Three takeaways from the NCLGS Summer Meeting

5 August 2016

BOSTON -- The National Council of Legislators of Gaming States held its Summer Meeting last weekend at the Boston Marriott Newton. Casino City was in attendance for the Friday session, which featured a lineup of six committee panels, plus a lunch presentation from Penn National Gaming's COO, Jay Snowdon.

While the panels covered a wide range of industry topics, a consensus approach to all of them was clear: the desire to modernize and reach younger audiences, an emphasis on empirical research and data, and the importance of collaboration and communication within the industry.

Get these kids onto my lawn

Ifrah Law attorney Jessica Feil brought a welcome perspective to discussions of millennial outreach.

Ifrah Law attorney Jessica Feil brought a welcome perspective to discussions of millennial outreach.

In a move that should surprise no one, several discussions addressed attempts to capture the millennial market, a very large market segment that simultaneously has a lot of spending power and very little disposable income.

The two sectors hungriest for millennial dollars were lotteries and racing, the most long-established forms of gaming in most U.S. states. Only 30% of millennials have bought a lottery ticket in the past year, and millennial presence at racetracks seems to be a matter for jokes rather than statistics.

Perhaps counterintuitively, one new product showcased — Equilottery, presented by its President and CEO Brad Cummings — combined the two, and performed very well among millennials in its market research studies.

Unusually for these sorts of discussions, one of the panels included an actual millennial, Ifrah Law attorney Jessica Feil. When a skeptical audience member asked if handicapping was really a skill millennials would even be interested in mastering, Feil was adamant: Millennials as a group are extremely competitive, and mastering and beating a game is a point of pride. This, she explained, is why they don't like slots — you can never "beat" a slot machine; you can only get lucky.

The flip side of this desire to show off skills is that millennial customers often know little about horse racing and are intimidated when they don't know what to do, so it's essential that the industry teach them to understand.

Lottery games traditionally have no skill component at all — which, according to Kurt Freedlund, president of LottoInteractive, means that younger audiences are unlikely to even think of them as "games." In addition to the obvious step of taking the lottery online (and mobile), Freedlund believes the key to bringing in a younger customer base for lottery games is to include more social gaming-type features, such as interactive components, leaderboards and friend invites.

Penn National Gaming's COO Jay Snowdon had other ideas, though, and named "Too much energy spent chasing millennials" as one of the main risks facing the industry in the next five years.

He presented a couple of key statistics comparing the millennial cohort with the similarly sized baby boomer generation, currently the largest-spending generation in the industry. One statistic: 42% of millennials carry student loan debt, while only 13% of baby boomers do. Another statistic: The average salary of a baby boomer is $60,000 per year, while the average millennial brings in just over half that, at $33,000 per year. Snowdon's advice on bringing in millennial customers was simply "Wait another 10 years."

Stand back, we're going to do science

The Committee on Responsible Gaming's "What is Right Approach in New Era?," the first panel of the day, set the tone for the rest of the day's discussions.

The PlayMyWay Program at Plainridge Park Casino allows users to set a budget for slot spending. (Photo by Mass Gaming Commission)

The PlayMyWay Program at Plainridge Park Casino allows users to set a budget for slot spending. (Photo by Mass Gaming Commission)

Much of the panel was dedicated to showcasing Massachusetts' two innovative responsible gaming programs, GameSense and PlayMyWay. In addition to explaining what these initiatives are and how they work, the Massachusetts Gaming Commission's Director of Research and Responsible Gaming Mark Vander Linden gave an overview of the full research agenda mandated by the Expanded Gaming Act of 2011.

The agenda — which aims to help create "sustainable, measurable, accountable and socially responsible" programs — includes SEIGMA and MAGIC, both multi-year comprehensive research projects on the impacts of gambling conducted at UMass Amherst, as well as ongoing research at the Division on Addiction at Harvard Medical School's Cambridge Health Alliance and the employment of a crime analyst to examine crime data in the casinos' host communities.

