Agbriefings November 2018 by Asia Gaming Brief

Jurisdiction Updates November 2018 Edition

In focus pg.28

Talking technology

ETGs, RFID, crypto and more...

PHILIPPINES

Duterte plays hardball pg.18

JAPAN

The politics of PR pg.12

CNMI

Executive exodus pg.42

Macau

Trade war clouds prospects pg.8

MGS 2018 SUPPLIER SPECIALS pg.44

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MESSAGE 3

Focusing on innovation

his year, the Macau Gaming Show is placing its focus

were some suggestions of a possible thaw, most analysts

on new technology and what it terms as “intellectual

estimate this will only be a short-term fix and unlikely

entertainment” and this edition of Asia Gaming

to satisfy some of the policy hawks in the administration

Briefings reflects that theme.

who see Beijing as a geopolitical threat. The resulting

Our Focus Section takes stock of some of the latest trends

slowdown in the Mainland economy will no doubt take

in gaming and how they are likely to affect operators’

its toll on the VIP sector first, though it remains to be

bottom lines. Our first piece discusses some of the latest

seen how much of a dent it will make in the mass market,

innovations in technology that are helping to improve

which now makes up a greater proportion of revenue after

operational efficiencies, taking a look at the relative

operator efforts to diversify in recent years.

merits of RFID versus optical technologies to manage

And then there’s the Philippines...one of the best-

table performance.

performing jurisdictions in Asia in terms of GGR growth,

We also discuss some of the issues facing online gaming

though where further expansion is in doubt due to the

operators in Asia. While the potential rewards from the

policies of hardline President Rodrigo Duterte. Galaxy

multi-billion dollar market are undoubtedly huge, there

Entertainment and local partner Resorts & Leisure World

are also major challenges that can carve a large chunk

have been stymied in their efforts to push through an

out of profit margins. From payment processing systems,

IR project on Boracay, while Landing International’s

to the widespread use of agents, through to ever more

groundbreaking ceremony for a development near Manila

sophisticated hacking attacks, online operators targeting

had the rug pulled out from underneath it due to sudden

Asia need to keep on their toes.

questions about the land lease.

Electronic table games have seen strong growth in Macau

In Japan, efforts to woo both local governments and the

and some of the larger jurisdictions in Asia, providing a

hearts and minds of the local population continue apace

table solution for the region’s baccarat-crazy players at

in the race for a coveted license. Most operators will

a lower cost point, given the lower labor requirements.

require the services of local PR agencies to smooth the

While that growth in Macau is expected to slow, ETGs are

way, though given the market is dominated by two giant

still expected to see strong expansion as casinos pop up

firms, there are considerable concerns about potential

across the zone. We take a look at the latest trends and

conflicts of interest.

where that growth is likely to be concentrated.

The AGB team will be at MGS and following the seminars.

Lastly, no discussion of technology nowadays can

If you’d like to get in touch for a meeting write to us at

avoid the topic of cryptocurrencies and their possible

admin@agbrief.com. See you at the show!

Rosalind Wade

Luis Pereira

applications. We argue that Asia may be the leader in incorporating crypto and blockchain into the gaming

Connect with us:

industry and therefore could act as a catalyst for @agbrief

widespread adoption globally. In our jurisdiction reports, we focus on some of the

Asia Gaming Brief

political risks that operators will be facing in the year to come. Macau’s gross gambling revenue is feeling the

Asia Gaming Brief

On behalf of Asia Gaming Brief

fallout from U.S. President Donald Trump’s trade war

Rosalind Wade & Luis Pereira

with China. Although at the time of going to print, there

Publishers

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NOVEMBER 2018 EDITION Series II • Issue XIX

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Asia Gaming Briefings | November 2018

CONTENTS 4

GREATER CHINA

NORTH ASIA

MACAU

INDOCHINA

JAPAN

PHILIPPINES

SOUTH KOREA

MALAYSIA

RUSSIA

SOUTH ASIA

CAMBODIA

special focus

SOUTH EAST ASIA

Asia Gaming Briefings | November 2018

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CNMI

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Asia Gaming Briefings | November 2018

GREATER CHINA

MACAU

Trade war creates headwinds for Macau gaming stocks Macau gaming stocks are feeling the heat from the trade war between the U.S. and China, falling to their lowest levels in a year, with some analysts cutting their growth forecasts on concern for a slowdown in Chinaâ&#x20AC;&#x2122;s economy. Asia Gaming Briefings | November 2018

oth Deutsche Bank and Morgan Stanley have both recently reduced their estimates for gross gambling revenue for this year and next. Deutsche Bank’s forecast for 2018 has been trimmed to 13.9 percent from 14.2 percent, while it expects growth to drop to 6.8 percent in 2019 and slow further to 5.1 percent in 2020. Morgan Stanley, while noting that it still sees Macau as a long-term growth story, cut its 2018 GGR estimate to 13 percent from 16 percent and more than halved its estimate for next year to 5 percent from 12 percent previously. “3Q18 EBITDA in general will disappoint, and we expect consensus earnings revision to be down meaningfully over the next few months,” Morgan Stanley analysts Praveen Choudhary, Jeremy An and Thomas Allen said in a report. “Macau in a slowing growth environment tends to underperform, and we do not expect the stocks to trade above long-term averages.” September GGR rose only 2.8 percent yearon-year – affected by casino closures during Typhoon Mangkhut and related disruptions. However, without the disruptions, analysts say growth would have still been in double digits. And Union Gaming managing director Grant Govertsen said that although stocks have fallen, as yet there is no discernible impact on the ground. “Clearly everyone is on edge and watching to see what happens. There has been no change in customer behavior so far,” he said. “Obviously the stocks are baking in a significant downturn in Macau next year, which could, of course, happen although so far there are no obvious similarities so far between the global financial crisis-led slowdown in 2008/09 or the anti corruption-led slowdown in 2014/15 and today.” Still, the trade war shows no sign of abating, with tariffs affecting about $260 billion in bilateral trade, which are already having a

GREATER CHINA 9

negative impact on China’s economy. Factory activity stalled in September after 15 months of expansion, with export orders falling the fastest in over two years, a Caixin survey found. New investment growth is also at a record low. On October 7th, Beijing announced it was cutting reserve requirement ratios by one percentage point from Oct. 15th to give the lower financing costs and give its economy a boost.

“

Macau in a slowing growth environment tends to underperform, and we do not expect the stocks to trade above longterm averages.

”

The trouble is many of the worst-hit provinces are the southern export-trade driven coastal regions, which form the main feeder markets for Macau. “If you look at the Macau market, 75 percent of revenue is from VIPs and premium mass, these are basically high-net-worth individuals, with a lot from Guangdong and other coastal provinces,” Bernstein Research analyst Vitaly Umansky said in a recent podcast. “If their own economic situation worsens as a result of a trade war and China slows, we are going to have significant headwinds to new growth in Macau and that’s where the short-to-mediumterm concern lies.”

Umansky said he is not optimistic of a short-term solution to the trade battle, which he sees as being part of a larger geopolitical struggle. “If you take a step back and think about the parties around President Trump and their view of China as a strategic competitor, it’s hard to see how this all goes away relatively quickly.” He said any trade concessions designed to trim the deficit are unlikely to be seen as a victory by those who regard China as a potential threat. There is little doubt that the first sector to feel the strain will be the high rollers and those operators with the biggest exposure to VIPs will be the hardest hit. Morgan Stanley recently raised its rating on Sands China, the most mass market-focused of Macau’s operators to overweight from equal weight, while cutting Galaxy Entertainment from overweight to equal weight. It cited Sands’ mass exposure, high dividend payout and yield and strong Q3 outlook for its decision. It also said it favours MGM China over Wynn Resorts and Galaxy as it’s cheap with the ramp up of its new Cotai resort not yet priced into the stock. It noted Wynn and Galaxy have high exposure to the VIP and premium mass business. Longer term, there remains a question mark over whether the tension between Beijing and Washington will have any impact on the concession renewals for the Macau operating licenses. Govertsen said it’s highly unlikely that trade wars will have any impact whatsoever as we do not expect any decisions to be made until well after 2022.” Umansky agreed that a present, the renewals are too far away, but added it’s something to keep an eye on. If tensions continue to ratchet up, the U.S. operators could find themselves at higher risk than the locals.

Asia Gaming Briefings | November 2018

GREATER CHINA 10

Wynn macau

Sands China

Wynn Macau (1128:HK) operates two resorts, with its $4 billion Wynn Palace opening in 2016. The company’s original property is on the Macau Peninsula. The Wynn Palace has 1,700 hotel rooms and 90 percent of the resort will be non-gaming. The resort has two further plots of land available for development and the company is considering adding more non-gaming attractions. (Wynn results 25th)

Sands China (1928:HK) has five properties in Macau. The $3 billion The Parisian opened in September 2016 and is now a key driver of group results. It features a scale replica of the Eiffel Tower, nearly 13,000 hotel rooms, two million square feet of retail-mall offerings and two million square feet of MICE capacity. Announcing Q3 results, Chairman Sheldon Adelson expressed confidence in Macau’s potential and said the company would be stepping up investments across its Cotai properties, with new projects to be rolled out in 2020 and 2021. For the quarter, total revenue for Sands China increased by 13 percent to $2.2 billion, while adjusted property EBITDA reached $754 million, an increase of 15.8 percent year-on-year. Bernstein Research said the results were largely within its expectations.

SJM Holdings SJM Holdings (880:HK) has 22 casinos in Macau, though the former monopoly has been losing market share to new IRs on Cotai. The company recently announced the appointment of Paul Baker, a former Genting executive, to head its Lisboa Palace IR. The opening of the $4.6 billion resort has been delayed until the second half of next year. Duty-free retail operator China Duty-Free Group will be one of the anchor tenants of the retail space at the new resort, with 7,500 square meters of retail space on the first floor. (Earnings on 30th)

MGM china MGM China (2282:HK) is operating two casinos, with its MGM Cotai IR opening in February. The IR, with its jewellry box design, is already contributing to group results. The HK$27 billion IR features 1,400 hotel rooms and suites, meeting space, high end spa, retail offerings and food and beverage outlets as well as the first international Mansion at MGM for the ultimate luxury experience. (Earnings on 30th)

Galaxy Entertainment Group Galaxy Entertainment Group (27.HK) has three main properties and runs three City Club casinos inside hotels. The company’s Galaxy Macau Phase 2 and Broadway at Galaxy Macau opened on May 27, 2015, almost doubling the capacity of the resort. The company is seeking a license in Japan and also wants to build an IR on Boracay in the Philippines, though President Rodrigo Duterte has said he will not allow that to proceed. For Q3, Galaxy reported a six percent increase in its net revenue to $13 billion. Group adjusted EBITDA was $3.9 billion, up 10 percent year-on-year. Despite the increase, Galaxy said it suffered from bad luck in its gaming operations which impacted adjusted EBITDA by $332 million.

Asia Gaming Briefings | November 2018

Melco resorts & entertainment Melco Resorts & Entertainment (6883. HK) has three casinos and the Mocha Clubs. The company operates the City of Dreams and Studio City in Macau and the City of Dreams Manila. The company’s Studio City International Holdings unit recently raised a total of $359.4 million in a U.S. Initial Public Offering, with a final offer price of US$12.50 per ADS. The company sold 28.75 million ADS in its offering, accounting for approximately 38.7 percent of the enlarged issued share capital of Studio City. Upon closing of the global offering, Melco said that its interest in Studio City will be diluted from 60 to 57.3 percent but will remain as Studio City’s majority shareholder.

GREATER CHINA 11

GROSS GAMING REVENUE GGR 2017

+19.1%

+21%

+17.2%

Sep

+2.8% 13.9%

2018E 6.8%

2019E

(Source: Deutsche Bank)

2018E 2019E

13% 5% (Source: Morgan Stanley)

Pansy Ho touts non-gaming focus Pansy Ho Chiu King, co-chairperson and executive director of MGM China says that Macau operators have been “collectively positioning” themselves to appeal to non-gamblers ahead of the 2020 and 2022 concession renewals. Ms. Ho said: “I think it is conducive for the industry as a whole to have the extra time to put together a stronger proposition and to demonstrate we are capable of attracting the non-gamers.” Ms Ho was quoted by Macau Business as saying. “…we shall have to see, because everyone is asking the same question, is it [the diversification efforts] effective? We will see if this will be changing the landscape,” she added. The first of Macau’s gaming concessions are due for renewal / rebidding in 2020. However, the government has kept hush on how the process will be conducted – saying only that it is currently “researching” the renewals at this stage.

Macau gaming taxes up 17 percent year to August The Macau government saw its direct taxes from gaming reach MOP70.9 billion (US$8.7 billion) from January to August 2018, up 17 percent from the prior year period. During the same period in 2017, the government recorded gaming taxes of MOP64.1 billion. In 2016, gaming tax revenue reached MOP 54.9 billion in the period. The accumulated tax revenue makes up for 86 percent of the MOP82.4 billion in gaming tax revenue targeted for the full year. The increase in gaming tax revenue is attributed to a similarly strong growth in gaming revenue. However, a slowdown has been expected for the second half of 2018.

Asia Gaming Briefings | November 2018

NORTH ASIA

JAPAN

PR agency power paves roads to IR licenses In recent years, IR operators have been building their Japan operations from scratch, their eyes firmly on the prize of winning a gaming license and the considerable profits that are almost universally expected to derive from the Japanese market. One of the key tools that most or perhaps all of these operators have reached for is that of local PR agencies.

