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.
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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
