AGBriefings December 2014 by Asia Gaming Brief

JURISDICTION UPDATES December 2014 Edition

JAY CHUN ON MACAU DOWNTURN:

Healthy correction • Special Focus pg.28 • Last Words pg.50

MACAU

Staffing costs outstrip revenues pg.30

PHILIPPINES City of Dreams Manila a game changer? pg.6

VIETNAM

Abuzz with projects, debate continues pg.21

MACAO GAMING SHOW ‘14 SPECIAL REPORT p.36

MESSAGE 3

Celebrating Macau

acau celebrates its 15th anniversary of

lack of liquidity and scandals in the junket market that

the official handover from Portugal to

controls VIPs, to a softening Chinese economy.

China on 20 December. China’s President

The fact is that, whatever the reason(s), a market

Xi Jinping will visit the enclave this

correction was due and the dizzying growth rates

December and participate in ceremonies marking both

were unsustainable. Having participated in the Macao

the inauguration of the re-elected Chief Executive

Gaming Show in November, AGB can attest that there

of Macau, as well as commemorating the handover

is plenty of life and optimism in the market yet, and

anniversary.

the casino operators themselves do not seem unduly

The President’s visit is widely seen as an endorsement

concerned. Indeed, a correction away from the decades-

of Macau and he will be greeted with much fanfare. His

old business model of the casino agent, or junket, is

“gift” of increased opening hours for the China-Macau

likely ultimately a beneficial one for the operators.

border crossing is already in place. However, his visit

As the year draws to a close, AGB also has much to

may conceal undercurrents of concern.

celebrate - the launch of our new logo and brand, the

The tiny territory has been punching above its weight

hosting of several successful industry networking

ever since the liberalization of the casino industry. The

events, the launch of the All Asia Dealers Tournament

gambling mecca became the fourth richest territory in

alongside G2E Asia next May, and almost two years

the world in 2014, overtaking Switzerland with a per

of publishing essential Asian content for gaming

capita GDP of over $91,000.

executives everywhere.

Aside from a dip in 2009 during the financial crisis, the

Next year will see more new announcements and

world has watched astounded as gross gaming revenue

partnerships as we continue on our path to be your

continued to expand at a vertiginous pace off impossibly

trusted partner in the Asian gaming industry.

high bases. GGR has risen by an average of 30 percent

So let’s banish negativity and darkness in true

annually for the last ten years, with the first quarter in

Christmas tradition, and join Macau in celebrating

2014 topping 100 billion patacas ($12.5 billion).

as only it knows how. 2015 may get off to a slow start

Then the slide started to happen. In June this year GGR

in GGR terms, but we’re predicting it’s going to be a

fell for the first time since 2009 by 3.7 percent. The

great year.

expected rebound in July didn’t happen, and from there

Happy 15th Anniversary Macau - and happy holidays to

on in it has got worse and worse, with October seeing a

you all. l

Rosalind Wade

Luis Pereira

record 23.2 percent decline and November 19.6 percent lower than a year prior.

On behalf of Asia Gaming Brief

Various factors have been blamed, from the FIFA World

Rosalind Wade & Luis Pereira

Cup, to President Xi’s anti-corruption campaign, to a

PUBLISHERS

www.asiagamingbrief.com DECEMBER 2014 EDITION SERIES II • ISSUE V Jurisdiction updates december 2014 edition

JAY CHUN ON MACAU DOWNTURN:

Healthy correction • Special Focus pg. 28 • Last Words pg.50

MACAU

Staffing costs outstrip revenues pg.30

PHILIPPINES City of Dreams Manila a game changer? pg.6

VIETNAM

Abuzz with projects, debate continues pg.21

MACAO GAMING SHOW ‘14 SpeCIAl RepORt p.36

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Asia Gaming Briefings | December 2014

CONTENTS 4

NORTH ASIA

SOUTH EAST ASIA

REGIONAL SPECIAL FOCUS

PHILIPPINES

JAPAN

INTERVIEW WITH JAY CHUN

SINGAPORE

SOUTH KOREA

RACING

MALAYSIA

RUSSIA

CRUISES

INDOCHINA

AUSTRALASIA

GREATER CHINA

AUSTRALIA

VIETNAM

MACAU

NEW ZEALAND

MYANMAR

MAINLAND CHINA

PACIFIC ISLES

CAMBODIA

MGS SPECIAL REPORT

CALENDAR OF EVENTS

LAST WORDS

you asked. we responded.

the new neTworkInG, eduCaTIon and BusIness InsIGHT. POWERED BY

Asia Gaming Briefings | December 2014

corporate sponsor:

SOUTH EAST ASIA 6

PHILIPPINES

CoD a game changer ? a special in-room menu crafted by Chef Nobu.

further retail space, a theatre and nightclub.

The resort, developed with local partner Belle

In recent years, the Philippines’ improving

Corp., will feature a wider range of entertainment

economy, and a young, working population with

options than currently available in the Philippines’

higher spending power and consumer confidence

other casino resorts.

have made it a promising destination for tourism

Venues will include Manila’s first branded

and business. The country’s GDP improved 6.4

Family Entertainment Center, a venture with

percent year-over-year in the second quarter

Hollywood film studio Dreamworks.

of 2014, according to the Philippines’ National

“DreamPlay by DreamWorks” mixes education

Statistical Coordination Board (NSCB).

with entertainment using Dreamworks

Per capita gross national income grew by 5.5

characters, such as Shrek, Kung Fu Panda

percent in the quarter. Despite being in the early

and the team from Madagascar. The company

stages of development, the gaming industry in

claims the concept, which will open along with

the country is expected to pull in $4.5 billion by

the resort later this year, will be the first of

2018, double the 2013 levels, according to J.P.

its kind in the world.

Morgan. About 45 percent of that additional

The resort will also boast a live performance

growth is likely to be driven by City of Dreams.

central lounge inside the casino and a nightclub

There are challenges, however. Casino operators

situated at the Fortune Egg, an architecturally-

have to contend with regulation, high taxes,

unique dome-like structure, which will be

a conservative Catholic majority with vocal

accented with creative exterior lighting design.

leadership, and delays in the roll-out of

Aside from these, the company has collaborated

infrastructure projects.

he resort, scheduled for a soft opening

with Michael Van Cleef Ault to bring nightclub

The pros for operators include a larger domestic

in December, will be by far the largest

brands Pangaea and Chaos into the Philippine

market than Singapore and Macau. The local

in the country with more than 365

market.

mass market is strong and makes up about

gaming tables, 1,700 slot machines

It will be the second integrated resort to

46 percent of revenue at present, helping

and 1,700 electronic table games.

open in the Philippine Amusement & Gaming

counterbalance the more volatile VIP sector.

“We believe the entry of MCP, with its City

Corporation’s (PAGCOR) Entertainment City,

Despite political tensions stemming from

of Dreams Manila opening at the end of this

a gaming and entertainment complex built

maritime territorial disputes, tourist arrivals

year, will be a game changer to the industry,”

on 8 km² of land on the reclamation area of

from China remain high, increasing 8.53 percent

JP Morgan analysts wrote in a recent note.

Manila Bay. Bloomberry Resorts’ $1 billion

in the first half of 2014. Tourist arrivals from

“Locally, its diverse non-gaming offering with

Solaire Resort and Casino began operations

other countries have also risen – the Korean

well-branded hotels, as well as clustering effect

there in March 2013. Universal Entertainment

market contributed the biggest share of arrivals

with Solaire would finally help Entertainment

Corporation’s Manila Bay Resorts is expected

at 23.14 percent, while tourist arrivals from the

City to build the critical mass.”

to be completed in 2015 while Genting Hong

U.S. rose 7.63 percent.

Melco Crown says its latest integrated resort will

Kong and Alliance Global’s Resorts World

In its 2014 Asia-Pacific gaming report, Fitch

have a strategic mix of hotel brands, ensuring a

Bayshore is expected to open in 2018. The

said the Philippine gaming sector may improve

“celebrity-inspired and fun-luxury experience.”

complex is the centerpiece of the Philippine

its global market share to around 4.5-5 percent

It will have six hotel towers, including the

government’s push to become one of the top

in the next three to five years, from the current

260-room Crown Towers hotel, which will

integrated resort destinations in the Asia

3.3 percent.

cater to the high-end VIP and premium mass

Pacific region.

It also believes the Philippines’ low-cost

market segments, and the 321-room Nobu Hotel

In the six months to June, Solaire had gaming

environment compared with other gaming

Manila, a project spearheaded by celebrity chef

revenue of PHP 10.82 billion ($241.8 million)

destinations like Macau, Singapore, and

Nobu Matsuhisa, and championed by Hollywood

up from PHP 3.81 billion in the previous half

Australia would counterbalance a relatively

actor Robert De Niro and Hollywood producer

year. The resort is now gearing up to open the

high tax regime.

Meir Teper.

second phase of its development, Phase 1a,

Melco Crown said it wanted to expand in the

The latter will feature a Nobu Restaurant where

which will include more gaming tables, but

Philippines because the country is a popular

customers can enjoy signature dishes as well as

will also widen its entertainment offering with

tourist destination and close to major markets,

With the opening of Melco Crown Entertainment’s $1.4 billion City of Dreams project, Manila’s Entertainment City complex got its second integrated resort which is seen as a potential game changer in creating a true gaming hub in the Philippines

Asia Gaming Briefings | December 2014

SOUTH EAST ASIA 7 including South Korea, Taiwan, Japan and China. The company also said it wanted to

CITY OF DREAMS.

“take advantage of the anticipated growth

Belle Corp and Melco Crown are scheduled

in the leisure and tourism industries in the

to open the City of Dreams casino resort

Philippines, which will cater to an increasingly

project towards the end of this year. City of

affluent and growing Asian middle class who

Dreams will also bring luxury brand, Nobu

continue to seek new travel destinations and

to the Philippines, as well as an educational

experiences.”

entertainment center in a venture with

City of Dreams is expected to have an advantage

Hollywood studio, Dreamworks. Melco has

over other resorts in its ability to leverage its

also teamed with the Ault Group to add two

strong Macau client base to attract VIP players.

renowned nightclubs - Pangaea and Chaos.