NORTH ASIA

ournalists communicating with gaming executives will often find themselves directed to one of these firms: Las Vegas Sands has worked with the Japan branch of Powell Tate; Caesars works with Ashton Consulting; Galaxy Entertainment works with Golin; Rush Street Gaming has employed Finsbury; and the list goes on. The larger IR operators do not necessarily form exclusive connections with their local PR firms, but may hire different companies for different tasks. They are not in the habit of making public which firms they have contracted with, so the picture that can be offered here is necessarily incomplete. Famously, Japan is dominated by two giants in the communications sphere, Dentsu and Hakuhodo. Their power is omnipresent in Japan, and their political connections go right to the top. To name just one of them, among Dentsu’s alumna is First Lady Akie Abe. One consequence of this industry structure is that the more-than-a-dozen international IR operators setting up in Japan quickly come to realize that the largest PR firms have contractual relationships with many other operators that they are in direct competition with. The major PR firms try to put the operators at ease by explaining that different teams will handle each account, and that strict walls are put up between the various teams. They insist that the confidentiality of the operators’ strategies can be fully maintained. With the stakes so high, more than one of the international operators views such an arrangement with caution. Tim Drehkoff, CFO of Rush Street Gaming, explains that his company was initially surprised to hear such things, and ultimately decided to seek a smaller PR firm whose loyalties are undivided. “It was important to us to find a PR agency that

wasn’t conflicted with someone that we may be competing with,” he observes. Other operators feel very much the same way. Once the contracts are signed, many operators are having a similar set of experiences. There is general agreement that the PR companies in Japan are very strong when it comes to political connections and their knowledge of the decision-making landscape. They have established relationships with key politicians and bureaucrats at both the national and prefectural levels. They can make introductions and facilitate meetings.

important “to usIt was to find a PR

agency that wasn’t conflicted with someone that we may be competing with.

”

Indeed, some operators have noted that PR agencies in Japan are focused on this aspect of their work more than in some other countries. They are very useful sources of intelligence and provide a good deal of important information that foreign business people coming into the Japanese market need to know. The key weakness that many operators have discovered is that, not surprisingly, the Japanese PR firms know very little about the gaming and IR industry, as until recently they had never handled such accounts. It is obviously very difficult to construct a communications

GROSS GAMING REVENUE GGR $5b - $6b

(Source: Fitch)

GGR 2025 $15b

GGR 2030E $24.2b

from six locations

(Source: Global Market Advisors)

(Source: Morgan Stanley)

Tomakomai race narrows to six The competition to partner with the Tomakomai municipal government appears to have now narrowed down to six serious suitors - Caesars Entertainment, Hard Rock International, Mohegan Sun, Rush Street, Clairvest, and Foxwoods. All six companies have given public presentations in Tomakomai in recent months. These presentations were organized by the Tomakomai IR Promotion Council under the chairmanship of Hiroaki Fujita, the president of the Tomakomai-based Fujita Corporation, which is mainly involved in the operation of restaurants and fast food outlets. Among the six IR operators in the hunt, Clairvest and Hard Rock have already established local offices.

strategy about a product that you don’t really understand. Clearly, there will be a learning curve in this respect, with major operators working hard to quickly educate the teams that they have made contracts with. Most of the competing IR operators are also building their own permanent teams in Japan. There seems to be a consensus that, at least for the time being, it is necessary to have both in-house staff and to hire outside PR firms for various tasks. Indeed, many also note that their PR teams back in their home countries are also playing a crucial role in formulating their overall communications strategy for the IR license hunt in Japan. The role to be played by the PR agencies will also evolve as the process continues. At a certain point within the next few years, the importance of lobbying government officials will recede and that of engaging with the general public will start ramping up. Perhaps by the end of 2020 or so, the three consortia to receive IR licenses will have been chosen and the IR construction process will get underway. The task of shaping messages to the host communities—typically concerned with issues like gambling addiction, an increase in criminal activity, and the corruption of the values of young people—will become a primary concern. In this area, too, some observers say that the PR firms will have a learning curve, as these are not matters that they really have much experience in dealing with. By that time, the successful IR operators will be filling out their own in-house Japanese staff and will become less reliant on what the contracted PR agencies offer. Still, for the giants Dentsu and Hakuhodo, with their unparalleled reach in print and broadcast media, there will undoubtedly be an ongoing role to play even after the first IRs open their doors.

Sega Sammy sets sights on being major IR operator Sega Sammy Holdings says it wants to be on an “equal footing with world-famous IR operators” in any project in Japan. The group has released a 150-page “Integrated Report 2018” setting out its intentions. “Many companies have announced their intention to participate,” Chairman and CEO Hajime Satomi said. “However, I want the group to hold the majority of projects and develop businesses in a broad range of fields with casino operations as the central focus. At present, we are laying the foundations for participation by accumulating know-how through Paradise City and other resorts, establishing financial resources, and conducting multifaceted investigation and analysis.”

Asia Gaming Briefings | November 2018

NORTH ASIA 14

SOUTH KOREA

Mohegan teams with Live to fill Inspire Arena Mohegan Gaming & Entertainment has teamed with Live Nation in a bid to drive non-gaming revenue at its planned $5 billion South Korean resort.

he development, known as Project Inspire, is close to the Incheon International Airport, one of the busiest in the world and is scheduled to open in 2020. The casino portion of the property will be for foreigners only and therefore the ability to attract large local audiences with entertainment and other options may be key to driving revenue. “Mohegan Gaming & Entertainment and Live Nation have been long-time partners in creating one of the most successful arena venues in the world for its size, the Mohegan Sun Arena in Uncasville, Connecticut,” said Mohegan CEO Mario Kontomerkos. “Now, we are partnering again to do the same, only this time it will be at the Inspire Super Arena at the Incheon International Airport, right in the heart of the burgeoning Northern Asia entertainment market.” The companies said the venture was a “multiyear” partnership, though gave no further details. Alan Ridgeway, Live Nation president, international and emerging markets, said touring in North Asia has been expanding significantly in recent years and the Inspire arena will help to boost growth. Project Inspire is expected to include a three-tower luxury hotel complex with more than 1,300 five-star and six-star guest rooms; more than 20,000 square meters of luxury retail; more than 20 food and beverage concepts and a 4,500 square-meter Korean cosmetics and beauty hub, promoting South Korea’s dominance in Asia in this field. The arena will have capacity for up to 15,000 attendees. The resort is also expected to include an indoor/outdoor amusement park with 100,000 square meters of high-tech amusement rides; a 33,000 square-meter EcoAdventure Park featuring indoor rock climbing, zip lining, an indoor rainforest, and an archaeology experience

Asia Gaming Briefings | November 2018

and a 20,000 square-meter casino. This property will be the first and only destination resort in the world with an adjacent private air terminal. Project Inspire will join Paradise City, a joint venture between South Korean operator Paradise Co. and Japan’s Sega Sammy and a planned development by Caesars Entertainment. Paradise City opened in April 2017 and has been ramping up strongly, now accounting for about a third of total group revenue. In Q2 sales were up almost 61 percent year-on-year, although were lower quarter on quarter due to bad luck. The company said 68 percent of its revenue was from non-gaming sources due to strong domestic demand. In the casino, Japanese players were a major driver for growth. The company also said it had seen a solid performance from other VIP sectors. However, the VIP drop from China was lower, falling to KRW339 billion from KRW391 billion the same quarter the prior year. Relations between Seoul and Beijing were strained due to the deployment in South Korea of a U.S. anti-missile defence system. In retaliation, China banned tour groups to the country in March, 2017. Although that ban has since been eased, a Communist Party owned newspaper in June warned South Korea that China tourism numbers are unlikely to return to their pre-ban levels unless Seoul changes its approach to national security. Paradise City opened new facilities in September, with a greater emphasis on entertainment, completing the first phase of the development. The facilities developed under Phase 1-2 feature 110,000 m2 of floor area and are comprised of a boutique hotel, Art Paradiso; a premium spa, Cimer; a club, Chroma, which will be the largest in Northeast Asia; an art gallery, Paradise Art Space; an event-type shopping mall, Plaza; a cutting-edge film studio, Studio Paradise and an indoor family entertainment facility, Wonderbox, together with other facilities.

NORTH ASIA 15

GROSS GAMING REVENUE Annual Casino Sales (in hundred million won) Only for foreigners

Kangwon Land

17.000 16.000 15.000 14.000 13.000 12.000

2013

2014

2015

2016

2017

(Source: National Gambling Control Commission)

Opposition demands illegal hiring probe Opposition parties submitted a proposal to launch a joint parliamentary probe into alleged illicit hiring practices of public agencies, including state-owned Kangwon Land. Demand for an investigation came after recent allegations against Seoul Metro, which alleged that 11.2 percent of its 17,000 strong workforce was related in some manner. Kangwon Land, a stateowned casino, was also embroiled in a hiring scandal after it was revealed that the operator had hired children of powerful figures in the country from 2011-2014 under the leadership of Choi Heung-jip. Liberty Korea Party leader Kim Byong-joon said the exposed cases may only be “the tip of an iceberg,” according to Korea Herald.

Landing chairman still missing Landing International Development says there is still no news of its missing chairman, whose disappearance has sent the company’s shares into a tailspin. Landing confirmed recently that Yang Zhihui is still missing and can’t be contacted. The company announced on August 23 that Yang could not be found, with local media in Cambodia subsequently reporting a few days later that he had been arrested there. There has been no confirmation of his detention. The company operates the Jeju Shinhwa World IR on the island of Jeju and regulators there say they are monitoring operations of the project as a precautionary measure.

Asia Gaming Briefings | November 2018

NORTH ASIA 16

RUSSIA

Junket demands force VIP policy rethink Summit Ascent Holdings says it’s seeking cooperation with new junkets, in particular those from Macau, after its current agents began demanding higher rebates.

he Hong Kong-listed company, which runs the Tigre de Cristal integrated resort in the Primorye gaming zone, said it had been under increasing pressure from agents since the beginning of the year. Instead of giving in and accepting an erosion in its profit margin, Summit Ascent said it had decided to focus more attention on developing its premium mass business. In its interim report, the company said the results so far had been “quite encouraging,” although VIP business took a hit in the first half, with rolling chip turnover dropping 23 percent to HK$6.5 billion as a result of its policy. VIP revenue net of commissions dropped 45 percent. However, mass market revenue jumped 47 percent to HK$83.5 million compared with the first half of the prior year, marking the first time this sector has outperformed. During the initial ramp up period the resort struggled to attract the mass market, and in particular locals, due to rampant illegal gambling and poor infrastructure links. It had instead been heavily reliant on mainly Chinese VIPs. “On a positive note, we remain of the view that our unique competitive advantages and location will attract new agents, particularly those from Macau, to work at our property in

the near future,” it said. “We therefore remain sanguine about the prospects of our rolling chip business.” Tigre de Cristal opened in autumn 2015 and was the first of several planned investments for the zone in Russia’s Far East, close to Vladivostok. Progress on other projects has been slow, though activity now appears to be ramping up in tandem with increasing tourism and flight connections. Summit Ascent said as of June 2018 there were almost 50 percent more direct flights than the same time a year earlier and tourism has been growing at an annualized rate of more than 33 percent in the past five years. The company is now planning to forge ahead with the second stage of its development, which is slated to include more shopping and an indoor beach. It says Phase II will be geared to both “foreign mass and rolling chip customers,” with extensive dining and entertainment facilities, anchored by a premium outlet mall. It says Phase II has been delayed until the second half of 2020 due to changes in shareholding at the group level and subsequent alterations in the design. In December 2017, Macau tycoon Lawrence Ho sold his shareholding in the company and stepped down as non-executive director and chairman to be

positive note, we remain of the view “thatOnoura unique competitive advantages and

location will attract new agents, particularly those from Macau, to work at our property in the near future.

”

Asia Gaming Briefings | November 2018

replaced by Kuo Jen Hao of Taiwanese shipping firm First Steamship. Shortly thereafter the Taiwanese company became the largest single shareholder in Summit Ascent. It says it’s now finalizing the design and financing options and hopes to begin construction in the first half of next year. Given that other planned projects appear to be accelerating, the company expects to gain the benefits of a cluster of resorts as early as 2021. Cambodian casino operator NagaCorp’s Naga Vladivostok is scheduled to open next year, while a third resort being developed by Russian group Diamond Fortune Prim is also expected to open next year, known as the Selena resort. Russian businessman Maxim Smolentsev, who heads Shambala, presented its plans to the governor of the Primorye Territory Andrey Tarasenko earlier this year. He plans to invest RUB 8 billion, (US$128.6 million) in a resort with a casino with 500 EGMs and 50 gaming tables, as well as a five-star hotel with 270 rooms and a spacious nightclub. More recently, K International, a South Korean company, outlined plans for a possible RUB18 billion entertainment project, with a casino, a shopping centre and a Duty-Free area.

NORTH ASIA 17

N.Korea denies Moscow embassy hosting underground casino

Police bust mega Moscow gambling ring

North Korean officials have denied claims of an illegal casino in its embassy in Moscow, calling the reports “complete nonsense”. Local news outlet TASS recently quoted a local law enforcement officer alleging that there was an illegal underground casino operating in the premises of the North Korean embassy in Moscow. “A total of fifteen gambling joints and casinos were closed down in Moscow. One of them was in a building on the premises of the North Korean embassy,” said the source to TASS. The casino allegedly served deputies, lawyers, and diplomats, with an army of guards there to keep order. The report was quickly denied by the local DPRK diplomat, who said the story was “complete nonsense”, and that there was “nothing out of the ordinary.”

Russian law-enforcement in September busted one of the largest criminal communities organizing illegal gambling in Moscow, with monthly turnover reaching into the hundreds of millions of roubles. More than 100 people were detained including the suspected head of the criminal community, According to Russian Investigations Committee representative Yulia Ivanova, the criminal network has been active since May 2016, disguising its illegal gambling venues using legal bookmakers’ brands. It is reported to run 15 gambling clubs and casinos in Moscow. “The financial turnover of the criminal community amounts to hundreds of millions of rubles per month,” Ivanova noted. The news comes amid the ongoing crackdown on illegal gambling in Russia.

