Casinos find ways to work more efficiently to better financial performance



If progress is defined by developing new and better ways to do what you need to do, the casino industry is moving forward.

As the top line gets harder to grow, operators are steadily addressing both sides of the internal price/value relationship, by lowering costs and improving the quality of operations. Sometimes, the consumer sees an undeniable benefit; sometimes the simple exercise of saving money is all. But, there’s no denying it: Technology is affording daily new opportunities to bring down costs, and the best operators are keeping their doors wide open to the process, with an eye toward managing toward the appropriate number of Full-Time Equivalent (FTE) employees.

In many ways, casinos are simply embracing strategies that other industries have deployed as they matured. Just-in-time inventory management is an old idea, and the just-in-time approach is now being deployed across multiple casino departments. By the same token, the concept of renting capabilities via outside vendors instead of owning them in-house has gathered steam in the past few years. At its most strategic, the push for efficiencies illustrates a new agenda: move employees from generic “work” that others can do better to the knowledge-based, customer-focused activities that are required for success in increasingly competitive markets.



“If you do five Currency Transaction Reports a day, there’s five hours of your time taken up. With an automated system, five minutes of your time is taken up."
--Tom Bechtel, COO, NEWave

FREEDOM FROM PAPER

The casino industry runs on documentation, but to the extent that record-keeping can be made paperless, operators are all ears. And, sometimes, they don’t even have a choice.

As of July 1, Currency Transaction and Suspicious Activity Reports (CTR’s and SAR’s) have to be filed electronically with the federal government’s Financial Crimes Enforcement Network (FinCEN), which oversees the Bank Secrecy Act sites tied to Title 31 anti-money laundering rules. “Right now, if you don’t have a software program to run these reports for you, you have to go online and type everything in,” said Tom Bechtel, chief operating officer, NEWave, Inc. “Each SAR takes about 90 minutes. If you do five CTR’s a day, there’s five hours of your time taken up. With an automated system, five minutes of your time is taken up.”

NEWave estimates that automating the Title 31 process from all-manual inputting, which relates to all cash and check documents, saves a typical 1,000-machine property $100,000 per year. “Let’s say you take a cash buy-in report using money into gaming devices,” explained Bechtel. “Instead of going through that whole report, it automatically goes into the software and it aggregates and tracks everything automatically for them. The time savings there is from front and back of the house processes and also not using any paper whatsoever.”

There are many other ways to eliminate paper, noted Bechtel, benefitting property and player alike. Take a simple audit idea; if a casino has 50 jackpots per day; two pieces of paper are tied to each jackpot, or 100 pieces of paper. It takes about an hour to manually match up, sort out those documents, put them all together and verify that numbers match up between the drop copy and the original that moves through the cage. “To do it electronically takes it down to 15 minutes,” said Bechtel. “The software matches up everything and takes care of that for you.”

The recently opened Maryland Live! uses NEWave’s tax form and patron verification services. Players scan in their ID’s and get their Social Security numbers verified. “They start out spending five to seven minutes on this and they’re unsure of themselves,” said Bechtel. “They’re not positive that this is going to produce better results for them. Then the next time the property does a transaction for someone who has been verified it takes about 30 seconds. About 85 to 90 percent of jackpots are won by your known customers; people who are out there on the floor regularly. You’re not helping them by forcing them to fill out forms every time they win a jackpot.”



Golden Nugget Atlantic City is one of many resorts using Bally Technologies’ service tracking technology.

For all of the opportunities to go paperless, the industry is still very much in a transition period, said Claudia Winkler, president, GHI Solutions. “The problem is the paper solutions that were purchased 5-10 years ago were very expensive,” she said. “Meantime, the cost of technology continues to come down. Over 20 years ago, a terabyte of storage would have required a building and it would have required another building to cool it. I now have a two-terabyte networked appliance sitting on my desk that costs $500.”

Winkler identified improved document handling and storage as two major areas of savings opportunities. “If we can implement document management systems where we have a centralized repository for paper, people aren’t always looking for things,” she said. “I’ve been on several document management assessment projects where, for example, a personnel action form gets lost four times before it gets processed. If we can implement an electronic process where, I’m the supervisor, I fill it out, sign it electronically and there’s a work flow built in that sends it to the person up the line, who gets an e-mail and approves it, it all happens automatically and it never even gets printed out. It goes right into the employee’s file.”