“Melco group’s long-standing relationship with

In June, Melco upped its estimate for the

Macau junkets should open the door for them to

Entertainment City resort by about a third,

participate in the market, which, underpinned

from $680 million to $832 million. The

by higher commissions and rebates, should

property will feature 365 gaming tables,

help operators tap into the Chinese VIPs,” JP

1,680 slot machines and 1,680 electronic

Morgan says.

table games upon opening, catering to both

While Melco is making moves to shift its focus

the VIP and mass market, and 950 hotel

to mass market gaming in light of declining VIP

rooms. Melco Crown Philippines posted a

revenues, especially in Macau, the company’s

net loss of P1.4 billion for the second quarter

growth strategy in City of Dreams Manila is

and a loss of P2.4 billion for the first half of

to expand both the VIP and premium mass

2014. Pre-opening costs were P736.5 million

markets in the Philippines. The company

for the three months ended June 30, 2014,

believes that Manila is well positioned to

compared with P151.1 million year on year.

cater to both segments. It expects the diverse offerings of entertainment, lifestyle and leisure to be appealing to domestic, regional and international visitors.

UNIVERSAL RESORTS Pagcor chairman and CEO Cristino Naguiat Jr. has said that Universal Entertainment’s

GROSS GAMING REVENUE (Source: JP Morgan)

$4.5b $3.7b $3.2b $2.6b

Y14E

Y15E

Y16E

Y18E

PAGCOR is to penalize the local affiliate of Japan’s Universal Entertainment Corp if it fails to open a $2 billion casino-resort along Manila Bay in 2015 as planned. Tiger Resorts Leisure and Entertainment said in September that it was likely to launch the first phase of the project in 2016, a year later than planned. Pagcor chairman Cristino Naguiat said Tiger would lose a $2.24 million guarantee that all casino operators must maintain with the regulator.

SOLAIRE RESORT & CASINO

Manila Bay Resorts would not be allowed to

Bloomberry Resorts’ Solaire Resort & Casino

resolved, including foreign equity limits on

was the first to open in Entertainment City

land ownership and bribery charges filed

and is now set to open its 200,000 square-

against Japanese billionaire Kazuo Okada and

meter extension in October this year. The

his companies. Former joint venture partner,

break ground by the end of this year on the

$400 million add-on will feature more VIP

Century Properties, recently said it wants

$1.1-billion Resorts World Bayshore along

gaming sections, 300 all-suite hotel rooms,

to resume talks with Universal on their

Manila Bay. The opening has been delayed

a shopping center with 30 to 40 high-end

accord, which was terminated in March, on

to 2018. The company is also pushing ahead

shops, a 1,800-seat entertainment theater,

the original terms. Successful conclusion

with the expansion of Resorts World Manila.

3,000 parking spaces, a nightclub and more

of negotiations would put the Japanese

It has allotted $600 million for the second

restaurants. The initial outlay was boosted

company back in compliance with Philippine

and third phases of the resort to boost retail

to $680 million, $60 million more than

laws on foreign land ownership. The

space by 60 percent. It will add 1,100 rooms

previously announced. “This is definitely

company is seeking to open its $2-billion

to the existing 1,226 rooms in Resorts World

going to drive visitation to Solaire not just

gaming complex by the third quarter of 2015.

Manila’s Maxim’s, Marriott and Remington

from locals but more so from foreign VIPs

The casino will feature 2,000 rooms, state-

hotels. In a disclosure to the Philippine

going forward,” said Leo D. Venezuela,

of-the-art gaming facilities, and an indoor

Stock Exchange in April, Travellers said

director of investor relations at Solaire

man-made beach club covered by a huge

Pagcor approved new gaming capacity of 420

Resort and Casino. Bloomberry Resorts Corp.

glass dome, high-end and casual dining

gaming tables and 4,148 gaming machines.

Q3 total revenue was 5.85 billion pesos ($130

restaurants, upscale retail shops, trade halls

At end-2013, Resorts World Manila housed

million), compared with 4.11 billion the

and cinemas.

287 gaming tables for the VIP and mass

open its casino until outstanding issues were

previous year. Gross gaming revenue jumped

markets, 1,822 slot machines and 210

57.5 percent to 7.7 billion pesos. Bloomberry

electronic table games. Travellers says it has

said as of September 30, 2014, the group

RESORTS WORLD MANILA

so far used about 1.11 billion pesos ($25.5

has 58 junket operators that actively bring in foreign VIP players. Solaire Rewards Club

Travellers International Hotel Group, a joint

raised through an initial public offering on

registered 370,000 members and visitation

venture between Genting Hong Kong and

the Phase 2 expansion of the Marriott Hotel

for 2014 has reached 3.24 million.

Alliance Global Group, was scheduled to

and the Maxim’s Hotel and facilities. l

million) of the 16.8 billion pesos that it

Asia Gaming Briefings | December 2014

SOUTH EAST ASIA 8

SINGAPORE

Draconian online gambling ban

Matt Pollins*

*Matt Pollins is an international technology & media lawyer based in Singapore at global law firm Olswang, and an AGB Advisor

Singapore’s Remote Gambling Act is here – and far beyond the borders of the South-East Asian city-state, the gambling industry is weighing up the implications of one of the most far-reaching and restrictive remote gambling laws seen in any jurisdiction to date

he Act, passed after its second reading, criminalizes

a Singapore-customer link.” It is not yet clear whether

the entire spectrum of remote gambling activities.

geoblocking will be a minimum requirement.

The restrictions are extremely broad and will

With extra-territorial laws, enforcement is always the

be felt by operators, agents, brokers, service

challenge, which is why the Government is introducing

providers, advertising networks, payment processors,

payment blocking (via local financial institutions) and

financial institutions, ISPs – and, of course, players.

site blocking (via local ISPs) as part of the Act. The

There will be a licensing regime, but the Minister’s speeches

Government has even indicated that it could seek the

during the Parliamentary session indicate that there are only

extradition to Singapore of individuals involved in the

a couple of real candidates – Singapore Pools and Singapore

operation of offshore remote gambling services that

Turf Club. In the Minister’s own words: “The entity has to

target Singapore, although one would expect that to be

be based in Singapore so as to aid the enforcement of the

reserved for very serious cases.

exemption conditions. The exempt operator has to be a

If the service is based in Singapore then the rules apply,

not-for-profit entity which contributes to public, social

wherever the customers are based. It will be illegal to

and charitable purposes in Singapore.”

operate a “Singapore-based remote gambling service.”

Even when the licenses are handed out, casino-type

This applies regardless of whether the service targets

games will not be permitted, so Singapore customers

Singapore customers or foreign customers, so geoblocking

will have no legitimate options available to play online

Singapore isn’t a solution.

casino games. In addition, the licenses will come with

However, the Minister’s speech does raise some question

some heavy conditions, which are expected to include

marks as to exactly what types of operations would be

requirements for customers to register and provide certain

caught by the rules: “Enforcement will be targeted at

information, imposing a minimum age requirement for

those who are deeply involved in, and provide core and

registration and not granting betting on credit.

critical services in support of the illegal activities of the

It does not matter whether the services are hosted or

unauthorised remote gambling operators.” The question of

based in Singapore or abroad. By providing a remote

what types of Singapore-based service would be regarded

gambling service with a “Singapore customer link,”

as being “deeply involved in” gambling operations

operators are subject to the rules, wherever in the world

has not yet been answered and further guidance will

they are based. What’s more, the long arm of the new

be needed for services established in, or considering a

law actually requires operators based overseas to make

move to Singapore.

operational changes to comply. These include informing

In the absence of clear guidance, there is a risk that companies

prospective customers that Singapore law prohibits

based in Singapore which provide support functions to

the provision of the service to Singapore-based users,

remote gambling businesses (whether to those businesses

updating their terms and conditions and taking “such

specifically or as part of a range of clients) will be looking

other measures as far as reasonably practicable to ensure

to move away from Singapore to other parts of the region.

that the service did not, or could not reasonably have,

Other territories seeking to develop a “hub” offering in

Asia Gaming Briefings | December 2014

SOUTH EAST ASIA 9

GROSS GAMING REVENUE (Source: JP Morgan)

$7.4b $6.4b $6.4b

Y14E

$6.6b

Y15E

Entertainment & Gaming revenue $1.47b Asia, such as Cagayan in the Philippines, may

seven years.

stand to benefit.

So what happens next? The law itself is expected

The law even attempts to regulate games of

to take full effect from 2015. This gives a brief

chance (or chance and skill combined) that are

window of opportunity for organizations engaged

played for virtual credits or virtual currencies.

in the remote gambling industry, wherever

The Minister’s speech suggests that regulatory

they are based, to review the requirements and

action won’t be targeted at games such as Candy

assess what steps they need to take to comply.

Crush or Farmville: “As a matter of principle,

It also provides an opportunity for the potential

the bill does not intend to cover social games in

candidates for a license to weigh up their options,

which the players do not play to acquire a chance

which may include seeking operational support

of winning money, and where the game design

and industry experience from licensed operators

does not allow the player to convert in-game

in other parts of the world.

credits to money or real merchandise outside the game.” This suggests that “real money in but no real money out” games will not be regulated. Unfortunately, the actual drafting

GENTING SINGAPORE

Operator of the Resorts World Sentosa IR,

of the legislation is broader than the Minister’s

reported a 43 percent drop in Q3 net profit

comments suggest, which does leave some room

and warned the Asian gaming and tourism

for uncertainty. Social casino games, in particular,

industry is facing “significant challenges.”

may still wish to seek further clarification, given

The group posted a net profit of $127.1 million

the Government’s apparent concern with all

($98.5 million). Revenue declined 17 percent to

casino-related gaming: “Social casino games

$644.8 million, while adjusted earnings before

are of particular concern as they are designed to

interest, tax, depreciation and amortization

simulate real world gambling such as slots and

was S$253.9 million.

poker and replicate the experience of a casino.” Despite this being one of the most restrictive remote gambling laws ever passed, much of the Parliamentary debate focused on whether, by

MARINA BAY SANDS

Posted a 5 percent decline in Q3 revenue to

opening the door to a limited licensing regime,

$735.5 million, while casino revenue was down

the Government was somehow “condoning”

8.7 percent. The company posted adjusted

gambling activities. As such, there will be some

property EBITDA of $351.7 million, down 5.9

pressure for the law to be actively enforced –

percent. Rolling chip volume was down almost

and it certainly has teeth, with fines of up to

34 percent, while mass revenue dipped 1.6

US$400,000 and/or imprisonment for up to

percent. l

Y16E

Y18E

+12%

TOURISM RECEIPTS

+2%

INT. ARRIVALS

-3%

14H1 14H1

Senior Singapore lawmaker, Denise Phua Lay Peng, called for an increase in the casino entry levy imposed on Singapore citizens and permanent residents of the republic. She also called for the introduction of an “opt-in” system, whereby only Singaporeans who formally register an interest in gambling at the two casino resorts would be cleared to do so. Singapore Pools chief executive officer Tan Soo Nan, who oversaw a range of betting initiatives, including sports betting on the Formula One motor race, is to step aside after more than 12 years. Tan oversaw the introduction of the 24-by-7 phone betting service, expanded sports betting to include Formula One motor racing and the setting up of four sports entertainment venues that offer live betting to sports fans. He will be succeeded by CEO Seah Chin Siong on Jan 1, 2015.