GROSS GAMING REVENUE Rolling chip turnover

Total table drop

Q1 2018

Q2 2018

1H 2018 1H 2017

3,239

Q2 2018

3,268

164 184

1H 2018

6,507 8,403

1H 2017

348 259 (Source: Summit Ascent)

Asia Gaming Briefings | November 2018

SOUTH EAST ASIA

PHILIPPINES

Risk premium clouds prospects “I hate gambling. I do not want it. There will be no casinos outside of what are existing. I am not granting anything.”

ince the beginning of his presidency just over two years ago, Philippine President Rodrigo Duterte has not minced words when talking about his disdain for gambling. It was only a couple of months ago, he lashed out at the casino sector anew with those stark words. “Online gambling must stop,” were Duterte’s words during his very first cabinet meeting on June 30, 2016 as he vowed to destroy illegal online gambling and electronic gaming parlors that had previously been loosely regulated. Putting action to words, on February 2, 2017 he passed an executive order directing law enforcement agencies to step up the fight against illegal gambling. In January, Duterte ordered state-owned casino regulator, the Philippine Amusement and Gaming Corp. (PAGCOR) to stop accepting new casino applications to prevent overcrowding in the sector. But that has not stopped confusion between the President’s office and PAGCOR and the two bodies have made conflicting statements about the status of casino projects in the country, creating an uncertain investment environment in the gaming sector. In late March, Duterte announced that he would not allow any casinos to open on Boracay, and that the island would be closed to tourism for six months for an environmental cleanup. The pronouncement came only a few days after PAGCOR issued a provisional license to Macau-based Galaxy Entertainment and its local partner Leisure and Resorts World. Later, Galaxy Vice Chairman Francis Lui Yiu Tung said his company’s dispute with the government over its plans to develop a gambling resort on Boracay was just a “misunderstanding.” Duterte had in fact held a meeting with Lui Chewoo, chairman of Galaxy on December 6, 2017 in the Palace, where according to PAGCOR Chair, Andrea Domingo, the proposed casino-resort was discussed and agreed upon. But when asked, Duterte appeared to not know about Galaxy Entertainment’s plan, saying “What? Mga casino? Who owns the casino? There are no plans there for casinos. There are too many.” Although Galaxy officials have expressed optimism about their chances of proceeding with casino projects in both the Philippines and Japan, they have said that Macau will remain their priority for now. Then in August, Duterte abruptly shelved Landing International’s $1.5 billion integrated casino project in Manila and fired Nayong Pilipino Foundation Inc., which leased around

SOUTH EAST ASIA 19

10 hectares to Landing just as it was breaking ground on the new project at an elaborate launch ceremony. Duterte ordered a review of Landing’s lease contract calling it “flawed,” and the 75-year lease period a “ridiculous long period of time.” After much confusion, Justice Secretary Menardo Guevarra said the deal between stateowned Nayong Pilipino and Landing would be investigated, but stressed that it did not mean the project was dead. “The removal of all the members of the Nayong Pilipino board, by itself alone, does not affect the implementation of the project,” he said following the event. A report by independent financial adviser FTI Consulting Philippines, Inc. states that “despite the (gaming) industry’s positive outlook, it is not without risks brought about by the current regulatory environment.”

Policy uncertainty “ has always hounded

the gaming segment, from tax implications, to money laundering, and now to expansion plans of other casinos.

”

The report goes on to state that the current administration’s policies on casinos and gaming were “quite unpredictable,” This confusion and uncertainty comes at a time when the Philippine gaming sector is poised to become one of the fastest growing in Asia, partly benefiting from bans on gambling in many Southeast Asia nations such as China. According to government data, at the end of last year, there were nine private casino firms in the Philippines operating 1,444 gaming tables and 9,427 electronic gaming machines. The country boasts one of Asia’s fastest-growing gambling markets, with gross gaming revenues rising 11.6 percent to 176.5 billion pesos last year. “Policy uncertainty has always hounded the gaming segment, from tax implications, to money laundering, and now to expansion plans of other casinos. The more important question is if the growth of the market will be strong enough for more players to enter the market. With the

risk of VIP growth slowing down because of uncertainty in China’s economy, this brings into question if the market can handle more supply in the near future,” said Richard Laneda, a research analyst at Col Financial. “Sentiment was ok up until this year when the China economy was put at risk because of the trade dispute with US. We saw VIP volume growth in Macau slow down in 2H18 and this affects the outlook not only in Macau but also in the Philippines,” he added. While VIP growth might be at risk, there is still movement in the online gaming sector. The recently set up Philippine Online Gambling Operations (POGOs) licenses have generated some economic development, particularly in the property and F&B sectors. Gambling is illegal in China and to skirt this obstacle gambling companies have to operate outside the mainland- mainly the Philippines. According to the PAGCOR, 57 POGOs have been authorized to operate in the Philippines. While it’s unclear how many Chinese are employed under these POGO licenses, anecdotal evidence shows that the majority are Chinese-owned, helped by Duterte’s improved ties with Beijing. PAGCOR predicts the licenses will generate P6 billion in fees in 2018. The gambling regulator gets 2 percent of the gross gaming revenues of POGOs,which are then used for PAGCOR’s programs. “I think they are here to stay as they are an important source of funds for the government. But additional demand has slowed this year and could slow further next year as PAGCOR is no longer giving out new licenses,” said Laneda. Despite the uncertain political environment, some plans are moving ahead. Japan’s Universal Entertainment Corp announced it will take its local unit public through a backdoor listing in Manila. Asiabest Group International, an investment holding company listed on the Philippine Stock Exchange, said its shareholders signed a deal for Universal’s subsidiary, Tiger Resort Asia Ltd, which owns operates the $2.4 billion Okada Manila integrated casino-resort, to acquire two-thirds of the company for $12 million. PAGCOR has said it will look into the transaction. “Any application by our licensee to undergo public listing will require approval of PAGCOR but we have not received any application yet from Tiger,” said Domingo. While the President has made clear his distaste for gambling, it’s also clear that the gambling industry is very lucrative for the country.

Asia Gaming Briefings | November 2018

SOUTH EAST ASIA 20

Bloomberry Resorts

City of Dreams

Bloomberry Resorts’ Solaire was the first IR to open in Entertainment City and is now planning a second IR to the north of Manila to cater for the local mass market in Quezon City. Solaire is a 16-hectare integrated resort. The Bay Tower of Solaire consists of a casino with an aggregate gaming floor area of approximately 18,500 square meters (including 6,000 square meters of exclusive VIP gaming areas), with about 1,400 slot machines, 295 gaming tables and 88 electronic table games. Bay Tower has 488 hotel rooms and 15 specialty restaurants. Contiguous to the existing Solaire Resort and Casino, the Sky Tower consists of a 312 all-suite hotel, an additional ten VIP gaming salons with 66 gaming tables and 223 slot machines. It also includes a certified 1,760-seat lyric theatre. Sky Tower has been named as one of the 58 most luxurious hotels in the world by Forbes Travel Guide 2018. This is the second time running that the hotel tower has won the Forbes Travel Guide 5 Star Award.

The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. Melco has dropped plans to delist Melco Resorts & Entertainment (Philippines) after objections raised by some minority shareholders. It will proceed with a planned tender offer. City of Dreams Manila has six hotel towers with approximately 950 rooms in aggregate, including VIP and fivestar luxury rooms and high-end boutique hotel rooms, a wide selection of restaurants and food & beverage outlets, a 4,612.44 square meters family entertainment center in collaboration with Dreamworks Animation, a live performance stage, two international nightclubs and a multi-level car park. In October, the company opened Southeast Asia’s first Bandai Namco VR gaming facility, named “The Garage.” With a space of 2,714 square meters, the attraction is the first of its kind in the Philippines – merging VR gaming recreation with dining. The zone

$4.52b $3.83b

2016

$3.19b

2017

2018E

2019 (Source: Morgan Stanley)

Philippines mulls visitor caps The Philippines is considering imposing “capacity limits” on tourists in major tourist hotspots similar to those imposed in Boracay Island. Tourism Secretary Bernadette Romulo- Puyat said President Duterte has already instructed the Department of Tourism, the Department of Environment and Natural Resources, and the Department of the Interior and Local Government to check the carrying capacity of all major tourist destinations. Boracay currently has a tourist limit of 19,215 per day – a limit used to assist with the island’s rehabilitation. Boracay had a soft opening on October 26, with new guidelines announced for tourists, business owners, and residents. Romulo-Puyat said that big gatherings, such as the annual La Boracay in May, as well as gambling and casinos, will not be allowed on the island.

Asia Gaming Briefings | November 2018

Tiger Resort, Leisure and Entertainment Okada Manila, owned by Japan’s Universal Entertainment, is the largest resort in Entertainment City and the last to enter the market, with a soft opening in 2016. The property spans 44 hectares and at the completion of Phase One, Okada will have 994 hotel rooms and operate 500 tables and about 3,000 slots. Its centrepiece is the world’s largest coloured fountain, as well as a giant inner city beach complex, known as “Cove Manila.” The company is planning a backdoor listing on the Philippine Stock Exchange through a takeover of Asiabest Group. Former Universal Chairman Kazuo Okada is questioning the transaction and has filed intra-corporate suit against Tiger fighting his removal from the board.

Resorts World Manila

GROSS GAMING REVENUE

$2.81b

will feature 3 immersive VR games from Bandai Namco, and 10 crowd-favorite food and beverage restaurants via food trucks.

Casino workers banned from gaming The Philippines gaming regulator ruled that all gaming workers holding a “Gaming Employment License” (GEL) will be prohibited from playing in any gaming establishments in the Philippines. The Philippine Amusement and Gaming Corp said that it has added the names of all GEL Holders into the National Database of Restricted Persons, effective September 10, 2018. Those included in the entry ban are gaming table and machine operators, promoters, workers in cashier cages, security and cleaning staff, restaurant staff, and staff members that work in surveillance rooms.

Travellers International Hotel Group, a joint venture between Genting Hong Kong and Alliance Global, is the owner and operator of Resorts World Manila. The hotel room count for the group’s three hotels (Maxims Hotel, Remington Hotel, and Marriott Hotel Manila) remains at 1,226. The property is currently in the third phase of its expansion. The new Grand Wing will have three international luxury hotels – Hilton Manila, Sheraton Manila Hotel, and Hotel Okura Manila, adding approximately 940 rooms. It will also include new gaming and retail spaces, as well as six basement parking decks. Further down the road, it will open the fourth and final IR planned for Entertainment City, which is scheduled for 2020. The group is planning to spend P240 billion (US$4.4 billion) over three years to ensure its “organic growth”. AGI said its capex is intended to launch more development projects around the country, including the expansion of its hotel and integrated resorts operations, among others. “We are mindful of the current domestic and global economic developments, but we remain cognizant of the vast opportunities in the market; hence, our continued aggressive capital spending,” says Kevin L. Tan, chief executive officer, AGI.

SOUTH EAST ASIA 21

Asia Gaming Briefings | November 2018

SOUTH EAST ASIA 22

MALAYSIA

Malaysia ops outperform as new attractions draw visitors Genting Malaysia says it plans to further leverage new facilities at its Resorts World Genting property to boost growth and is seeking opportunities in regional markets.

n a recent presentation to analysts, Malaysiaâ&#x20AC;&#x2122;s only casino op erator highlighted the positive impact from the Genting Integrated Tourism Plan (GITP), which it launched in 2013. The RM10.4 billion ($2.5 billion), 10-year overhaul of its resort in the Genting Highlands is now close to completion with the new attractions helping to boost visitation by 21 percent in the first six months of this year. As of end June, the company had invested

Asia Gaming Briefings | November 2018

RM7 billion in the project, rolling out new hotel and casino facilities, a cable car ride to the hilltop resort and a premium outlet shopping mall. Still to come are the attractions seen as likely to be the main crowd pullers, which are a theme park developed with 20th Century Fox and an indoor theme park, as well as more luxury hotels. The 20th Century Fox attraction has been delayed and is now expected to open in the first half of 2019, with the indoor park expected towards the end of this year.

The resort attracted 12.8 million visitors in the first half, with about 73 percent of the total being daytrippers to the property. Average occupancy across its 10,500 hotel rooms stood at 96 percent, up from 93 percent in the same period last year, with the average rate rising 15 percent to RM105. The group, which has operations in the U.S., Bahamas, the U.K. and Egypt, still gets about 67 percent of revenue and 83 percent of EBITDA from its Malaysian operations,

SOUTH EAST ASIA 23

RGB eyes HK IPO for technical unit Electronic gaming machine supplier RGB Asia has confirmed plans to spin off its technical support and management division and list it on the Hong Kong Stock Exchange. The Penang-based company told The Edge Markets that it was seeking more capital to expand its concession business - in terms of location as well as number of outlets and gaming machines. It said it would keep overall control of the unit after the listing, which would likely be on the main board.

Political tensions hit tourism The number of Chinese tourists to Malaysia dropped more than 30 percent during the key Golden Week holiday following political and trade tensions between Beijing and Kuala Lumpur. According to tourism officials, it’s the first time that Malaysia has seen a drop in China visitors during the period. The country was the sixth most popular destination for outbound Chinese tourism last year, but that’s likely to drop down to about tenth in 2018, local media reports.

