center – for $2.25 billion. Real estate investment trust VICI Properties is buying the real estate and buildings for $4 billion and will become Apollo’s landlord.
Venetian Operating Co. CEO George Markantonis has held the position since March 2015 and is expected to continue in that role once the transaction closes, possibly by the end of the year.
But could Rodio be part of Apollo’s longer term plans?
Brendan Bussmann, a partner in Las Vegas-based gaming industry consultant Global Market Advisors, believes it’s a possibility.
“With Apollo’s latest acquisitions in the gaming sector, this may not be the last time we have seen Mr. Rodio,” Bussmann said. “While the Venetian has an experienced property management team that will likely stay through the transition from Las Vegas Sands to Apollo, the long-term play may be to bring him back into the fold into Las Vegas because of his extensive experience in the market.”
Apollo Partner Alex van Hoek, who is now chairman of Great Canadian, said landing Rodio showed the new ownership’s commitment to improving operations north of the border.
"Tony is one of the industry's most accomplished executives, and we are confident that his experience leading businesses through transformative periods of innovation and growth will help to take Great Canadian to new heights," van Hoek said.
Rodio spent more than a year as Caesars’ CEO after Icahn became the casino company’s largest shareholder in early 2019 with a 20 percent stake acquired through a series of stock transactions. He was given several seats on the Caesars board and the control over hiring a new CEO. Icahn was pushing to sell or merge Caesars with another casino operator.
Two months after Rodio was named CEO, Caesars announced a $17.3 billion merger with Reno-based regional casino operator Eldorado Resorts. With Eldorado as the acquiring partner and CEO Tom Reeg waiting in the wings, Rodio was entrusted with operating Caesars’ properties during the regulatory review.
But COVID-19 stretched the process out until the sale was finalized in July 2020. During those 13 months, Rodio was credited with keeping the operations on track in 16 states and reopening casinos across the country under health and safety protocols after their closures due to the pandemic.
After the sale closed, Rodio stayed on with Caesars briefly as a consultant, overseeing the company’s expansion into Danville, Virginia, which included a successful ballot referendum last November.
For now, Rodio is focused on relaunching Great Canadian, which experienced COVID-19-related closures.
"Great Canadian is an incredible gaming and entertainment franchise,” Rodio said in a statement. "Together with Apollo and my management team, we see tremendous opportunity to build on Great Canadian's leading market position, improving the guest experience and entering new channels for growth."
As a loyal lieutenant for Ichan, Rodio led the billionaire’s seven-casino Tropicana Entertainment that was sold in 2018 for $1.8 billion to Eldorado and real estate investment trust Gaming and Leisure Properties. He spent more than three decades in Atlantic City, helping to lead the Boardwalk gaming community’s growth and a subsequent resurgence after new competition sent the market into a prolonged nosedive.
Rodio spent seven months in between Tropicana and Caesars as CEO of Las Vegas-based regional casino operator Affinity Gaming.
Bussmann said Apollo may have grabbed Rodio with its Las Vegas expansion in mind.
“Mr. Rodio has been through some challenging transitions only to leave the companies in a better position than when he started,” Bussmann said. “As Apollo continues to invest in gaming, it would not surprise me if they put to use his expertise in the other investments they have in the gaming sector."
Veteran gaming executive Cynthia Kiser Murphey to oversee the off-Strip Palms
The $650 million purchase of the Palms Resort-Casino by Southern California’s San Manuel Indian tribe is awaiting regulatory approval, but the property has a general manager.
Long-time Strip gaming executive Cynthia Kiser Murphey will oversee the 700-room resort, which has been closed for more than 18 months. San Manuel is buying the property from Red Rock Resorts, which closed the casino at the outset of the pandemic. It was one of four casinos not reopened by the company when gaming resumed after a 78-day shutdown.
San Manuel will become the first tribe to own and operate a casino-resort in the Strip corridor. Connecticut's Mohegan Gaming, the business arm of the Mohegan Indian Tribe, manages the casino space inside Virgin Hotels Las Vegas.
“It was important to our board that we find a leader for the Palms who shares our values, personifies our commitment to diversity, and exhibits a leadership style that puts people first,” San Manuel Gaming and Hospitality Authority Chairperson Latisha Casas said in a statement. “Upon meeting Cynthia, it was clear that she has all three and more.”
Kiser Murphey was president of MGM Resorts International’s New York-New York Hotel-Casino on the Strip for more than 10 years and held several leadership positions with the corporation from 1992 to 2008, including senior vice president of human resources.
Since 2020, Kiser Murphey has been CEO of a large benefits fund.
Through a spokeswoman, Kiser Murphey declined to comment beyond the statement released by the tribe.
“The Palms is an iconic property with a rich connection to the community,” she said. “I look forward to strengthening those ties while working with the team to create a wholly unique experience for team members and customers that reflects the San Manuel Gaming and Hospitality Authority’s values and culture.”
San Manuel announced the acquisition of the Palms in early May and hopes to close the transaction by the end of the year. Prior to the sale, the hotel-casino had multiple casual and upscale dining options, meeting and convention space, a 2,500-seat theater, and a pool and spa. The Palms Place condominium tower is attached to the resort.
The tribe has not discussed the status of the restaurants, a few of which were operated by celebrity chefs. Also, the Palms workforce was laid off after the closure by Red Rock Resorts’ operating subsidiary, Station Casinos.