Asia Gaming Briefings | December 2014

SOUTH EAST ASIA 10

GROSS GAMING REVENUE (Source: JP Morgan)

$1.7b

Y14E

MALAYSIA

Gambling industry escapes tax hike The Malaysian government did nothing to help or hinder the country’s gambling industry in the 2015 budget, despite speculation that it planned to introduce a so-called “sin” tax on alcohol and gambling

he consumer sector can breathe a sigh

closure of many of its key facilities, such as

of relief. There were also no additional

its theme park. However, analysts predict a

gaming duties while the property

spike in visitor arrivals from 2015 thanks to

sector also escaped unscathed after

the opening of 1,300 new rooms, 3,000 new

the punitive curbs imposed last year,” RHB

car park bays, and a theme park in partnership

said in a post-budget analysis.

with US-based studio Twentieth Century Fox.

However, the government did confirm the

The entire 1,300-room hotel expansion had

introduction of a general sales tax next year

been expected to come on stream next year.

as the government seeks to reduce the deficit.

However, Genting now expects the opening of

This is likely to lead to a rise in inflation and a

the first 500 rooms of that expansion by the

general slowdown in the economy to 5.3 percent

end of the year and the remaining 800 rooms

growth in 2015, from an estimated 5.8 percent

by mid-2015.

in 2014, RHB said.

Meanwhile, Genting Group is forging ahead

Malaysia’s only casino operator, Genting Bhd,

with its expansion plans overseas. It recently

reported a slowdown in its second quarter as

began construction on the $4.0 billion Resorts

VIP spending dropped and construction work

World project in Las Vegas, with a first phase

to revamp its Resorts World Genting property

to be opened in 2015, with themes targeting

disrupted traffic.

Asian visitors. It’s also waiting to hear on the

However, according to analysts the RM5 billion

results of two bids for licenses in New York state.

($1.6 billion) upgrade of the 49-year-old property

The company’s Genting Singapore unit has

appears to be ahead of schedule, positioning the

teamed up with China’s Landing International

operator for a pick up in earnings from next year.

Development for a resort on Jeju island in

The company is expected to see a drop in visitor

South Korea and the group is also eyeing a bid

numbers in 2014 as The Genting Integrated

for a casino license in Japan once legislation

Tourism Plan Phase 1 will force the temporary

legalizing casinos is passed. l

Asia Gaming Briefings | December 2014

$1.8b

Y15E

$1.9b

Y16E

$2.2b

Y18E

GENTING MALAYSIA Y14Q3 Revenue

Leisure & hospitality

-9%

Group revenue

+5%

Malaysia’s Attorney General is seeking a revamp of gambling legislation to help clampdown on illegal online gambling. Tan Sri Abdul Gani Patail said his Chamber will submit a proposal to amend and update Malaysian laws with regard to online gambling. “The current laws cover gambling, but not virtual gambling. The problem is that many illegal gambling activities are done online. We need to have a new set of laws or amend the old laws,” Gani Patail has said. Berjaya Corp is seeking casino joint ventures in South Asia, looking for growth outside of its home country. The company also plans to the sell shares in its environment services division in Singapore to raise funds for growth in the business. Berjaya is interested in finding a partner for a gaming project in South Korea and wants to join a consortium in Japan.

AUSTRALASIA 12

Packer highlights importance of Asia Asia’s ballooning middle class will provide enormous opportunities for Australia’s tourism industry and Crown is investing heavily to take advantage of changing demographic trends

CASINO GAMING REVENUE (Source: CIMB)

Y13 Y14E Y15E

$3.5b $3.6b $3.7b

Aristocrat Entertainment says it’s reviewing its operations in Japan after its business there held back profit in the third quarter due to regulatory and other issues. Aristocrat chief executive Jamie Odell said the company still had two games to release in Japan, but recent and pending regulatory changes made the market uncertain. The group is reviewing its options. Chris Morris, the new owner of the Jupiters Townsville casino in the Australian state of Queensland plans a $17.4 million overhaul of the property to bring in more tourists. Morris plans to improve the design and put in more bars and restaurants. The Australian millionaire bought the casino from Echo Entertainment for $70 million.

n a recent speech to shareholders, Packer

for a license to redevelop the Queen’s Wharf in

pointed out that the domestic economy

Brisbane in the Northern State of Queensland.

is soft at best, highlighting the need for

It’s competing against a rival consortium made

operators to attract the Asian tourism dollar

up of Echo Entertainment and Hong Kong

to fill multi-billion resorts being planned from

interests Chow Tai Fook Enterprises and Far East

Sydney to Queensland.

Consortium International. Both groups interested

“By 2030, two thirds of the world’s middle class

in the Brisbane license have now submitted their

will come from Asia Pacific, up from just under

detailed plans to the Queensland government,

one third in 2009. There are over 300 million

which is expected to make a decision early next

middle class consumers in China alone - equal

year. The state government is also offering two

to the entire population of the USA,” he said.

regional licenses.

near Cairns, while ASF Consortium plans a $7.5

By 2030, China is expected to have 1.4 billion

However, the size and scope of the proposed

billion development on the Gold Coast.

middle class consumers compared to 365 million

developments has raised eyebrows both from

However Fung’s plans have been thrown into

in the USA and 414 million in Western Europe.

local environmentalists and some academics

doubt after his bid to buy Reef Casino Trust fell

China is also by far and away the world leader in

who fear the resorts will have a major impact

through after failing to provide information

tourism expenditure, having grown its tourism

on fragile ecosystems and risk becoming white

crucial to gaining regulatory approval by his

spend 10 times from $13 billion in 2000 to $129

elephants should they fail in attracting the

November 28 deadline. Fung has said that a

billion in 2013.

much vaunted Asian dollar.

comprehensive review of the Aquis project will

“That is an extraordinary figure that investors

The local population is sparse and by far the

be conducted, but that he had recently signed

should keep in their mind as we move forward

preferred gambling option for most Australians

an extension on the option of the core site at

as a business to meet this growing tourism

remains the humble pokie machine. Also, there

Yorkey’s Knob.

demand,” he said.

are new integrated resorts springing up across

“The extension reflects our commitment to

Crown is planning a six-star resort in Barangaroo,

Asia, at a much shorter flying distance from

push ahead with AQUIS but also acknowledges

Sydney aimed at the VIP market. It is also bidding

mainland China than Australia.

the increasing complexity and difficulty of the

as part of a consortium with Asian investors,

Hong Kong billionaire Tony Fung’s Aquis Barrier

approvals process and the fact we may need some

including Chinese property developer, Greenland,

Reef plans an $8.15 billion ($7.6 billion) resort

more time than first anticipated,” Fung said. l

Asia Gaming Briefings | December 2014

AUSTRALASIA 14

GROSS GAMING REVENUE

NEW ZEALAND

SkyCity eyes South East Asia growth SkyCity Entertainment Group plans to focus on Southeast Asia to boost revenue growth, after reporting a 55 percent surge in business from the region in the first quarter

forward to growth in the second half of 2015,” says chief executive Nigel Morrison. SkyCity Entertainment hopes to boost its share of the Australasian market for high-rollers

-0.3%

Casino spend Y13 $520m

+2.1%

Lottery spend NZ$432m

+3.1%

Racing board FY14 $2.8b

+6.7%

Scientific Games has won a contract from the New Zealand Lotteries Commission to provide instant games for Lotto New Zealand. Under the terms of the agreement, Scientific Games will work with Lotto New Zealand to grow sales of the Lottery’s instant game portfolio. It will also provide marketing support and creative services. The seven-year contract began in September 2014 and includes a one-year extension option.

from 5 to 8 percent to 15 percent following the Adelaide Casino redevelopment. But the Auckland casino was key in overall revenue in the first quarter, up 12.4 percent with international business rising 4.1 percent to NZ$1.39 billion.

Pokies spend FY14 NZ$826m

Auckland grabbed the lion’s share of international t its annual meeting in Auckland, the

business at 64 percent, followed by Adelaide at

country’s only listed-casino operator

18 percent and Darwin at 16 percent.

reported good growth across core

Overall first quarter mass gaming (machines

businesses, buoyed by robust growth

and local tables) revenue was up 5.4 percent.

New Zealand has vowed to crack down on online gambling overseas, which the country’s horse racing industry claims is robbing the sport of a vital source of funding. The country’s racing minister, Nathan Guy, told the New Zealand Racing Board’s annual meeting this week that tackling the problem would be his number one priority for the current term. The New Zealand Racing Board estimates as much as $300 million ($236.5 million) may be lost each year to overseas online bookmakers.

in Auckland and strong momentum, especially

The casino operator witnessed “good growth”

in the second half of financial year 2014.

from Chinese players, a “core target VIP market”,

International business turnover grew strongly,

with turnover from Chinese domiciled players

“exceeding” NZ$ 6billion ($4.76 billion).

up more than 400 percent on the previous

But costs of redeveloping the Adelaide casino

period last year.

and the continued “significant appreciation”

Overall, SkyCity Entertainment reported a 55

of the New Zealand dollar over the financial

percent increase in international business to

year (to June 30) led to a 4.3 percent fall in net

NZ$2.2 billion.

profit to NZ$287.6 million.