In most cases, jurisdictions will accept a digital copy, and the alternative is costly, said Winkler. “If you’re not storing your documents electronically, you’re spending a lot of money on record retention, because they’re at Black Mountain or some other off-site storage facility and you’re spending hundreds of thousands of dollars a year in document storage.”



Bally Technologies’ Service Tracking Manager (STM), pictured here, has helped Foxwoods Resort Casino and other gaming properties save money and improve customer service through better management of dispatch and alert deployments.

AUTOMATING SLOT PROCESSES

At the Bally Technology User Conference earlier this year, Lou Rosa, vice president of slots at Foxwoods Resort Casino, addressed the question of how to create service and operational efficiencies on a 6,300-machine floor. A primary answer for him is Bally’s Service Tracking Manager (STM), an automated, rule-driven dispatch and alert system.

“STM gives you an ability to measure what is going on your floor and respond to it. What is measured is managed, and if you don’t subscribe to that theory, you’re going to be at a competitive disadvantage,” said Rosa. “We used to staff areas of the floor, regardless of business volume. In one casino in particular, or any, for that matter, you would have to have two to three attendants to cover lights and get transactions. In today’s world, you can put in one attendant with a mobile device get the transaction and then attend to it. It’s not only coming through our device, but it’s coming through based on the patron’s tier level. Customers of greatest worth are prioritized in the queue.

Before implementing STM, Foxwoods used guesswork based on volume of business and metrics such as coin-in to assess staffing. STM allows the casino to see where its tasks fall during the course of the day so that it can look at our staffing accordingly.

“We are now capturing tasks by attendant, by time of day, we have six casinos so it also tracks in which casinos the transactions are happening,” said Rosa. “The direct interface from STM to our slot system is very beneficial because it allows us to capture events in real-time and dispatch people very quickly. Essentially, STM eliminates the need for a dispatch room. We conservatively calculated that it would take 14 FTE’s to man a dispatch room, so it has radically transformed the way we service our floor. We are no longer staffing based on areas, we are staffing based on transactions.”

STM also alerts the casino to problems with games. “I can’t say that we use it strictly for maintenance, but it allows us to be proactive when we see games that are having repeated problems and get to them before it becomes a big issue,” said one Foxwoods floor attendant. “Printer issues, reel tilts, BB tilts, all these messages come through so attendants can bring better service to the guests and get to the machines faster to take care of the problem at the machine instead of chasing lights and waiting for someone to attend to you.”



The recently opened Revel casino resort in Atlantic City relies on MEI’s Easitrax soft count system to streamline the cash box replacement process at slot machines, saving both time and money when it comes to drop and soft count procedures.

Bruce Rowe, senior vice president of strategy and business development at Bally, added: “You can’t make money if the game won’t play. If we’re being honest, we probably all have games on the floor today that are causing inconveniences to players. Either paper is low or we send people out on the floor to top off printers even though they may not need it. In terms of cash cans and emergency drops on weekends. If we can proactively do drops and fills, if we know when the games are tilted, we can get out there and improve customer service and drive significant increases in revenue. During those peak times when we’re losing 10 or 20 minutes on an individual transaction, it may not seem material. But as we add it up over time, it’s substantial when we look at the average bet and the money we’re not collecting because of game outages.”

One way to justify the expense for such a technology is to see if it applies to other areas of the operation, said Joe Basara, director, WhiteSand Gaming. “STM or an STM-like solution can be extended to the entire enterprise,” he said. “I wake up in the morning and the hot water or something doesn’t work in the hotel room. I can’t tell you the number of times I have notified the front desk only to come back later in the day to find out nothing has been done. Why? There’s no tracking on it. You take STM and it can apply to the hotel side. It immediately opens up a work order that has to be satisfied by somebody. It can automate everything that has a work order associated with it, whether it’s STM or an STM-like system. We can buy it for the floor and then miss a lot of what it can potentially do for us.”

Basara and WhiteSand helped implement STM at the Golden Nugget in Atlantic City earlier this year and worked with Bally to broaden its reach. “I have to spend money on the software, a server, maintenance; it adds up,” he said. “If it’s a five-year payback I might have to save at least one head to pay for it. The more I can turn around and use it across the entire enterprise, the more I can justify it.”

