Interview with JADE Entertainment CEO Joe Pisano
I had the opportunity to sit down with Joe Pisano the CEO of JADE Entertainment and Gaming to discuss his company, his history in the gambling industry and we delved into doing business in Asia, living in the Philippines and the convergence of Internet casinos and land based casinos.
The Australian born Joe Pisano has worked in the gambling industry for 30 years with his entrance coming while he was working for Digital Equipment Corp, which was later bought out by Compaq. His experience with real time operating systems at DEC, led him to his position at Automatic Totalizators. Pisano worked as a project manager in charge of installing Totalizer systems at horse tracks around the world, Pisano said, “I grew up in front of the racetrack, when the opportunity came up, the company came to me and said, ‘Look we’re developing a tote system. Would you be interested?’ I said yes.”
It gave Pisano a chance to explore the world and help him cement his love of the gambling industry. “We ended up installing the Tote in all the Major Asian racetracks. Other projects included Cape TAB South Africa, Mauritius, and on course betting in Australia, during the time and then in ’88 I ended up here (Manila) and installed the Manila Jockey Club and introduced off-track betting to the Philippines.”
Pisano spent some time with gaming machine manufacturer IGT and that lead him into his current role as CEO of JADE Entertainment and Gaming. JADE is a distributer of casino gaming machines. If you make slot machines and you need to sell or lease your machines, JADE is a good option as they have access to space in the best casinos in Asia.
What has made JADE and their clients so successful is their model of business. They offer a couple of options to their clients; they will outright sell the machines and JADE offers a revenue-sharing model. In the revenue sharing model, they find a casino with floor space and install the machines of their clients. This allows the casinos to save money on the initial investment while allowing JADE and the manufacturer to share in the revenues generated by the casinos patrons.
It’s been very successful for all parties involved. “JADE gaming, we distribute for some of the major manufacturers. IGT, Novomatic, FutureLogic, Crane. What we try to do with the Jade brand, we try to look for the world’s leading brands to join us and distribute here and also in Macau. The Novomatic brand we distribute in Macau and they’re actually the world’s largest now with $2.8 billion in revenue.” He continues, “Basically, if you have a property and don’t want to invest in the product, then we’re happy to do it, build (the machines) for free and take a small piece. The Oxford property (Oxford Princess Casino), we service the machine, they generate $200 a day, which is better than Las Vegas properties. If we look at some Manila properties, they are currently generating over$300 a day, which is excellent, compared to western countries.”
One aspect of the gaming machine industry that’s changing is the complexity and the depth of slot machines. Pisano explained to me how the next generation of gamblers have grown up with Xboxes and PlayStations and he knows they won’t enjoy their time in the casino playing “Triple Bar Sevens”. The Xbox generation means gaming machine manufacturers consistently need to evolve their game offerings. JADE gaming distributes some of the top branded games in the casino space, with machines such as the Dark Knight, Dirty Dancing, American Idol, Wheel of Fortune, Sex and The City and The Hangover the next generation of gamblers will find something they can enjoy.
Move to the internet
When asked about JADE’s plans for a move to the internet, Pisano revealed they are already implementing server based technologies, “Well I installed a test site of IGT SBX server based at Paranaque, which is on 20 machines just for PAGCOR to get to know what server based (gaming technology) does. IGT is leading the way with Server based technology with installs at Cosmopolitan and Aria Casino. And that’s where internet comes in. Cloud technology will in the future allow those machines to be hooked up to an internet based server (anywhere in the world) and then hooked up to multiple software providers.”
The server-based technology allows operators to change gaming machines with the click of a mouse rather than replacing the entire machine. This ability to switch out poorly performing machines means less downtime and more customization for casino operators. It also allows Casinos to customize their offerings to their unique clientele. The games that are popular in Macau are very different from those in Manila, Korea, Japan, Vietnam or Singapore.
“Places like Vietnam, multi-player electronic table games are very big in most markets mainly because they don’t have access, especially Vietnam to live tables… IGT and Novomatic games are performing great in the Philippines”, Pisano said.
Land based are looking at things backwards
Our conversation inevitably turned to the current lobbying efforts by the Las Vegas Casino operators to push poker regulation. Pisano said something that should please many in the online gaming space, “a lot of the (land based) gaming companies are looking at it backwards. What they’re looking at is taking land based (gaming) and placing it on the internet. So it’s taking a very small footprint and trying to put it into the big market. However, companies that are already on the internet like Bodog, they have an opportunity now to go the other way to expand their brand into land based.”
Pisano feels Asia is where we’ll see the true convergence between online and land based casinos, “The market in Asia, it’s ready for that. It’s not only taking the brand, it’s utilizing the technology. If you look at internet providers and think ofthem as a cable TV provider, cable companies distribute many channels. You have CNN coming in, HBO coming in and the way I look at it, internet gaming copanies with a cable type infrastructure and then you have all the providers (connecting) their technologies and it gets distributed to homes, iPads, casino floors, because basically, slot machines are pc.” That pre-existing technology is where online companies will have a large advantage over the brick and mortar casinos looking to get into the internet space.
We turned our attention to the hottest gambling market in the world, Asia. The Philippines revenue per machine is impressive compared to the western casinos but as Pisano explained, the Philippines has a long way to go before it catches up to the Asian powerhouse, Macau. The local market’s revenue was $1.2 in 2011, a fraction of to Macau’s $33b.