Morrison said the planned NZ$350 million to

However the outlook was favorable. Overall,

$380 million capital expenditure on the new

first quarter revenues were up 6 percent over

six-star hotel together with additional gaming

The win rate from international business for

the previous financial year, despite disruptions

facilities and VIP rooms in Adelaide should enable

the first quarter was 1.72 percent compared

to the Adelaide property.

the international growth to equal Auckland’s.

to 1.45 percent in the same quarter last year.

“We expect disruption to continue in Adelaide

Over the past four years international VIP table

Morrison said the international business was

for the remainder of first half of 2015 while we

game return has risen from NZ$15 million to

returning a margin of between 15 and 20 percent

complete the redevelopment and then look

NZ$90 to NZ$100 million currently.

net profit. l

Asia Gaming Briefings | December 2014

AUSTRALASIA 15

PACIFIC ISLES

GROSS GAMING REVENUE

Casino interest in Tinian heats up

SAMOA Y14E $10M

As details are finalized for Saipan’s first casino, attention has now turned to its smaller neighbour Tinian, which is seeing a flurry of Asian investor interest

other direct costs that will ultimately cost the government about $15 million in lost revenue, it said. Breaking his silence in a letter to a local newspaper, Hee K. Cho admitted he had financed the campaign. “They also have intentions to distribute a second pamphlet and I will be involved in that one as well.”

Insiders say it’s hard to tell how the people

est Sunshine, a unit of Hong Kong-

would vote had the issue gone to a referendum,

listed Imperial Pacific beat rival bidder

with the community divided. Some see the

Marianas Stars Entertainment to win

economic benefits, while opposition is being

the license in July.

fueled by reports of corruption.

Saipan law does not allow for gambling facilities at the island’s airport, while gambling could be possible on nearby Tinian and Rota, according to an analysis of the concession program and leasing strategies in the Commonwealth of Northern Mariana Islands. The study was carried out by consultant Ricondo & Associates and commissioned by the Ports Authority. So far no gaming facilities have been developed at CNMI airports. DFS Galleria in Saipan—now rebranded as T Galleria Saipan - has been talking to casino developer Best Sunshine about constructing a new $100 million plus hotel in Garapan on Saipan. DFS Group Limited executive vice president for strategy and market development, Lamonte James Beighley, confirmed that DFS and Best Sunshine had had “initial discussions on this potential partnership.”

The award was dogged by controversy, with

Meanwhile, Best Sunshine continues to evaluate

both sides trading accusations of bias and

one of three sites for the luxury casino resort.

Marianas Stars seeking a court injunction to

The company is eyeing the current site of the

stop the whole process.

Mariana Resort in Marpi. Its public land lease

However, despite promises made in its campaign

expires in four years, but the owners want a

to provide handouts to all residents in the form

new 40-year lease.

of a $10 million contribution to be distributed

Under the terms of the Best Sunshine license

through cash vouchers, Best Sunshine still

accord reached in August, the company has eight

faces local opposition.

years to fully complete the project, though the

A group known as Citizens for a Cleaner CNMI

the agreement sets out a detailed timetable for

has distributed anti-casino pamphlets around

a phased implementation.

the island, accusing the company of talking up

Within 24 months, it needs to develop an initial

its share price and calling tax breaks given by

gaming facility consisting of a five-star 225

the government unheard of.

room hotel. Within 36 months, it has agreed to

The group had sought 16,000 signatures to force

construct an 800-room four or five-star luxury

a referendum overturning the decision. It’s

hotel, a $100 million themed entertainment

resort. An inconsistent power and water supply

unclear who is behind the campaign, though

facility, a wedding chapel and 10,000 square

may create further challenges.

some sources said it was bankrolled by Hee K.

metres of gaming space, among other facilities.

The Marianas Visitors Authority estimates that

Cho, the owner of a rival resort on nearby Rota.

On completion, the complex will have at least

the 2,000-hotel room integrated resort could

The group claims Imperial Pacific profited by

2,229 hotel rooms, 200 villas, 17,000 square metres

have a $1.8 billion economic impact to the CNMI

making statements about its intentions for

of gaming space, 23 food and beverage outlets,

if the hotel rooms are fully booked. The IR will

a casino on Saipan in February, before a bill

1,050-square metre fitness area, 1,900-square

double the current available rooms. MVA projects

was even introduced to legalize casinos. The

metre spa facility, and the entertainment facility.

that the CNMI will have to increase its number

comments ultimately sent the company’s stock

Best Sunshine is now required to provide its

of visitors by approximately 451,000 in order

to a record high of $2.78.

proposed implementation schedules to the

to fill up all the additional rooms.

The group also points out that the granting of

Development Plan Review Committee within

Still, Best Sunshine parent Imperial Pacific

an exclusive license for 40 years with no tax is

60 days of receiving the license, which sets an

is optimistic about its prospects on Saipan.

unprecedented and will lose the government

October 12 deadline.

The group is winding down, or seeking to

revenue. This, the group said, “is a first in

Some industry experts have expressed concern

sell, some of its poorly performing Chinese

casino industry history.”

over the scale of the project, saying the company

food businesses to focus on Saipan and other

Best Sunshine will also be exempt from

may find a serious shortage of labor to staff the

gaming businesses. l

Asia Gaming Briefings | December 2014

NORTH ASIA 16

JAPAN

Casino bill in tatters; neighbors to benefit? The absolute “best-case” scenario for the passage of Japan’s long-delayed framework legislation to open up its casino market is late 2015, making it a real possibility Taiwan will beat its neighbour to open the first integrated resort

Asia Gaming Briefings | December 2014

peaking at the Macao Gaming Show,

targeted 20 million foreign tourists by 2020

Dr Kazuaki Sasaki, assistant professor

and 30 million by 2030. That compares with

at the Nihon College of Economics in

just over 10 million in 2013.

Japan, said the “absolute best case”

The market was seen to have the potential to

scenario would be for a revised casino bill to be

become the world’s third-largest gambling

presented before the next extraordinary session

hub, with CLSA forecasting revenue could rise

of Japan’s Diet this time next year.

to $40 billion by 2025. As a result most of the

Sasaki is one of the few researchers specializing

world’s major casino operators were lining up

in the gaming industry in Japan and is Director

multi-billion dollar projects in an attempt to

of Gambling at the Gaming Academy in Japan.

win a coveted license.

The framework legislation was designed to

Japan has a wealthy population of about 127

lay the groundwork for what is expected to

million, who already spend about $153 billion

become the world’s third-largest gambling

every year in the country’s pachinko parlors,

market. Prime Minister Shinzo Abe has backed

making the local market a key draw.

the bill as part of his efforts to boost tourism

Both LVS and MGM have been vocal about their

arrivals. However, his strength in parliament

plans to bid for a casino license in the country.

and therefore his ability to push the bill past

MGM outlined its plans for a “uniquely Japanese”

opponents concerned about problem gambling

resort in the city of Osaka, in which it would be

and organized crime, was hit by the resignation

prepared to invest about $5 billion.

of two cabinet ministers over an unrelated

MGM Resorts’ president Bill Hornbuckle gave

corruption scandal.

a presentation of the project at the Mizuho

Abe was pushing the bill as a key component

Convention Centre in September and stressed

in his efforts to boost tourism revenue. Under

the resort will be a multi-faceted entertainment

his so-called “Abenomics” growth policy, he

centre, with gambling just one part of the equation.

NORTH ASIA 17

PACHINKO/PACHISLOT ANNUAL REVENUE

PACHINKO/ PACHISLOT ANNUAL REVENUE

$153b

(Source: Japan Productivity Center)

CASINO GAMING VENUE ESTIMATE Y1

$10b (Industry median estimate)

CASINOS ESTIMATES $40b

$18.4b $9.4b

He said the project could create 10,000 jobs.

makes a major difference to the amount it is

MGM says the casino resorts have the ability

prepared to invest in any given market.

to boost tourism arrivals by about 5 million

Taiwan is also seen as a promising market, and

more than the government’s stated 2025

the political momentum to pass legislation

target of 25 million and 10 million more than

legalizing casinos there seems to remain intact as

the government’s 30 million target in 2030.

long as gambling is restricted to outlying islands.

Caesars Entertainment said it may be prepared

Dr Day-Yang Liu, director at the Center for the

to spend $5 billion in Japan, while LVS has

Study of Lottery and Commercial Gaming at

mooted a potential total of as much as $10

the National Taiwan Institute of Science and

billion. Boyd Gaming, Wynn Resorts, Genting

Technology said he was optimistic that the

and Melco Crown Entertainment are among

gaming bill, now on its second reading, could

the other names all said to have been eyeing

be passed by June of 2015.

a Japan license.

However, he warned that the market is likely to

The indefinite postponement of the Japan bill

be strictly regulated and will be more likely to

has lead to questions as to where that money

resemble the situation in Singapore than Nevada.

may be invested, if anywhere, as an alternative.

There will be a limited number of licenses and

The general consensus appears to be that

a strong emphasis on non-gaming facilities.

neighbouring South Korea would be a major

“It will not be like Macau,” he said, but

beneficiary. However, the current ban on local

nevertheless the introduction of casinos will

access to the casinos may act as a deterrent.

“help the outer islands dramatically to boost

LVS has said it would be prepared to spend

tourism and their economies.”

billions on a resort there, but not if locals were

Dr Liu also said that at present in Taiwan

not allowed access.

there are no specific proposals outlawing

MGM has also said that allowing local access

locals from casinos. l

Y20E

Y25E

Y30E

(UBS)

(CLSA)

(UBS)

Pachinko parlor operator, Niraku Corp., is reported to be preparing a $100 million initial public offering on the Hong Kong Stock Exchange in the first IPO of a foreign company there since December last year. The planned IPO is expected in the first half of 2015, although full details on the sale are yet to be revealed. Steve Wynn says he’s ready to enter Japan: “We will step up and bring our capital, experience and imagination to the table,” he told AGB recently. Wynn argues that his track record in Macau and the US puts Wynn Resorts as a strong contender in obtaining a license in Osaka or elsewhere in Japan. “Its not about the money” he added.

