Archive Page 2

The Pac Man Returneth

The 1980s popular icon, Pac Man is coming to Las Vegas.  On display for the first time as a gambling device at G2E, Pac Man is bringing hope to the casino industry.  The industry needs a new generation of slot players and can possibly Pac Man help.  It might bring in gamblers who will respond to the skill-based games of their youth in a way they do not to conventional slot machines. Pac Man was a national sensation when it hit gaming arcades in the 1980s.  Its appeal went across age, gender and social-economic barriers.  At five or six, my niece loved playing Pac Man; she was not very good at it and I was no better.  We played in a small arcade in a nearby grocery store.  Each game cost a quarter, but we played so poorly that my bankroll of four quarters was gone very quickly.  Win or lose, my niece always wanted to go back again.  Pac Man was part of the first wave of arcade video games and by 1983 there were 25,000 arcades generating $7.7 billion in annual revenues.  That year, video gaming in arcades was the most popular form of entertainment in the country ahead of music which generated $4 billion and films $3 billion.

The video games that came afterwards were played primarily at home on consoles, not in an arcade.  The home computer games lead to a crash of the arcade video gaming industry; the collapse began the year after that seven billion dollar peak.  In the time since, the technology has improved video games beyond recognition and with the improvements the player base and attendant revenues have grown dramatically. The top selling games of all times are Tetris, 495 million units, Minecraft 107 million, Wii Sports, 82 million and Grand Theft Auto V, 70 million units.  Today’s video games can still be played on a home console, but far more popular ways to play are on a computer, mobile phone or internet connected device.  Video gaming has come a long way from Pac Man, but for casinos it might just be back to future with Pac Man.

Slot machines with random number generators provide the lion’s share of the revenue in all but the most elite of casino resorts.  The player base is aging, but skill based games could bring in a replacement base.  Slot machines in which the player’s skill plays a role along with the randomly generated results of traditional games are now legal in some states. However, thus far those games that have been trialed have been underwhelming.  Last year at G2E, I walked the floor for hours looking at the skill-based games that were being touted as the savior of casino gaming.  I did not find much that was exciting or seemed to have much chance of commercial success.  Most of the games I saw were reworkings of skill games that had been popular in other eras.  I could not see much that was interesting or entertaining in them, nor anything that was going to attract a new generation of gamblers to casinos.  And that of course is the core issue – a new generation of gamblers.  The need to attract new players will only increase as baby boomers drop out of sight.  There may still be one thin generation behind the boomers that is willing to play the slot machines of today, but after they pass on, casinos will be faced with a serious challenge.

 Will Pac Man do the trick and bring in that next generation of gamblers?  I am not the one to say; the people who liked to play Pac Man 30 years ago will be the ones to make that determination. The challenge for the game designers will be the same as it is for the creators of game show and board game slot machines, creating games that deliver on the promise of the theme.  Pac Man and every other slot machine must first attract the eye of the player.  And then, and this is where the rubber hits the road, it has to deliver an emotional experience that replicates the original game.  To be successful, a 21st century Pac Man has to recreate the feelings in the player of the 20th century version.  A thing much easier said than done.  Everything has changed since Pac Man came out, including the players. My niece is approaching 40 today.  There are very few things that she loved to do when she was a little girl that she still wants to do today; and that includes playing Pac Man.

It is certain that this year the designers and manufacturers of games will have learned from last year’s game experience and will be bringing better offerings to G2E 2017.  Still, the solution to the new player dilemma may not be found in this year’s games either; it may take more than one or two years to find the magic key to hearts of a new group of gamblers.  However, I believe as naively as I did last year that skill based games will be fundamental in that process.  It is a process; the slot machines we see today are very different from those when I began working in a casino.  The constantly evolving technology has driven changes in slot machines over the years.  The evolution of technology and customer preferences will drive the development of skill based games also.  Pac Man may not be the one that changes the game, but it will make its contribution, if only as a lesson in what does work.