GROSS GAMING REVENUE which outperformed its other geographical regions in the first half. Overall group revenue gained 7 percent, while revenue from Malaysia was up 14 percent to RM1.9 billion. Adjusted property EBITDA was up 19 percent on a group level and up 23 percent in Malaysia to RM540.2 million. Genting said it had benefited from higher hold in the mid-to-premium section of the market in Malaysia, while its margin had improved due to lower VIP costs and reduced expenses from the ramp up of the GITP. However, the momentum slowed in Q2, with revenue up just 10 percent. Research firm Alliance DBS said the decline was likely due to the World Cup and it expected an improvement over the following reporting periods. Going forward the group said it plans to improve its digital and strategic marketing efforts as well as step up database marketing to pull in greater visitor numbers. In its overseas operations, Alliance DBS said the company’s results had “not been so inspiring.”

In the U.K. and Egypt, revenue dropped 2 percent and adjusted EBITDA was down 46 percent in the first half. The group attributed the decline to lower business volumes at its land-based properties in the U.K., with visitors down 5 percent. Revenue at Resorts World New York City and Resorts World Bimini was up 4 percent in the first half, while losses at the Bahamas property narrowed significantly. The group is also weighing up its options when it comes to a $426.3 million investment in promissory notes issued by the Mashpee Wampanoag Tribe to finance an integrated resort in Taunton, Massachusetts that Genting was to have managed. On Sept. 7th, the U.S. government ruled that the tribe didn’t satisfy the conditions to have the land in trust for an IR. “The group is currently deliberating the appropriate course of action by working closely with the tribe to review all options available for the group’s investment in the promissory notes as well as its recoverability,” it said.

Revenue Malaysia 67%

US & Bahamas 15% UK & Egypt 18%

Adjusted EBITDA Malaysia 83%

US & Bahamas 12% UK & Egypt 5%

(Source: Genting Malaysia)

Asia Gaming Briefings | November 2018

INDOCHINA

CAMBODIA

Naga eyes further growth NagaCorp says its pushing ahead with plans for the third phase of its IR in Phnom Penh after achieving strong success with Naga2, which opened in late 2017.

Asia Gaming Briefings | November 2018

INDOCHINA

he Hong Kong-listed company said Naga3 is already in the advanced planning stage. In the past, the company has said that a third stage would be likely to incorporate more non-gaming facilities, such as a water park, to appeal to the region’s growing middle-class family leisure market. “In view of the success and fast ramp-up of Naga2 and often times facing capacity constraints for both gaming and non-gaming areas, increasing inbound tourism especially from China and the stable political environment, the group is in advanced stages of planning for the development of Naga3,” the company said in a filing to the Hong Kong Stock Exchange. “Based on feedback from stakeholders, the group is confident that additional capacity is necessary to further fuel business growth (both gaming and non-gaming) to position the group as one of the most successful integrated resorts in Asia.” In the nine-months to end September,

gross gambling revenue almost doubled to $1.07 billion, with VIP rollings up 128 percent to $25.03 billion and mass table buy-ins up 57 percent to $887 million. For Q3 alone, Union Gaming points out that mass gaming beat expectations, increasing by 64 percent in the period, while VIP underperformed its expectations with a 153 percent surge to $8.2 billion, below the firm’s forecast for $9 billion. “Given the lumpiness of VIP we are not concerned by the delta,” it said. “Further, and similarly to mass tables, we generally expect 4Q to be stronger than 3Q. With increased junket awareness of Naga2, and some of the best commissions available in the whole of Asia, we expect this segment to continue to post better-than-Macau growth rates for the foreseeable future.” Naga 2, designed by U.S. architects Steelman Partners, opened its doors in Nov. 2017. The extension adds an extra 903 rooms, taking the total to 1,700, as well as MICE

space and more than 3,800 square meters of duty free retail. It also elevates the service and entertainment offerings to a level not yet seen in Cambodia, with regular on-site performances both traditional and modern. “Overall, the property is more modern, brighter and luxurious compared to Naga1 with interior design reminiscent of certain Macau Cotai buildings,” research house CIMB wrote in a report. NagaCorp said it has seen minimal cannibalisation from Naga2, which is attracting a different clientele from its original property, which has retained its guests. The company is currently upgrading Naga1, with completion scheduled for next year. Analysts say the outlook is positive, with strong economic growth and tourism arrivals. Total international tourist arrivals increased by 11.1 percent to 3,455,716 visitors in the first seven months of 2018. Of the top 10 markets, China was the highest at 31.7 percent, followed by Vietnam, Lao PDR, Korea and Thailand.

GROSS GAMING REVENUE Unaudited figures for the 9 months ended 30 September 2017

Unaudited figures for the 9 months ended 30 September 2018 (units in US$’000)

Gross Gaming Revenue

Mass Market Business

553,267

+ 94%

1,071,268

Mass Tables Buy-ins

566,414

+ 57% VIP Business (Rollings)

EGM* Bills-in

11,001,798

+ 128%

887,631

1,316,119

+ 22%

25,034,448

1,603,100 (Source: Nagacorp)

Kelly Holding seeks lottery shakeup with blockchain platform

Amax signs services accord for Sihanoukville casino

Kelly Holding Group, a Cambodia-based company, says it is developing a blockchain powered lottery platform aimed at “revolutionizing” the lottery industry. The company said it is working on a “Taobao” platform, which allows users to design their own gaming rules, all of which will be guaranteed through blockchain technology. Through a decentralized structure, the platform would allow bankers to set their own rules through intelligent contracts and blockchain technology. Blockchain technology would also be used to encrypt currency, which would ensure the complete autonomy of funds and the safety of the users. The CTO of Kelly Chuangfu Club said that the aim of establishing a blockchain based gaming platform is to break boundaries and let users become both gamers and investors.

Amax International said a wholly owned unit had reached an HK$9 million ($1.1 million) accord to provide technical and pre-opening services to a casino in Sihanoukville, Cambodia. The casino is owned by British Virgin Islands-incorporated Cheung Shing Global Travel Entertainment, which is owned by Amax Chairman Mr Ng Man Sun. Amax will provide the design, development and implementation of information technology systems; the overall casino design; the establishment of operational and internal control structures and the provision of headhunting and recruitment services. It will also help with the procurement of all relevant licenses. The casino is expected to open in March next year.

Asia Gaming Briefings | November 2018

SOUTH ASIA

NEPAL

Tiger Palace ramps up Silver Heritage Groupâ&#x20AC;&#x2122;s Tiger Palace resort in Nepal appears to be recovering from its development hiccups to ramp up fast, turning positive on a property EBITDA level in August after less than a year in operation.

Asia Gaming Briefings | November 2018

he group points out the marker was reached despite Nepal being in the grip of the monsoon season, which makes access to the resort along potholed roads extremely difficult. The Australia-listed company said propertylevel EBITDA for August was $175,000, while revenue generated at the property in the first two months of Q3 was equal to 97 percent of revenue for the whole of Q2. Tiger Palace held the grand opening for its casino in March this year, though the hotel began operations in September last year. The resort features 100 five-star rooms, two luxury villas, Nepal’s largest swimming pool, as well as entertainment and MICE facilities. The casino is operating 45 tables and 216 electronic gaming machines. The property is situated near the Indian border and Silver Heritage is counting on the large and rapidly growing middle-class population there to populate its gaming tables. Casino gaming is only legal in two states and one union territory in India and none of the facilities currently available are of a worldclass standard. Silver Heritage said all statistics show significant traction into the third quarter despite the traditionally slow monsoon period. It has seen 11 percent compound monthly growth in table drop with 15.5 percent growth in total gross gambling revenue. It says about 60 to 70 percent of its visitors are return customers. The growth has come despite the fact that key transport infrastructure has not yet been completed. A 24km highway that will connect Northern India to Nepal’s main East/West highway is scheduled for completion in December this year and will pass close to the resort. While a domestic airport just 10km from the property is being extended and upgraded to become the second gateway to Nepal. The expanded airport, which is scheduled for completion in July next year, will be able to accommodate wide-bodies jets and is forecast to account for 30 percent of inbound traffic. Silver Heritage also operates The Millionaire’s Club and Casino in the capital Kathmandu and the Phoenix Club in Vietnam. It says the current GGR per table per day at the Tiger Palace is about $252, but that it’s “entirely possible” that figure could rise to match the $5,353 being generated per table in the Phoenix Club. In August, the company confirmed it has managed to complete the purchase of a second plot of land in Jhapa, East Nepal, for a second integrated resort. The company had initially

SOUTH ASIA 27

intended to purchase 115,134m2 for about $4 million, but was unable to raise the financing to complete the purchase. It subsequently came to an arrangement with the vendor for a smaller sized 74,500m2 plot for $3.2 million. The parcel is about the same size as the one the current Tiger Palace is built on. Although the Tiger Palace now appears to be moving in the right direction, the group has had a patchy first half, reporting that its group loss ballooned to $9.9 million. It recently raised

A$5.2 million from a retail entitlement offer, although the bulk came from underwriters. CEO Mike Bolsover told Finance News Network that the capital raising and renegotiation of bond terms had put the group’s balance sheet on a firmer footing. “We’re very confident again moving forwards that we’ll be able to both service the debt and also make additional earnings over and above that to fund expansion or for whatever strategies that we end up deciding as a board,” he said.

GROSS GAMING REVENUE 1H2018 monthly average

August (units in US$)

Revenue

467,000

July 975,000

625,000

571,000

401,000

396,000

Tiger Palace

TMCCK

EBITDA 466,000

206,000

175,000

172,000 30,000

7,000

Tiger Palace

TMCCK (Source: Silver Heritage)

Nepal tourism peak season starts with arrivals jump Nepal started the peak Autumn tourism season with an almost 34 percent jump in arrivals in September, led by China and India, according to the Nepal Tourism Board. Arrivals from India nearly doubled to 16,345 in September compared to the same month last year. Arrivals from China soared 55 percent to 12,947. The number of tourists from Sri Lanka surged to 8,807, up 57.1 percent. For the year through to end-September, arrivals gained 20 percent year-on-year to 772,798 visitors.

GDP tipped for 6 percent growth Gross Domestic Product in Nepal is expected to grow on average by six percent for the next three years, according to a World Bank report. The service sector has been a key driver, contributing 3.6 percentage points to growth, with more than 60 percent coming from trade and hotels. The number of foreign tourists is expected to increase as the country has launched the Visit Nepal 2020 campaign.

Asia Gaming Briefings | November 2018

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Taking the pulse of technology Technology is changing all aspects of our lives, sometimes faster than weâ&#x20AC;&#x2122;re ready for, and the gaming industry is no exception. Even processes that have always been entrusted to human hands are now getting extra help from artificial technology.

ur focus section in this edition of Asia Gaming Briefings delves into some of the innovations that are being brought to the casino space and how they can help optimize performance. We look at the various merits of systems used to monitor table games, such as radio frequency identification and camera sensors. Both are able to collect and analyze vast quantities of information from the game as it is played, helping casinos manage staff and tables, as well as collect valuable player data. We also take a look at the developments in serverbased gaming and the potential to shake up the slot machine industry, which has traditionally lagged in Asia. Server-based systems can create operational efficiencies, but perhaps more importantly, they throw the spotlight on the provision of quality content, providing a greater variety for the player. Some argue this may be the way to tempt that elusive millennial gamer onto the casino floor. Staying with gaming products, we provide an update on electronic table games, which bridge the divide between man and machines. ETGs have gained strong traction in Macau, where a cap on actual table numbers provided a catalyst for growth. However, that expansion appears

Asia Gaming Briefings | November 2018

to now to be slowing and the focus is switching to other Asian jurisdictions. We look at the potential for growth and the latest trends. In the online world, the mind-boggling topline numbers of money wagered in Asia, has many companies salivating. However, as a largely unregulated market, operators venturing in will find many challenges they have not had to contend with in Europe. We speak to several experts already operating in the field to ask what the key problems are and how they can affect the bottom line. One of the main issues is payment processing, which means many are still heavily reliant on the agent system, similar to the junket system in the land-based world. As a result there is a strong focus on how cryptocurrencies could be adopted to alleviate some of the major issues. Our tech-focused section therefore would not be complete without a look at the ultimate disruptive technology - blockchain and crypto. Asia is already ahead of the curve when it comes to embracing crypto, with Japan, South Korea, and Vietnam accounting for a phenomenal 80 percent of global bitcoin trading. We argue therefore that crypto and online gaming in Asia may be a match made in heaven and even serve as a catalyst for more widespread adoption elsewhere in the world.