Asia Gaming Briefings | December 2014

NORTH ASIA 18

GROSS GAMING REVENUE (Source: JP Morgan)

$3.8b

SOUTH KOREA

South Korea throws weight behind IRs The South Korean government is counting on integrated resorts to help it to achieve its tourism goals and has called for a concerted effort to expedite the approval process

he government is preparing a master

China, such as Shanghai.

plan for IR projects and is streamlining

South Korea’s Paradise Entertainment is

the casino license bidding process

likely to be best placed to benefit from market

during the second half of this year.

growth, as it will enjoy first mover advantage

The Ministry of Culture, Sports and Tourism

when its IR opens on Yeongjong in 2017. The

(MCST) aims to nearly double inbound tourist

company which is building a $1.1 billion resort

visits to 20 million in 2017 from 12 million in

with Japan’s Sega Sammy broke ground on the

2013, according to Standard Chartered research.

project in November. Caesars Entertainment in

Notably, it plans to achieve this by easing visa

March was also granted preliminary approval

regulations for China travellers and opening

for a $2.2 billion resort on the island with the

more tourist attractions.

Lippo Group.

The U.K. bank expects the government to seek

So far, the South Korean market has proved

to create casino clusters with the new licenses

more resilient to the slump in VIP revenue

likely to be granted on Yeongjong island. It sees

currently affecting Macau.

2 to 3 new licenses being allowed there.

According to September figures, Paradise Group

“We expect Yeongjong to be centre stage for

had a 17 percent jump in revenue in the month,

IR development in Korea, which could expand

while Macau declined 11.7 percent.

into a major tourist destination in northeast

UBS said the strong results were driven by China

Asia,” the note said.

visitors, with mass growth up 25 percent and

South Korea is seen as potentially one of the

Chinese VIPs up 17 percent, helping to offset

biggest gambling markets in the world, due to

a decline in Japanese visitors by 10 percent.

its close proximity to China. Standard Chartered

Despite the opening of the government to

estimates the foreigner only market could

support the development of IRs, the governor

quadruple from 2013 levels by 2020 to generate

of Jeju island in the south continues to present

revenue of about $5.2 billion.

opposition, raising question marks over

In 2013, China supplanted Japan as Korea’s top

Genting Singapore and Landing International

visitor source. Chinese visitor arrivals continued

Development’s planned $2 billion project there.

to report strong gains this year with a 46 percent

The companies had been scheduled to break

increase in the first seven months and are set

ground in June, though the ceremony has

to beat a projected 5 million for the full year.

been delayed.

Backed by this growth, the Chinese accounted

Governor Won Hee-ryong has called for stricter

for 1.35 million visits to Korea’s foreigner-only

guidelines on casino and other foreign investment

casinos - about half of the total.

to the honeymoon island, saying the tougher

Standard Chartered expects growth to continue,

rules could mirror those adopted by Singapore.

with a 15 percent compound annual growth

The calls would include a revision to taxation

rate from China through 2016. The bank says

policies on casinos to improve transparency

Korea is seen as being a more convenient

of the gambling industry and boost the

destination than Macau from cities in northern

local economy. l

Asia Gaming Briefings | December 2014

$3.1b $2.7b

Y14E

$2.9b

Y15E

Y16E

Y18E

Y20E Foreigner-only casino revenue $5.2b (Source: Standard Chartered.)

Genting Hong Kong will pay $117.2 million to invest in a 50/ 50 joint venture with China’s Landing International Development to manage a casino in the Hyatt Regency Hotel on South Korea’s Jeju Island. The casino is one of the eight gaming licenses in Jeju under the Tourism Promotion Act. The casino is now under renovation and is expected to reopen in January 2015 with around 30 gaming tables and 16 slot machines. The joint venture will operate the Jeju Casino under Genting Trademarks. Bloomberry Resorts, the owner of the Philippines’ Solaire Resorts & Casino, is considering a casino acquisition in South Korea. “Korea is just one of several prospective jurisdictions outside the Philippines that Bloomberry is looking at, but there is nothing definitive at this point. It is part of the company’s ordinary course of business to continuously evaluate potential opportunities offshore.”

NORTH ASIA 19

RUSSIA

Gambling regions expand, but projects face delays Russia now has a total of six legal gambling zones, following the addition of Crimea and Sochi in July, however the expansion of facilities has not kept the same pace, with construction delays and other complications plaguing development

SUMMIT ASCENT GROSS GAMING REVENUE (Source: Goldman Sachs)

Y16E

$375m

Y20E

$1.7b

Russian authorities have shut down more than 72,000 illegal gambling houses and 1,000 underground casinos in the five years since Moscow banned gambling, except for in designated zones, according to reports. Prosecutors jointly with other law enforcers have checked more than 108,000 facilities and have confiscated more than 980,000 units of gambling equipment.

n September, Bermuda-based Summit

about poor infrastructure and illegal gambling.

Ascent Holdings said the construction of

The gambling zone envisaged 15 casinos and 30

its Primorye resort has been pushed back

hotels, with a capacity to host 3,000 visitors by

again “due to unforeseen obstacles” and the

2020. The first was scheduled to open in 2010.

opening is now due in the second quarter of 2015.

The Siberian Coin finally opened in November,

Construction was to be completed in April

ahead of the opening of the Altai Palace Hotel

2014, and if the new target date of the first

Resort next year. Located in a remote region near

quarter of 2015 is met the project will be a year

the China/Kazakhstan border, the casino launched

behind schedule.

with 16 gaming tables and 20 slot machines.

“Subject to the time taken for usual commissioning

Primorye in the Russian Far East was seen as

formalities, such as government inspection,

the most promising of the zones and has also

approval and the issuance of the occupation

attracted interest from Hong Kong-listed

permit, etc., the casino hotel is now expected

Nagacorp. The company plans a $350 million

to be fully operational sometime in the second

integrated resort, gaming and entertainment

quarter of 2015. FGCE does not anticipate any

complex near the port city of Vladivostok.

further delays and remains confident that it

The region’s main draw is seen as its close

can complete construction of Phase 1 within

proximity to major Asian cities, such as Beijing.

previously estimated total capital expenditures,”

US-based research firm, Gaming Market Advisors,

the company told the Hong Kong Stock Exchange.

has estimated that the region has the potential to

However, Summit chairman Lawrence Ho told

generate $5.2 billion by 2022, while the Russian

the local governor in September that work was

government also offers one of the lowest tax rates

now progressing well and he expects the first

in the world to attract investors.

hotel to open in March next year.

In the west of the country, the zones of Sochi

The company said there had been delays in

and Crimea are seen as potentially in direct

getting design approval from local authorities,

competition to each other.

slow delivery of equipment and delays in getting

Sochi, which hosted the Winter Olympics earlier

mentioned that closure was possible, but that

approval for foreign workers. There are now 150

this year, has many purpose-built and currently

no final decision had been made.

workers on site and this will increase to 450 at

under-used facilities. At a recent conference

However, in the longer term analysts are more

the peak of construction.

experts predicted that a gambling zone could

optimistic about the prospects for Crimea

Gambling has been banned across Russia since

be up and running in three to five years.

which, before the current conflict, had a long-

2007 except in specific zones. The four original

In 2013, about 4 million tourists visited Sochi,

established tourism industry.

gambling regions were Azov (Krasnodar),

with that number expected to have risen 30

Government officials there say foreign investors,

Yantarnaya (Kaliningrad), Primorye (Far East)

percent in 2014 due to visitors coming to the

including from Asia, have expressed interest

and Siberian Coin (Altai).

Olympics. It’s forecast to drop off again next year.

in Crimea, though gave no names.

Siberia had ambitious plans for Russia’s biggest

The opening of Sochi as a gambling zone has also

Crimea’s acting governor Sergey Aksenov told

casino complex, combining gambling with eco-

cast doubts over the future of Aznov-City the

state-owned Russian news agency TASS that

tourism, but international investors have shown

only region currently up and running. Russia’s

he expects to begin implementation of the

little enthusiasm for the project amid concern

deputy Prime Minister Dmitriy Kozak recently

Crimean zone project next year. l

The Russian Premier Football League and the International Centre for Sport Security have signed a partnership to protect the country’s top football league from corruption and from threats to safety as the country prepares to host major sporting events such as the 2018 FIFA World Cup. The RFPL and ICSS will work together on a number of events, initiatives and training programs designed to enhance sport safety, security and integrity.

Asia Gaming Briefings | December 2014

INDOCHINA 20

VIETNAM

Country abuzz with project but locals debate continues Vietnam has been buzzing in recent months with talks of new projects and longdelayed developments finally set to progress, although foreign operators are still waiting to hear whether casinos will be opened to locals, which is seen as the real catalyst to kick-start growth

Asia Gaming Briefings | December 2014

inaCapital, an asset management

“In 18 to 24 months after we commence

firm focused on Vietnam, said in

construction in mid-2015, the resort will be

October that it’s finalizing talks

operational,” he was cited as saying.

with a foreign investor partner

To make it more attractive to prospective

and expects to start construction soon on its

investors, VinaCapital proposed that the

$4 billion integrated resort in South Hoi An.

local authorities reduce the size of the

“We expect to start construction on this

project from 1,538 hectares to 1,000 hectares.

development in mid-2015. We are determined

The developer also asked for permission to

to develop it because this is a very big tourism

extend the project’s lifetime to 50 years and

project,” Don Lam, co-founder and CEO of

for the ability to add 20 more gaming tables

VinaCapital told Vietnam Investment Review.

for a total of 90.

