ZZZ - GMG - VEGAS INC 2011-2014

gaming Online poker is starting to pad companies' bottom line By Richard N. Velotta senior staff writer Gaming companies blazing the trail for online poker are starting to generate revenue from their Internet investments. It's still too early to determine exactly how much they have made and how sustained the results will be, but frontrunners Caesars Entertainment and Station Casinos both have realized proceeds from online gaming. Caesars began generating online poker revenue during the third quarter of the year in Nevada and the fourth quarter in New Jersey. The company's third-quarter earnings included only 11 days of online poker revenue. Caesars unveiled its World Series of Poker site Sept. 19. The company didn't specify online poker revenue in its earnings report. Station got an even earlier start, having already managed more than 1 million hands here, and is ready to roll out its product in New Jersey. Both companies take a percentage of gamblers' money for every hand played. Overall, Caesars reported revenue of $2 billion, down 0.7 percent from the third quarter last year. The company associated press paying dividends: Casino industry representatives and exhibitors watch an online poker game during the G2E conference in 2011. Companies are starting to see profits from online poker. reported $112 million in casino revenue, a 7 percent decline offset by lower promotional expenses and increases in nongaming revenue. Will the company's tide turn with four online gaming outlets debuting in New Jersey? Caesars is teaming with 888 Holdings and Amaya Gaming Group for online poker offerings on the East Coast. But the company also is reeling from losses it assumed when it withdrew its bid to build one of Massachusetts' first casinos. Online poker also could be profitable for the Boyd Gaming Corp. and MGM Resorts International, co-owners of Atlantic City's Borgata, who are teaming up with Internet gaming provider bwin. party. During the third quarter, Boyd saw its losses widen to $37 million despite a 20  percent increase in revenue. Executives were happy with the results at Borgata but disappointed in spending by customers at Southern and Midwestern riverboat and racino properties. MGM, meanwhile, is aggressively gearing up for online play in New Jersey. MGM's losses narrowed in the third quarter due to a 9 percent increase in revenue. MGM has the comfort of having a cash cow Macau property in its back pocket while waiting for New Jersey online revenue to roll in. Two more companies have a similar luxury. Wynn Resorts saw its earnings climb 63 percent to $182 million, up 7 percent from a year ago, due to revenue generated in Macau. Las Vegas Sands also had a record quarter, with revenue up 32 percent to $3.6 billion and earnings up 82 percent to $809 million, thanks to earnings in Macau. But neither Sheldon Adelson nor Steve Wynn has any interest in pursuing online gaming. Q+A: JOHN VANDEMOORE IGT exec on social media, online gaming and brick-and-mortar casinos By Richard N. Velotta senior staff writer Despite the fact that the company is Reno's fourth-largest employer, IGT's corporate home is in Las Vegas. CEO Patti Hart and Chief Financial Officer John Vandemore live in Southern Nevada, which has become IGT's base of operations. Vandemore recently talked to VEGAS INC about the company. Are there advantages to being based in Las Vegas? It's a perfect place to have your corporate headquarters because it has a good talent base and you can get almost any place from here. There hasn't been a month yet when I haven't had to fly to either Reno or Seattle, San Francisco, London or Macau. It is a tremendous as| 23 DECEMBER 2013 20131223_VI07_F.indd 7 | set in terms of getting to customers and key markets easily. How is the slot machine manufacturing division doing? We're incredibly Vandemore pleased by our landbased business and product sales. It has done phenomenally well. It grew revenue at 12 percent this year, which is fantastic. It's the foundation of the company, and it bleeds into our interactive business. How does IGT make money from social media? We offer a free-to-play service where you can effectively play almost any game we have on a living casino floor in a virtual sense. Every day, we give people an opportunity to win chips that they can use to play slots, blackjack or roulette. They're free, and they can never be withdrawn for value, so they stay in the game. What we also do is offer the opportunity to buy more virtual chips. It's people paying to be entertained. above and apart from online poker. But IGT Interactive offers real-money online wagering. We have games today ... that allow you to play the same game you would on the casino floor in an online environment for money. Nevada has opted not to include casino-style games in its online regulations, but New Jersey and Delaware have allowed that. Will people be able to play online for real money like they can Internet poker? Our social gaming actually spans the globe today, and we will keep it separate. It's an unregulated business that leverages the same content. Because it's not regulated and it's not gambling, it's something that can be played anywhere. That provides us with an opportunity Online gaming also familiarizes players with your land-based games, right? Absolutely. What we've seen in markets where there is land-based and online casino-style gaming allowed is that it's reinforcing play. If people like to play a game on land, they like to play it online. And if they like to play it online, they like it on land. 7 12/19/13 4:36:49 PM

• Cover