Inside Asian Gaming

inside asian gaming May 2014 92 New Boss at WMS: How About Gavin Isaacs? The latest from Las Vegas is that Gavin Isaacs is consulting for Ronald Perelman, the billionaire investor who controls WMS Industries parent Scientific Games, in what could be a prelude to his move into the top job at the third-largest slot- maker in the United States. A new report from the Las Vegas Business Press places the highly respected Mr Isaacs near the center of a management shakeup at lottery giant SciGames, which bought WMS last year for US$1.5 billion. Long- time SciGames Chairman and CEO Lorne Weil was ousted a month after the merger closed in October. His replacement, David Kennedy, a director of the company and its chief administrative officer at one point, is a former CEO of US cosmetics conglomerate Revlon, a mainstay of Mr Perelman’s $14 billion fortune. Mr Kennedy is reported to be a confidante of the tycoon’s. Mr Perelman is SciGames’ largest shareholder and owns 38% of Chicago-based WMS. Mr Isaacs’ new role with Mr Perelman—which he confirmed with the Business Press —has observers wondering if Mr Kennedy “is keeping the seat warm for Isaacs,” writes Howard Stutz, who covers gaming for the Business Press and its owner, the Las Vegas Review- Journal. Mr Isaacs, formerly CEO of SHFL Entertainment, engineered SHFL’s $1.3 billion acquisition by Bally Technologies last year and has a non-compete clause that expires in November. He was Bally’s chief operating officer before joining SHFL. Prior to that, he headed US operations for Australia-based Aristocrat Technologies. In the meantime, a number of WMS executives have shifted into positions at SciGames, among them CFO Scott Schweinfurth, who was named to the same job at the parent company in a move designed to smooth its “oftentimes strained relations” with Wall Street. That’s according to Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski. New York-based Scientific Games, which provides systems and game terminals to government-run lotteries, bought WMS to expand into the casino business. WMS is the third-largest manufacturer in the US market behind International Game Technology and Bally. Analysts generally have applauded the acquisition, which is expected to yield $600 million in pre-tax earnings this year. At the same time, however, many in the investment community are “skeptical of the legacy team’s ability to achieve its $100 million deal-related cost-savings target and successfully integrate the two businesses”—this also is according to Mr Wieczynski—the “legacy team” meaning Weil-era SciGames, which has suffered from a history of “ineffectiveness in clearly articulating expectations to the Street and then operating the business against those expectations,” the analyst said. But that could all be changing, he said. He told the Business Press he is now “more upbeat on the Scientific Games investment case, a feeling we expect to be shared by the investment community in the weeks and months ahead”. Putin Backs Casinos for the Crimea Gavin Isaacs Russia’s President Vladimir Putin wants casinos in the Crimea and has presented to the State Duma a bill for creating in the breakaway Ukranian republic a fifth national gambling zone. The legislation is expected to result in the designation of a single resort area similar to the restrictive enclaves the lower house of the parliament established in 2009 when casinos were banned from Russia’s major cities. “Casinos and gambling zones will not be scattered over Crimea. Everything will be located in one place,” the republic’s acting president, Sergey Aksyonov, told news agency Itar-Tass . Legalization is supported in the Kremlin as a means to boost the Crimea’s foundering economy, which has left the local government heavily in debt and dependent on Russia, which backed its secession from the Ukraine, for substantial loans. Opening Sochi to casinos also was considered at one point to bail out investors in the money-losing 2014 Winter Olympics, but the idea did not enjoy Mr Putin’s support and was scrapped. Russia was home to a thriving gambling industry before the 2009 crackdown. Some 12, 000 casinos and machine gaming parlors were running, 80% of them in Moscow and St. Petersburg. The market at its peak was generating US$5.5 billion in annual revenues from an estimated 350,000 slot machines and 5,000 table games. The four zones that replaced it have struggled to attract investment. Envisioned by the government as multifaceted tourist destinations, only one, Kaliningrad in European Russia, has actively expanded. In 2010, the Azov City zone in the south was moved to a more desirable Black Sea location. The Far East zone near Vladivostok is expected to have some appeal for Chinese and Korean gamblers and two casinos have been proposed there to date, one backed by Macau casino magnate Lawrence Ho, one by Cambodia’s NagaCorp. The other zone is in the Altai region of Central Asia. INTERNATIONAL BRIEFS