The company is seeking a partner to replace

Vietnam is currently finalizing new legislation

Malaysia’s Genting Bhd, which pulled out in

on the country’s gambling industry and may

2012, effectively putting the development on

open up casinos to locals amid reports Hanoi

the backburner.

is losing about $800 million a year from its

Earlier this year, the firm said U.S. company

nationals crossing the border to Cambodia to

Peninsula Pacific would be stepping in to fill

gamble. Debate continues on the issue and

the void. However, the report said it now

whether to impose entrance fees, or even

appears likely that Peninsula Pacific has also

potentially a form of means testing before

withdrawn. Lam wouldn’t reveal the name of

locals are allowed to gamble.

the new investor as the agreement has not yet

In the meantime, several other locations around

been signed.

the country are being touted as possible casino

INDOCHINA 21

GROSS GAMING REVENUE MIN E

$275m

MAX E

$300m

LOST to Cambodia E

$800m

DONACO Y14E Hotel/gaming revenue

+33%

VIP

+67%

Slot machines

+144%

Visitation OCT14 Tourism arrivals 6.6m China Arrivals

destinations as officials seek to boost tourism

the Mekong Delta, as part of plans for a special

and the local economy.

economic zone.

A senior Vietnamese banker recently weighed

Chairman of Kien Giang Province, Le Van Thi,

into the casino debate, urging for a development

was cited as saying that the move to expand

on the central island of Ly Son and an islet off

followed approval in 2004 by Prime Minister

its coast.

Nguyen Tan Dung for the development of a

Tran Bac Ha, chairman of the Bank for Investment

tourism and international trade centre.

and Development of Vietnam, made the

The island district’s economic growth rate has

comments after the regions were connected

been 25 percent a year on average over the past

to the national power grid.

10 years. Last year the island lured 430,000

He said the 69-hectare Be Island should be set

tourists, an increase of 32 percent compared

aside for a “high-end entertainment area,”

with 2012.

with five-star hotels and casinos to attract

Meanwhile, Australia-listed Donaco International

tourists for long holiday visits, adding Ly Son

reports strong growth at its newly opened

could become the “silver island of the central

luxury Aristo International resort in Lao Cai

region in a near future.”

in the north of the country.

Ly Son and Be islands comprise some 10 square

Donaco Gaming revenue in Vietnam in the 2014

kilometers of land sitting 15 nautical miles off

financial year rose 33 percent, contributing to

the coast of Quang Ngai Province, also home to

an 80 percent gain in overall group revenue.

Vietnam’s sole refinery, Dung Quat.

The results mostly reflect revenue from the

Vietnam’s politburo has also reportedly agreed

old Aristo property. Net profit after tax was

to the opening of a casino on Phu Quoc Island in

up 52 percent. l

+8%

+81%

International cruise lines, including Royal Caribbean Cruises, are petitioning the Vietnamese government to overturn a ban that requires all shops and onboard facilities, such as casinos, to close when the ship is in one of the country’s docks. Royal Caribbean vice president John Tercek met with Vietnamese officials in early September to discuss the issue, according to media reports. Royal Caribbean is planning to increase its business in Vietnamese ports. Australian, Shaun McCamley, has been appointed president of Vietnam’s Grand Ho Tram Strip integrated resort and casino. The Grand Ho Tram Strip is located in Vietnam’s Vung Tau province southwest of Ho Chi Minh City. McCamley, an Asia Gaming Brief advisor, began his 35-year career in the casino business as a croupier in London’s exclusive Curzon House Club Mayfair.

Asia Gaming Briefings | December 2014

INDOCHINA 22

MYANMAR

Gambling bill faces uphill parliamentary road Myanmar, which is emerging from decades of political and economic isolation, is the latest Asian nation to consider opening up its gambling industry to boost government revenue

he country is currently drafting a

gaming and video poker machines. In the town

gambling law that is expected to allow

of Mong La, bordering China in Shan state, the

for foreigner-only casinos in hotels

casino and gaming business has been revived in

to further capitalize on an already

recent years after being shut down by Chinese

GROSS GAMING REVENUE STATE LOTTERY $1.3b

DOMESTIC HORSE RACING $258m

Myanmar’s Ministry of Hotels and Tourism is planning a Visit Myanmar Year for 2016 in order to further boost the country’s growing tourism industry. Deputy minister Tin Shwe says the planned campaign fits into the government’s Tourism Master plan, which seeks to develop a sustainable industry.

booming tourism industry.

officials prior to 2003. Reports say that since

However, the bill still faces considerable

the revival the city has some 20 casinos, most

parliamentary hurdles and needs support from

of which are Chinese owned. The only currency

President Thein Sein.

of trade at the gaming tables and restaurants

The drafting of the law was confirmed by a

is the Chinese Renminbi. There are reports of

director of the Ministry of Hotels and Tourism,

widespread illegal operations in other areas of

U Myo Win Nyunt, and has led to increasing

the country.

speculation over the category of hotels that

Myanmar also has an official state lottery,

may be granted a license. “We haven’t issued

although many punters prefer the illegal and

any licences for casinos yet because it is still

underground lottery that is also cheaper to play.

considered a type of illegal gambling,” Win

Poverty and low incomes have meant that few

Nyunt told local media. He added a gambling

locals have the funds to play and stay at the

law was drafted by the Ministry of Home Affairs.

resorts, leaving them predominantly populated

But legal sources in the capital Yangon told

by Thais and Chinese.

AGB there are still several steps before the bill

The Andaman Club Resort on the southern

in the eight months to the end of August. In

would be passed by parliament. These include a

Myerik (Mergui) archipelago had a casino and

2013, Myanmar reported 2.04 million foreign

review by the Attorney General’s Office, before

was popular with domestic travellers from

tourists, generating $926 million in revenues.

being presented to lawmakers where the bill

Yangon, as well as Thais who accounted for 80

But while travel operators welcomed moves to

would be reviewed.

percent of the clientele. The resort, previously

license casinos, there were also calls for strict

The legislation needs to pass both houses of

known as Victoria Point, was recognized as the

controls to be put in place and for efforts to be

parliament before submission to the President

only international gambling facility in Myanmar

made to close down illegal operations throughout

and if cleared would be re-submitted to the

on the Andaman Sea. However, the hotel is

the country.

joint houses for final consideration.

currently undergoing major renovations over

Also, some expressed concern over whether

The bill is expected to allow for the issuance of

the 2014/15 period and is not expected to reopen

it would be the right direction for Myanmar

casino licenses to hotels with at least three stars,

until 2015/16 during the high season.

to take when developing its tourism industry.

most likely near border crossings. Myanmar,

Laurent Kuenzle, chief executive officer of

Sean Turnell, an economics professor at

formerly known as Burma, shares borders

Bangkok-based travel agency, Asian Trails,

Australia’s Macquarie University, said: “I think

with, among others, Thailand, China and India,

says casino tourism in Myanmar could be

this is a negative development for Burma’s

which all prohibit gambling. It would also bring

attractive to Chinese tourists in particular, but

tourism sector.”

a clear regulatory framework to operations in

also to Indians and Thais. Kuenzle pointed in

“Of course gambling is an attraction already in

the country.

particular to the high number of Thai gamblers

outlying regions near China, but is much less

Myanmar is reported to have at least four

currently traveling to gamble in casinos along

so elsewhere in the country,” he said.

mainstream casinos located in the border regions

the border with Cambodia.

Turnell has closely monitored developments

of the country, though also has a great number of

Moves by Myanmar to allow licensed casinos

in Myanmar over recent years.“In my opinion,

smaller, highly shadowy facilities. The northern

comes against the backdrop of a tourism boom,

Burma should not go chasing this low rent trade

township of Tachilek, near the border with Thailand,

albeit from a lower base than most regional

with all its attendant social and cultural costs,”

has two gambling facilities. Kawthaung, at the

neighbours. Tourism Minister Htay Aung, has

he said. More attention, he adds, should be paid

southernmost tip of Myanmar, has the Treasure

forecast international arrivals will reach 3.0

to the affluent overseas travellers and educated

Island Resort and Casino, which is reported to

million by the end of 2014, after reporting a 40

and culturally aware backpacker sectors which

be the largest, offering 22 table games and 150

percent increase to almost 2.0 million arrivals

leave “a smaller destructive footprint.” l

Asia Gaming Briefings | December 2014

Hilton Worldwide made its market debut in Myanmar in October with the opening of Hilton Nay Pyi Taw, in the country’s capital city. The 202-key property spans more than 100 acres of land.

INDOCHINA 23

GROSS GAMING REVENUE

CAMBODIA

Cambodia mulls access for locals Cambodia, which stands to lose substantial casino revenue if neighbouring Vietnam opens its market to allow locals to gamble, is mulling changes to its own laws to allow Cambodians access

“W

e have thought about

outcome,” MGM Resorts recently told AGB.

Vietnam legalizing it.

According to the World Bank, Cambodia’s economy

Gambling nowadays is

is expected to expand by 7.2 percent in 2014,

a worldwide industry,

driven by growth in the garment, construction

not just in one country or two. It is an international

and services sectors. It says that growth may

industry. So now we too have to internationalize

pick up further in 2015 to 7.5 percent.

the gambling industry. But in order to do that,

Poverty among Cambodia’s 15.2 million people

we have to get the laws in Cambodia finished,”

has fallen sharply, with the country achieving its

said Ros Phirun, spokesman for the Ministry

Millenium Development Goal of halving poverty

of Economy and Finance’s gaming and casino

in 2009, though only by a very small margin.

department.

Meanwhile, the country’s largest operator

The government in Phnom Penh is currently

NagaCorp, has reported a healthy gain in nine-

drawing up a new law on gambling that may be

month revenue, bucking the downward VIP

available by the end of this year. The country

trend seen in Macau. The Hong Kong-listed

may also legalize online gambling as part of

company posted a 25 percent rise in junket and

the reform process.