Much of the cost overruns were because of exorbitant spending on Kaos, a flashy 73,000-square-foot indoor-outdoor nightclub and day club attached to the pool area. The club closed seven months after opening in 2019 and the company reported $34 million in one-time charges during quarterly earnings, which included buyouts of contracts covering high-priced celebrity performers and DJs.
The property was also loaded with high-priced artwork, including several pieces created by Damian Hirst.
Other items of interest:
Scientific Games is set to sell its OpenBet sports betting platform to Endeavor Group Holdings, a global sports and entertainment company that owns the Las Vegas-based UFC, for $1.2 billion. Scientific Games announced in June it was looking to sell its sports betting and lottery divisions to help pay down long-term debt of $9.2 billion.
The company will receive $1 billion in cash and $200 million in stock. The transaction is expected to close by June 2022. OpenBet offers sports content, technology and services to casino and sports betting operators. It is used in 24 sportsbooks in 12 states.
“The transaction is a significant milestone towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility,” said Scientific Games CEO Barry Cottle.
The American Gaming Associationreleased new research last week showing Americans increasingly view gaming as a responsible economic driver and a community partner. The study was part of the week-long Responsible Gaming Education Week, which is sponsored by the AGA.
According to the study, which came from two online polls, two-thirds of adults view the industry as a positive economic contributor that provides high-quality jobs, while 73 percent support legalized sports betting in their state.
The study found the percentage of Americans who believe the gaming industry is committed to responsible gaming activities has increased by nearly 40 percent since 2018. Nearly 80 percent of gamblers are aware of industry-provided responsible gaming resources — pointing to specific measures like deposit limits, casino employee training, and time limits as most effective.
Cait DeBaun, theAGA’s vice president of strategic communications and responsibility said gaming companies and casino operators promoted the industry’s responsible gaming commitment on social media, through employee training, and through news releases and announcements. The AGA said it’s Have A Game Plan. Bet Responsibly. campaign picked up seven new partners during the week, bringing the total to 19 since the campaign was launched a year ago.
“We are making steady progress in our mission to unite the broader sports betting industry around a strong, consistent, and fan-focused responsible gaming platform,” DeBaun said.
UNLV’s International Gaming Institute is receiving a founding grant from the Entain Foundation for a betting and gaming research initiative concerning responsible gaming. The announcement was made as part of Responsible Gaming Education Week. UNLV said the initiative will allow the school to take a multidisciplinary approach and develop strategies and establish evidence-based best practices that translate research insights into operational programs.
The initiative will focus on all gaming, including sports betting, online gaming and esports wagering. The study will cross areas related to problem gambling, responsible gaming, public health, education, economic impacts, research and technology. The Entain Foundation is funded by United Kingdom betting giant Entain Plc., which is the 50-50 joint venture partner with MGM Resorts International in sports betting operator BetMGM.
“For the first time in this field, this initiative brings vital academic research in the U.S. to the public domain in dozens of applied settings,” Bo Bernhard, executive director of the Gaming Institute, said in a statement. “We are actively moving beyond the traditional ‘research center,’ since this project will translate scientific research into actionable, operational programs that can be implemented in real venues by operators, regulators, legislators, clinicians, and other stakeholders.”
Speaking of Entain Plc, news last week that DraftKings is offering $20 billion to purchase the company led to speculation that MGM Resorts would acquire the 50 percent of BetMGM that is owned by Entain. Wells Fargo gaming analyst Daniel Politzer put a price tag on what the deal would cost – roughly $5.04 billion.
Politzer told investors the DraftKings offer presents an opportunity for MGM Resorts to remove any overhanging issues on the company’s stock price. Earlier this year, MGM Resorts offered to buy Entain for $11 billion, but the deal was rejected by the company as too low.
“For DraftKings, we think the transaction makes both strategic sense … and financial sense,” Politzer said.
The National Hockey League’s jersey advertising program won’t kick in until the 2022-23 season. But Caesars Sportsbook isn’t waiting around. The company signed a multi-year partnership with the Washington Capitals to place its Caesars Sportsbook logo on the team’s home and third jerseys worn for games played at Capital One Arena.
The 3-inch by 3.5-inch patch is positioned on the upper right chest area of the jersey. The deal makes sense since Caesars already operates a sportsbook at the Washington D.C. arena that opened last spring. The agreement is the first since the NHL announced the program and, obviously, the first deal involving legal sports betting.
“We love blazing trails, and we are always looking for innovative opportunities that drive engagement and storytelling for fans,” Chris Holdren, co-president of Caesars Digital, said in a statement. The agreement also includes a Caesars hospitality space and VIP seating at Capital One Arena.
The Reno Sparks Convention and Visitors Authorityapproved a $57,776 bonus for CEO Charles Harris last week, but the decision wasn’t unanimous. Reno Mayor Hillary Schieve and Rick Murdock, vice president of government affairs for Caesars Entertainment’s three Reno casino-resorts known collectively as The ROW, voted against the decision.
Schieve mentioned Harris' less than a year tenure at the RSCVA as one reason for her no vote, according to The Nevada Independent reporter Tabitha Mueller, who live-tweeted the meeting. Schieve also said she wanted to “check the temperature” of RSCVA’s culture and talk with employees who took pay cuts during COVID-19.
The bonus represented 35 percent of Harris’ annual $290,000 salary. The move also followed a 3 percent increase for all RSCVA employees. As a comparison, Steve Hill, CEO of the Las Vegas Convention and Visitors Authority, will earn nearly $400,000 annually when his 4 percent raise takes effect this fall.