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Art of the deal

Art of the deal

Casinos operators represent a highly-regulated multi-million dollar industry, but they use a surprisingly high level of technology to ensure the only ones taking risks are the players.

Casinos operators represent a highly-regulated multi-million dollar industry, but as Darren Greenwood and Irene Tham report, they use a surprisingly high level of technology to ensure the only ones taking risks are the players. Every day, hordes of gamblers plonk their riches on gaming tables and feed them into slot machines.

But few of them realise they are not only playing with chips, but against them - the microchips sitting on the computing cores of slot machines and many other gambling devices.

Increasingly, casinos are investing and relying - heavily - on technology for their 24x7 operations.

Our very own Sky City is no exception. Aided by a government-imposed halt to casino expansion in New Zealand, the entertainment group is generating windfall profits, fuelling its takeover of rival casinos both here and in Australia.

Over the past year or so, SkyCity has increased its share in Christchurch Casino and SkyCity Hamilton, it has bought Darwin Casino for A$195 million, and invested $85 million in a new Sky City Grand Hotel in Auckland, due to open in April 2005.

While SkyCity Auckland with its 328-metre tower is perhaps New Zealand's best-known casino, Christchurch Casino, which turned 10 last month, is among the country's oldest.

Like other casinos, Christchurch Casino is a 24x7 operation, and it receives around a million visitors every year. IS manager Tom King looks after its IT systems, aided by a couple of tech support specialists. King joined the casino 10 years ago, helping to grow the business, setting its IT strategy in tandem with the company's finance director.

Christchurch casino, like the others, relies heavily on IT, fuelled partly by government regulation. The Gambling Act, introduced in 2003, prevents the expansion of existing casinos and the building of new ones. The Act also meant the removal of ATMs from casino areas and limits on banknote acceptor change machines.

Gaming machines must also be monitored, which by 2007 will have to be done electronically. Such electronic monitoring systems (EMS) will assess how much money is gambled on each machine, how much is paid out as winnings and how much money is banked. They will also ensure casinos use approved gaming software.

24x7 security

Like other casinos, King explains, Christchurch uses POS (point of sale) systems for bar outlets, tables, and cash desk. These are proprietary systems specific to the industry, with the casino using the dominant player, Aristocrat of Sydney.

Loyalty systems are also used, along with stock control software, the usual finance software, all housed in the casino's own secure computer room.

"The main difference to other organisations, is that casinos are 24x7 operations so systems must be robust and reliable, needing little support," says King.

Christchurch Casino uses 10 servers, mainly Unix, Windows 2000 and Novell Admin servers. Test and back-up servers are also part of the casino's disaster recovery plans.

The variety extends to databases and applications, with the casino using Oracle, Informix and Progress. Operating systems include Unix, Linux, Novell and Win 2K.

"The variety was driven by the suppliers and we have had no integration problems," King states.

Two years ago, Christchurch casino integrated its POS with a loyalty system, using an Oracle database. Food and drink sales are recorded on Win2K or XP terminals and fed through the Oracle database.

Aside from 24x7 reliability, another main issue is security. King claims no viruses have ever infected casino systems, with him using a range of anti-virus products, including NetIQ and MailMarshall at the interface.

Looking back over his 10 years, he sees the continued integration of systems as a main trend. In coming years, more graphically intensive gaming machines are expected, which will require bandwidth, and will operate similar to high-end workstations.

King also expects 3D software to be increasingly used, cashless systems and perhaps wireless systems, so the casinos will need fewer wires.

Las Vegas-based casino architect Paul Steelman also expects greater use of 3D technology, especially in the design of casinos, as they increasingly target the 21 to 29 year-old market.

Steelman has designed casinos across the world, including the Desert Resort and Casino in Las Vegas, Casino Thun in Switzerland and the Grand Casino Riviera in France. However, his firm was unsuccessful with proposals concerning Sky City Auckland, Star City Sydney and the Adelaide casino.

Nonetheless, Steelman confirms information drives the casino business, with technology used to drive every cent from as many punters as possible.

Steelman has introduced surveillance systems to identify players who try and beat the odds, through ways such as card counting. He has also helped install RFID systems in chips to help casino operators find counterfeiters and check big winners are not cheating the house.

"About 8.5 per cent of the total projected cost of building a new casino is devoted to IT systems," Steelman told a recent Casino Expo in Singapore.

Sky Alpine in Queenstown cost $14 million when it opened in December 2000 and the Sky Riverside Casino in Hamilton cost $50 million when it opened in September 2002, suggesting multi-million dollar budgets even for the smaller casinos.

"There is no cheaper way of doing things. The competition is spending big. Better get on with it or fall behind the curve."

Captive audience

Computerisation of casinos started in the mid-1980s. Today, technology has a hand in everything from lighting and power management to the design of flashy exteriors, parking lots, high-roller hotel suites, restaurants and concert halls.

"Everything is digitally designed using CAD/CAM (computer aided design/ modelling) tools, just like in car design and production," says Steelman.

Using advanced 3D modelling and rendering tools, architectural and interior designs are brought to life on computer screens for virtual walk-through.

Steelman pays meticulous attention to detail when designing a casino. He even counts steps from the parking lots to the lifts and from the lifts to the hotel rooms, rest rooms and gaming tables to ensure everything is within easy reach of customers.

"It's really about creating the 'wow factor'; getting people in through the door and keeping them there," he says.

Today's casinos are also heavy users of enterprise software, including customer relationship management systems for tracking customer spending and managing loyalty programs, and business intelligence (BI) tools for dynamically pricing hotel rooms based on demand.

"You could be staying in the same room for days and pay different rates on different days," says Steelman.

Watch every penny

Room management systems help casinos work out the best rates to attract customers. Advanced CRM and BI tools help casinos track profitability down to each customer, hotel room and game.

Massive purchasing management systems are also indispensable features of such mega-entertainment complexes. For instance, casino restaurants spend up to US$20 million a year on shrimp alone. "You want to source for the best prices from suppliers around the world," says Steelman.

In the early days of IT in the gaming industry, gigantic mainframes took up a sizeable area of the complex. Today, however, servers are often remotely located and managed.

But whether it is located on-site or remotely, technology does one thing: It makes sure the house doesn't lose its shirt.

After all, operating a casino is a game of balancing profit making with empowering customers to win.

"The longer you are there at the gaming table, the better chance the casinos have of making a profit," says Steelman.

Learn:

How to assess the value of technology investments in fast-growing industries.

Why casinos can provide vital pointers for managing 24x7 operations

What are management challenges of enterprises that are heavily reliant on information technology.

Number of tables and electronic gaming machines

Casino Tables EGMs

SkyCity Hamilton 23 339

Christchurch 35 500

SkyCity Auckland 110 1647

Dunedin 12 180

Queenstown Wharf 6 74

SkyCity Queenstown 11 84

Total 197 2824

Source: Department of Internal Affairs (May 2004)

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