Advertisements

Fall Is Here and G2E 2017 Is Just Around the Corner

For young people just starting out in gaming, eager to learn all they can about casinos and casino gaming and for experienced executives who want to catch up with friends and see the latest slot machines, Las Vegas is the place to be in the fall.  Every autumn industry leaders and practitioners convene at the Global Gaming Expo (G2E).  At G2E, the latest technologies and products are on display and the issues currently affecting gaming are discussed and debated.  This year’s event will be held on October 3rd through October 5th.

G2E is descended from a noble line of gaming conferences.  Annual gatherings of casino executives, regulators, accountants and attorneys began in 1979 with the Laventhol & Horwath Annual Gaming Conference.  L & W was a national accounting firm with several casino clients.  The casino industry was still in an immature state and the firm felt it would benefit from exposure to leading experts in the fields of finance, accounting, management and law.  Those conferences were followed in 1986 by the World Gaming Congress and Expo.  Since 2001, G2E has been the gathering place of gaming, replacing the other two, while building on their legacy.  The publication Exhibitor, named G2E one of the top and fastest growing trade shows in the country.  In 2016 over 25,000 people attended, there were 600 exhibitors and 100 conference sessions.

G2E is a far cry from its ancient ancestor, Laventhol and Horwath. In 1980, L & H was proud to have attracted 200 people. There were no slot machines available or products on display at those meetings, no lunches, dinners or late night parties.  But there was always a very distinguished list of speakers bringing their unique perspective and knowledge to the attendees. For me as a newly minted casino executive those conferences were heady times indeed. I was privileged to see and hear the leaders in the casino industry and experts in law, accounting, finance and regulation.  The four Laventhol & Horwath conference I attended were essential to my understanding of the industry and the issues that affected our business.  They exposed me to people and ideas from a world much larger than the one I inhabited in Reno, Nevada, although at the time Reno was the third largest casino market in the country after Las Vegas and Atlantic City.

The addition of the exposition and trade show made a major change in those annual gatherings.  The number of people who attended began to increase significantly year by year, going from a few hundred to many thousands of interested people.  At the time of the addition of a trade show to the conference, I worked at the Comstock Hotel and Casino in Reno.  The Comstock was small potatoes compared to most casino companies, but still we took a team of eight to ten people to the conferences where the sessions were divided up among team members to avoid missing something important.  The conferences were in the morning. In the afternoons the team walked the floor of the exhibit, eagerly looking at all the slot machines, new table game ideas and everything else on display.  Each person carried a bag filled with brochures, just as our heads were being filled with new ideas.

The educational sessions and the displays were only part of the reason we were in Las Vegas.  From the time the show closed at five in the afternoon until we were too exhausted to walk another step we went from casino to casino and toured each property.  We tried to soak up everything in Las Vegas in three or four days.  Las Vegas has always led the gaming industry, the newest and best ideas were there for us to study and study them we did.  When we got back home, we tried to digest everything we had seen and put as many of those new ideas and products as we could to good use on our floor. In a strategic sense those trips were more important in the planning process than the week spent every year doing an annual budget.  Budgeting was always a struggle and boring, but those trips to Vegas were exciting.  No one wanted to do budgets, but everyone wanted to go to Las Vegas.

In 1990, I left the Comstock and began consulting, but I did not stop going to the annual show each year.  My role changed several times in the next two decades.  I was a vendor trying to sell the Nevada Gaming Almanac, a consultant to several slot machine companies and for the last few years, I have been an observer writing about my experiences for CDC.  This is the fifteenth year that CDC has distributed my Adams Daily Report.  And for most of those years I have been at G2E with the CDC team.  This year I am staying in Reno and acting as support for the 16-member CDC team which will be producing a daily news and commentary publication from the floor of G2E.

I will miss the excitement, the new technology and catching up with old friends, but will have enough to do in Reno to keep me busy.  G2E and its predecessors have been the most important opportunities I have had in my career to study the gaming industry.  I have heard all of the major figures in gaming speak over the years and learned far more from that experience than I could ever have learned staying home.  The slot machines on the expo floor have been just as influential for me; before those shows the slot machine companies held small private showings that were more about food and drink than slot machines. But today a prospective slot machine buyer can walk from booth to booth comparing products and meet other operators and discuss individual experiences with particular games or companies.  Just as it was for me in the 1980s, Las Vegas and G2E is the place to be for executives catching up on the developments in this very dynamic industry.