FOCUS 29

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| November 2018

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Technology tools to boost table game yields The development of new technologies is creating opportunities to optimize casino operations in a way that would not have been thought possible a decade ago, in particular when it comes to table management, though there is debate over which systems provide the best solution.

he ability to measure the performance metrics of live table games in a cost-effective and timely way has until relatively recently eluded casino operators, who have been forced to rely on labour intensive manual counts during operational hours. This leaves a wide margin for human error, potential fraud and at the end of the day money on the table for the operator. There are two main forms of technology now being used to help solve this issue, RFID and optical table sensors and suppliers of both claim significant expansion. RFID stands for radio-frequency identification, a technology that uses radio waves to transmit information from RFID tags to an RFID reader. In applications of RFID for casino gaming, a sensor at the table or cage reads the information on the gaming chip. It is similar to a barcode, except the tag is electronic rather than a physical image, and instead of reading just one barcode at a time, many RFID tags can be stacked together and read at once. In the past, RFID technology has been criticized for not being capable of operating in a reliable way in a fast-paced environment such as a casino floor, where there is also confusion from many other electronic and electrical sources. However, Walker Digital Table Systems (WDTS)

Asia Gaming Briefings | November 2018

claims to have overcome these issues with its PJM3.0 RFID, which it says its three times faster than other RFID technologies, being able to read 1,200 tags per second. Its edge is that it uses eight data channels across a broad range of frequencies. This means not only greater speed but also greater resiliency and reliability in an electronically “noisy” casino environment. “RFID table solutions are the key to automating manual table procedures, integrating data across casino systems, and enabling significant gains in operational efficiency, transaction accuracy, and game integrity,” Neil Crossan, WDTS Chief Commercial Officer says. “Our customers experience increases in game speed and the elimination of leakage drives incremental increase in table hold. Every customer that has invested has continued to expand their investment with WDTS, as the ROI is continuous and compelling.” “Table automation also eases the supervisors burden - resulting in increased customer service and focus, whilst real-time dealer metrics support coaching for optimal dealer performance. Even more exciting are new insights on aspects of table performance that are now available.” Crossan says “PJM3.0 has become the industry standard. There are alternate, slower RF technologies available in the market however all of the major chip manufacturers supply PJM RFID and it is the prevalent

FOCUS 31

chip technology on Casino floors today. We do not require these customers to change their technology - our systems allow the customers to leverage the PJM chips they have. We encourage new Casino operators to adopt the advantages of PJM RFID chips at the outset, and have had major operators convert to PJM, driven by the operational advantages our platform offers” Detractors of the technology point to the fact that it’s expensive to install, involving the replacement of casino’s stock of chips. They also say that some RFID technology can actually slow gameplay. Australian company SenSen Networks has an alternative solution that it says is costeffective to install and equally as efficient. It has developed a technology based on 3D Time of Flight (ToF) cameras that capture a multispectral, 3- dimensional view of all gaming tables. The colour, infrared and depth-sensing technology determines the number of players at each table, number and type of bets placed and the value of all wagers. The accuracy and stability of the solution has been established on live games of Blackjack, Baccarat and various kinds of Poker providing real-time tracking of player demand. The technology is able to monitor table occupancy; bet count; bet type; bet value; game start; game end; time between games and hands per hour. “RFID-based solutions slow down the dealers and reduce the number games played thus reducing the turnover of the tables,” SenSen CEO Subhash Challa says. “The SenSen Camera solution does not need a change to dealer or player behavior, layouts or chips and has no impact on game speed and dealer KPIs.”

Challa said the technology received an “exceptional response” from operators at both G2E Macau 2018 and G2E Vegas 2018 and several of them progressed to trails within their own properties. He sees the biggest opportunities in Asia in Macau, the Philippines, Singapore and Malaysia. RFID suppliers counter that optical technologies cannot provide the same level of security, or reliability to the casino operator. “A critical advantage of RFID solutions over optical, is RFID’s high speed and reliable identification of chip validity at a serialized level,” WDTS says. “This means that RFID provides the protection against counterfeit

chips that optical solutions cannot, as optical can give false positives for fake or invalid chips.” Crossan also notes that that identifying chips at the serialized level allows operators to use the same cash chip set for all gaming activities that today requires the purchase and daily management of many different sets of cash chips, program play chips and junket chips. This reduction is a material saving for any casino. With the rapid growth in casino properties across Asia, from the multi-billion IRs planned for Japan, to the smaller resorts mushrooming in Cambodia and elsewhere, there’s room for sales growth for both technologies.

Asia Gaming Briefings | November 2018

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Technical hurdles hinder online gaming Asia’s multi-billion dollar online gambling industry is an opportunity too big to ignore when it comes to the expansion plans of many global players, yet technical issues ranging from latency, through to security and payment systems can prove to be costly challenges for newcomers.

iven online gambling is mostly unregulated across the region, exact figures for how big the market is are not available, though most estimates run into the hundreds of billions of dollars, with China’s outfacing market alone put at about $600 to $700 billion. While the volumes are massive, increasing competition, the costs of client acquisition and other market peculiarities can eat meaningfully into margins. One of the biggest issues facing online gaming operators in Asia is payment processing systems. In unregulated markets the mainstream banking system is generally not an option, with punters

Asia Gaming Briefings | November 2018

choosing popular payment methods, such as Alipay and WeChat Pay. The problem with these is that they are closely monitored by authorities and client accounts are regularly blocked and shut down. This leads to a continued reliance on the agency system. “The Western market doesn’t have the same issue with well recognized licensing authorities and a wide availability of various payment options including Visa/Mastercard,” one Asia operator who asked not to be named said. “The Asian market continues to be a largely cash market with the clientele not willing, or not able to use bank cards.

FOCUS 33

“All these aspects lead to the agent networks still being very relevant. Agents also have the ability to provide credit, dealing with customers directly which adds to these networks’ value. However, agent networks eat at the online operators profits largely leaving casinos with a very small margin.” Nick Hill, commercial director at Flow Gaming, says these payment difficulties are driving research into cryptocurrency models that can be used in a closed network to make moving money much easier. Also likely to eat into margins is the cost of client acquisition in a highly cutthroat market, where client loyalty is tough to establish. Hill says that rebates to clients can typically be about 0.8 percent to 1.2 percent of the total game wager, with the operator working on a margin of about 3 to 3.5 percent. “That means you give back 30 percent, it’s an unsustainable business model,” he says. “We are trying to educate operators into improving loyalty and retention, as the life expectancy of a player in Asia is only about one week, compared with 3 to 6 months in Europe.”

Given the costs of acquisition, keeping clients is a key focus and most operators in the region are obsessively secretive about customer databases.

They acquired “ the player through

their marketing efforts and spent a lot of money and now he’s betting on another site.

”

While a few years ago, web attacks in Asia were mainly DDOS based, aimed at shutting down or disrupting competitors’ operations, hackers are now more sophisticated and seeking rivals’ information. “To an extent companies are reaching a level of security that they know what

to do and what systems to put in place (against DDOS),” says Jaheer Abbas, senior director Southeast Asia & India at Limelight Networks. “Newer kind of attacks are now gaining prominence, with hackers looking for useable information.” As a result, there has been strong interest in web application firewall products to prevent code being embedded into systems, which is a much harder problem to detect. Another trend that has been noted is blatant copying of websites to steal clients through DNS hijacking, where the player may not even notice they have been redirected to a mirror site. “The operator loses out,” says Hill. “They acquired the player through their marketing efforts and spent a lot of money and now he’s betting on another site.” Online latency has also been identified as an issue, especially in live betting situations, where there is a lag between the actual event and its appearance onscreen. The gap, which Abbas says can be as much as four to five seconds even for a live television broadcast, takes away from the user experience and can create opportunities for manipulation. This issue has become more complex with the increasing migration of players onto mobile platforms, many of which don’t support Adobe Flash. Users are turning to HTTP Live Streaming to overcome the problem, but the latency is unacceptably high at about 30 seconds to a minute, Abbas says. “This greatly disrupts players’ game experience, and even results in a loss in revenue for the gaming operator as the high latency reduces the number of playing rounds, which in turn cuts the operator’s revenues from the game.” Martin Trang, regional director Asia at Frosmo, says the problem is particularly acute for any companies targeting China, given they are likely to need to use content delivery networks, which slows things down. “It affects the user experience negatively, especially if you have to load content-heavy websites,” he says. Frosmo’s focus is on improving the user experience, in particular by personalizing a site to the individual client. “There is more target on what the user wants to see and when they want to see it,” he says, which can improve load time. However, even here Trang acknowledges there is a lot of concern in the market that 3rd party solutions may give access to their well-guarded data. “Everyone is scared of giving up any access to their data,” he said.

Asia Gaming Briefings | November 2018

FOCUS 34

Ed Brennan*

Can Asia drive crypto in gaming? As the adoption of blockchain-based crypto-enabled platforms gathers momentum in iGaming, a persistent question continues to come up: what is going to be the catalyst that drives the adoption of this new technology among mainstream casino operators and their players? The answer may well be quite simple: gaming in Asia.

hile the intersection of gaming and blockchain users is still relatively niche in the West, I predict that Asia will be fertile territory for a marriage of the two. Further afield, widespread adoption is still in its infancy. If cryptocurrency and blockchain is analogous to internet technology, weâ&#x20AC;&#x2122;re still in the early 90s. The world over, thereâ&#x20AC;&#x2122;s a tremendous amount of education required and indeed scepticism to be overcome, but Asia will likely be the catalyst.

Asia Gaming Briefings | November 2018

Worldwide there are approximately 25 million users of crypto, many of them originating in Asia. There are also hundreds of millions of online gamblers in the world. Again, many of them originate in Asia. In my view, what makes this such a good fit is the fact that the Asian market is ahead of the curve when it comes to crypto adoption. Awareness is far more prevalent in Asia too, and more importantly, the crypto regulatory markets are far more developed and sophisticated in the majority of countries than many places in the West.

FOCUS 35

South Korea is not only home to the most active cryptocurrency exchange in the world, it is also the third-largest market for Bitcoin trading and responsible for 35 to 40 percent of global Ethereum trading. Put together, Japan, South Korea, and Vietnam account for a phenomenal 80 percent of global bitcoin trading. South Korean regulators are also implementing regulations that will outlaw anonymous trading. In Japan, in a bid to increase transparency and consumer protections, regulators have officially approved the operation of 11 exchanges and 17 currencies for trading. Australian legislators are also evaluating laws that would place the regulation of cryptocurrencies in the purview of AUSTRAC, the country’s financial intelligence agency. We believe strongly that operating in regulated markets is the place to be. As markets become regulated, the adoption by players in those markets increases. Married with this is the far greater proportion of Asian participants in iGaming, which makes it a fantastic opportunity for reaching the mainstream. However, while the opportunity is undoubtedly there, we need to take some

lessons from the wider world to realise there are also significant challenges ahead from which Western operators can learn. Looking at Uber’s performance when moving East provides a good example. One of the reasons Uber looked to exit the region so fast is that they did not localise their goto-market approach. Uber’s failure was principally because it did not successfully build a product catering to a Chinese customer-base. Despite the large sum of money it poured into the Chinese market, it was still losing market share to Didi, a local competitor. Analysts suggest that Uber should have gone to market with a local partner such as Didi, rather than going head-to-head with a leading local provider. When it comes to crypto-enabled iGaming, the same approach needs to be done. Currently, most Western-orientated crypto companies do not apply a traditional tech-based go-to-market strategy when trying to expand into other regions. Instead, most choose to leverage their ‘global communities’ and incentivise regional token holders to do local marketing and encourage them to find more token buyers in the region. Granted, this is a great idea for those who want to

make a quick buck, but not so efficient for ones who can sustain a platform. The same holds true for us and will present the greatest challenge for crypto’s adoption in the Asian gaming market. Establishing awareness and legitimacy around the industry is also going to be essential, even in a such a region that is more crypto-friendly than the rest. Partnering with a local operator will no doubt be the way forward, which will enable a far more tailored offering to local audiences. Given the store of value in Bitcoin and other cryptocurrencies on the market, growth will happen when both the operators and players can see the benefit, of which there are undoubtedly many - player trust, the ability to negate fraud, the speed of transactions and transparency. The early and quick adoption of cryptocurrency in the region, coupled with the rapid regulatory response by regional governments ultimately bodes well for the global cryptocurrency market. I believe it’s going to be a marriage made in heaven as adoption begins to pick up. *Ed Brennan is president of CashBet.

Asia Gaming Briefings | November 2018

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Content is king Server-based gaming in Asia is seeing strong growth. New ways of delivering slot content, both online and off, are helping supercharge a product vertical that has previously struggled to grab the attention of consumers in the region.

n the land-based side, server-based gaming, a success story of the global street and retail sectors, could transform the slots offering of Asian casinos and help it make headway versus table games. And online, a new breed of content aggregators is finding new approaches to quickly and seamlessly rolling out fresh games from multiple suppliers. At its core, a server-based gaming system connects a number of slot machines to a central server. The benefits of this are multifold. On the content side, it enables operators to remotely deliver and continually update slot content on terminals. But it can also centralize all manner of functions, including bonusing, player management and even responsible gaming, allowing operators to cut costs, drive efficiencies and ultimately deliver a better user experience. With Macau’s casinos taking less than five percent of revenues from slot machines, the approach, which has proved successful for many years in the retail environment, could be game-changing.

Asia Gaming Briefings | November 2018

“Server-based gaming has proven to be extremely useful as a new form of gaming in new and established gaming markets,” Igor Rus, Director of Systems at software provider Comtrade Gaming, told AGB. “Server-based gaming is coming to different markets in different forms. At the phase we are in, we see it in gaming halls or the so called ‘street market’. I believe that, over the next decade, server-based solutions will be introduced onto leading casino floors. This form of gaming is absolutely beneficial to all relevant parties that can see past existing business models.” Currently server-based gaming comes in different forms. It is rare in the modern casino environment for a terminal to be entirely self-contained; at a minimum, most locate the game on the terminal, with the RNG and logic determined by a server. This enables casinos to sync RTPs across the floor, and also upload new content remotely - albeit usually from a single game provider. However, a new generation of server-based gaming, ushered in by the 2016 release of the Gaming Standard

FOCUS 37

Association G2S protocol, goes a step further. It allows operators to connect terminals from a range of providers to a single, open system, and also upload games from various creators. “Past vendor-specific server gaming solutions were limited by the fact that operators needed to run a separate system for each slot machine vendor. That is changing now. The G2S protocol enabled slots of different leading vendors to be connected to the operator’s central server, that runs unique ticketing, cashless and responsible gaming programs,” said Rus. Online model The server-based gaming model is also applicable in the online space, where a new generation of content aggregators is rethinking how games are distributed to operators. “Our mission statement is to recruit the best (RNG games, gaming studios), and distribute them to the best (operators, suppliers),” Jonas Alm, CEO of Asia-facing games distributor QTech, told AGB. “Player proclivities can differ wildly across Asia’s wide spectrum of gaming colours. So it’s a stringent selection process, segmented across countries, which aligns with cultural proclivity, age and gender preference, not to mention ascendant legislation.” Rather than online operators integrating new slots content independently from games

studios, QTech centralizes the process, adding five to ten new, specifically selected titles each month. It ensures operators continue to receive fresh content on a regular basis. Earlier this year, QTech also launched its QT Play app, a cross-provider recommendation mobile app that allows players to choose and switch between games from multiple providers. “QT Play’s ability to distil the prevalent trans-Asia variety and bundle it according to player preference and respective market requirements allows our partners to target any region with precision and confidence,” Alm said, adding that the app could do for online gaming what Spotify has done for music. The future of content It is clear that there is already strong demand for advanced, server-based solutions to the content conundrum. In August, retail giant Inspired Gaming credited a strong third-quarter performance to the 37.7 percent growth in its server-based gaming revenues. The challenge now is to capture the same efficiencies on the casino floor. “The way I envision development of server-based gaming is more complex than just having online games being projected on computers in the land-based environment. Slot cabinets are an important part of the unique

value proposition of traditional vendors in the retail world,” said Rus at Comtrade. “The ultimate value is that getting data instantly allows analytics to provide insight for the operational adjustments and development of unique cross channel loyalty programs. There is enormous potential for the operators to use the instant data, to act promptly on their product mix and optimize operations.” So far US-based casinos have led the way when it comes to server-based gaming, although in many respects it is even better suited to Asia, as a way of delivering more content in casinos which are cautious when it comes to assigning additional floor space to terminals. Server-based enabled multi-game terminals are a cost-effective way of expanding the slots offering. This does require a change of mindset for many operators. One industry consultant told AGB that the current products on the market fail to provide a UI that truly engages the user or unlocks the full potential of server-based gaming. Recommendation engines, like those utilized by QTech online and Amazon, Spotify and Netflix across broader ecommerce, may be the answer. Indeed, replicating the success of those internet giants by placing content at the heart of the gaming experience could be a major step for operators, both online and off.

