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Gaming Strategies by Geoff Wohlsen & Terry O’HalloranCMA Gaming Summit | June 2017

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Gaming Strategies20 June 2017

CMA Gaming Summit

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DWS and Club Training Australia

Terry O’Halloran Geoff Wohlsen


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The program today

» A quick overview of what we’ve had to deal with as a collective

» Current challenges» What we should be doing now» What we should contemplate over the

next 5 years» 15-20 years?

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Poker machine gaming is in decline in Aus

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200

400

600

800

1,000

1,200

1,400

1991

–92

1992

–93

1993

–94

1994

–95

1995

–96

1996

–97

1997

–98

1998

–99

1999

–00

2000

–01

2001

–02

2002

–03

2003

–04

2004

–05

2005

–06

2006

–07

2007

–08

2008

–09

2009

–10

2010

–11

2011

–12

2012

–13

2013

–14

2014

-15

Qld

Vic

NSW

ACT

NT

SA

TasReal annual expenditure on

machines – per adult

Smoking restrictions


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But so is traditional gambling generally

-

200

400

600

800

1,000

1,200

1,400

1,600

0

5,000

10,000

15,000

20,000

25,000

1989

-90

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

Real Total Gambling Expenditure

Real Expenditure

Per Capita

$M

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NSW over the last 20 years

» Hotel Gaming, Star City Casino (1997)

» MTGM products

» X Series protocol

» Smoking

» Tokenisation TITO Cashless

» CRTs

» Machine trading scheme

» Taxes


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Qld over the last 20 years» Hotel Gaming, Casinos

» LMOs

» Smoking

» New gaming taxes

» Loss of $50 and $100

» Trading hours

» Tokenisation TITO/Cashless

» GFC, Mining, Floods

» 92% cap

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The challenges, the obstacles

We believe that online gaming at foreign casinos, card rooms, sports books, lottoland and

slot halls is attracting in the range of $4bn in Australian play (loss)

That’s ~ 20% of legal gaming in Australia


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The truth

The truth is that clubs need to achieve 15%ebitdard on revenues, $140 per machine per day and $1.5M ebitdard per 100 machines in operation to survive

Cost are growing at 4%‐5%Gaming revenues maybe 3%

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There’s more at risk


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Pubs are gaining ground in NSW

30%

35%

40%

45%

50%

55%

60%

65%

70%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2012 2013 2014 2015 2016 2017

Clubs 67%Clubs 64%

Club’s market share 12‐17

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Pubs are dominant in Qld

44%

46%

48%

50%

52%

54%

Dec‐12

Mar‐13

Jun‐13

Sep‐13

Dec‐13

Mar‐14

Jun‐14

Sep‐14

Dec‐14

Mar‐15

Jun‐15

Sep‐15

Dec‐15

Mar‐16

Jun‐16

Sep‐16

Dec‐16

Mar‐17

Clubs 47%

Clubs 46%

Club’s market share 12‐17


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Pubs are rule in Victoria but it’s stable

30%

35%

40%

45%

50%

55%

60%

65%

70%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Clubs 35% Clubs 34%

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TAB bar separation

Service to gaming

Product & environment

Service, skills & culture

Café service to gaming

Carparking

Loyalty and

rewards or TOD

Membership

4‐5% growth

What a gaming strategy looks like - now

A good strategy has many aspectsAnd involves the management team and board


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Loyalty and rewards in perspective

At ~2% it’s within the benchmark of 4%-5%

Members Rebate ‐ 1 point for $ T/O

Rebate % on T/O

Monthly cost at 100% redeem

Monthly cost at 80% redeem

% rebate redeemed

Redeemed on metered win @ 9%

Level 1 3 $2 0.50% 2,250 1,800 0.40% 4.44%

Level 2 10 $3 0.33% 2,667 2,133 0.27% 2.96%

Level 3 50 $4 0.25% 1,875 1,500 0.20% 2.22%

Level 4 200 $5 0.20% 2,800 2,240 0.16% 1.78%

Level 5 8,070 $6 0.17% 8,632 6,906 0.13% 1.48%

Total 8,333 $4.70 0.21% 18,224 14,579 0.17% 1.89%

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More weapons based on points

