Talking Points: Forward Looking
Sal Scheri recently accepted the position of president and CEO of Valley Forge Casino Resort, which is licensed to operate 600-slot machines and 50 table games. He will lead the development and management of the property, which is projected to open in mid-2012. Scheri is the former managing director of WhiteSand Gaming, a leading gaming and hospitality consulting group, which will co-produce the 9th annual Gaming Technology Summit with Casino Journal later this month. He recently discussed the opportunity at Valley Forge and the current state of gaming technology with executive editor Charles Anderer.
Observers who know the Pennsylvania market think you have a promising location at Valley Forge.
Scheri: I’m absolutely thrilled to be a part of this project here in Valley Forge for a number of reasons. Casino development, openings and management is in my blood. Consulting is always fun, but getting back onto the operations side is where I spent much of my career. There are some unique challenges in the Pennsylvania market, but some great opportunities, especially in this location. Our target market is composed of people who really want to game, but have to drive quite a distance to get to the other Pennsylvania casinos or perhaps even Atlantic City. On top of that, it’s a fairly populated area and the traffic can be bad. On the other side, there are people who haven’t frequented casinos because it’s not convenient. But now, with this great location-we’re so close to the King of Prussia mall-I think that will entice them to try it out.
You’re working with some established non-gaming businesses there. Any challenges from a technology standpoint?
Scheri: This is an existing facility with a hotel and a convention center, but no casino and no gaming systems. This provides a unique challenge because now we have to take some existing non-gaming systems and integrate them into casino applications. Some of them may stay, some may go; we’re doing that evaluation right now with some of the WhiteSand team.
Is the casino industry overlooking or underutilizing any technologies right now?
Scheri: I don’t think so. IT professionals in this business are bringing things to the attention of CEOs all the time. They are always trying to figure out the next, most beneficial technology. And many CEOs are open to new technologies. It’s not uncommon for them to say, “this makes a lot of sense,” or, “this is a little wacky, but we might have a role for that.”
The tech leaders on the Strip are sort of in a technology league of their own, and they automatically appeal to many technology providers. But much of the industry is composed of smaller, locals-oriented casinos. Are their good, customized solutions available for that segment?
Scheri: There are so many good options out there today at many different price points. You might not get the top-of-the-line solution, but you can purchase what you need to get you where you’re going. And that’s the key. Forget about spending millions of dollars and trying to justify the means; just invest a little money and get going. You can begin to analyze your players, for instance, in a meaningful way without spending two years and $2 million on a solution.
Where are the smaller operators generally in terms of leveraging technology to improve the quality of their operations and business results?
Scheri: There isn’t one answer; they’re all over the board. There are some smaller operators who are more advanced than the big boys. In fact, if you asked me who is the most advanced operator it would be one small operator that is particularly aggressive in deploying new technology in a very well thought-out manner that allows them to evaluate success before they deploy across the entire property. At the same time, other smaller operators are still living in the 1980s with technology.
It seems customer analytics software has come a long way in the last three to five years in terms of acceptance. Are these must-have tools for all casinos now?
Scheri: There’s a wide range of quality and the performance indicator isn’t always price. It’s not an automatic “A” just because it’s expensive. But, at the end of the day, these tools are critical to your operation. If you don’t know who your customers are and what they are doing, how can you possibly manage your operation? You’re shooting in the dark if you don’t have some type of BI analytical solution, and I promise that you are wasting money somewhere.
What has been the impact of the economic downturn on gaming IT?
Scheri: For the most part it has been a double-edged sword. Budgets have been slashed for IT departments but, at the same time, they are expected to do more than they ever have before. People are being told, “don’t tell me I need to spend another $3 million when I’ve already spent $25 million.” A lot of IT departments have been trying to squeeze out as much as they can with what they’ve got, and plans that were supposed to have been implemented by now have been scrapped. This has always been a difficult task for them, finding ways to grow new revenue or cut more costs without reinvesting in new technology.
We’ve talked a lot in recent years about “new” technologies that aren’t particularly new, such as server-based gaming and mobile check-in on the hotel side. Are you surprised that these or any other customer-facing technologies haven’t made greater inroads?