Asia Gaming Briefings | November 2018

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Emerging Asian markets to lead sales growth Macau is likely to remain the largest market in Asia for electronic table games (ETGs) for the foreseeable future due to its sheer size, though growth is slowing and emerging markets such as Vietnam and the Philippines are likely lead further expansion.

he sector has flourished in Macau, where a table cap imposed nearly six years ago limited the increase in table games at just three percent. ETGs allowed a great many more players at a baccarat table, with fewer staff required. “Macau, and to a lesser extent Singapore, are the dominant markets in terms of the number of ETGs in operation,” said Grant Govertsen, Union Gaming’s managing director and head of Asia equity research.

Asia Gaming Briefings | November 2018

“It is no coincidence that both of these markets have very high labour costs, which therefore incentivize casino operators to look for alternative solutions. “That being said, Macau is nearing the end of its development pipeline, and as such we expect only modest growth in ETGs from here forward. Singapore is stable, and now that Genting has wrapped up its renovated casino project in Malaysia, there is little to expect in terms of ETG growth there too.”

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Post-2019 growth is expected with new properties in locations such as Incheon and Jeju in South Korea, Manila in the Philippines and the Russian port of Vladivostok, 50km east of the Chinese border. In its latest ETG report, published in May last year, Union Gaming predicted a modest rise of 1,000 ETGs across the region to a total of 15,000 by the end of 2018. Japan, South Korea and Vietnam are expected to provide Asia’s greenfield casino growth, helping to offset a slowdown in other territories. Vietnam has proved to be a particularly lucrative market for Interblock. “Vietnam is the emerging and hot gaming market, like Macau was in 2005, with gaming licences and properties being granted and built non-stop,” Interblock’s vice-president of Asia, Michael Hu, said. “Interblock has been enjoying dominance… with 2,500 units installed in Vietnam over the past 10 years.”

Across Asia as a whole, Hu expects ETGs to occupy as much as 30 percent of the casino floor space in the future, given labour cost considerations and the popularity of the games. “Stadium multi-game and multi-play offerings are becoming extremely popular,” Hu added. “ETG games that are implemented on traditional slot platforms will become another game-changer.” There are two primary types of ETG – stadium and standalone, which are either fully automated or provide a live dealer. The stadium games can have as many as 200 seats, while a standalone ETG seats between five and 10 players. There appears to be particular momentum behind ‘live’ products, with technological advances offering more life-like interactions with the dealer. As a guide, the DICJ reported that live multi-game products generated $250 million in gross gaming revenue in Macau in the first nine months of this year – up

from $224 million over the corresponding period in 2017. “In terms of market trends, we observe that Asian players may feel more comfortable when betting on a real live dealer distributing cards instead of betting on random resultsgenerated machines,” said Leo Chan, chief financial officer and company secretary at Paradise Entertainment, whose LT Game unit dominates in Macau. “As the… sole supplier of live multigame (LMG) machines in Macau, and the biggest ETG supplier in Macau in terms of number of seats, we still see LMGs as the most influential ETG product in Asia at least in the near to medium term.” From a distributor’s perspective, Herman Ng, CEO and executive director of Asia Pioneer Entertainment Holdings, believes the recent popularity of standalone ETGs in Macau could achieve cut-through in markets like the Philippines and Vietnam. “Fully automatic multi-table game stadium products are emerging products in Macau and Singapore and this trend is hitting Southeast Asian markets as well,” he said, before adding that his company plans to explore standalone and stadium ETG opportunities in Japan. “Southeast Asian markets have space for increasing [the number of] ETG machines. Roulette machines were the only famous table games in these two markets for years.” LT Game’s dominance in Macau translates into more than a third of the ETG market across Asia, according to the most recent figures available, whilst Aruze, Interblock, Scientific Games and Alfastreet had market shares in the low double digits. However, the outlook is likely to change considerably in the coming years due to new market entrants as the continent shifts away from one-stop-shop solutions to a multivendor approach. According to Ng, this will not only lead to more competitive pricing. “Competition improves innovation and product quality,” he said. “This means fewer technical issues and a more stable machine performance – a key factor in making a brand successful.” Further down the road Japan is expected to be a promising market. With high labour costs and casino space restricted to just 3 percent of the total IR size, ETGs could serve as an efficient revenue-generator, especially with the population’s appetite for mechanical games such as pachinko.

Asia Gaming Briefings | November 2018

AUSTRALASIA

AUSTRALIA

VIP seen firm in face of trade war Australiaâ&#x20AC;&#x2122;s casino operators are monitoring the trade wars between the U.S. and China on concern a sharp slowdown in the mainland economy could lead to another slump in their overseas VIP revenue. Asia Gaming Briefings | November 2018

he sector has just rebounded from a sharp downturn caused by Beijing’s crackdown on corruption, which was further exacerbated by the arrest of Crown Resorts employees in China in October 2016 on gambling offences. The trade war and resulting slowdown in China’s economy has already taken a toll on the stocks of Macau operators, where VIP revenue has also declined in recent months. However, analysts say so far Australia is holding up well. “Our recent industry feedback has allayed some of these concerns, with Chinese hotel/ leisure companies reporting minimal impact on current trends and ample junket liquidity after recent consolidation. Further feedback suggests that overseas VIP market growth remains very strong relative to Macau – particularly in the Philippines and Cambodia,” according to a recent report by Morgan Stanley analyst Monique Rooney. Crown announced a net profit of $326.7 million before significant items for the 2017/2018 year, which was up 5.8 percent from the previous year. The result was boosted by VIP program play turnover in Melbourne, which was up 73.9 percent. Crown also says it has seen strong interest from international and local buyers for its residences at its new Barangaroo resort in Sydney, which will be a VIP-only property aimed mainly at Asia’s high rollers. The resort is on the foreshore of Sydney Harbour and will be the city’s first six-star hotel. It will feature 349 hotel rooms and suites, luxury residences, signature restaurants, bars, luxury retail outlets, pool and spa facilities, conference rooms and VIP gaming facilities. The Crown Sydney Hotel Resort podium is rising on the Barangaroo foreshore and the tower core structure has been constructed to Level 12.

AUSTRALASIA 41

The company says completion is scheduled in the first half of calendar year 2021 and the total gross project cost is expected to be approximately $2.2 billion, with a net project cost of approximately $1.4 billion. “We believe that Crown Sydney will become an international tourism icon and will help Sydney attract high net worth travellers from all parts of the world,” Executive Chairman John Alexander said in the company’s annual report. Star Entertainment, which is teaming with Asian partners to build an IR at the Queen’s Wharf site in Brisbane, also posted strong results for the year. The group reported record normalised gross revenue up 15.3 percent, with growth in both Sydney and Queensland, and record normalised EBITDA up 14.2 percent. Normalised International VIP rebate revenue increased 51.8 percent. Star said the VIP volumes during the early months of the 2019 fiscal year had been “pleasing,” while it had also seen an improvement in domestic revenue trends. The company, which is also carrying out a major revamp of its Gold Coast property, is counting on increased tourism to Queensland to drive growth. According to recently released figures from the Queensland government, overall spending on gambling in Australia declined 0.5 percent in the 2016/2017 year, with casino table games among the worst performing. The data, which is published with a year’s lag, covers the period that was affected by the Crown detentions. The data illustrates that the domestic market alone is not enough to fuel growth at the country’s casino properties. They carried on spending on pokies in pubs and clubs, with a gain of 0.5 percent, but by far the highest growth sector of the market was sports betting, which grew 15.3 percent in the period.

Ainsworth CEO Gladstone steps aside Ainsworth Game Technology says Danny Gladstone has chosen to give up his role as CEO, but will remain with the company in another capacity. Gladstone will finish as CEO on June 30th next year and Ainsworth is searching for a new executive, the supplier said. Following an appointment of a new CEO, Mr Gladstone will continue with AGT in a different role to utilise his extensive industry experience and expertise, it said. “While there will be a more appropriate time to formally thank Danny, I would like to state that he has been an excellent CEO for AGT,” said Chairman Graeme Campbell. “ He has successfully driven significant international expansion and growth in recurring revenues. Ainsworth is much stronger for Danny’s contribution. We are delighted he will continue to assist us in the future.”

Queensland racing seeks tax money Queensland’s thoroughbred racing industry is demanding a share of the state’s new point of consumption tax to increase their prize pools. The tax requires betting houses to pay 15 percent tax on all bets placed in Queensland, no matter where the company is headquartered. Australian Trainers Association state executive Cameron Partington said the industry wants an immediate cash injection into its prize pools – matching what is on offer in other states. At the moment, the thoroughbred racing industry in Queensland does not give any prize to 5th place, making racing in other states more favorable for trainers. The solution, said Partington, is to increase the amount of money in the prize pool overall so that enough can be spread around.

GROSS GAMING REVENUE 2016/2017 Gambling expenditure AS$23.69b Casino table games $4.79b

-0.5%

-7.8%

Sports betting $1.06b

+15.3%

Racing $3.3b

+6.9% (Source: Queensland government)

Asia Gaming Briefings | November 2018

AUSTRALASIA 42

CNMI

IPI loses executives, sheds workers Imperial Pacific International (IPI) continues to hit the headlines for all the wrong reasons, losing more senior executives and coming under fire for sacking workers, after having argued labor shortages were a key reason for delays in finishing its Saipan resort.

he Hong Kong-listed company in September was given a three-year extension to complete the project after missing another deadline in August. It has cited difficulties in sourcing skilled labor on the island, as well as issues with one of its main contractors, which was accused of hiring illegal Chinese workers. However, last month, IPI fired 80 construction workers brought in under temporary visas.

Asia Gaming Briefings | November 2018

The workers said the termination had been a shock as their visas and contracts had earlier been extended to Jan. 30th next year. The employees met with local government officials to plead their case, with some politicians questioning IPIâ&#x20AC;&#x2122;s ability to meet even the extended deadline. â&#x20AC;&#x153;With all of these local and H-2B workers being laid off, are we really supposed to believe that IPI will complete the hotel

casino construction project within 2.5 years?, opposition lawmaker Edwin Propst was cited as saying by the Saipan Tribune. The company also announced the departure Chairman and CEO Harry Cheang in October after less than a year on the job. He was the fourth key executive to depart this year, after former CEO Mark Brown left in January, Executive Director Cai Lingli departed in August, as did Chairman Marco Teng.

AUSTRALASIA 43

The company provided no reason for Cheang’s departure and as of the time of writing no replacement has been named. Since a promising start after winning the license in 2014, things have gone from bad to worse for the company. It had been operating out of a temporary facility in an upmarket mall, generating eye popping levels of monthly rolling volume from just a handful of tables. According to its web site, Phase 1 was to be a rare combination of luxury integrated casinos, five-star luxury accommodation, and a wide range of exclusive dining and entertainment facilities, including more than 200 gaming tables and over 350 slot machines. The 14-storey hotel building will offer more than 340 opulent hotel suites. An even more expansive Phase 2 was to feature 20 six-star themed hotels, a onekilometer-long duty-free shopping boulevard featuring top international designer labels, and the themed water park.

However, only the casino portion and a cocktail lounge have so far opened, with the key hotel section of the glitzy white and gold resort still be be finished. IPI has stopped providing monthly rolling figures and profit in the first half plunged 91.3 percent to HK$79 million (US$10.1 million), due to a drop in total revenue, but also higher trade receivables. The company has struggled to collect debt from its VIP customers to whom it had been extending direct credit, with a particular concentration on just a handful of high rollers. It has been in talks for some time to obtain permission for more junkets to operate on the island. The Commonwealth Casino Commission has now approved four. They are Bula Mula LLC, Hengqin Guiji LLC, High Tides (CNMI) LLC, and Stellar Paradise CNMI LLC, joining Big Bang Entertainment which was previously approved.