Carl Raked in the Pot in Icahn Poker!

Carl Icahn just sold the unfinished Fontainebleau Las Vegas for $600 million making a tidy profit of $450 million on the deal. The $2.6 billion, but still unfinished Fontainebleau has been standing half finished since declaring bankruptcy in 2009; Icahn bid on the property at the time and took possession in 2010.  As he had done with TWA in the 1980s, the first thing he did was sell off whatever he could of the assets; in the TWA deal there was a lot to sell.  With the Fontainebleau there were no airplanes or prime routes, just some furniture to sell.  But whatever there was to sell, Icahn sold it, likely netting about $5 million.  For the big payoff, he had to wait seven years. The final check was probably worth the wait.

The Fontainebleau was not Icahn’s first bet on Las Vegas casinos. In 2008 he sold the Stratosphere, Arizona Charlie’s Boulder, Arizona Charlie’s Decatur, and Aquarius Casino Resort for nearly a billion dollars more than he paid for the properties. Icahn had begun investing in the Stratosphere in 1997 when he bought some of the property’s debt.  That is Icahn’s specialty, buying the debt of distressed properties and holding it until conditions change before unloading it.  He plays an extremely high-stakes game, making large wagers on underperforming properties and then as the song goes, Icahn knows when to hold’em and when to fold’em.  The game takes nerve and a large bankroll and Icahn has both.  Forbes terms Carl Icahn an investor and says he has $15.7 billion making him number 26 on the list of the richest people in the country.

To say that Icahn is an investor is to undervalue the amount of risk he takes; in truth Carl Icahn is more of a gambler than anything else.  He routinely wagers 100-300 million dollars on assets he may be forced to hold for many years.  Patience is the key to Icahn Poker; both the Fontainebleau and Stratosphere investment took nearly ten years to come to fruition.  In the case of the Stratosphere the casinos were operating under Icahn’s management company and thus did produce cash during the holding time, but the Fontainebleau was just an unfinished dream with no cash flow.  It takes nerve and faith in one’s judgment to make those bets.

As he has done in Las Vegas, Icahn has made a couple of “casino plays” in Atlantic City. In the 1990s he bought and sold Trump debt several times, making a tidy profit in the process.  In 2010, he bought the Tropicana Atlantic City Resort, adding it to the other Tropicana Entertainment Inc. casinos he had recently purchased.  Seven years later, Icahn’s operating company still runs the Tropicana in Atlantic City; although, he has sold some of the other assets of Tropicana Entertainment in other states.  It may be years before he can find a way to monetize the Tropicana as Atlantic City is a difficult market- so difficult that even Icahn finds Atlantic City a hard place to make the big killings for which he is famous.  In fact the city is the home of his most famous failure.  The Trump Taj Mahal was one of those bets he lost and he says it cost him $350 million. In the end, he ran out of patience and folded. In October 2016, the Taj Mahal bid adieu to its last customer.  Icahn did recoup a portion of his investment when Hard Rock International bought it for an undisclosed sum; analysts’ estimates put the price at $50 million.

 

Carl Icahn has frequently been the subject of criticism for his tactics because he is always an outsider.  For his gaming operations, he hires casino-people to run the casinos, but Icahn does not really understand the industry and he does not seem to care.  Over the years, I have been guilty of some of that criticism of Icahn and other outsiders like him trying to stake a place in the gaming industry.  In my mind and the minds of other casino people like me, the outsiders were doomed to fail; they just didn’t understand our business.  In the 1980s, there were several rich Japanese and a California farmer bent on buying casinos on the Las Vegas Strip.  They had lots of money, but no knowledge of the casino business.  They claimed it was totally unnecessary, it was just business and any good business person could do it.  So we cheered when they failed.

