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Bits, Bytes and Bets

Casinos are going high-tech converting cache into cash
Michael Kaplan
From the Print Edition:
Matthew McConaughey, March/April 2011

It is an NBA Sunday in Nevada. Across the state, odds makers nudge point-spreads, gamblers scrutinize fluctuating lines, and casino clerks process last-minute blizzards of incoming wagers. From glitzy palaces in Las Vegas to bare-boned dumps in the hinterlands, all of this amounts to business as usual for bettors.

Walk up to the counter, hand over your money, receive a slip in return, and take your chances. In case you show up after the opening tip-off, well... tough luck. You're locked out of the action. Things have been done that way since time immemorial.

But at five casinos in Vegas, it is a whole other story; a brand new story. Gamblers have money on account, they place their bets from computer terminals or handheld tablets known as eDecks that can be used anywhere on the gambling floor or out by the pool, and they're in action (if they choose to be) all through the game. They bet on whether or not a player will hit a foul shot, whether Kobe will outscore LeBron and on the outcome of the contest as it progresses.

Show up a few minutes late and it's no big deal. You can still bet on which team will win the game-albeit, with a reconfigured line. In this system, the odds continually shift, and the savviest gamblers hedge in and out of positions as if they're day-trading futures on the NASDAQ. During time-outs or lulls in the game (or right in the heat of things for the truest action junkies) they busy themselves by playing steroidal versions of baccarat and blackjack on the very monitors and tablets from which they've been sliding in sports wagers. Think your 16 will have a shot at beating the dealer's up card of a King? Bet on it, and the game, XtraOdds Blackjack, will give you a price.

This form of futuristic gambling is the brainchild of Lee Amaitis, formerly the CEO of the investment-world giant Cantor Fitzgerald International and now the president/CEO of Cantor Gaming. He and his new form of sports betting-launched in the Las Vegas book of M Resort, and now available at Tropicana, Cosmopolitan of Las Vegas, Hard Rock, Palazzo and Venetian as well-are emblematic of the new, technologically engaged Las Vegas.

Gambling entities that had been notoriously slow to embrace new technology are marching into the 21st century. Slot machines that communicate with you, players club programs that anticipate your desires and blackjack tables with electronic chips rank among the newest innovations.

"The pit had been behind the times in terms of technology," acknowledges Jim Jackson, senior vice president of product development at Shuffle Master, the game development company that has devised the computerized blackjack table. "A little bit of that is related to cost," says Jackson. It is, after all, a lot more expensive to buy a blackjack table implanted with a hard drive and touch screen than one that is made from wood and felt. Additionally, Jackson adds "a little bit of that is related to superstition."

In other words, casinos made plenty of money by doing things the old-fashioned way. There was no need to rattle customers and bean counters by introducing anything newfangled. But then the recession hit, technology got cheaper, visitation to Vegas dipped and it began to look as if maintaining the status quo could be the biggest risk of all. And if you know anything about casinos, you know that they are in the business of managing risks, not taking them.

Of all the new, geeked-out ways to put your money into peril and get the most out of your gambling, the Cantor sports betting operation appears to be the most revolutionary, not only for players, but for Amaitis. Besides offering play-by-play In Running (the betting format that allows for wagering on outcomes during the actual game), Cantor is also willing to take the largest action from the sharpest bettors in town.

This runs totally against the old fashioned way of doing things. Traditionally, managers of casino sports books have shunned smart players with deep bankrolls. This is done for a simple reason: They don't want to accept bets from people who tend to win.

"Not taking sharp action is the silliest thing I ever heard," Amaitis snaps in a gruff voice. "If you're going to take bets, you want all the sharp action you can get; they tell you where things are at. Yesterday [in the Auburn vs. Oregon college football game] the line went from Auburn plus-3 to Oregon plus-1. How did it get there? All the sharp guys bet Oregon. Mike Colbert [overseer of bookmaking operations for Cantor] was able to get ahead of the game because he recognized where the sharp action was going. It allows us to anticipate the side on which money will be coming. Turning down sharp bettors would be like turning down the smartest guys on Wall Street."

