Frank Fahrenkopf, president and CEO of the American Gaming Association (AGA), who will retire June 30, has been the first and only chief executive of the AGA since its inception in July 1995. During that time the AGA has enjoyed tremendous success, including the positive findings and recommendations of the National Gambling Impact Study Commission (NGISC); the establishment and good works of the National Center for Responsible Gaming (NCRG); and the worldwide success of industry trade shows Global Gaming Expo and G2E Asia as watershed accomplishments. Casino Journal Executive Editor Charles Anderer recently spoke with Fahrenkopf about his tenure at the AGA and what’s next, both for him and for the Association.
When one looks at the success of the AGA since 1995, one of the things that’s clear is you made a strategic decision to address responsible gambling head-on, with blindly-funded industry research, and that had an incredibly constructive impact, not just on the Study Commission, but on the worldwide industry to the present day.
Fahrenkopf: After I agreed to take this job, which took a lot of convincing, I really only agreed to do it for a year to get the Association up and running. I realized going in that the whole question of responsible gaming was just something that we had to take on. I had a very close friend, who I still play golf with, who had run the Tobacco Institute, and I had seen the problems that his industry had run into by denying the harmful effects of smoking. We knew going in that problem gambling was something that we had to handle and it was the subject matter of our first board meeting. I wish I could tell you that everyone recognized it at the time but there were some who disagreed.
The fortunate thing on that issue was the fact that Phil Satre, who was then the head of Harrah’s, had participated in a seminar at Harvard that had to do with youth gambling where he met Dr. Howard Shaffer. So Phil indicated to me that he thought Shaffer was a person that I really should meet. I reached out to him and, over breakfast at a hotel in St. Louis, told him that we thought it was important the industry go forward and find out what the prevalence rate of non-responsible gaming was in the country. I was a little leery of him because I didn’t know what those numbers would be. The anti-gaming movement at that time was saying that 20 to 30 percent of people were pathological gamblers. There was no real science to look at. And he was, I think, a little distrustful of me and our industry and whether or not we were just trying to use them and wouldn’t be hands-off.
So we agreed to fund the NCRG, and Boyd Gaming was the first company to step forward with a check. So we started it and were very careful about how we proceeded. We used the protocols of the National Institute of Health and formed advisory committees, and now I think it’s one of the truly great accomplishments of the American Gaming Association.
That was a pretty substantial endeavor to tackle when you had the Study Commission bearing down on you.
Fahrenkopf: We were almost immediately thrown into the NGISC. Right now, we only have 10 full-time people. Back then, I think we only had five. And, let’s face it; the Commission was originally created to do away with legalized gambling in the United States. Frank Wolff, the Republican in the House and Paul Simon, the Senator from Illinois, joined together to create it and they didn’t pull any punches as to what their goal was. They helped Reverend Tom Grey get his (anti-casino) organization going. We spent three years travelling around with the NGISC everywhere it went. We made sure that both sides of the story were told. We were extremely fortunate to have three people who were knowledgeable on that commission; Terry Lanni, Bill Bible and John Wilhelm. But the other six were pretty much anti-gaming led by Jim Dobson of Focus on the Family.
Ultimately, the commercial casino industry fared pretty well in that report. Looking back, was the NGISC a blessing disguise?
Fahrenkopf: In many ways, I think it was. Our industry came out of that commission better than any of the other legalized gaming industries. And on the whole issue of responsible gaming, they commended us in their report saying that the commercial casino industry was the largest funder of peer-reviewed research on the issue, even more than the federal government or state governments. Those early years were very dynamic and the NGISC actually pushed off our efforts with regard to the trade show. It was a tough five years, but they really laid the foundation for the association.
You mentioned Phil Satre and Bill Boyd. Who were some of the other individuals that stood out in those early days?