However, there have been some outsiders who managed to do pretty well in the casino world; Kirk Kerkorian, Sheldon Adelson and Carl Icahn were all outsiders when they first came to town.  They had not worked their way up from a craps table, but that did not seem to hamper them.  They learned enough about gaming to build a fortune by owning, operating and selling casinos.  And in the case of those three, they were more than successful. They all turned out to be among the richest and most successful investors in the history of our industry.   Adelson is more than an investor; he has kept what he bought, improving and expanding it. Today Adelson is the richest casino guy in the world.  Kerkorian was more like Icahn than Adelson, except he put more effort into becoming an operator than Carl.  Casinos were never Kerkorian’s only interest and like Icahn, Kerkorian continued to invest in other industries until the end.

 

And that is the point of my little tale.  The most successful people in the casino industry are turning out to be savvy investors and businessmen rather than old time operators.  The days when a casino operator could build an empire from a single craps table or a bingo game as Bill Harrah did are gone.  There may be one major exception; Steve Wynn is a casino guy.  He has lots of talents, but he worked his way up from… Oh wait, Wynn worked his way up from another business with a really good real estate investment. He bought some vacant land on the Strip and sold it to Caesars for enough money to buy into the Golden Nugget.  The casino industry has matured; dealing the games may be a good foundation for managing a casino, but gaming experience by itself is not enough to operate at the highest level in the industry in the 21st century.  And it certainly isn’t enough for a seat in the high-stakes game of Icahn Poker.

We Need to Install Bollards Now!

Bollard is a 19th century word that is being re-purposed in the 21st century.  The word used to refer to a short, thick post on the deck of ship or a wharf.  But it is now being used to describe a steel post used to protect people from cars.  And bollards are likely to be next major adjustment to make in the war with terrorism.  In the latest round of attempts to limit the effects of acts of terrorism, Las Vegas is scurrying to have bollards installed along the Strip before the end of the year.  The bollards were in the works, but the project developed a sense of urgency after two recent events.  In the first incident, Heather Heyer was killed when a white supremacist drove into a group of demonstrators in Charlottesville, Virginia; and then in Barcelona, Spain 13 people were killed and dozens of others injured by terrorists ramming a car into a crowd.  Those incidents follow others in New York, London and France where terrorist cars have become the weapon of choice.   In fact, ISIS is directing would-be terrorists to use cars and knives instead of guns and bombs.  Each incident increases the odds that there will be another.   Every city is going to need something to protect innocent pedestrians.

A car attack has already happened in Las Vegas.  In December 2015, a woman used her car to kill one person and injure 36 more.  The police said it was an intentional act, but not an act of terrorism; to the dead, that is a distinction without a difference.  It also happened years ago in Reno.  On Thanksgiving Day in 1980, Priscilla Ford drove her Lincoln Continental onto the sidewalk killing 7 people and injuring 23.  She was not a terrorist either.  She might have been insane, but not enough to meet the legal standard.  Ford was convicted of murder and sentenced to death; she died 25 years later in prison of lung cancer.  As I said she was not a terrorist by the standards of her day or ours, but it would be hard to find the difference.  Ford professed to believe she had a special godlike status.  She was using her car to punish people for society’s crimes against her, but in her mind she was incapable of sin or murder.

The veil of righteousness is powerful.  Priscilla Ford thought it gave her the right to punish innocent people.  At her trial she testified that she believed she was the reincarnation of Jesus and therefore incapable of sin.  In Virginia, the 20-year old man from Ohio who drove his car into demonstrators was moved by political righteousness.  To him, the demonstrators were “left wing” radicals committing crimes against the true America.  And of course, all of those attacks in Europe were done by young men bent on bringing god’s vengeance on “unbelievers” and revenge for the Western attacks on Islam.  It does not seem to matter if you are Christ, a white supremacist or an agent of Allah, you have the right and sometimes the obligation to kill people.  And as Priscilla said when she asked how many people were dead, “the more that are dead the better it is.”