One can argue that it's easy for Amaitis to be confident-he's the one with Midas in his corner. Built at a cost that ran in the high eight-figures, Midas is the nickname for a piece of Wall Street-style predictive software that not only churns numbers for In Running but also spits out incredibly accurate lines before the games get played.

Here is how it works: Cantor programmers wrote computer code that has the ability to predict the outcomes of sporting events. They merged that code with a database of factors and details from previously played games. Using that information and applying it to current conditions before a game begins, the computer configures a line. Then, once play begins, Midas uses seconds-old information provided by data inputters at the stadiums to create on-the-fly lines for everything from the play that is about to happen to the final outcome of the game.

All that computer power makes it an easy decision for Amaitis and his crew to take on the sharps and to move the line accordingly. As he puts it, "By using the analysis of Midas and the street smarts of Mike Colbert, we make money." It's like on Wall Street, he adds, where augmenting the market intelligence of feel-traders with the mathematical power of program traders can make for a lethal weapon.

Still, there are avid, amateur sports bettors who remain undeterred. They maintain that Midas can be beaten via seat-of-your-pants gambling. "I'm sure the computer is smarter than us, but it does make mistakes," believes a former boxer and M Resort regular who goes by the name Spider. How is he doing with those mistakes? "I'm holding my own. I am staying afloat."

Who knows? What's clear is that Cantor's approach is catching on-with gamblers and with casino management. After all, partnering with Amaitis is a big decision for the guys who run casinos. For Amaitis to get involved, casino management must give up control of a facet of their gambling business and lease him the sports concession as if it is a restaurant.

At the fashion-forward Cosmopolitan of Las Vegas, the newest casino on the Strip, getting involved with Cantor seemed to be a no brainer. "We knew we needed a race and sports presence," says John Zaremba, Cosmopolitan's vice president of casino operations. He witnessed Cantor technology in action firsthand at his previous job, working for the Venetian. "Considering the demographics and psychographics of our clientele here, we know that their propensity is to be technologically savvy. Cantor, which now has a renowned name in the sports betting industry, is a perfect partner for us."

Amaitis puts it more bluntly: "We're going to take the risk, we're putting in $5 or $10 million in capital improvements [to build computerized sports books], we're bringing in players and we're giving them the business. They're paid a nice chunk of change and a guarantee. Why would they not let us go in there?"

If this is a match made in heaven between Amaitis and casinos, it's also perfect for some gamblers. Guys who can't get down in other casinos are happy to be able to wager openly and high at the Cantor outlets. However, they do complain about paying 10-percent vigorish as opposed to the lower rates that they can find offshore. For others, the opportunity to gamble on In Running is the greatest lure.

Though professional gambler Steve Fezzik quibbles about relatively low $1,000 limits on In Running, he does like that you can make hundreds of bets over the course of a game. "I've had tremendous results with college basketball," he says. "If you have a team that isn't going to give up, you bet the over. You can tell from watching the body chemistry as the game progresses."

The subtext of Fezzik's point is that Midas can't gauge intangibles as well as Fezzik can. Nevertheless, Amaitis is confident enough that he is willing to put his brain up against the smartest brains in gambling. Underscoring that fact, he welcomes gamblers to create their own programs. "We have no problem with people bringing computers in here," says Amaitis. "You want to have your computer going up against our computer? That's fine."

Fezzik does not bring a computer to the casino, but he does bring plenty of money. He expects to have what he calls "a hedged portfolio" during March Madness and to be all in, over the course of a given game, with tens of thousands of dollars at risk. "You wait for the one situation out of five where Midas's line is off," he advises. "But you don't have long to get in your bet. I get mine in because I type a lot faster than the average person."

In a sprawling office at the Bellagio, Bill Hornbuckle, chief marketing officer of MGM Resorts International, holds a small plastic card in his hand. Logoed across it are the words M Life. He maintains that this is a technological game-changer for MGM Resorts, the company that owns much of Las Vegas, including CityCenter, Mirage, Bellagio, and, of course, MGM Grand.