Fahrenkopf: Chuck Mathewson was the chairman for seven years. He was the only manufacturer; the other players were all operators and I guess their egos wouldn’t allow them to choose anyone else among themselves. But Chuck was really instrumental, as was Steve Wynn. I went and visited Steve in Vegas a couple of months ago to thank him because if it hadn’t have been for him I don’t think the AGA would have gotten off the ground. I actually sat in Steve’s office in The Mirage while he got on the phone and called other CEOs and said, “This is something we’ve got to do.” He really was the one who got companies to join and get it moving. Skip Avensino, who was then at the Hilton, was an early supporter. And of course Terry Lanni for years was just a rock of integrity and a very, very articulate spokesperson for the industry at a time when Wall Street was looking at us. When you could have someone like Terry meet with them, go to editorial boards; he was such a classy guy and so knowledgeable. He helped raise Wall Street’s perceptions while we were becoming a mainstream industry.
I always thought the AGA helped raise the profile of companies like MGM and Harrah’s in terms of being able to spotlight leadership-level standards and policies to the broader industry.
Fahrenkopf: I think that’s right. Developing codes of conduct wasn’t easy. Every company is a little different; they have their own customs and culture. But even though there are strong egos and companies suing each other on the manufacturer side, when it came to sitting down at the table and making decisions about what was in the best interests of the industry, I have to say that over the last 17 and-a-half years, the members of the board, despite what their own feelings may have been or their own companies’ positions, really made decisions that were in the best interest. We went for over 16 years without ever having a vote. Things were always done by consensus. The only time we had a vote was over the question of changing our position on online gaming.
One of the smart things we did at the beginning was, in order to sit on the board and vote, you’ve got to be the decision maker; president, chairman or CEO. We had the deciders right there at the table and that is very crucial.
Have the media perceptions of the industry evolved at all?
Fahrenkopf: It’s still a difficult road. There’s no question that basic journalism is opposed to the gaming industry, though it has gotten better. If you get reporters from the New York Times or the Wall Street Journal or some of these major papers and they are covering the industry for a couple of years, they get it. But my frustration was you’d get a reporter who just about the time they figured out the industry, the jobs and revenue we produced, they’d get transferred and replaced by someone who starts asking me questions about the Mob. We’ve made some improvement, but there are still some newspapers, like the Washington Post and the Boston Globe, that are virulently anti-gaming, even when you do editorial boards and sit down with them.
What about the perception of the industry in Washington?
Fahrenkopf: There’s no question that there has been a lot of education on the Hill and more members understand our industry. We’re in so many states, between the commercial and tribal sectors, so they see the economic activity. But we still have a problem, which we see when we do our polling with Peter Hart and the Wall Street Journal, that 80 to 85 percent of people have no problem either gambling themselves or with others gambling, but there is that rock-hard 15 percent that is opposed, usually on moral or religious grounds. Nothing is going to change their views. That’s why every time, no matter what state or community that might be considering changing their mix of legalized gambling, you always have a group of ministers, usually led by the Methodist Church, who will hold a press conference in opposition. And no elected official, whether he’s in city hall, the state legislature or the Capitol here in Washington, wants to get in a fight with a minister in his district. So there still are a lot of legislators who are leery of coming out and voting “for” something related to gaming.
Where we’ve been very successful is preventing any federal legislation that has damaged the industry; there really hasn’t been any.
Under your leadership, the AGA extended its work overseas. You were one of the founders of the International Association of Gaming Attorneys (IAGA). Was there carry-over from there to the AGA?
Fahrenkopf: IAGA was an integral part of my thinking. That was something I helped start in 1980. Steve Wynn and I were major speakers at this conference at the Waldorf in New York. Mike Sloan, the late Shannon Bybee and some others went to Harry’s Bar that night and I happened to mentioned that we ought to create an organization of gaming attorneys who worked in the field. We agreed that night to create the Nevada Association of Gaming Attorneys (NAGA). A few years later when Atlantic City had developed, it became the National Association of Gaming Attorneys. Then we reached out to regulators and had them join. That showed me that people around the world, regulators and attorneys who are in the gaming industry, have a tremendous amount in common and can learn from each other.