Neither political nor religious fanatics are prime casino customers.  Most of those righteous evil-doers probably do not even play the lottery.  But inadvertently casinos might be in their sights because casinos are bright lights that attract moths.  Especially on holidays casino and casino centers attract large crowds of people.  Las Vegas has 200 thousand tourists in town every weekend; on major holidays that number goes over 300 thousand.  At any one time thousands will be out strolling up and down the Strip.  All casino jurisdictions are going to need protection for their visitors, but Las Vegas is the most vulnerable.  It is difficult to imagine a place that presents an easier target than the Las Vegas Strip.  It is always filled with people and anything that happens in Vegas rather than staying in Vegas is immediately broadcast around the world.  The Strip should be leading the world in developing safeguards.

Since the attack on the Twin Towers in New York in 2001 our world has been increasingly shaped by terrorists.  Air travel will never be the same, but now the streets of every city are vulnerable and our sense of freedom of movement will be limited even more.  To make it worse, ISIS is a disembodied concept.  It no longer has land, an army or indeed even a recognized leader. But it has evolved into an un-organization; its free-floating operatives have learned to motivate the disadvantaged, disfranchised and angry youth of many different countries to take action on their own.  How do we fight back?  There is no organization to fight or leaders like Osama bin Laden to kill.   Instead the enemy is an ideology that takes vulnerable, exploitable people and shows them how to die as martyrs.  ISIS, al-Qaeda, the Taliban, Muslim Brotherhood, Boko Haram and all of the other terrorist organizations could disappear tomorrow and the danger would remain.  The internet and a few rogue preachers of hate are there to point the way to heaven thorough righteous action for those would-be martyrs.  It is the path out of the ugliness of poverty, discrimination and defeat into the arms of celestial virgins.  And once you change the weapons from guns and bombs which can be identified and tracked by the police to something as innocuous as a car, the dynamics have been completely altered.  Bollards will not end the threat, nor will they save everyone.  But for the moment, installing bollards is the best option available and we should begin installation as soon as possible.

Playing Chinese Croquet with the Red King

In its own way, doing business with China is like playing a game of croquet with the queen of hearts.  The rules are not quite clear and they are subject to change at a moment’s notice.  And if the queen is displeased, she cries “off with his head!”  This was the case recently when a former Communist Party trusted chief and loyal party leader, Wang Min, was sent to prison for life – which means as long as he lives.  He was convicted on hundreds of charges of bribery (amounting to $22 million), corruption, and negligence of duty.  He neglected his duty by committing serious election fraud including vote buying.  A year ago, Wang Min was still on the job as party leader in Liaoning and Jilin provinces.  But, his corrupt deeds were said to have taken place over a twelve year span of time between 2004 and 2016.  What changed to make Wang a criminal instead of a party faithful?  Apparently, the rules were altered while he was waiting his turn to play.

By now, the changes in direction in China are well known to anyone observing the casinos in Macau.  In 2013, Xi Jinping became the “Paramount Leader” of China; Chinese president, head of the Communist Party and chairman of the Central Military Commission and an ex-officio on the Politburo Stand Committee.  When Xi set out to consolidate his power, one of his first acts was a campaign to crack down on corruption which often resulted in potential challengers going to jail.  Some media reports have said that as many as 200 senior party officials bit the dust in the last four years.  When Xi changed rules in China, things in Macau did not stay the same.  Those corrupt officials seem to have been the backbone of VIP gambling revenue in Macau.  As soon as the crackdown started revenues in Macau began falling dramatically.

President Xi is in the process of putting all of his allies in positions of power to replace the corrupt officials whose allegiance was questionable.  The 19th National Congress of the Communist Party of China is coming up and observers think new rules will ultimately come out of the meetingExcept for Xi and his friends, no one knows what those new rules will be, but Macau can expect some changes also.

All of that is pretty much a rehash of old news, but coupled with more recent events it raises some questions.  The casino industry in Macau is an intriguing mixture of modern and feudal business practices.  There are billion-dollar palaces that cater to gamblers from Mainland China.  Every element in those casino-resorts is as updated and modern as possible.  But at the same time in a dark medieval manner, there are also gangs acting much as they did before the Communist takeover in 1997.  The triad-like criminal gangs loan money to unsuspecting gamblers and then coerce them into a costly repayment. Sometimes they find it necessary to imprison the gambler until his family repays his debt.  In July, one such gambler attempted suicide to escape his tormentors; each time he went to into a casino the gang sought to collect 30 percent of his winnings.

