gaming management innovation

PROFITABLE CASINO:ERIC SWALLOW’S

ROYAL FLUSHKrista Reiner

Your heart races, thud-thud thud-thud thud-thud. You can feelsalty-sweet sweat dripping from your forehead onto your stiff denimjeans.You coach yourself not to flinch as you steal another peek atyour cards. Finally, as you go all-in, the real rush takes hold.You knowthat brimming pot is yours.This is your day.Your royal flush has come.

If you’ve ever been dealt that win-all of win-all hand, you know theadrenaline rush that comes with it. It takes over your body from headto toes. It’s a feeling that no one forgets and many never experience.And although Eric Swallow, CEO and co-owner of the Garden CityCasino card room in San Jose, Calif., has never been dealt that suitedstraight, he knows all about the ecstatic sensation of the ultimate win.

He might have felt it vicariously through a handful of his players atGarden City, but for Swallow, a self-professed IT nerd, that once-in-a-lifetime win has come not from a string of cards, but from a string offactors that led him to develop a technological royal flush of his veryown.And unlike cards, Swallow’s winning combination wasn’t basedon luck or chance. It was based on years of business acumen,practiced skill and the foresight to bring technology into a space ithad never been before.

Going All-InWhen Swallow and his business partners, Peter and Jeanine

Lunardi, first heard that the then-bankrupt Garden City Casino was onthe market more than three years ago, it took little to convince themthey should go“all-in”on the venture. Although none of the three hada background in gaming, it was obvious to them that with a city capon tables and a steady rise in population and game popularity, supplywould not be able to meet the demand—and that equaled dollarsigns.What they didn’t know about was the incredible lack ofoperational efficiencies on Garden City’s floor, and the complete lackof technological options to solve them.

“At the time (2005), Garden City literally had no operationaltechnology involved in its business operations,”Swallow recalled.“Everything was being done with pencil and paper.Whether it wasscheduling, payroll, cage counts, break times or rotations, it was all

By

Eric SwallowCEO and Co-Owner, Garden City CasinoCEO and Founder, Profitable Casino

Casino Enterprise Management SEPTEMBER 2008 www.CasinoEnterpriseManagement.com32

being done by hand or was stuck in someone’s head. It was eye-opening to see there was no system or technology to optimize all theday-to-day business functions in place.”

The list of inefficiencies maysound familiar. First there wasthe overstaffing, which causedunreasonable amounts ofpayroll expenses, and theunderstaffing, which decreasedrevenues due to lost game play.Then there was what Swallowlikes to call “the slime factor”—the rampant practice of tablegame dealers bribing themanager in charge of floorrotations for the prime-toketables—not to mentionCalifornia’s litigiousemployment climate, whichmade class action lawsuits analmost constant occurrence. Andlet’s not forget the cage’s inabilityto deliver real-time counts anddrops.

But the problems didn’t stopSwallow and the Lunardis. Duringthe two years that it took to getlicensed in California, the threewent to work finding a solution.The first place they looked? Thebiggest gaming event of the year,of course: G2E.

“Back in 2006, I headed to Las Vegas for G2E, literally planning topurchase software to optimize payroll, optimize the efficiency of thedealers and all of the floor personnel who run the casino,”Swallowsaid.“I just assumed the technology was out there and available.”

As industry professionals know all too well, there wasn’t atechnological solution on the market to fix Garden City’s back-endoperational deficiencies.While at G2E, Swallow discovered why:Nobody believed it could be done, and the floor personnel wereextremely resistant to help find a better solution.

He left the biggest gaming show of the year empty-handed andstunned by the lack of solutions—and the industry resistance todevelop them. (Although he will admit there were many highlyadvanced solutions for front-end operations.)

Finally, the reality of the situation set in. If he wanted to optimizehis staffing, HR functions and revenues through technology, he wouldhave to step up to the table himself.

With a background in technology, a slew of experience withInternet development companies, and years spent working with ITindustry giants like SBC Pacific Bell/AT&T, PeopleSoft/Oracle, Chiron,Fidelity, First American and LandAmerica, Swallow knew he had theskills to design a solution. All he needed was the perfect team to helphim build it.“I realized early on I needed to bring in management andpeople who were experienced in this particular field of the industry,”he explained.“One of the first things I did was bring in Scott Haydenfrom L.A.’s Commerce Club to be the casino’s general manager.”