VIP rollings in the nine months to Sept 30 to

The willingness to entertain the concept of

$4.08 billion from $3.27 billion for the same

allowing locals into the country’s casinos comes

period last year. The company also reported a 25

amidst a decision by neighbouring Vietnam to

percent gain in gross gaming revenue to $271.86

potentially allow its citizens to gamble in a new

million. Revenue from public floor gaming table

law currently being drafted.

buy-ins was up 21 percent, or $59.71 million,

According to estimates, Vietnam loses about

to $349.46 million in the nine months, while

$800 million in revenue a year from locals

electronic gaming machines bills-in rose 7.0

crossing into neighbouring Cambodia to gamble.

percent to $886.22 million from $825.93 million

Between 500 and 1000 Vietnamese gamble daily

in 2013. The company also recently confirmed

in Bavet town on the border alone.

its exclusivity rights to all gambling within a

The issue of whether to allow locals to gamble

200 km radius of the capital Phnom Penh for

is being debated in several Asian jurisdictions

a period of 70 years.

and is seen as a game changer when it comes to

In a statement, signed by chairman Tim McNally,

the amount foreign investors may be prepared

the company said that in Sept 2014 it received

to spend, or whether they would be prepared

formal, written confirmation from the Ministry

to enter the market at all.

of Economy and Finance of Cambodia that its

“If the policy objective is to significantly

Ariston unit continues to enjoy the exclusivity,

spur FDI, expand international tourism and

and that this will, indeed, run until the end

stimulate the economy through investment

of 2035.

and job growth, then access for local people

It said that the company had “every faith in the

to integrated resorts is very important to both

Royal Government of Cambodia’s ability to assist

the business model and the resulting policy

the group in the enforcement of its rights.” l

(Source: CIMB)

$0.4b

Y13

Y14E

Y15E

NagaCorp GGR 9-month GGR $271.8m

+26%

Junket VIP rollings

+25%

14H1 Visitation Tourism arrivals 2.2m China Arrivals

+5%

+19%

Donaco International said it agreed to buy a “significant” gaming and hospitality business in Cambodia. The company has signed an exclusive term sheet and is currently carrying out due diligence on the business, which it didn’t name. The term sheet includes an exclusive negotiation period extending into early 2015. Donaco says the proposed Cambodia acquisition serves a different market from its Chinafacing business in Vietnam and will boost earnings. Australia-listed Cell Aquaculture has terminated a deal to acquire Cambodian gaming operator, Roxy Casino, citing difficulties in employing staff. The Roxy Casino, located in Bavet City in Svay Rieng Province, just 200 metres from the Vietnam border, was opened on August 14 this year, operating 24-hours a day gaming activities.

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 24

“Healthy correction” Paradise Entertainment Chairman Jay Chun says he’s optimistic about the future of gambling in Macau, though says the market is shifting and he expects the biggest percentage of revenue to come from gaming machines within the next five to 10 years

n an interview with AGB during the second Macao

that has a higher income population compared to the

Gaming Show, Chun said he expects the Macau market

Zhuhai area. Also Macau will be less than a 45-minute

to mature to become more like the U.S.

drive from Hong Kong international airport. Over the

“I’m still very positive on the mass market,” he said,

long term Macau will benefit from all kinds of favourable

though added the VIP situation is challenging.

Jay Chun*

conditions.

Gross gambling revenue in Macau has fallen in each of the past five months, with the 23.2 percent decline in

How can local EGM-based companies contribute to

October the worst on record. The fall has been lead by a

the local market and beyond?

steep drop in VIP revenue.

The EGM sector is now established as a creative industry

Chun spoke about the outlook for Macau and the Macao

and those responsible for creating captivating games, new

Gaming Show, as well as developments at Paradise

gaming experiences, or even new gaming models and

and its LT Game unit. Chun is also head of the Macau

concepts are respected in creative and commercial circles.

Gaming Equipment Manufacturers, which is the main

iGaming is slowly gaining pace and the playing experience

organizer of MGS.

is heavily influenced by the EGM experience. Creativity has leveled the playing field which means that small

AGB: What do you see as being the outlook for Macau

companies can now be as creative as the big ones. The

in the short, medium and long term?

key, distinguishing factor is the quality of the product.

Jay Chun: In the short term, it is a healthy correction

Local EGM companies can look for opportunities in this

after 4-5 years of continuous growth. Macau has not had

area and, in the process, become more reputable and

any new casino openings in 2013 or 2014. Since Macau

more profitable, initially within Macau, and then further

visitation is still growing, we can see the bottleneck of

afield in gaming’s key export markets.

hotel room inventory still being a problem. From an operator perspective, all of the casinos are recording

Could Macau become a focal point for slot R&D?

strong revenues, but there has been and continues to be

That is definitely a possibility. Local universities have been

a change in player profile from high end to middle and

offering courses relating to gaming play development, such

middle to low end gamblers. This means that more and

as 3D animation and graphics, for several years. There are

more long-term players cross over to grind mass market.

discussions about forming a slot R&D center in Macau,

Medium term three new casinos are on course to open

which requires participation from government, academics,

in 2015 with more scheduled in 2016, which is a very

and the slot industry as a whole. As I mentioned earlier,

positive development and one which will add between

MGS is helping to facilitate some of these developments,

10-20 percent new hotel rooms over the next 2 years.

and we hope to see more activities come into play in the

Looking ahead to the long term, we will have more than

not too distant future.

10 new casinos by 2020. The bridge which will connect * Jay Chun is the chairman of Paradise Entertainment and president of the MGEMA

with Hong Kong and Zhuhai will open up more and more

What has been the impact of introducing new technology?

areas to Macau, meaning more and more people will have

We are not only a casino service provider in Macau, but

quicker and easier access to Macau. We should not forget

also a global gaming machine and system supplier. We are

the bridge connecting Hong Kong and Shenzhen an area

introducing the most advanced gaming table technology

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 25

to the industry – namely the first chip-less

has added two more new locations in the year,

How do you envisage MGS evolving over

casino in the world. We have been using our

we are experiencing very steady double digit

the next few years?

new E-baccarat table with LMG and intelligent

growth. When we start to deploy our machines

Planning is very important in terms of the

cash handling machine at the Macau Jockey

to export markets we are anticipating 30-50

development of an exhibition. On the one hand

Club. Amongst many other benefits, this serves

percent year-on-year growth.

we have to be very aware of the changes in the

to: increase table productivity - game turns -

market and be able to respond to them but we

thanks to there no longer being

LT Game wants to grow

also have to have a clear strategic vision to help

the need for human calculations

overseas sales in 2015 by

direct that process.

60 percent. What are the

MGS 2014 is still very much Asia focused, as

prospects?

this is the fastest growing gaming sector in

We believe that LT product has the

the world. New opportunities are coming up

best and most authentic Chinese

in Japan, Korea, Vietnam, Cambodia and other

background, having been operating

parts of Asia. Every Macau casino will have new

very successfully in Macau. With

property openings before 2017. However, we

Australian operators starting

also see Macau gaming operators starting to

to focus on Chinese gamblers,

invest into Europe and Africa.

there’s no doubt that LT products

Research has shown that gaming is both localising

constitute the best option.

and globalising at the same time. MGS will be

with the payout undertaken by the computer; the casino saves on labour costs with no pit boss, no cashier and minimum supervision; there’s increased security and lower security costs as there’s no cash or chips on the table and nothing to rob; operational efficiency has increased between 30-50 percent, which means an

“WE ARE NO LONGER LOOKING AT AN EGM MARKET OF 15,000 IN MACAU BUT A MEGA US MARKET WITH OVER A MILLION EGMS”

increase in operating revenue,

watching this closely to ensure that we continue

compared to the traditional way of operating

Do you see potential for expansion

to meet the needs of our exhibitors and visitors.

the same size casino; although we didn’t expect

elsewhere in Asia?

Meanwhile, Macau SAR Government is vigorously

it, we have been seeing 40 percent MoM GGR

The company’s main focus is on Macau, the US

promoting the exhibition and convention

growth since May. Although this is based on 5

and the Australian markets, because they are

industry in Macau. Everything is in place at MGS

months of operating, we found no problem for

the top three global GGR contributors. However

and there is only one place for the exhibition

players to accept betting without chips using

we have no problem supplying our products to

to go and that is to become more successful

our e-baccarat table. It is the best showcase to

other Asian casinos.

by being totally in touch with the needs of our

demonstrate to other operators how casinos will

clients and our community.

operate in the future with the associated benefits

What is next for the LT brand in the U.S.

of higher productivity and lower running costs.

and what are your future plans with IGT?

How important is it for local companies to

The LVS group has experienced the commercial

support the show by exhibiting/attending?

Are you looking at any other properties?

prowess of LT products at the Palazzo, and

The gaming industry is an integral part of our

The first priority for us is to ramp up the GGR of

together with the expertise of the IGT sales force

economy and the Macau SAR Government

the new locations. We have got two established

I am certain that we will see more and more LT

has earmarked technology and the creative

locations (Kam Pek & Lisboa 3/f LMG zone), and

products at LVS casinos throughout the United

industries as key sectors to support.

now we have added two more at the Waldo & MJC.

States. We will be working very closely with IGT

Technology and knowledge gained from

Our objective is to ramp up the Waldo revenue

especially following the G2E show, where we

international casino operators have been

to that of the Kam Pek level over the next 12-24

had tremendous response from operators from

internalized to become immensely useful to

months. With four current locations, we start

the states, including Pennsylvania, Indiana,

our young generation of entrepreneurs who

to enjoy the economies of scale in operation

California, Florida, Maryland and Mexico.

want to carve a niche in the gaming industry.

and marketing. The company will benefit with

Financial law prohibits us from disclosing any

MGEMA strongly supports and encourages local

more tables and machines.

topics that are confidential, but what I can

organizations to be part of MGS and we have

Of course, we would like to provide the casino

confirm is that IGT has already introduced a

invited all of our local universities to participate

service solution to more satellite casinos also.

number of their main clients to LT. We believe

in the exhibition this year.

the exclusive agreement with IGT is a major

All of these initiatives serve to raise the interest

Paradise EBITDA almost doubled in H1,

milestone for LT. We are no longer looking at

levels of young people and local companies to

what are the prospects for the full year?

an EGM market of 15,000 in Macau but a mega

explore how they can capitalise on the wealth

For the casino service side, since the company

US market with over a million EGMs.

of gaming experience that exists in Macau. l

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 26

ASIA RACING INDUSTRY

Protecting revenue as competition grows Asia’s storied horse racing clubs, once the only legal means of gambling in many nations across the region, are taking steps to protect their revenue in the face of increasing competition, as casinos and other types of sports betting are legalized

he region’s clubs are reporting a severe threat

business is growing all the time,” HKJC CEO Winfried

from the rise in illegal gambling, with black

Engelbrecht-Bresges said in the club’s annual report.

market operators able to offer a wider range

In the 2013/2014 financial year, HKJC saw racing turnover

of products and offer punters credit.

rise 10 percent to HK$103.92 billion, producing a net margin

The Hong Kong Jockey Club recently reported a record

for the club of HK$4.42 billion, a 7.4 percent increase.

financial year, but was clear about the challenges, while

However, Chairman T. Brian Stevenson pointed to

both Singapore and Japan have reported a declining

estimates indicating that Hong Kong citizens lost about

revenue trend.