Harvard Medical School's Dr. Matthew Tom discussed how all this data was gathered and analyzed so that it could be used to evaluate programs. In addition, Dr. Marlene Warner explained how the Massachusetts Council on Compulsive Gambling works with the casino operators, the research groups, the MGC, and other responsible gaming groups in other jurisdictions to develop and implement its programs.

The result is an impressively robust network of stakeholders who all appear committed to a uniform vision of the state's gaming industry: That of a complex engineering project that can be carefully studied and structured and debugged until the whole thing runs smoothly, which will make everyone happy. From a pure PR standpoint, the Responsible Gaming Committee has flawless unity of messaging.

That Massachusetts would take the lead on developing a deeply researched, data-driven approach to responsible gaming is perhaps not surprising — Massachusetts has a very high concentration of well-respected and elite research universities, and got on the casino gaming train late enough that the lack of data on some of these issues was conspicuous.

But that doesn't mean that the rest of the industry doesn't have a similar attitude. Throughout the day, panelist after panelist brought up the importance of learning from the mistakes and successes of other jurisdictions and of having realistic expectations for growth and revenues. Everyone came armed with PowerPoints full of numbers tracking the success and failure of new gaming products, lottery privatization projects, tax rates, tribal compacts and more. While no other research discussed appears to delve quite as deeply as the MGC's studies, it was clear that the careful, methodical, no-surprises approach is the preferred one.

Everything is better when we stick together

Deeply entwined with the research-driven approach was an emphasis on collaboration. To some degree, this is almost a matter of definition: Comprehensive research means acquiring as much information as possible, including from other people. And it's common sense that "freshman" states would want to learn from the experiences of "senior" states, as Lasell College professor Dina Tanuvia put it, so as not to repeat avoidable and potentially costly mistakes.

But the gaming industry is made up of a lot of smaller industries — lotteries, casinos, racetracks — that are often in fierce competition for gaming dollars. The same goes for states, especially smaller ones whose neighboring jurisdictions may be just a short drive away.

Bill Egan of Spectrum Gaming Group argued that forcing lotteries and casinos to cooperate with each other was vital for states looking to expand either one of them. He pointed out that Massachusetts' Expanded Gaming Act contains language that requires all casinos to be lottery vendors and to take steps to mitigate harm to the lottery industry.

The horse racing sector was also repeatedly called out as a part of the industry that needs to do a better job of playing well with others in order to remain viable. Greenspoon Marder's Steven Geller referred to it as a "circular firing squad," and believes that most efforts to pair pari-mutuel racing with other attractions have not been properly integrated. Brian Hansberry of Delaware North suggested that horsemen tend to overestimate the amount of money from casinos that's available to "save" them.

But despite complaints of serious structural issues within the horse racing industry, the Special Committee on Pari-Mutuels was nonetheless full of ideas for restructuring, modernizing, cross-marketing, expanding and, occasionally, condensing the racing sector to fit more comfortably within the modern gaming industry as a whole.

The two afternoon panels from the State-Federal Relations Committee, one on state-tribal relations and one on Internet gaming, exemplified the same attitude of pragmatic cooperation. (The one exception was Les Bernal of Stop Predatory Gambling, who contributed a Gish gallop of rhetorical questions and blanket condemnations of the futility of regulation.) On the panel "The Balancing Act: Tribal and State," Mashpee Wampanoag Tribal Gaming Chair John Roberts explained that, as Massachusetts learned from the mistakes of California and other states, the National Indian Gaming Commission learns from tribes; the tribes learn from the NIGC; and the states have learned that the best way to protect their interests is to communicate with the tribes and tribal commissions.

Whether this oft-stated commitment to cooperative action will actually be sufficient to overcome some of the internal divides in the industry remains to be seen, but since it appears to be rooted in a widespread desire to make well-researched decisions with predictable consequences, it's likely to stick around as a principle.



Related Links
National Council of Legislators from Gaming States (NCLGS) Gaming Vendor Information
National Indian Gaming Commission (NIGC) Gaming Vendor Information
Penn National Gaming, Inc. Gaming Vendor Information
Spectrum Gaming Group LLC Gaming Vendor Information
Penn National Gaming Ownership Details
Massachusetts Gambling
Ranked Online Lottery Sites

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