However, once Bloomberry and Belle open in the next 12 months we will see gap close, both companies have hired some of Asia’s leading Gaming professionals and we will see rapid growth in Philippine Gaming revenues
Macau holds the dominant position now but it’s important to remember as the rest of Asia wakes up to the potential of the lucrative gambling market, they’ll have other markets gunning for the number one spot. Korea has announced plans for a $3b development, Cambodia, Laos, Vietnam, and the Philippines are all investing heavily in new gambling developments and even Japan is talking about allowing casinos.
“We’ve increased development in other markets in Asia. Cambodia is growing, Laos, there’s quite a few properties going up in Laos. I think we’ll see in the next few years (gambling) legislation passed in Taiwan. That’ll make a whole lot of difference to Macau and I hope so legislation passes. “
I asked Pisano if Macau would sustain their dominance as these new markets develop, “It depends on China really. If China says now let’s open (casinos) in Guangzhou, Shanghai, and Beijing will it make a huge difference?” Joe briefly touches on the power of Junket operators and the power they hold in the Asian gambling market, “And because 73% of the market is VIP, a lot has to do with where do the junkets want to bring their business? Will they get better value if they bring (their players) to Macau or if they bring them (elsewhere); there’s going to be discussions over commissions. Now if we bring them to the Philippines do we give better commissions and you know, a fraction of a percent if you’re turning over 100bn a month…it’s going to make a difference to where these junket operators take their business.”
Gambling on the Philippines
Joe Pisano has lived in the Philippines for the better part of three decades. His decision to move to the Philippines wasn’t for any financial or business reasons. It was love. “I met my wife in 1988 while i was installing the Manila Jockey club system. It was right at the end of the project and i had to return to Sydney. So I simply returned to Sydney on the Saturday, quit my job and return to be with my wife, we have been together for 23 years now.”
It didn’t take Pisano long before he found a new opportunity, “there was a project next to Harrison plaza which was the jai alai…and i was asked to be the project manager and set up the betting, i remember buying a book on Jai Alai to see what it was all about, from opening the project was a huge success we were attracting 20,000 patrons a night.”
Jai Alai was a tremendous success for Pisano, when it opened in 1994 the venue was drawing 20,000 people a night, 7 nights a week and would bring in revenues of 10m pesos a night.
With all this opportunity, it had me wondering why the large American casino corporations haven’t looked at the Philippines for development. Joe explained the biggest reason is the government run regulator PAGCOR. PAGCOR, not only regulates gambling in the Philippines, they are also an operator. The American casinos feel they don’t want to compete with a Government entity that is also in charge of making the rules.
This is an unfounded fear, Pisano told me that having PAGCOR as both the operator and a regulator means that the regulations put in place will be fair and favourable to all operators as they have to abide by the rules they themselves put in place.
With the US operators staying away, it’s creating opportunity for other, more forward thinking groups with Genting, Travellers, Belle, Bloomberry, Aruze all are at various stages of development in the Philippines.
Among this newfound goldmine, there’s a hidden gem outside of the Philippines capital city, which was once home to the US Military. The city of Clark, just a short 2 hour drive from Manila is home to an international Airport and has plenty of land for development. Pisano points out, “AirAsia has just made it their hub… you fly from any major city in Asia you can be off the plane and into the hotel in 2 minutes. If your main market is the international market, it’s the ideal place. From Clark, you can be in a beautiful resort within an hour. If you go to Macau observe the environment, it can’t compare.”
The beautiful beaches and resort feel is where the current gambling giant can’t compete with the Philippines. If we look at the Caribbean and the success of the Atlantis Resort in the Bahamas, Pisano feels that success can be replicated here, “We have the best natural resource, 7,104 islands, and internationally the Philippines can be sold as a destination. The same way they sell Atlantis… I’d love to see someone come here and build an Atlantis because it’s all here.”
Another advantage the Philippines has over its competitors is its people who are some of the naturally warmest caring people on the planet. Even in Macau, the majority of the service staff is Filipinos. “Sold properly, the Philippines can be up there with Singapore and Macau. Its security and infrastructure just needs time to get there but it will get there,” Pisano said.
Joe Pisano has called the Philippines home for a long time. He raised and educated his children here. The ability to do business here has afforded him a very comfortable lifestyle. In the Philippines, the middleclass is growing yearly but there is still many impoverished people so I asked Pisano if JADE Gaming has a program to give back to the community that welcomed him so many years ago.
Pisano says the best way to give back to the community is thru education and Jade has recently sponsored the construction of its first classroom in Pampanga thru the Adopt-a-school program.
Advice about moving to the Philippines
“If you’re coming here to live, you can have a very good lifestyle here, even to work, the major properties are opening up and they need experienced gaming managers. It’s a great place to live. We have probably some of the best vegetation; we have some of the best international schools. In all my time here, I’ve never had a security problem and I walk openly outside.
And doing business at high levels is probably a lot easier than doing business in the US. If for example you wanted to go see one of the business Taipans, you could make an appointment. At a very high level, people are open to talking to you and listening to your idea, which is very different to, say, the US…everyone is open and wants to listen.”