When we started the AGA, the concept was really just America. But when I started going over to the ICE show, I was always hopeful that there would be a meaningful European gaming association that would be a group that we could work with. I met over the years with two or three different people who were making an effort, but it never really went anywhere. And then when we experienced the growth that we did in Asia, I think a global approach is more important than ever, although it is a harder sell there. We have had a difficult time, even doing the educational programs at the show in Macau, particularly those that have to do with responsible gaming. It’s a different culture. But, clearly, it seems to me, as gaming spreads throughout Asia, the more important it is to have that kind of interaction. We only have three American operators in Macau, with Las Vegas Sands also being in Singapore. But we also represent all the manufacturers, who do business internationally. So one of the things that I hope my successor takes a look at is how the AGA can interact more with the industry abroad or help form some type of world gaming association because it’s something that I think is needed.
Your best moment?
Fahrenkopf: One is where we are in the whole area of responsible gaming. The NCRG’s annual conference attracts the leading clinicians, physicians and caregivers from all over the world who come and participate. Even the opponents of gaming have to now accept that the NCRG is a meaningful institution that is doing great things to try to help that one percent of people who can’t gamble responsibly. That’s clearly on my top shelf.
One of the happiest moments was when the Commission report was issued in 1999. As I mentioned, the end goal of the people who put that commission together was to destroy the industry. To come out of that after a couple of years of work with the results that our portion of the gaming industry realized was concerned was a real important moment for me.
Your biggest challenge?
Fahrenkopf: The economic crisis. We got hit with a double whammy with the fall of the economy in late 2008. We suffered just like every other business that depends on consumer spending. But the second whammy for us was the liquidity crisis. It hit when MGM was in the middle of City Center, you had Boyd with Echelon, you had Las Vegas Sands building in Macau and, suddenly, there was no place to go and refinance your debt, there was no market for bonds or preferred stock and it was a very, very difficult time. That’s why, in 2009, we suspended all dues. Fortunately, I had built up along the way a rainy-day fund, most of which was profits from the trade shows, and we were able to finance ourselves through 2009. In fact, we are still not back to full dues. In 2010, we went to 50 percent dues and we’ve been there every year since.
There are also times when you get caught in the middle, say when something like Question 7 happens in Maryland and you’ve got two members on one side of the issue and one on the other. But, on balance, it was a remarkable 18 years when I agreed to do it for a year. I had fun, I hopefully made a contribution to the industry and I’m looking forward to the next three months.
What’s next for you?
Fahrenkopf: I’ll be at the Southern Gaming Summit [to receive a Lifetime Achievement Award] in May and IAGA will be giving me an award at their meeting in London in June so it’s a fun time. I’m not retiring; I want to make that clear, I’m just stepping down from this job. I’m talking to a couple of universities about doing some teaching, writing and consulting as I do know a little bit about this industry.
What might the AGA look like after you’ve departed and when might we see a successor named?
Fahrenkopf: There’s a search committee, Korn Ferry, and we’ve been involved in this process now for a couple of months. The Board can always change its mind, but I think what they’re looking at is, as I’ve said, we have a very small staff, and (executive director) Judy Patterson has been with me from the very beginning; Keli Elkins, who works with her on the trade shows, has been here for over ten years; Holly Wetzel, who has been our communications director, has been with us for eight or nine years. So I’ve got a very senior staff and I think their thinking is that Judy will continue doing the trade shows with the staff and with the NCRG, and the person we bring in will be in charge of the lobbying operation. I can’t speak to that committee and they all have their own views; but I have asked them if it’s at all possible to decide by the end of April because we have G2E Asia in May and even though I don’t step down until the end of June it would be great to be able to take him or her to Macau with us. Then I will be a consultant for at least six months so I can take my successor through G2E in Vegas.