Between July 2016 and July 2017, there were 523 cases of kidnapping and 413 cases of loan sharking, a twenty percent increase over the previous year.  In the first week of August, eight more people were arrested for loan sharking.  The local press said they were part of a criminal gang from Jiangxi Province.  Two weeks before that incident, fifteen people were arrested on the same kidnapping/loan sharking charges; the officers on the case say the gangs simply recruit new members every time one of their operatives goes to jail.  If there have been that many arrests, there must have been many more times when a poor beleaguered gambler suffered and paid without ever being rescued by police.  Extortion appears to be big business in Macau, but the headquarters of the gangs are all in China.

That is what I find most confusing; President Xi has taken charge of China; he is reshaping the Chinese economy and as much of the economy of the rest of the world as he can.  At the same time, he is intent on wiping out corruption and crime from the Communist Party and Chinese business.  His campaign targets all levels of crime or what he calls both the “tigers” and the “fleas.”  Clearly, Xi has a grand plan for China and the Chinese people.  Where do those criminal gangs fit into Xi’s vision for China?

It makes me wonder about that game of croquet with the queen of hearts, or more accurately, the red king of China.   What are the rules of this game?  Are those gangs just smarter than the officials in China and Macau, or is there a reason they are allowed to ply their trade just outside the doors of the billion-dollar palaces of Macau, are they neither tigers nor fleas?

Remembering Wayne Williams: a Friend and Mentor

Wayne Williams was 89 years old when he died on August 2nd.   He was a member of the Tulalip Tribes of Washington and a very good person.  Wayne spent the majority of his life working for his tribe.  He was dedicated to tribal culture and history as his mother and grandparents had been.  I met Wayne in 1990 just after the National Indian Gaming Regulatory Act Passed.  At the time, he managed the Tulalip Bingo and was involved in the tribe’s efforts to take advantage of the opportunity to develop a casino. At the time, the bingo hall and a timber lease were Tulalip’s only had two sources of revenue.  I was introduced to Wayne and Tulalip by a mutual friend. They were looking for someone with casino expertise to help them and our friend recommended me.  The timing was perfect; I had just left the Comstock and was attempting to begin a career as a consultant.  Tulalip was my second client and my introduction into Indian gaming.

Wayne invited me to visit the tribe, see the bingo hall and discuss the possibilities of casino gambling on the tribe’s land near Everett, Washington.  My first trip lasted three days; Wayne showed me everything I asked to see and talked to me about Tulalip, its history and culture.  From the first day, I knew he was a very special person.  Our relationship lasted a few years, before the tribe outgrew my experience.  In 1992, the tribe built and opened the first compacted casino in Washington.  Twenty-some years later it opened a new and larger casino resort.  In 2001, the tribe created Quil Ceda Village under provisions of the Indian Tribal Governmental Tax Status Act of 1982.   The village is located on a 495 acre parcel of the Tulalip Indian Reservation and incorporates a wide variety of businesses including Wal-Mart, Home Depot, Cabela’s, Bob’s Burger and Brew, Olive Garden and the Tulalip Casino Resort.  The village came from the tribe’s experience and revenues from its casino.  Wayne and the other tribal leaders were always seeking to diversify their revenue streams as a way to protect the tribe’s heritage.