» Accelerators & points to cash at low demand times (Qld)

» Every visit after the 10th this month, we’ll bonus you 500 points ($5)

» A lucky losers incentive – “we hope your favourite machines have been kind to you this month, but not, leave it to us, we’ll bonus you 1,000 points when you next come“


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More weapons based on points» Chase the winners – try to claim the winnings

back, don’t let it go to your competitors with cash in their pockets

» Celebrate bank wins?» Player exposure to points – eg “if you visit us

another five times this month, play machines with the card in, you’ll advance to our silver membership”

» Redeem points for seasonal items eg winter bathrobes, towels, spray jackets, sunglasses, watches

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Loyalty and rewards – the missing piece

What’s missing is the management talent and skills to continually work the program


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The cost of marketing gaming

A 200 machine club will spend $250,000/yr on points and bonusingAnd a further $200,000/yr on general gaming promosAnd a further $150,000/yr on marketing wages and systemsThat’s $600,000/yr or 0.5% of turnover

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Drain the AEMP swamp

% total revenue

12%

2002 2017

AEMP costs as % revenue have increased from 6% to over 10% in 15 years …why?


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Café, TAB and bar

separation

Conciergeservice

Member tailored

environment

Member tailored

service andculture

Café service to gaming

SegmentedCarparking

Rewards linear to spend

SegmentedMembership

4‐5% growth

What a gaming strategy will need to look like

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Food as the key differentiator

Great food all day

GP 70%Wages 40%

Great food on your terms


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Value chainWhat the customer sees, feels, tastes and experiences every time

there is contact with your Club

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Where are all the good new managers

As an industry, we don’t have enough skilled, motivated young professionals coming through the ranks

We need to grow our own


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The balanced venue

Two DOSAs and 2.5m2 per

machine

ATM locations

0.8 to 1.2 dining seats per machine

2+ car parks per machine ‐ covered

1 CRT per 70 machines

TAB as small as you can make it

Café at the front for all to see

Best female toilets money can buy

Re‐invest at 30% above depreciation

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Some interesting statistics

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‐ 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Car park ratio (total bays per machine) Car park ratio (marked and sealed bays per machine)


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Efficiency and improvement through technology

Canada Bay Club

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Operational efficiency through technology

Automated Cash Management devices

Hand held device ordering


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Entertainment and ambience using techThe Hellenic Club Canberra

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Access to money

What the banks thinks about the sector is important- Ebitdard- Growth- Governance- Interest cover

over 2 times


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The checklist for now and 5 years….Capital reinvestment at 1.3 times depreciation

Ebitdard at $1.5M per 100 machines

Good governance, board & Constitution

Great data & systems

Guaranteed late night trading hours

Smoking, car parking, café offers

Loyalty and rewards at 2% or time on device

AEMP at 8% or less

A trained & developed management team

Service & Culture –value chain

Localisedpolitical relevance

Food – at the right GP & that meets customers’ needs

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Projected Gaming advances

In the next 5-10 years we see;Introduction of near field technology

Clubs Apps as the main portal for in venue ordering and other betting services – Keno and Wagering

Server based gaming 2.0

Cabinet size will increase and change the layout

Cohort Analysis


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What is eSports all about?

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In 15 - 20 years we might look like this

In 15 - 20 years time we may have:Greater numbers of older people but trying not to beFewer carsOver 50% living in smaller apartmentsComputing power 1 millions times betterAll entertainment on demandHardly any food prepared in homeTwo worlds – reality and virtual – 24 hours activityGreater disposable Y ~ home ownership


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In 20 years we might look like this

In 20 years time:

Greater numbers of older peopleFewer carsOver 50% living in small multi-dwellings

Computing power 1 millions times better

Entertainment of demand

More focus on accessing things immediately

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www.dws.net.au | [email protected](07) 3878 9355

DWS Hospitality Specialists

cma gaming summit - cmaa - home · cma gaming summit ... 1992–93 1993–94 1994–95 1995–96...

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