Building a New Entertainment Brand: The Story of Community Gaming Centres

Canadian Gaming Summit - 20 April 2011

Building a New Entertainment Brand

BC’s Model

Flashback

Envisioning a New Future

– Four Cornerstones

20/20 Hindsight

– Issues

– Successes

– Regrets

– Results

BC’s Model

Gov’t Gaming Policy & Enforcement Branch is the regulator for all gambling in BC (commercial, charitable, horse racing)

BCLC is a provincial crown corporation with responsibility to conduct and manage commercial gambling:

– Lottery (1985)

– Casino (1997)

– Bingo (2001)

– CGCs (2004)

– Internet (2004)

BCLC has long-term contracts with private sector companies for Casino/CGC/Bingo operational services and facilities

BCLC: Net Win Growth

$6.40

$7.10

$8.00

$9.00

$10.00

$11.00

$12.20 $12.80

$13.40 $13.40

$14.10 $14.70 $14.80

$15.20 $15.40 $15.00

$0.38 $0.38 $0.41 $0.46

$0.75

$0.89 $0.94

$1.03

$1.14

$1.25

$1.40

$1.61

$1.78

$1.91 $1.95 $1.94

$2.03

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

CANADA BC

BCLC: 2011 Net Win Projections

$464.9

$16.0

$166.9

$39.3

$1,339.3

Lottery

eGaming

Community Gaming (slots)

Bingo

Casino

Building a New Entertainment Brand

Flashback

State of the Industry: 2001

Industry initiative to turn around dying business and protect charities; BCLC manage & conduct

32 Bingo Halls around the province

22 Service Providers (many were charities)

3-4 Bingo Halls on the brink of closure

Negotiating for territories; new agreements

Model did not preclude charities from continuing as Service Providers

By 2003, BCLC/Industry jointly exploring future models

Flashback to 2004: Perceptions Bingo players said….

Bingo is a social ritual that’s important to me, but far short of ideal.

“Get away from Cheese Whiz poured over

nachos.”

“You should be allowed to

socialize while you’re playing.”

“We should be treated less like cattle and more like valued customers.”

“Bingo could be more

entertainment based , rather

than just a sterile room.

It could be more fun.”

Flashback to 2004: Perceptions

Non-players said…..

I can’t see myself playing.

“Crummy prizes”

“Bingo is a game for

old people and losers”

“Smoke-filled halls”

“Boring”

Flashback to 2004: Ideal What players and non-players wanted…..

“Not too dressy.”

“Something for everyone.

Go as a group, play some games and

meet up later for a drink.”

“Sharing, humour.”

“Having fun, feeling good

about myself.”

“Freedom, escape from

everyday.”

“Exhilaration.”

“Dancing!”

Flashback to 2004: Reality

Flashback to 2004: Reality

Flashback to 2004: Reality

Building a New Entertainment Brand

Envisioning a New Future

The Challenges

Create a strong business from a dying business

Ensure the new business can compete long term

Mix existing bingo players with new guests

Encourage investment; create attractive ROI for

Bingo Service Providers and BCLC

Align BCLC and BSP visions

Build positive partnerships with municipalities;

create a financial and entertainment asset

Strategic Response

New Revenues – use bingo gambling facilities to

meet market demand for slots in a responsible way

Differentiate Our Portfolio – distinguish the CGC

experience from Casino and Hospitality facilities to

improve overall market penetration/participation

Reinvent the Experience – create broader appeal

and compete effectively as an entertainment option

Strategic Response:

New Revenues – Meet Slot Demand

8,000 slots in BC; market demand for 14,000+

Bingo model not viable

Casino model not feasible

VLT model not desirable

Bingo halls in BC already offered gambling

Municipal participation in gambling revenues

Community Gaming Centres were born:

– Lower cost operating model (vs. casinos)

– New/Different standards for staffing

– Maintained gambling integrity and player safety

Strategic Response:

Differentiate Our Facility Portfolio

Strategic Response:

Reinvent the Experience

Four Cornerstones:

1. Exciting, inviting facilities

2. Product variety

3. Remarkable guest experience

4. Effective marketing

Four Cornerstones:

1. Exciting, inviting facilities

Vision:

• 16,000 to 25,000 sq. ft. on a single level

• Enter through lively slot zone, transition thru lounge and e-bingo, quiet zone for paper bingo

• Quality F&B amenities; space for group events

• Small stage (100-200 sq. ft.)

• Moderate facility investment

• Most $9M - $11M

• Range $4 - $19M

• Facility Development Comm’n

Exciting, inviting facilities

Flashback to 2004…….a reminder

Exciting, inviting facilities

Four Cornerstones:

2. Product Variety

Vision:

• Bingo – paper, electronic, linked, personal play

• Slots – 50-225, lower volatility/denoms/jackpots

• Tables – electronic only

• Lottery – Lotto, Keno, S&W

• Horse Racing - teletheatres

• Interactives, Multiplayer

• Signage – more subdued

Product Variety

Four Cornerstones:

3. Remarkable Guest Experience

Vision:

• Friendly, personal service

o Chances Customer Service Standards

o Customer Service Training Kits/Modules

• Well-priced, quality food & beverage

o White Spot comparable

• ‘Winnertainment’

o Game Shows

o Musical Bingo

o Lightning Bingo

o Contest Vignettes

Remarkable Guest Experience

Four Cornerstones:

4. Effective Marketing

• Shared marketing roles:

o BCLC supports provincial player development

o SPs support local player acquisition and loyalty

• Common brand to compete for share-of-voice

• Graphic Standards/Templates

• Chances brand positioning:

“Chances celebrates

the thrill of winning, great food

and hours of fun with your friends.”

Effective Marketing

Building a New Entertainment Brand

20/20 Hindsight

Issues

BCLC and SP alignment

- Managing expectations

- Vision (lack of long term view, requirement to invest)

- Slots (number, need for facility upgrades, selection)

- Compensation, contract terms

Access to capital (charity-owned SPs)

Chances Brand: preserve sense of ownership/independence and desire not to become a ‘franchisee’

Municipal approvals: initial reticence but Service Providers and charities were very successful in engaging communities

– problem gambling, crime, policing costs, revenue-sharing, public acceptance

Successes

Player participation and support in small markets

Overall market growth, limited cannibalization

Vision achieved: Four Cornerstones

– Facilities: 15 CGCs, 4 underway, 10 Bingos remain

– Guest experience: F&B, ambience, service

– Variety: products, winnertainment, amenities

– Effective marketing: Chances brand, BC Gold

Municipalities now seek CGCs (new, relocations)

Regrets

Underestimated change management

New operations requirements overwhelmed SPs

Compensation

Contract structure

Over-built bingo floors

Several SPs over-leveraged

No SP downside for delays in build-outs

Results

BCLC: CGC revenues $275 Million

SPs: annual commission/investment 13-32%

Slot cannibalization of Bingo met projections (22%)

Player visitation increased by 50%+

Player satisfaction (77%)

Public support for gambling remained steady

Municipal revenue-share $8 Million per year; plus tax revenues, employment, economic spin-offs

Community Gaming: BCLC Net Income

$18.8

$27.9

$36.7

$63.2

$76.2

$81.1

$91.2

$-

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

Net Income

Building a New Entertainment Brand