Scheri: I certainly expected both of those technologies to be further along, and I still think it’s going to happen. It’s going to be slow and steady for them to win their race. But what I do see is social media technologies such as Facebook, Twitter and Foursquare that have leap-frogged over what we thought was going to be the next big thing. These technologies are so transformative that operators say, “I’ve got to have it,” whereas the other stuff is more of a logical next step.
Also, server-based adoption is going to be a function of the replacement cycle. The capital required is high, and the ROI is just starting to be demonstrated; it is thousands of times more than what is required to set up a Facebook or Twitter account, which is easy to do, fast and relatively inexpensive. Mobile gaming is another example; we’re seeing that embraced more readily than server-based, and, again, a big part of that is the cost. Mobile gaming is also something that they can feel, touch and see right away whereas a customer sitting in front of a server-based game sees some slight changes but nothing as dramatic.
Is there a technology that stands out in your mind as a real driver of change in this industry?
Scheri: Wireless technology itself is shaping the way we approach almost every aspect of technology. Whether it’s for empowering the guest, providing Internet access, mobile gaming, employees and staff, systems or even critical functions. Rather than being tethered to a terminal that’s plugged in somewhere, we’re freeing up employees with tablets and smart phones. It’s really changing the way we do business.
What is the impact of the tablet on gaming? Are we going to see people using iPads to game?
Scheri: Without a doubt, we’re seeing various forms of tablet gaming already, whether it is iPads, tablets or personal smart phones that become active when you are in an approved area.
If there should be a jurisdictional development that legalizes a form of Internet gaming, is the industry in a good position to take advantage and what do you make of the opportunity?
Scheri: Operators where this has been discussed are ready to roll. They have been working on the approach, the deployment and the technology for a long time. The big question is how this would affect the brick and mortars. I think if anyone tells you they know, they’re lying.
I recently pulled out a report I worked on about 10 years ago that talks about the proliferation and legalization of Internet gaming and we talked about how it would be a big positive for all of these commercial casinos because it would introduce gaming to a whole set of people who had never seen it before. Well, in the last 10 years, we’ve seen a lot of new casinos that people have visited. The number of people who want to game but haven’t is a lot lower than it was 10 years ago. Internet gaming could be a wash for the brick and mortars; maybe they pick up some people, maybe they lose some. Or there could be a negative effect. I don’t see it as being a positive, except for the direct revenue from the online games; Harrah’s Las Vegas or Bellagio wouldn’t see increased revenues at their brick and mortar locations due to the launch of Internet gaming in Nevada. I’m not talking about sports wagering or racebooks; that’s a completely different animal. I’m talking about pure casino gaming; slots, blackjack, etc. I also don’t see it working for the locals-oriented casinos. In fact, it’s a potential negative. It would require a lot of time and money. And the guy who was thinking of coming in and placing a bet, might stay home if it’s a little cold out and get his gaming fix that way.
I imagine the degree of difficulty of combining an Internet and bricks-and-mortar strategy would be high for many operators.
Scheri: I have had discussions with CEO’s of large-sized independent casinos throughout the U.S. who are facing a real dilemma: Do they invest $2 million to have an Internet presence when it may or may not be legal and it may or may not ever recoup their investment or do they stay the course and reinvest that money in their players or their property? My answer is, at the end of the day, it’s a lot like keeping up with the competition. Casinos used to need a hotel, a buffet and a coffee shop to provide value and compete. In the future, they might need an Internet gaming product, too.
Sal Scheri was recently named president and CEO of Valley Forge Casino Resort in King of Prussia, Pa. Previously, he was managing director of WhiteSand Gaming, a leading gaming and hospitality consulting group. Scheri has well over 25 years experience in gaming consulting and management, including executive roles at Morongo Casino Resort, Aztar Resorts, Trump Taj Mahal, Deloitte & Touche, Pricewaterhouse- Coopers, Showboat Atlantic City and Golden Nugget Atlantic City. Pricewaterhouse-Coopers, Showboat Atlantic City and Golden Nugget Atlantic City.