As long as I worked with Tulalip, Wayne was always my host, my guide and mentor.  He talked to me about Tulalip and its culture and showed me how to behave in that context.  He talked about the tribe’s treaty history, the historical and contemporary leadership and much, much more.  He was very proud of his heritage and particularly of his grandparents and his mother.  He used their lives to illustrate the challenges tribal members faced under the rule of the federal Bureau of Indian Affairs.  Wayne’s grandparents were part of the first generation after the treaty of 1855.  They had experienced the boarding school, loss of language, religion and traditions and brutal racism.  But they fought to keep as many of their traditions as possible and to force the federal government to live up the conditions of the treaty.  Still, the mixed culture education and life created confusion and conflict for them.  Wayne’s mother stood by her father’s side and helped in his legal battles.  She also served on the tribal council and as its chairman.   Wayne was heavily influenced by the conflicts of cultures and the battles to retain the tribe’s tradition.  Wayne’s grandfather was a traditional chief and he gave him a traditional role that continued to shape his behavior for his whole life.  Wayne was to be a speaker, one who spoke for the other tribal members.  When he became an adult, no meeting was complete until Wayne spoke, summarizing the issues and pointing out the traditions.  People joked about it, but they always waited for Wayne to speak.  His job was not to shape opinions, but simply speak the words that explained everything in the context of tribal culture.

Wayne taught me many things, but the underlying lesson was always the same; business and money come second to people and traditions.  Most consultant and casino companies have struggled in Indian country because we reverse that order and put money and business first.   To really learn the lesson I had to let Wayne set the tone.  As often as not, I just watched while he demonstrated the traditional ways, as was the case in a meeting we had with the tribal gaming commission.  A compact is a treaty between a state and Indian tribe, gaming compacts govern the operations of casinos.  The compact between the Tulalip and the State of Washington called for a tribal gaming commission with some specific duties.  I felt the tribe was failing to meet the conditions as specified in the compact.  In my world of gaming regulations, compliance with regulations is an absolute.  Failure to comply could lead to heavy fines or even a loss of the casino license.  Because of the importance of the issue, I asked to meet with the gaming commission to explain the requirements and where the tribe might not be in compliance with the compact.

Wayne agreed to a meeting and scheduled a lunch with the commission members.  Wayne took charge in the quiet, non threatening way he always used in meetings.  He began by talking about drumming with the commission chairperson and then moved to talking about family relationship with each of the commission members going back at least a hundred years, tightening the bonds between them as he talked.  The meeting lasted three hours, but for most of the meeting I just watched dumbfounded as Wayne built the meeting around common relationships and history.  By the time it was my turn, they were ready to listen and easily agreed to pay more attention to the details of the compact. Wayne was masterful in weaving tribal culture into casino culture.

Wayne took those skills everywhere and used them to serve his tribe.  He did not act out of self interest; everything he did was done with integrity.  Also, he sought to honor his mother and grandparents in everything he did,.  I learned from Wayne that our cultures were very different, but with respect and compassion we could work together.  I had other tribal clients and other mentors, but no one every helped me as much as Wayne and he did it will respect and compassion.  Wayne Williams was a very fine man and I was proud to call him my friend and mentor.  I will miss him, but his tribe will miss him much more.  

Macau, Hong Kong and the Chinese Dance of Time

Macau and Hong Kong have much in common.  Both are former colonies that have been reclaimed by China.  In 1997, Hong Kong left the shelter of the United Kingdom and submitted to the authority of China.  Macau was transferred from Portuguese control to China in December of 1999.  In the process, both cities became unique governmental entities – Special Administrative Regions of China – with autonomous legal and economic systems.  Hong Kong is a banking, finance and technology center.  Macau’s economy is famously founded on casino gambling.  China embraced the concept of special regions under the slogan: “One Country, Two Systems.” The commercial activity of both cities is important to China’s economy.

The cities may have a common foundation, but in the years since the colonial era ended, Hong Kong and Macau have taken different paths.  Hong Kong has never fully embraced Communist China and its legislature continually resists Chinese laws and authority.  Macau on the other hand seems quite content to be part of the one country with its communist government.  China recognizes the difference in attitudes of the two cities.  On his last visit to the region, Chinese president Xi Jinping, praised Macau and its leaders for the city’s progress in integrating into the greater China identity and embracing the communist party’s vision of the future. In contrast, Xi has issued veiled threats to Hong Kong, telling the city’s citizens they must get aboard the Chinese train.