From there, Swallow added more star players to his team, includingCompliance Director Robert Lytle, the former director of the CaliforniaDivision of Gambling Control, and CFO Kathy Reiner, a financialmanagement and gaming operations professional with more than 18years of industry experience.

Taking the information they uncovered regarding the sorry state ofoperations at Garden City, Swallow developed the aptly namedProfitable Casino, a real-time,Web-based software solution that

encompasses optimizingefficiencies in three of the mostimportant areas of operations:the gaming floor, HR and payroll,and revenues.

The Sweet SuiteThe entire Profitable Casino

system is built into a bar-codedcard-scanning system thatmonitors every employee’sscheduling and staffinginformation. As employees enterthe building, they swipe their bar-coded name badge into thesystem,which works as a digitalsignature for in and out times,including lunch and breaks. Fromthere the system monitors forcompliance with company rulesand state and federal labor laws.If employees are late for theirshift or miss a break, for example,it automatically writes them upfor company policynoncompliance, ensuring theemployees are responsible fortheir actions and not theemployer (thus leaving the

chance of a class action lawsuit slim to none).The system alsoautomatically suspends and terminates employees using a patent-pending technology, and monitors vacation, PTO and sick pay accrual.Once employees get to their stations, they must also swipe theirbadge into a scanner at the table that monitors where,when and whythey are at a given table on the floor. By swiping their badge at thetable, the system monitors their speed of play, dealer stops, dropcounts, palm shows and customer service levels,with the help ofGarden City’s digital surveillance system.

As casino manager, Hayden was particularly concerned withstaffing, scheduling and complying with state employment law. Luckyfor him, Profitable Casino’s Gaming Floor Module took out theguesswork needed in many of those areas. Based on artificialintelligence, the system forecasts how many tables and dealersshould be open to accommodate demand, based on past history.“Webasically put together a technology that predicts outcomes based onpast history, the number of games, and by the hour of the day andthe type of games that are played,”Hayden said.“With the GamingFloor Module, the efficiency in scheduling is just incredible.”

The Gaming Floor Module has also eliminated the slime factor.Gone are the days of dealers bribing floor managers for prime tables.Now the system automates rotations based on performance metricsthat management has established, ending the long-standing traditionof pit bosses taking tips and kickbacks from dealers in search oflucrative rotations and tables.“With Profitable Casino, there are nolonger biases involved in rotations,”Hayden explained.“No longer is ahuman telling dealers where and when to go based on appearances,kickbacks or tips. Swallow has created a system that virtually thinkslike a human and tells the dealers where to go based onperformance,which is really revolutionary for our industry.”

gaming management innovation

Kathy ReinerCFO,GardenCity Casino

Employees use their bar-coded badges to swipe into the Profitable Casino System.

Scott HaydenGeneralManager,GardenCity Casino

www.CasinoEnterpriseManagement.com SEPTEMBER 2008 Casino Enterprise Management 33

gaming management innovation

“We created a system that enables us to eliminate the pit boss fromtelling the dealers where to go,while optimizing rotation so it’s fairand equitable among the employees, and maximizes the dealers’ timeat the tables,”Swallow added.“Now when they are here at the casino,they are able to maximize their earnings.”

In order for artificial intelligence to equitably deliver rotations,management determines what performance metrics need to beoutlined to get the best results from the system and the employees.For Garden City,management has set up metrics based on customerservice levels, hands per hour, palm shows before drops, attendanceand complying with company policies.This part of Profitable Casino,like many others, is flexible, as each operator may have differentperformance objectives.

The other benefit of the Gaming Floor Module is its real-time,Web-based functionality, a feature that spans the entire suite of ProfitableCasino.Now management can access a real-time graphical view of its

Combine the Gaming Floor,

HR/Payroll and Revenue/Chip

Counting Modules, and you have

Profitable Casino, the gateway to a

more efficient, profitable and

pleasurable casino.

Employee BenefitsFor employees, Profitable Casino means a fair and equitable

system for tracking work performance and table rotations,while at

the same time minimizing limbo time, giving employees the

maximum deal time at the tables for the maximum amount of tips.

Management BenefitsFor management, Profitable Casino greatly reduces time and

money invested in payroll, and virtually eliminates the risk of

class action lawsuits related to tip-sharing and employee lunch

and break issues. It also eliminates all dealer complaints related

to personnel directing table assignments and table rotation

assignments by assigning tables based on a patent-pending

system that adapts to the casino floor in real time and makes a

fair and equitable table rotation system.Management also has

the ability to view what’s happening on the floor at any given

time on any given day and receive e-mail alerts regarding

revenues, HR issues, staffing and scheduling.