Winkler said the same crossover potential can be found in non-gaming software. “Tools that expedite room check in, such as Mtech’s HotSOS and Room Expeditor, improve the work flow for guest room attendants and their supervisors so that you’re not checking guests into dirty rooms, and that items such as special requests have been honored,” said Winkler. “They have a very robust work order system that can be used not just by guest room attendants; the slot department can use them, too.”



“If you’re not storing your documents electronically, you’re spending a lot of money on record retention, because they’re at Black Mountain or some other off-site storage facility and you’re spending hundreds of thousands of dollars a year in document storage.”
-Claudia Winkler, president, GHI Solutions

MORE TIME & MORE MONEY SAVERS

Another increasingly popular solution for the slot floor is MEI’s Easitrax soft count system, which has grown in use from 80,000 to 100,000 machines in the past year alone, said Eric Fisher, senior vice president, Americas.

Fisher estimates Easitrax, which eliminates the need to match up cash boxes, saves about 30 seconds per machine per drop. “If you’re dropping 800 games a day, that’s 400 hours and it starts to add up pretty quick,” he said. “Just the idea that they can take any cash box and swap it out in a matter of seconds saves so much time. Not only does it make the drop process efficient, but they can track the cash in the casino back to the soft count room. That efficiency represents true ROI, bottom-line dollars.”

The system also generates acceptance rate reports, a key indicator for maintenance needs; drop status reports, which compare boxes that were and were not dropped compared with the daily schedule; a jams report which highlights note jams; reject type report which identifies why a reject occurred and a version report which identifies the latest software and helps avoid jurisdictional fines.

The cost of downtime and/or lost business is another key selling point for slot operators. MEI’s SC Cashflow has proven popular in dispersed markets such as Illinois and Canadian VLT jurisdictions where the acceptance of street-grade currency is vital. “The $20 bill that the machine won’t take stays in somebody’s pocket,” said Fisher. “Those start to add up over time; especially in route operations. You’re not going to have slot techs on-site to, for instance, clear a jam. Up-time at the game translates into 5 to 8 percent more cash in the pot in the casinos we’ve seen, which is very significant.”

Another time and money saver is jackpot kiosks for employees, said Winkler. “When customers hit a jackpot, employees can go to the kiosk and get the money to pay the jackpot without having to go to the cage. The kiosk is lab-approved as a witness to the jackpot. Sometimes you have jackpots that aren’t even taxable. Some places want to create excitement with, say, $600 jackpots that are hand-paid. ATM’s and kiosks don’t get sick or go on vacation; they might run out of paper or lose connectivity…but they save time and money.”

The spread of self-service solutions such as kiosks does bring a couple of challenges with them. One is keeping track of the amount of money you have on the floor, the other is ensuring ease of use.



Maryland Live! Casino, shown here at its recent grand opening ceremony, uses NEWave software and systems to automate and manage player verification and tax form processes.

NEWave recommends what might be called a just-in-time approach for cash management. “Casinos have anywhere from $2 million to $50 million sitting out there in the property,” said Bechtel. “You’ve got money going out to non-gaming areas, kiosks, jackpot stations, ATMs, and you’ve got money coming in from your soft count drop, from the bank when you’ve ordered it, you table game drop and non-gaming drop. Everybody has a hard time deciding how much they really need. When I look at the money that I have sitting out in my kiosk machines, what am I doing with $4 million sitting on the floor? Why do I have all these hundreds inside of there? What does it cost for me to get this money out there, not just have it sitting out there? Every time you deposit money in the bank or order it from them, they charge you. What we’ve done is put together a software program that tracks everything relative to the days of the week, what holidays are coming up, etc. So you know what you should have out there in real time.”

New properties in particular are attracted to the latest and greatest self-service technologies. With all the moving parts associated with a project opening, ease-of-use can be one thing that falls through the cracks. To guard against such problems, WhiteSand developed what Basara called a Technology Learning Center for the Golden Nugget when it was transitioning from the Trump brand last year.