Ainsworth says performance improving after 2018 profit drop Gaming manufacturer Ainsworth Game Technology Ltd profit after tax fell 15.8 percent in the 2018 financial year, due to a decline in Australia, Asia and Europe sales. Profit after tax for the year was recorded at A$31.9 million (US$23.3 million), down from A$37.8 million in FY17. Ainsworth noted however that it saw much improved second-half performance, with profit before tax (PBT) up 68 percent compared to the first half of the year. The second half results were slightly ahead of Ainsworth’s upgraded guidance, said chief executive officer Danny Gladstone. “Our performance continues to show signs of improvement and is a direct result of the strategies implemented to expand our international footprint, invest in technology to enhance our product suite, and build our participation fleet to improve the quality of our earnings.”

Crown profit shines on VIP play Crown Resorts reported an almost 13 percent increase in normalized profit after tax for the year ending June 30th, fuelled by a 54.4 percent surge in VIP program play turnover. Normalized profit was $386.8 million ($286.7 million). “Crown’s full year result reflects a solid performance from our Melbourne operation and continued subdued trading in Perth,” Crown Executive Chairman John Alexander said in a statement to the Australian Stock Exchange. “Total normalized revenue across Crown’s Australian resorts increased by 10.6 percent on the prior comparable period. Main floor gaming revenue increased by 1.5 percent, with modest growth in Melbourne offset by softness in Perth. VIP program play turnover in Australia of $51.5 billion was a pleasing outcome, particularly at Crown Melbourne (up 73.9 percent), given the difficult trading conditions in the pcp.”

GAMBLING EXPENDITURE Total in 2017 $23.65b

+3.9%

Casinos $5.19b

+0.4%

Gaming machines $12.07b

+4.2%

Sports betting $920.6m Racing $2.94b

+13% +4.1%

Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 44

MGS 2018

Showcasing intellectual entertainment The MGS Entertainment Show makes its return to Macau on November 13-15, 2018, at the Venetian Macao Cotai Expo Hall A and B.

ith over five years of development, the event attracts more than 15,000 visitors each year, with more than 162 exhibitors coming from the gaming, hospitality and entertainment industry in Asia. The theme of the show this year is “New Era— Innovative Technology & Intellectual Entertainment,” highlighting the entertainment and leisure needs of integrated resorts in Asia. According to Jay Chun, chairman of the Macau Gaming Equipment Manufacturers Association, the expo will be made up of seven major sections: leisure technology; gaming equipment; an integrated resort procurement fair; environmental protection and sustainability; hotel supplies; fire safety and E-sports. Over the years, the exhibition has also become known for showcasing companies outside of the traditional gaming industry. This year, the event brings forth leading innovators in Asia’s science and technology industries. It is made possible by MGEMA’s new event coorganizers, which include the Nam Kwong Culture and Creativity Industry and China National Machinery Industry International. “There is no doubt that both companies have great

Asia Gaming Briefings | November 2018

potential in promoting the MGS Entertainment Show. Nam Kwong is one of the largest exhibition organizing companies in Macau with intensive exhibition experience locally and abroad. China Machinery International has made remarkable achievements in mechanical technology,” said Chun. Two major forums will also be held at MGS 2018, including the “MGS Summit 2018” and “Global Digital Entertainment Summit 2018.” The “MGS Summit” will discuss the status of Macau’s gaming concession rebidding process and the enactment of the Japanese Integrated Resort Act - and will invite government officials, senior managers of gaming organizations and economic experts to join the discussions. The Global Digital Entertainment Summit 2018 will invite well-known tech gurus from Asia, such as the marketing director of Net Ease Game, the vice president of Lenovo Group, the MI VR team leader and other professionals to share the latest developments on e-sports, blockchain and AR/VR technology. Over the next few pages, you will find our 2018 MGS Supplier Special, where we highlight the key gaming-related suppliers at MGS, giving you a sneak peek at the products they will have on show.

SUPPLIER SPECIAL REPORT 45 ARISTOCRAT

“It’s all about what’s inside”

he Link segment comprises one of the most important product types in Aristocrat Asia’s portfolio and is a key engine to any successful gaming floor across the Asia-Pacific region. To breathe further innovation into this segment, Aristocrat is showcasing a range of different approaches to the link segment at the Macao Gaming Show this year, to suit a variety of customers and players. At MGS 2018, we are excited to debut our latest link family– Gold Stacks 88. Gold Stacks 88 presents an Asian All Star cast. Led by Baby Choy Sun Doa, Dragon, Peacock, Foo Lions & Panda. The characters cheerfully award players with exciting jackpots and more ways to win on offer, using Aristocrat’s Extra Ways math model. At launch, we will have two titles available: Dancing Foo and Lunar Festival. Both titles are highly Asian-centric, themed with Chinese New Year meaning, to bring the Prosperity and Wealth to your players. In addition to Gold Stacks 88, the Lanterns family and Fast Fortune will also be featured at this year’s show. Lanterns Link delivers Persistent Wilds that award Jackpots and entry into the Free Games feature with players able to wager an ante-bet to activate additional floating Wilds during gameplay. These floating WILDs stay on screen for a number of spins and can explode

into adjacent reel spots, adding to the excitement. Fast Fortune 5 Dragons Gold merges the fan favourite 5 Dragons Gold math model, allowing all jackpots to be awarded at any bet level, and at any time, with an additional sixth reel for added enjoyment. “Our global teams of designers, creatives, mathematicians and engineers are united behind one goal: to create innovative games and cabinets that help our customers provide their guests with

the best player experience and entertainment possible” said Chris Rowe, Aristocrat Managing Director Asia-Pacific. We look forward to carrying this momentum forward further in the coming months and invite you to celebrate the unveiling of a number of key Linked progressives and other products on display at the Macao Gaming Show this year. Join Aristocrat on stand #AR38 at Macao Gaming Show.

APE

Presenting with strategic partners

sia Pioneer Entertainment Holdings, a leading electronic gaming equipment supplier in Macau, is privileged to be an exhibitor together with our global strategic partners Jumbo Technology, Konami Australia, Spintec and Transact to showcase their latest products and services. The theme of MGS 2018 is “New Era—Innovative Technology & Intellectual Entertainment.” “This is the sixth year in a row of APE participating in MGS. Feedback from the MGS 2017 was amazingly encouraging. Credits are given to our strategic partners for their endeavors to provide the ultimate products and services to the Asian market. We are eager to seek more opportunities in the show to commit our wish of positioning Macau as a world center of tourism and leisure,” said Herman Ng, managing director and CEO of APE. Jumbo highlights its electronic table

games that enable players to play Jumbo’s Long Dragon Baccarat, Roulette, and Sicbo all in one terminal simultaneously, with exciting features such as “Random Pay”, “Mystery Dragon Jackpot”, “Long Dragon” side bet that pays up to 10,000 times, and random multiplier payouts. Spintec is presenting its hot games Karma Automated Roulette and Sic Bo, with eight playing stations and the Aura Multigame to visitors. Konami Australia unveils its latest gaming cabinet “Concerto,” which has been recently approved in Macau. The premium series released with this cabinet is named “Cai Lai Si Ji” and includes standalone progressive jackpot settings. The industry award-winning printer Epic950 is one of the highlights for Transact. It is known for proven reliability, casino-tested, and casino-preferred for ticket-in/ticket-out casino printing.

Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 48 ARUZE

Growth and innovation

ruze Gaming has set the mark in revolutionizing traditional gaming products. As one of the fastest growing companies in the global casino gaming industry Aruze continues to focus on creating the best gaming experience for players and delivering premium quality products with the highest level of service to its casino customers. The wild success of the award-winning Muso Triple-27 cabinet has brought a great deal of attention to Aruze’s commitment to innovation. The Muso Triple-27 is an unrivaled design with LED backlighting that gives a 360-degree presence on the casino floor. When the cabinets are connected, a sequential lighting feature occurs on the back panel which provides an exciting way to attract players. Muso Triple-27 will be scattered throughout Aruze’s booth along with the newest addition to the Muso family, the Muso Curve-43. The Muso Curve-43 carries a vertical presentation with a 43-inch J-style curved LCD monitor. The Muso product line is equipped with the industry’s first wireless charging functionality, brilliant graphic displays using 500 Candela, a large ergonomic glass-table button deck with a 13.3-inch LCD deck. Aruze’s ETG product continues to thrive with Lucky Roulette and Super Big Wheel.

Lucky Roulette is a roulette game that features a real ball and roulette wheel with projection imaging to enhance the visual aspect of the game. Another unique factor about Lucky Roulette is the Jackpot Chance side bet. If the ball drops into a randomly displayed jackpot spot on the wheel, the

Jackpot Chance is triggered. All players participating in the side bet win either a bonus prize or a jackpot based on the result. Super Big Wheel is a big six wheel that contains 7 kinds of symbols on 52 segment that includes side bets and progressives. Visit Aruze at booth #AP32.

solutions for land-based business owners. Specifically for the latter, BetConstruct will present its retail portfolio this year which includes Sportsbook and Live Casino solutions. As for Sportsbook, visitors will be able to experience the land-based platforms available for betting shops with 30,000 live matches, an industry-leading coverage. Taking into account the rapidly growing interest for eSports in Asia, the in-house developed eSports product

will also be showcased at the expo. BetConstruct’s offering covers 15 types of eSports with live betting on more than 9,000 monthly exclusive events. When it comes to Live Casino, BetConstruct has an attractive and profitable offer for the owners of physical casinos. The company will be sharing details of our special solution allowing the extension of the physical presence of the casino brand to the web in order to attract online players. BetConstruct is delighted to be a part of Macau Gaming Show 2018 and we are always happy to see our partners and meet new peers to continuously demonstrate all our newest products and services and help our partners transform their retail or land-based business into the online world. To take a closer look at our products, you can visit at booth #AJ28.

BETCONSTRUCT

Product convergence

acau Gaming Show 2018 will cover both online and offline gaming businesses. This year, in line with the needs for local economic diversification, BetConstruct will introduce innovative and technological elements to enrich the summit and share professional networks. It is a great opportunity for the software provider to demonstrate its capability and solutions for the digital environment and traditional casinos, as well as offer its

Asia Gaming Briefings | November 2018

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Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 50 BLUE TECHNOLOGY

IGT

Asia-specific solutions lue Technology Limited, provides gaming solutions to the growing and dynamic gaming market. The company’s vision is to provide innovative technological and multimedia entertainment to boost the efficiency and customer expectations of online, mobile and land-based gaming operators. This year Blue Technology invites you to visit us to see the newest Asiaspecific gaming products that have arrived from the following manufacturers: Amatic, introduces Asia-specific market development of 2 game packs. Game Pack 1, includes 10 Stand Alone + Grand Jeu Virtual Roulette on the hard drive. Game Pack 2 includes 2 Stand Alone PROGRESSIVE games / Linked Progressive. Casino Technology, offers Asia-specific market development of 5 Blessings for all Asian jurisdictions. In addition, for jurisdictions excluding Macau, a 6 game pack of stand-alone games. Fazi, a roulette manufacturer, has an offering of automated roulette with overhead signage to display stats and results. Gold Club, introduces a 6 game pack of slots games, as well as an Asian twist to roulette with their innovative and patented Chinese Roulette! Hydako, a South Korean manufacturer, is relaunching its brand with a new progressive link. In addition, they will also be introducing a new stand alone progressive game to complement their 3 SAP games that launched Q3. Tangiamo, brings cutting-edge technology to the roulette game! The Crystal Roulette is an automated roulette wheel that enhances player experience via cuttingedge display technology through a 65” transparent touch screen display. With this offering, casino operators can replace Live Roulette tables with Tangiamo’s Crystal Roulette (automated wheel) to increase their Live Baccarat area. Visit us at booth #AW31. GLI

Asian insights

LI Asia’s General Manager, Marina Wong, and her team of Asian experts are eager to share valuable insights gained from many years of close partnership with Macau’s regulators, operators, and suppliers at this year’s MGS Entertainment Show. And they will demonstrate how Gaming Laboratories International is the one and only independent testing laboratory that can take your products everywhere you want to go with the world’s leading testing, assessment, certification, and professional products and services. As the first and only full-service gaming lab located in Macau, GLI and Macau have a long, prosperous, and successful history together. In the late 1990s, prior to the establishment of Macao’s gaming commission, we helped the Macau government write the first gaming laws, with testing originally based solely on our GLI-11 Gaming Devices technical standard. We acquired our first customer in the region, the Hong Kong Jockey Club, more than 15 years ago. And for more than 15 years, regulators, suppliers, and operators in Macau and throughout Asia have both demanded and relied upon the Gaming Labs Certified ® mark because of its strong and well-known reputation as the industry’s premier symbol of quality. Through the years, we’ve continued to grow right along with the Macau gaming market by expanding our capabilities and staff to better serve our valued clients and customers; offering access to more than 475 global gaming jurisdictions with our industry-leading interoperability, test automation, and communications protocol technologies. To learn more about GLI’s world-class testing, assessment, certification, and professional services, please visit gaminglabs.com. Visit us at booth #AL32.

