|The Bahamas Investor Magazine
January 21, 2014
January 21, 2014
In The Bahamas, gaming has long been considered a profitable offshoot to the country’s thriving tourism industry. Gaming has proved its resilience during the recent downturn and is continuing to contribute significantly to the country’s economy, generating around $146 million in annual revenue, which equates to approximately $48.6 million per casino.
Hoping to grow the industry further, The Bahamas is on the cusp of a major overhaul of the sector.
At press time, the government was preparing to update the 1969 Lotteries and Gaming Act, with new legislation that seeks to modernize the industry and allow it to take advantage of innovations in Internet technology and mobile gaming—a move casino operators hope will help The Bahamas compete with rival destinations such as Nevada and New Jersey.
According to figures released by PricewaterhouseCoopers, spending in the gaming market in the US will rise by five per cent from $57.5 billion in 2010 to $73.3 billion in 2015. However, the firm predicts dramatic growth in the Asia Pacific region, with a projected 18.3 per cent increase compounded annually to $79.3 billion in 2015. To sustain this growth, the sector is constantly evolving and in recent years has expanded to encompass new technology, making it easier for gamblers to play online and make bets from personal devices. At press time, only two US states are legally allowed to offer online gambling—Nevada and Delaware. New Jersey has successfully trialled the technology and was expected to legalize it in November 2013.
The difference between a user’s device and a slot machine on the casino floor is crucial to a casino. While the average slot machine costs between $12,000 and $16,000 and requires regular maintenance, a smartphone or tablet gambler costs the casino nothing. Games can be updated as needed to keep pace with the industry, players are not confined to the casino floor and the system allows for more routes to revenue, such as earning points that can be spent in the resort, instead of money.
Atlantis Paradise Island is currently the largest gaming facility in the country and president and managing director George Markantonis says gaming comprises around 17 per cent of the resort’s business. Atlantis gained testing approval from the government this year to roll out mobile gaming offerings ahead of the new legislation and, in April 2013, announced that it would partner with Cantor Gaming to develop and manage the technology. “We looked at a variety of operators,” says Markantonis. “We liked Cantor’s installations in Las Vegas and we thought their proposal was the most favourable. They are a quality operation.”
The Atlantis Mobile Casino gaming application can be downloaded from the Atlantis website. Users must then visit Atlantis’s race and sports book in the casino to create their account and deposit funds that can be topped up as needed. The application is compatible with mobile devices and tablets and allows users to play slots, poker and other games.
Leaving Las Vegas
Las Vegas-based Cantor, which created the application, has a wealth of experience in the sector. The firm made mobile gaming history in September 2013 when it partnered with Celebrity Cruises to offer the cruise industry’s first online casino system that allows passengers to download free slots, table games and video poker to their personal devices, via the ship’s Wi-Fi network and play anywhere onboard the vessel, while it is in international waters. Similarly, with Cantor’s new system in place at Atlantis, visitors will be able to place a bet from anywhere within the extensive resort grounds, whether by the pool or at the beach. During its trial period, the technology is restricted to certain areas of the resort by means of geofencing—a technique that creates a virtual perimeter–but will be extended throughout the resort.
“You can literally make a wager anywhere on the property,” says president and chief executive officer of Cantor Gaming Lee Amaitis. “There’s a lot to do at Atlantis and most people are on the go. Most people want to be free to do what they want to do, when they want to do it. This technology means that any client in the confines of the resort can play.”
Giving gamblers this kind of freedom is especially significant in The Bahamas, where most visitors come to enjoy the country’s tropical climate and beautiful natural amenities. With mobile options, Atlantis hopes they will reach a new market of gamers—those that prefer lounging on the beach to spending their vacation on the casino floor. “We recognize that customers in their own jurisdiction gamble longer than when they are here,” says Atlantis senior vice president and chief casino marketing officer Michael Sacco. “When they are here, there are so many things to do that their play time is shorter.”
The resort is also hoping to stir up interest abroad, particularly in the South American market, which has given The Bahamas a boost in tourism arrivals since the introduction of Copa Airlines’ direct flights from Panama to Nassau in June 2011. According to Markantonis, Atlantis hopes to open sales offices across Latin American in 2014, establishing a presence in Brazil, Argentina, Colombia, Mexico and Chile. “The South American market is brand new for us. We are piggybacking on that with our casino,” he says.
The resort also has sales offices in Russia and the Middle East, which they will use to generate additional interest from those markets in the gaming operations at Atlantis. “Our hope is that our casino marketing teams will be able to take advantage of these [offices],” adds Markantonis.
One of the most common applications for mobile gaming is sports. The North American sports wagering market is estimated at around $300 billion, but only one per cent of that is placed through legal sports books. Currently only four US states have legalized sports wagering—Nevada, Delaware, Montana and Oregon—and, of those four, only Nevada has taken it to a comprehensive mobile platform.