SIDEBAR 1: American Gaming Association MilestonesUnder the 17-year leadership of Frank Fahrenkopf, the American Gaming Association (AGA) has come a long way in fulfilling its stated task of creating a better understanding of the gaming entertainment industry by bringing facts about the industry to the general public, elected officials, other decision makers and the media through education and advocacy. Here are some of the organization’s highlights:
1995 • AGA formed with Frank Fahrenkopf as president and CEO. The AGA immediately goes to work fighting to ensure that a proposed federal commission on gambling is a fair, impartial and unbiased study of the industry.
1996 • AGA founds the National Center for Responsible Gaming (NCRG) in Kansas City, Mo., the first national organization devoted exclusively to funding independent, peer-reviewed research on pathological and youth gambling. • With considerable input from the AGA, Congress enacts legislation that calls for a balanced examination of legalized gambling through the newly created National Gambling Impact Study Commission (NGISC).
1998 • AGA holds the first annual Responsible Gaming Education Week.
1999 • In a triumph for the AGA and the legalized wagering industry, the NGISC final report is released, confirming the important economic and social contributions from the commercial casino industry and putting to rest the erroneous anti-gaming rhetoric, myths and superstitions regarding regulation, crime and social problems. • The AGA files an amicus brief with the U.S. Supreme Court supporting an end to a decades-old ban on gambling shown in casino broadcast advertising-a ban the court strikes down in 1999. • The National Center for Responsible Gaming’s annual NCRG Conference on Gambling and Addiction debuts.
2000 • AGA launches the Diversity Task Force to address issues of diversity within the industry work force.
2001 • A two-year AGA lobbying effort comes to fruition when lawmakers on both sides of the aisle speak out against the legislation that would ban legal wagering on college sports in Nevada. • The AGA partners with Reed Exhibition Companies to produce the first annual Global Gaming Expo (G2E). • AGA enters Internet gaming fray, working to ensure that any legislation would support states’ rights, maintain a level playing field among different segments of the gaming industry, and not make anything that is currently legal illegal.
2003 • The AGA develops Suspicious Activity Reports (SAR) guidelines, in anticipation of the rule’s implementation by the Financial Crimes Enforcement Network (FinCEN) as part of the USA Patriot Act. • The AGA board of directors officially adopts the AGA Code of Conduct for Responsible Gaming.
2005 • Days after Hurricane Katrina, the AGA establishes the Gaming Industry Katrina Relief Fund, a 501(c)(3) organization aimed at providing disaster relief to industry employees in Mississippi and Louisiana who were affected by the hurricane’s destruction.
2007 • The newest addition to the G2E family of events, G2E Asia, takes place in Macau.
2009 • The AGA establishes a partnership with Monografie to jointly sponsor the South American Gaming Suppliers Expo (SAGSE).
2010 • The AGA modifies its neutral position on Internet gaming; acknowledging that past concerns about the adequacy of technological safeguards to prevent money laundering, underage gambling and other potential problems have been eliminated, and the technology now exists to properly regulate Internet gambling with appropriate law enforcement oversight to provide appropriate consumer protections.
2011 • The AGA leads an industry online poker working group to find common ground on policy principles and to ratify a position in favor of federal legislation that calls for a legal, licensed and regulated U.S. online poker market.
2012 • As part of the Global Gaming Women (GGW) initiative, the AGA launches a dynamic new website for the program-GlobalGamingWomen.org-with news, events and resources for women in gaming to connect and advance their careers.
SIDEBAR 2: Frank appraisals from the gaming industry...“I cannot begin to express the tremendous gratitude and respect our entire [American Gaming Association Board] holds for Frank. He has been a steady, thoughtful leader through a period of great change for our industry and has steered us through some of its most difficult challenges. The fact that today our industry is recognized as a vital part of the global economy is in no small part due to his tireless efforts and leadership.”
-Richard Haddrill, chairman of Bally Technologies and chairman of the AGA
-Jim Murren, chairman and CEO of MGM Resorts International
-Gary Loveman, chairman, president and CEO of Caesars Entertainment Corp.