Asia Gaming Briefings | November 2018

Market-ready for Macau nternational Game Technology will present an expanded range of approved, market-ready gaming solutions at the Macau Gaming Show. IGT will showcase compelling linked progressives and standalone slot games, while demonstrating the company’s strong commitment to localized content for Macau casinos and players. “At the Macau Gaming Show, IGT will continue to build upon the momentum that we generated at G2E Asia when we introduced a full suite of market-approved, ready-to-deploy content and cabinets,” said Walter Bugno, IGT CEO International. “With the abundance of market opportunity for IGT in Macau and neighboring markets, we are delivering even more localized products and services that will enable our customers to diversify their floors with IGT content.” Portfolio highlights IGT’s stand will include: • The Fortune Gong game family: IGT will demonstrate its internationally celebrated and soon-to-be-approved for Macau Fortune Gong games on the CrystalCurve and CrystalDual 27 cabinets. • The Fury game family: The sizzling, approved-for-Macau titles from IGT’s The Fury family will be one of many focal points within IGT’s stand. These market-ready games build on the success of the Wild Fury Jackpots, The Golden Fury and Fortune Fury games and are housed on IGT’s CrystalCurve cabinet. • The Prize Disk game family: Also deployed in Macau casinos, the Prize Disk Elephant King, Tiger Fortune and Wolf Ridge games include an anticipation-heightening scrolling prize disk above the reels that awards free games, bonuses and jackpots. • The Hyper Hits game family: Live on casino floors in Macau, IGT’s Hyper Hits progressive with base games such as The Golden Bow and Lotus Princess themes housed on the CrystalDual cabinet. • Exciting standalone games: A reimagined version of the famous Cash Cove game, Cash Cove Monster Catch, along with exciting games Ocean Magic Grand, Golden Egypt Grand and Fortune Rooster. Find IGT at booth #AJ32.

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Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 52 JCM

JUMBO TECHNOLOGY

A world of connections CM Global’s spirit of innovation has resulted in innovative products that connect operators to their customers across the enterprise. Now JCM is bringing its world of connections to the Macau Gaming Show, where JCM’s Macaubased staff, along with experts from JCM offices around the world will help operators find the perfect solution. JCM will be showcasing its iVIZION bill validator, GEN5 thermal printer, and ICB Intelligent Cash Box systems. “Our development teams work diligently to ensure our products protect operators while also enabling them to deepen their connections with customers, and we are grateful for the trust operators in Macau and across the APAC region give to JCM,” said JCM APAC General manager Ian Payne. JCM has shipped more than 250,000 units of the iVIZION bill validator globally. Operators rely on iVIZION to provide the ultimate protection, and its CIS technology scans the entire note or ticket, reading more than 9.5 million data points on every note, more than twice that of the nearest competitor. Highly robust anti-pullback technology adds to the protection. JCM’s GEN5 thermal printer is a favorite of operators worldwide because its faster CPU and faster print speed give operators the flexibility the need to connect with customers with TITO and promotional tickets. GEN5 also allows for various wager tickets and templated promo coupons. The ICB 3.0 streamlines the entire drop process and increases accuracy and accountability by eliminating human error. Its real-time web reporting further improves processes by providing better, smarter, and faster data, saving you time and labor. Please visit www.jcmglobal.com for more information. You can find us at booth #AS-28.

Asia Gaming Briefings | November 2018

Multi-player experiences umbo Technology will be exhibiting its latest multi-player electronic table games (ETG’s) and one-on-one “VIP baccarat ” ETG at this year’s MGS Entertainment Show. Jumbo Technology and Asia Pioneer Entertainment Holdings Limited will be exhibiting together to launch the latest gaming products and technology. Products exhibited include some of Jumbo’s best-performing games in Asia, such as Jumbo’s multi-player electronic table games that enable players to play Long Dragon Baccarat, Roulette, and Sicbo all in one terminal simultaneously. The ETG’s offer players exciting game features including “Mystery Dragon Jackpot,” the “Long Dragon” side bet that pays up to 10,000 times for consecutive winning Banker or Player streaks, and “Random Pay” that enables random multiplier payouts. Other products exhibited include

Jumbo’s “VIP Baccarat” ETG’s, which offer players an exclusive and exciting one-onone electronic baccarat gaming experience with a virtual dealer. The game also features functions that empower the players to be in control such as “Free Hand”, “Change Shoe”, “Change Dealer”, and “Squeeze Cards”. MGS this year has the theme “Innovative Technology; Intellectual Entertainment” to promote the importance of technological innovation and leisure elements in the industr y. This coincides with Jumbo Technology’s vision to become the best entertainment and innovative gaming partner in Asia. Jumbo hopes to grow with MGS Entertainment Show and is committed to offer the latest products, most innovative technology, and excellent service in the global gaming industry. Visit Jumbo at booth #AP27.

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Karma Second Generation!

Spintec at MGS November, 13-15 Stand #AP27

Book a meeting: primoz.krsevan@spintec.si www.spintec.si

Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 54 Pacific Intellectuals Alliance

Bringing the cloud to land

acific Intellectuals Alliance (Macau) Limited (PIA) was established in 2014 in Macau. It is the sole distributor of the world’s leading cloud-based gaming platform for land-based casinos – GameSource. GameSource is a revolutionary product that streamlines the operation and monitoring control for land-based casinos. In addition, it is an infotainment platform offering a wide variety of game choices to players. Furthermore, with the introduction of the Game Developer Program, it will open up direct market access to global game developers to integrate their games onto the platform, which will be made available to the land-based casino market via GameSource. PIA believes that with the introduction of GameSource, it will create an innovative impact in the current gaming industry and it will assist operators to offer enhanced entertainment to current players, and attract a new line of millennial players. Please visit us at booth #AW32.

SG GAMING

Introducing Stadium Casino War

t MGS this year, SG Gaming will be showcasing Jin Ji Bao Xi. The latest multi-denominational progressive linked jackpot offers two base games “Echo Fortunes” and “Endless Treasure.” Players will recognise the hugely successful graphics and sounds from their firm favourite 5 Treasures and 88 Fortunes. Both base games see the use of SG’s popular game mechanics ALL UP and ALL WAYS. In addition to baccarat, roulette, sic bo, and Stadium Blackjack, the Fusion Hybrid, which connects players with up to four live table games at the same player terminal, now features Stadium Casino War. This exciting new game addition requires the use of a podium and dedicated dealer, and promises to not only attract more players but to also increase your profit potential. Stadium Casino War also allows each operator to decide whether they want to deal three, five, or seven hands to participating players – the choice is yours! SG can be found at booth #AJ38.

Asia Gaming Briefings | November 2018

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Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 56

Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 57

Asia Gaming Briefings | November 2018

SUPPLIER SPECIAL REPORT 58 SPINTEC

Unrivalled gaming solutions

pintec and Macau distributor, Asia Pioneering Entertainment will present their compact and amphitheatre gaming solutions Karma and Aura. “Spintec is very excited to be at MGS once again. The response we got from last year was amazing and we are eager to see what this year will bring.” said Primož Krševan, Regional Sales Manager at Spintec. If you haven’t had a chance to see Spintec’s Karma GEN2 at G2E Asia, now’s the time. New Karma GEN2, successor of Karma first generation, provides the ultimate gaming experience unbeaten by any other related products on the market. When developing Karma GEN2, Spintec’s research and development team was focusing on establishing longer gaming sessions together with state-of-the-art design. Primož Krševan added: “Spintec’s Karma electronic roulette has become the number one choice between electronic roulettes in Macau, and we now hold a majority share among all new installations in this market. We owe a huge part of this success also to our distributor Asia Pioneer Entertainment, a team of gaming experts, providing excellent sales and after sales service to the operators.” MGS visitors will also have a chance to marvel at Spintec’s solution Aura. Aura works best in amphitheatre setups with multiple screens and tables, but it can also be used in an island with one central screen or as a

standalone station for a virtual game. Both Aura and Karma are completely customizable and can be tailored to operator’s needs. Operators can choose between different games (Roulette, Sic Bo/Craps, Baccarat or a variation of games), different technologies

(Automated, Virtual and Live), various languages (more than 20), and specific parameters. Both products also offer a multitude of different colours, materials and set ups to choose from that will fit any casino interior perfectly. Spintec will be happy to meet you at booth #AP27.

WIENER GAMES STUDIO

Creative gaming architecture

e are experienced architects and developers in the field of HTML5 skill slots, social casino games & casual to mid-core card and board games. Our companies partner together and combine efforts to deliver innovative modern solutions and to elevate the entertainment business to new digital heights. We have a lot of creative ideas how to improve what’s already on the market and how to introduce completely new ideas and game types. We can deliver complete solutions for White Label Social Casino Platform and all types of casino games. The main focus of our studios are casino games. Not only the well-known poker, roulette and slot games but also engaging

Asia Gaming Briefings | November 2018

social gambling games. Our slots have casual skill version and gambling version. We have implemented various game mechanics along with classic slot gameplay. Our social slots can be easily integrated in website and mobile apps, as well as in gambling websites and social casinos. Our multiplayer platform supports most popular card and board games, combined with advanced matchmaking algorithms and extensive social features. Our games already succeed on the Apple Appstore and Google Play. Using Frameworks like Phaser and PixiJS, NodeJS, MYSQL, PHP, iOS/Android, Actionscript, HTML/CSS, Javascript and

many more, we create cross-platform compatible games. We will support you in your projects whatever your needs may be: frontend development; back office solutions; artwork & animation; mathematics; RGS and RNG creation; 2D & 3D artwork; animation; visual effects; UI & UX and storyboarding. We are fully concentrated and dedicated to what we do and we are always willing to go the extra mile (or sometimes even ten!). We know how to lead projects and complete them with full client satisfaction. We always consult and advise our partners and clients on the right approach and technology for their projects and needs. Visit the company at booth #AR30.

CALENDAR OF EVENTS 59

2019

NOVEMBER Asia Gaming Summit 6-8 November 2018 W Taipei, Taiwan https://taiwan.asiagamingsummit.com/ Macao Gaming Show 13-15 November 2018 Venetian, Macau https://10times.com/mgs SIGMA 2018 28-30 November 2018 Malta https://sigma.com.mt/

FEBRUARY ICE Totally Gaming 5-7 February 2019 ExCel London https://totallygaming.com/eventblog/ice-live-2018/savedate-ice-2019 Spice India (Strategic Platform for iGaming Conference and Exhibition) 26-27 February 2019 Goa, India http://affiliatesummit.com/events/asapac18/

APRIL Betting on Sports America 23-25 April 2019 New York https://sbcevents.com/betting-on-sports-america2019/#venue

MAY Japan Gaming Congress 10-11 May 2019 Conrad Hotel, Tokyo http://www.japangamingcongress.com/

MARCH ASEAN Gaming Summit 19-21 March 2019 Conrad Hotel, Manila https://aseangaming.com/ Betting on Football 19-22 March 2019 Stamford Bridge, London https://www.sbcevents.com/betting-on-football-2019/

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Asia Gaming Briefings | November 2018

LAST WORD 62

Sharon Singleton

Managing Editor, AGB

Politics prick Asia’s gambling bubble As 2018 draws to a close, it looks like another year that started well in Asia’s gaming industry is going to fall victim to geopolitical forces beyond its control.

he main victim is again likely to be Macau, year, leaving major question marks about the potential where analysts have been reworking their for future expansion. Mercurial President Rodrigo Duterte has made it estimates for this year and next as the gambling hub begins to feel the impact of the slowdown clear he doesn’t like gaming and the on again - very quickly off again - pronouncements on major projects in Mainland China’s economy. President Donald Trump’s trade war with Beijing is give the impression he and his gambling regulator are hitting the pocketbooks of Macau’s main clients and at not always on the same page. It now appears highly unlikely Galaxy Entertainment the very least cutting the feelgood factor of mainland business entrepreneurs, especially in the export-intensive and its local partner Leisure & Resorts World Corp. will be able to proceed with their plans for an IR on the southern provinces. October gross gambling revenue edged up 2.6 percent island of Boracay. The announcement the island would after a gain of just 2.8 percent in September, when casinos be closed to tourism for an environmental cleanup and were forced to close due to a direct hit from Typhoon no casinos would be permitted came just days after The Mangkhut. But even before that VIP revenue had been Philippine Gaming and Amusement Corp. announced with fanfare the companies had slowing for several months. been granted a license. It was a sharp turnaround Since then, the rhetoric from the first few months of the October gross has only hardened with the year, with GGR in January surging government ordering the just over 36 percent to post its gambling revenue closure of a couple of existing best month in four years. For edged up 2.6 percent facilities on the island. the first half, expansion stood Landing International’s at almost 19 percent, although after a gain of just 2.8 project near Manila has suffered unless there is a major change percent in September, a similar fate. The government in fortunes, the second half will chose to announce it was sacking have been a washout. when casinos were the entire board of its local There doesn’t appear to forced to close due partner during a high-profile be an end in sight either, with to a direct hit from ground-breaking ceremony, no signs either side is willing throwing the plans into chaos. to drop the brinkmanship in Typhoon Mangkhut. Shares in the Hong Kongthe trade battle. based company have lost three The impact on other markets quarters of their value, after the around Asia has so far been less evident. There had been speculation that Australia’s fallout from the Philippines debacle was exacerbated IRs, which have become increasingly reliant on Asian shortly afterwards by the disappearance of Landing VIPs, may suffer. They took a particularly hard hit to Chairman Yang Zhihui. He was still missing as of the revenue after Beijing’s corruption clampdown shrivelled time of going to print. Looking forward to 2019, there have already been up the VIP market a few years ago. However, to date, some predictions that the gaming industry in Asia will that doesn’t appear to have been the case. In an October research note, Morgan Stanley said continue to fall prey to politics. Spectrum Gaming is the VIP market appeared solid with ample junket betting that Beijing will seek to crackdown on online liquidity. It said further afield, growth also remains gambling sites targeting China, with major implications for the Philippines and Cambodia, which have both strong, especially in the Philippines and Cambodia. Although existing IRs in the Philippines have seen a massive influx of Chinese capital. For the land-based sector, it remains to be seen how continued to gain ground, the industry as a whole there has had more than its fair share of ups and downs this deep the trade war cuts into local economies and spending.

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Asia Gaming Briefings | November 2018

Agbriefings November 2018

Articles inside

LAST WORD

SUPPLIERS SPECIAL REPORT

CNMI

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NEPAL

CAMBODIA

MALAYSIA

PHILIPPINES

RUSSIA

SOUTH KOREA

JAPAN

MACAU

FOCUSING ON INNOVATION