Hong Kong is undoubtedly frustrating for the Chinese; Hong Kongers act as if they are still citizens of the British Empire and show no inclination of wanting to become more “Chinese.”  Xi would like Hong Kong to begin acting like Macau and has told its citizens exactly that.  The difference between the two cities in their acceptance of the one country, two systems concept was a mystery until on July 21st, Reuters published an article entitled: China reaps payoff from hand-picked team placed in Macau.  The Reuters article described a group of 40 young Chinese trained in leadership and sent to Macau in the early 1990s, long before the transition in 1999.  Those young people were placed in key government departments and today hold important positions of power.  Besides the leadership cadre, over half of the population of Macau has immigrated to the city from China in the last two decades.  The leaders in Hong Kong were not born or trained in China and its residents are not recent immigrants.  Their loyalties are to democracy, a free economy, a free press and independence.  They easily take to the streets to protest and demand independence.  .

The article explains why it has been so easy for China to rule by suggestion in Macau.  There is no opposition; the government and the citizens want to please China.  The governing of Macau includes regulation of the casinos.  The changes in casino operations that fit China’s goals are written into regulations and enforced.  Thus, the casinos are falling in line with President Xi’s plan to make Macau an international destination and to limit or eliminate any dependence on a few VIP gamblers from China.  When the casino licenses come up for review, we can assume the most important factors to be considered will be those that fit the Chinese global plan; amenities and policies meant to attract as many people as possible.   Xi’s China has grand plans for its place in the world’s economy and power structure.  It is building a new silk road to connect China, the Middle East, Africa and Europe and Xi wants Macau to be an active participant.  China is also creating a mega-region that will include Macau.  It will be the 12th largest economy in the world and Macau is expected to be a key player.  The casinos are important in both roles because they will help diversify the region’s economy and drive large numbers of tourists and foreign currency into the region and by extension into China.  They have already invested between $10 and $20 billion in building resorts to meet those goals.

China’s government is well-known for its long term planning.  Its plan for Macau and the casinos is part of a strategy that began over 25 years ago.  It started before the negotiated transfer of power, before the one country, two systems concept, before casinos were fully legalized and before foreign companies were encouraged to apply for licenses.  That was long before any of us had heard of the new Silk Road or a new regional designation in China.  The Chinese are famous for their long-term world view; after all they have been living in the same place for at least 5,000 years.  As the situation in Macau has matured, it has been increasingly obvious that the foreign casino operators are not aware of the exact nature of China’s plan for Macau and its casinos.  But until the article by Reuters, I would never have guessed just how long-term and well thought-out the strategy is.  In fact, without the contrast between Macau and Hong Kong, one might still not believe the strategy existed.  However, when you see Hong Kong constantly striving to be something of its own invention and not a puppet for the Chinese, while Macau does exactly the opposite, it is clear that the foundation China started to build in Macau with those 40 young people has been very effective.  Its casino policies are also proving to be successful.  Macau generates more casino revenue than any other gaming jurisdiction in the world.  And although there was a drastic downturn in gaming revenues after President Xi cracked down on graft and corruption in 2012, the revenue is again growing at double digit rates and is almost back to the pre-crackdown levels.  One word of caution, conditions are about to change again. The crackdown was an outgrowth of the 18th National Congress of the Communist Party of China.  The 19th Congress is set for later this year and Xi is promising a dramatic new direction for China.  It is certain that both Macau and Hong Kong will have assigned roles in the new dance routine.


Disclaimer

This is a personal blog and the information in articles posted here represents my personal views. It does not necessarily represent the views of people, institutions or organizations that I may or may not be related with, and is not sponsored or endorsed by them unless stated explicitly. Comments and other public postings are the sole responsibility of their authors, and I shall not take any responsibility and liability for any libel or litigation that results from information written in or as a direct result of information written in a comment. All trademarks, copyrights, and registered names used or cited by this website are the property of their respective owners. I am not responsible for the contents or the reliability of any articles excerpted herein or linked websites and do not necessarily endorse the views expressed within them. I cannot guarantee that these links will work all of the time and have no control over the availability of the linked pages.

Pages

December 2017
M T W T F S S
« Nov    
 123
45678910
11121314151617
18192021222324
25262728293031