In October 2013, Atlantis relaunched its 6,860 sq ft race and sports book, with sports wagering provided by Cantor. The $5-million facility boasts a high definition video wall capable of showing up to 20 sporting events simultaneously, 44 personal wagering stations, eight personal betting lounge stations and eight bar gaming slots. Aside from betting in the resort’s sports book, which is located off the Royal Towers casino, players can download the Cantor Mobile Sports application to bet elsewhere on the property.
“Most casinos have their sports book as an amenity. We see sports as a primary business and our focus is to make sure our customers are taken care of,” says Amaitis. “One of the things people miss is the popularity of sports wagering. The fact that we made it mobile is a significant step.”
Cantor introduced mobile sports wagering into Nevada in 2009 and Amaitis believes there will be parallels between that state and The Bahamas–particularly when it comes to generating the “handle,” a gaming term meaning the total amount of money wagered on an event. “We changed the landscape in Nevada,” he says. “We have a good footprint on how we are going to operate [in The Bahamas]. Historically there has been very little handle down here.
That happens with word of mouth. Players come down, have a great time, tell other people and it becomes viral. In Nevada it spiralled out of player experience.
“If we capture a third of what Nevada does, it is big business for The Bahamas.”
Baha Mar ups the ante
Atlantis is not the only casino hoping to snag a share of Nevada’s business. When it opens in December 2014, the Baha Mar Casino & Hotel will gain the country’s fourth active gaming licence–the other three being Atlantis Paradise Island, Resorts World in Bimini and the Treasure Bay Casino at the Grand Lucayan resort in Grand Bahama.
Speaking at a conference in September 2013, Baha Mar vice president of corporate finance Vaughn Roberts called the casino “the heart of the whole resort” and said it would “drive 50 per cent of the economics.” With more than 100,000 sq ft of gaming floor, the Baha Mar casino will not just be the heart of the resort, but also the largest casino in the Caribbean region.
In spring 2013, Baha Mar chose Global Gaming Asset Management to manage its casino operations, which will consist of a casino with 150 gaming tables and 1,500 slot machines. The facility will also offer in-room gaming, as well as sports and online betting.
General manager of the casino and Baha Mar’s chief operating officer Paul Pusateri is well acquainted with Nevada’s gambling scene having served as president of the Palms Casino Resort, COO of the Hard Rock Hotel & Casino and senior vice president of The Venetian and The Palazzo resorts in Las Vegas. Shortly after his appointment to the position in October 2013, Pusateri said he hoped the resort would “attract discriminating guests from the US, Latin America and other global markets” who “literally have a world of choices in destination casinos.”
Ahead of the game
“Internet gaming is the future,” says Markantonis. “We are already seeing Las Vegas companies scrambling to make affiliations with gaming technology companies in preparation for what they think will be the opening up of Internet gaming in the US.”
As the US grapples with how best to regulate its Internet gaming industry, The Bahamas is taking the lead. The new gaming regulations, which were expected to be before Parliament by the end of last year, allow for sports betting, in-play wagering, mobile gaming, private gaming rooms, liberalization of credit, improved debt collection procedures and more. It will give the industry a chance to overtake its rivals on the US Eastern Seaboard and, unsurprisingly, has been welcomed by sector leaders, who have been working closely with the Gaming Board of The Bahamas.
“The gaming regulations that are sitting with government are an indication of what the industry feels needs to happen in this country,” says Markantonis.
“We can do a lot more to be competitive in this region. Part of the modernization of the gaming regulation is not only to take advantage of the upswing [since the 2008 recession], but to make sure we stay a step ahead.”
With these new services on offer, The Bahamas is poised to carve out a considerable foothold in a rapidly growing industry. By 2017, the worldwide mobile gaming market is expected to total $100 billion in annual revenue (of which $45 billion will be mobile sports betting), according to figures from analysts Juniper Research. Gaining a share of this lucrative field will not only benefit the niche gaming industry, but also create employment, contribute to the country’s gross domestic product, broaden The Bahamas’ tourism product and ensure its survival in a highly competitive market.
Sidebar: Betting on Bimini
In July 2013, Resorts World International, which is part of the Genting Group of companies, launched its fast ferry service between Miami and Bimini, which allows gambling onboard and can accommodate up to 3,000 passengers. The $100-million Bimini SuperFast features two casinos, with table gaming, sports book betting and slot machines. The ferry operates twice daily from the Port of Miami and is the fastest cruise ship in America, capable of reaching up to 30 knots and making the trip in around two hours. On arrival at Bimini, passengers can continue to gamble at the Resorts World Bimini Casino, which officially opened in June 2013. Attending the opening, Prime Minister Perry Christie said: “The economic impact on the local economy will be enormous as Resorts World proceeds rapidly in concert with the government to turn Bimini into one of the most attractive destinations in The Bahamas, having due regard to the environment, local culture and traditions.”
Resorts World is also constructing a 350-room luxury marina hotel, which is expected to be completed by the end of this month. The hotel forms part of Resorts World’s $150-million development for Bimini, including the casino and fast ferry service. The company estimates that the island’s redevelopment will bring as many as 400,000 visitors to Bimini each year.