“We tested technology in-house to see how it works; when you’re new, you’re thinking of all the ways technology can help, but you need to think through the entire process in terms of how it will be applied,” said Basara. “We had an instance of every piece of technology that the enterprise was going to use and tested all the touch points. Kiosks, for instance, which were tied into the player tracking system, which were tied into the floor system; what are the crazy things that customers are going to think of when they navigate it? If you test it only in the way you think it’s supposed to work, you will be disappointed more often than not. Software is very often designed by people who know the technology but not necessarily the use. If a customer had to go through 15 touches to make it work, they can make it work eventually, but they never will. You want to use technology to make their life easier.”



“Marriott International has stated very publicly that they will never build another hotel with its own laundry system. What they’ve realized is laundry is not their core business, so they’re aligning themselves with partners who can provide the expertise and all them to focus on their core business of hospitality.”
-Tyler Dion, national director of gaming, Cintas

RENTING CAPABILITIES, MANAGING RELATIONSHIPS

Another major trend in the search for efficiencies is leasing outside knowledge rather than developing it in house. A primary example is software as a service, a delivery model that has spread like wildfire.

“With a hosted model, you don’t have to maintain the system anymore,” said Winkler. “You don’t have the people overhead, you don’t have to buy the server, and you don’t need certain skill sets. That’s space in your data center, electricity that you’re not burning by running a server. Hardware gets old, it needs to be replaced. So if it’s somebody else’s headache, so much the better.”

Winkler said the skill set in gaming IT is changing as the industry is moving from build shops to buy shops and jobs become more about managing vendor relationships not building the product (i.e. programmers). “In many cases that person is charged with managing the business user relationship as well,” said Winkler. “You have to understand the vendor’s road map; they have to understand your roadmap. All the ancillary systems need to be understood as well. Your POS interfaces with CMS as does the hotel system. Anytime changes are made in one system, everything is impacted. So vendors need to be notified.”

It remains to be seen if smaller IT departments will be the result: “What I’m seeing increasingly is core functionalities being outsourced, but some of the secret sauce that differentiates a casino is still being done in-house. I see teams of people in-house working with third-party developers.”

The same renting vs. owning logic that applies to IT is being used across the enterprise. Cintas, for instance, once known for solely focusing on the direct sale of uniforms to casinos, now sells a number of different services to the industry, said Tyler Dion, national director of gaming, who noted that uniform rentals now accounts for 50 percent of all revenues.

“Marriott International has stated very publicly that they will never build another hotel with its own laundry system,” said Dion. “What they’ve realized is laundry is not their core business, so they’re aligning themselves with partners who can provide the expertise and all them to focus on their core business of hospitality.”

Casinos are seeing the point. Cintas consults with casinos on how a uniform room is built. The logistics flow behind the traffic flows and how the employees handle their uniforms. The company has a service that provides all of the labor for uniform rooms and it has demonstrated that we can save them money by using their inventory more efficiently than they can, according to Dion, who said that one major company outsourced all of its casino uniform operations to Cintas and it saved over $500,000 in labor in the first year.

“The old line is not many people get promoted into the uniform department, but that’s our business and we get a longer life out of uniforms than those who don’t specialize in the category,” said Dion. “We rotate the garments and get a longer life out of them. We tend to control what goes out on a loaner basis better than the average casino employee. Sometimes it’s their friend who’s asking and it’s difficult to say no to a friend. We’re a third party; we’re responsible for that asset and we have to know what the dollar value of that asset is at all times.”

Another Cintas service that has proved popular is ChemTron Coil System, a cleaning process for guest room air conditioners that the company says extends the asset life to 7 to 10 years versus 3 to 5 years when any type of service is not used.

“As casinos have cut back their labor, it’s usually the PM crew that has taken the hit, and as they were the ones doing the a/c cleaning, it has often been neglected,” said Dion. “We’re able to come in and do a deep clean with proprietary technology that gives real energy savings. We can keep the energy savings the same in July as it is in December.

Cintas uses a portable machine to clean the unit in the room, a big benefit because the traditional cleaning method usually means taking the unit out of the room, which, Dion notes, is not very efficient in terms of time and property.

“We can clean 35 units a day, whereas in-house tends to be 8 to 10 times per day,” said Dion. “They don’t have the technology to clean the coils properly and the overall task is a secondary focus.”

Cleaning is recommended once or twice per year. Cost is $25-$30 per unit, and the service reduces energy cost as much as 30 to 35 percent. The response? “Tremendous.”