Customer BenefitsAnd your customers, the most important part of the whole

mix, will experience better service, quicker seating on gaming

tables, efficient table pushes (dealer changeovers) for non-stop

gaming, and better quality dealers through game stoppage

tracking and hands per hour tracking.

For more information, visit www.profitablecasino.com.

Profitable Casino’s real-time, Web-based functionality allows management to view its gamingoperations from anywhere in the world.

Casino Enterprise Management SEPTEMBER 2008 www.CasinoEnterpriseManagement.com34

gaming operations while, for example, sipping vino tinto in Montefrío(or anywhere else in the world).The system also allows for real-timerevenue tracking, e-mail alerts and a customizable dashboard.“Profitable Casino enables us to track what games are in play at everysecond, every minute and every hour of every day,”Hayden noted.

While that might be the biggest priority for Hayden, Reiner is mostimpressed by the HR Module.“I’ve been in gaming all over the place,and I’ve never seen anything like it,” she said.“I’ve actually donepayroll from outside the office—and state—several times now.That’sa luxury I’ve never had before.”

That’s because Swallow built the system with an exportable payrollfile component that seamlessly delivers all the payroll information toany third-party payroll services.

For Swallow, perhaps the most important aspect of ProfitableCasino is the Revenue/Chip Counting Module,which allows him totrack each game, table and dealer both hourly and daily in real-timeand on the Web. It also tells him game revenues by shift, game typeversus costs by shift, game type, and game revenue averages by shift,day,week and month, allowing him to track the most profitablegames. In fact, the system is so intelligent, it sends him e-mail reportsbased on his preferences.“It tracks our revenue so that we know inreal-time what’s going on,”Swallow said.“In the count room, if wehave a situation where the counters don’t match their counts in thebox, an e-mail is sent out to the shift manager and lets them knowthere is a discrepancy.”

This is key, as one of the team’s top priorities was to ensuremanagers took responsibility for anything that happened during theirparticular shift.“I wanted to make each management levelaccountable,”Swallow said,“and so each department, staff memberand shift is accountable for what they do, notonly with procedure, but also with policy.Thissystem automates and makes that happen.”

With Profitable Casino in place,management can now address operationalissues in a much timelier manner. It also forcesthe manager on duty to input what happenedin the system and what they did to resolve it.“We solidly practice retrain, coach and counselwhen there is an issue with an employee,”Swallow noted.“With our system, a shiftmanager is now accountable for the bottomline of his shift—everything from thepersonnel costs to the revenue to how thegames are put down and so forth and so on.”

And setting the system up is literally plug-and-play. All you need is an Internetconnection, scanners on the tables and bar-coded badges.The data is stored on an offsiteserver.“We’ve made it very simple,”Swallowsaid.“No hardware.No IT staff dedicated forsupport. It’s literally put the bar code scannerat the table and drop in what we call a dumbserver that sends all the information to ahosted site where we have very largeexpensive servers that house the information.The time-consuming part is determining howto organize operations from a procedurestandpoint; the technology is the easy part.”

Royal FlushBefore Swallow and his team took over

operations in March 2007, Garden City had

suffered in bankruptcy for eight years. Since 1998,more than twodozen creditors had been anxiously waiting to recoup their losses.With the help of Profitable Casino, it took only three months to payback the property’s $22.5 million debt. And within the first year ofoperations, Garden City reduced its floor staff payroll by 25 percentwithout layoffs and experienced a 35 percent increase in revenue. Italso eliminated three-and-a-half full-time jobs,which amounted to$180,000 in savings per year.

Developing Profitable Casino was truly a once-in-a-lifetimeopportunity for Swallow to drastically change the way Garden CityCasino operated. And Swallow,much like the players who havedrawn that winning combination at his California card room, stillgets that winning sensation every time he sees his technologicalroyal flush optimizing the floor’s operations inside Garden City’snewly remodeled doors (hey, gotta spend those profits somewhere,right?).

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KRISTAREINERKrista Reiner is theManaging Editor forCasinoEnterpriseManagement.She canbe reachedat(701)293-7775 or by e-mail at editor1@aceme.org.

www.CasinoEnterpriseManagement.com SEPTEMBER 2008 Casino Enterprise Management 35