While the company has obviously been adept at acquiring prime Vegas real estate, Hornbuckle admits that it has been less successful at communicating with its customers in real time. Gamble high at an MGM property and the old players club system would get back to you after the fact with offers that you may or may not want. M Life, the new program which runs off of a system that's based on predictive modeling, is more proactive and tailored to the specific wants of individual players.

So if past activities paint you as a fan of '70s music who's ambivalent about sports, you'll get flown in for Eric Clapton and not bothered with a pitch for the Super Bowl. "Beyond that," says Hornbuckle, "the goal is to make this live all the time. If the system sees that you just bought your second Cirque du Soleil ticket of the week, it might offer you a third one for free."

Plus there is a facet of the new system that takes the mystery out of comping policies. "It allows you to understand, at any given moment, how many comp dollars you have," says Hornbuckle. "And then you can spend them accordingly." He points out that comp dollars can buy you anything from breakfast at the buffet to dinner for two right at the edge of the Bellagio's famous dancing water show. If you are an exceptional client, Bellagio will make sure that the water dances are scored to your favorite tunes.

The new program also converts cash-spends into comp dollars. If you don't gamble but you blow lots of money on meals and amenities, you'll be made to feel like a high roller. Plus, it turns players into de facto hosts. "Book a trip and contact 50 friends through a social link [provided by MGM] and you'll get a benefit [based on the number of friends who join you]," says Hornbuckle. "All of this is about making sure that customers are ultimately satisfied with the company."

For those who gamble at Aria, MGM's newest property, players may find themselves satisfied at the slot machines. There and at the newly opened Cosmopolitan, a system called "server based gaming" has all the machines running through a single computer.

This means that the games can be changed and updated with a few taps of the keyboard as opposed to having to be physically altered. "If a bunch of people love Siberian Storm, we can add 10 of those machines in 10 minutes, rather than waiting days and days for new hardware to be shipped and installed," says Jacob Lanning, Cosmopolitan's vice president of slots. "We do it off of a disk while most other casinos have to physically swap machines in and out."

They can also be used to communicate directly with specific customers. Information gets conveyed via video on the gaming machine screens. "We'd rather show you the steak dinner we want to give you than tell you about it," says Aria president/COO Bill McBeath.

At Cosmopolitan (which has the newest version of this system), the gaming machines can actually get smarter about customers. "If we have something on the screen that provides a list of the top 10 wineries in Napa Valley and you click on it, we learn about your preferences and passions and use that as a guide to presenting offers that you might find appealing," says Lanning.

A couple miles away from Cosmopolitan and the Vegas Strip, Shuffle Master is doing its best to change the way we gamble. For casinos where dice are not allowed by law, the company has created a digitized version of craps, which plays like the real thing but satisfies certain state regulations by using random number generators instead of dimpled cubes of plastic. Already in Vegas casinos is the blackjack variation played with real cards but virtual chips. Players make their wagers and gaming decisions on a touch-screen in front of them.

"We offer side bets that you can't find on a traditional blackjack table," says Jim Jackson, acknowledging that this hybrid game can take some getting used to, though it already seems to be catching on inside Planet Hollywood, Red Rock, and Barona in San Diego. "Normally a table has a Royal Match 21 side bet [a suited King and Queen, pays 25-to-1] and not many others. But these tables can have that bet and five more to go with it. All the calculations are done by the computer."

It should be noted that none of those side bets are particularly favorable to players (the true odds of winning are considerably longer than the payouts would seem to indicate), but the prospect of hitting a big return on a small wager is irresistible for many of us. Besides, if we wanted to do things that statistically favored us to win, we would not be gambling in the pits of casinos.

While other entities dream up new forms of casino-playing technology, Cantor Gaming's Amaitis is not exactly sitting on his hands. In a room behind the sports book at M Resort, Amaitis watches a few attendants tracking the games and betting-inflows on computers and TV monitors. Just outside of this Spartan room inside the sprawling sports book, gamblers root on their teams and play In Running like it's a video game. Back here, Amaitis expresses optimism for the future.


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