HK$31 billion in Macau’s casinos last year alone. He said

“Looking ahead, I am cautiously optimistic of seeing

the opening of a bridge between Hong Kong and Macau

continued positive growth in our racing and betting

in 2016 will ease transport links to the world’s biggest

operations, but competition in the leisure and entertainment

gambling hub presenting a further threat.

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 27 In Singapore, total totalisator turnover for the

STC also agrees that horse betting is under

Turf Club in the year ending March 2013 fell 9.9

pressure from other forms of gambling, such

percent to $1.56 billion, with the Totalisator

as casino games that offer instant gratification,

Board attributing the decline to competition

while other sports betting has also experienced

from casinos as well as lower attendance rates at

huge growth.

the track due to work on the main grandstand.

“In general, as a society matures, new forms

According to the STC, the biggest challenges

of leisure and entertainment emerge and

for horse racing and wagering are “combating

trends evolve. The same betting dollar is being

illegal bookmaking and the current greying customer population.” In addition, the club says that in Singapore, there are “increasingly more entertainment options and it is very difficult to engage the younger demographic in a sport such as horse racing.” The Japan Racing Association meanwhile, has seen turnover decline about 40 percent since its

CLUBS HAVE BEGUN TO OFFER COMMINGLING, WHICH THEY SAY WILL HELP CUT DOWN ON THE THREAT POSED BY ILLEGAL OUTFITS BY REDUCING ARBITRAGE OPPORTUNITIES

peak in 1997. The peak year as far as wagering is

invested across an increasingly varied product spread,” STC said. At a recent conference, executives from all the associations highlighted upgrades and initiatives designed to maintain their competitive edge. HKJC executive director of racing Mr William A. Nader said: “State of the art quarantine facilities, outstanding hospitality for international owners, trainers and jockeys and a comprehensive

concerned was 1997, when the annual turnover

to bet into Hong Kong pools, which have the

marketing and media strategy have all been

through 288 JRA racing days totaled more than

world’s highest liquidity and highest average

keys in the growth and success of this meeting.”

¥4 trillion ($40 billion), and average wagering

turnover per race at over HK$132 million,”

Kaora Obata, director of Japan Racing Association

per day was ¥13.8 billion ($139 million). The

Engelbrecht-Bresges said. “Commingling will

in charge of International Affairs, said the

best year for on-course attendance was 1975,

help further in positioning us as a global leader

industry had been seeking to broaden its appeal

when the total was 14,898,794: More than

and preventing sizeable pools on Hong Kong

through television marketing.

double the figure for 2012.

racing from developing elsewhere in the world,

“There are special feature shows and sports

Part of the decline in Japan, where the government

which could result in a loss of public revenues.”

news programmes on television, and we try to

is currently debating legalizing casinos, was

The HKJC in 2008 also won the right to offer

showcase the event by having exposure more

the decision to legalize sports betting on three

rebates on big losing bets.

than ever before on popular, top-rated TV

other sports - motorboat racing, bicycle racing

Singapore also allows commingling. Since 15

shows. We also air more TV commercials plus

and motorcycle racing.

March 2014, pari-mutuel common pooling has

advertisements in major newspapers, and in

To reverse the declining trend, the turf clubs

been available between STC and Australian tote

many other ways. As a result, about 7 million

have extended their product offering, but are

operators. The club commingles its totalisator

people watch the Arima Kinen on TV.”

still concerned they are unlikely ever to be able

pools with Tabcorp’s Victoria pool, as well as

The clubs have also made moves to leverage

to offer the same kind of variety, or credit, as

its WIN and place betting pools with Tabcorp’s

modern technology. The HKJC last season

the illegal operators can.

New South Wales WIN and PLACE betting pools.

introduced a popular Racing Touch App that

Until 1999, only three types of bet (Win, Place,

“While online platforms for tote wagering and

has graphic-intensive and vivid 3D horse

and Quinella) were offered at JRA tracks. The JRA

common pool commingling are seen as key

graphics. Users can also look up racing info,

introduced Quinella Place in 1999, followed by

trends in the horse betting industry, pari-mutuel

jockey profiles and real-time odds enquiry in

Exacta and Trio betting in 2002, Trifecta betting

wagering remains relevant and dominant in

addition to place a bet with its simple drag-

in 2004, and Pick Five in 2011. Of these, the

the context of horse racing today,” says STC.

and-drop feature.

Trifecta has proved by far the most popular,

“The fixed margins and lower risk exposure

Meanwhile, other countries are considering

accounting for more than 35 percent of total

contribute to channeling funds back to the

opening up to horse race wagering.

wagering in 2012 and 2013.

horse racing industry. Moreover, common pool

Mongolia’s government plans to propose laws

The clubs have also begun to offer commingling,

commingling across wagering jurisdictions will

to set up a professional horse-racing league

which they say will help cut down on the threat

be a key driver to sustain this form of wagering,”

and legalize betting to compete for the Chinese

posed by illegal outfits by reducing arbitrage

the club adds.

gambling market.

opportunities.

In Singapore, Win and Place-type bets form

The government is seeking to build a horse-

In 2013, the HK government amended the gaming

the larger pools with the customer seen as

racing track near the site where the country

law to allow commingling for the first time and

predominantly male, aged 40 to 60.

is building a new airport, 54 kilometers (33.6

the club now expects to extend international

STC agrees with its H.K. counterpart that the

miles) south of the capital Ulaanbaatar.

partnerships next year to Australia, Singapore,

market for illegal gambling is “still rampant as

This comes as rumours circulate that China

Macau, New Zealand and parts of Europe.

the availability to place bets on credit, better

will lift a ban on horse-race betting that could

“This will give hundreds of thousands of

rebates and promotions offered are driving

generate as much as 100 billion euros annually

racing fans across the globe the opportunity

customers towards illegal bookmakers.”

($136 billion) in revenue if legalized. l

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 28

ASIA CRUISE INDUSTRY

Chinese tourists set sail Asia’s cruise industry is expected to treble in size by 2020, with an onboard gambling component seen as a crucial offering to attract Chinese tourists

he new generation of Asian gambling cruises

the world’s biggest cruise operator.

are likely to have a much different image than

Salvador says that cruising is a truly integrated vacation

the down in the mouth vessels that leave Hong

experience however, “a modern, comfortable and

Kong waters solely to circumvent a gambling

competitive casino product” is an important element

ban at home, with global operators lining up to enter

of the experience.

the market with their latest and most luxurious ships.

All itineraries at Carnival feature gaming. Salvador

The Asian Cruise Association estimates that the overall

describes Carnival’s product mix as very similar to “any

Asian market could expand from 1.3 million passengers

land-based Asian casino,” including table games and a

in 2012 to 3.8 million in 2020, including 1.6 million from

diverse assortment of the latest slot machines.

China. Between 2008 and 2013, capacity in the Asian

Century Casinos does not own ships but operates 16

cruise industry has increased 302 percent, according to

shipboard casinos and pays a percentage of the casino

a report from Credit Suisse.

revenue to the cruise lines.

Peter Hötzinger, co-CEO and president, of Century Casinos

“The onboard revenue, including casino, can be very

said the number of Asians cruising today is similar to “the

lucrative” but that also depends on the type of cruise

number of Americans cruising in the 1980’s.” He says

and ship, Hötzinger says.

“no other market has comparable growth potential.”

“In principle, the shorter the cruise, the higher the onboard

“Cruising is a relatively new form of travel for the Chinese

casino revenue per passenger per day. In other words, a

consumer. Many are just starting to hear about or experience

three-month-long world-cruise does not generate much

cruising for the first time,” says Mark Salvador, director,

in onboard revenue per passenger per day, but a three-

global business development of Carnival Corporation,

or four-day cruise does.”

Asia Gaming Briefings | December 2014

SPECIAL FOCUS 29

Given the shorter vacation time in China, he

Cruises and Costa Cruises brands feature an

In 2015, with four ships based in China for

believes “the shorter cruises will be the trend

American and Italian heritage that offers “a

the first time, Carnival’s capacity is expected

to attract the Chinese (upper) mass market.”

more international gaming experience.”

to jump 140 percent over a two-year period.

There is significant room for further growth

The potential of the Asia Pacific market, especially

Carnival is also adding ships in Australia, where

when it comes to the Chinese tourist. According

China, has prompted global cruise operators

the market is also booming. Projections there

to figures from Morningstar, initially the cruise

to focus their latest offerings in the market.

are for Australian cruise passenger numbers

industry will only be able to reach the top earners

Genting Hong Kong executive vice president

to rise from 800,000 in 2013, to 1 million by

in China, or the top 1 percent of households.

marine operations and new ship building, Michael

2016, after having skyrocketed 130 percent in

However, that potentially means more than 12

Hackman, said there was “a very competitive

the past five years. The company’s P&O brand

million cruisers, which would be more than half

cruise market building in Asia.”

is adding two ships in the market.

of worldwide cruisers in 2013, it said.

Genting HK, which is a joint venture partner in

Rival Royal Caribbean will also move the base

At Century Casinos for example, only five percent

the Resorts World Manila integrated resort in

of its newest ship Quantum of the Seas to

of guests are Chinese, compared with nearly 30

the Philippines, also runs casino cruise ships

Shanghai next summer. It’s Legend of the Seas

percent Chinese and other Asian customers in

under the Star Cruises brand. Hackman said

ship recently moved its home port to Brisbane in

their land-based casinos in Canada.

the company plans to build two new 150,000

Australia and its Mariner of the Seas’ vessel will

Asked about whether ships with a gambling

tonne (4,500 passengers and 2,000 crew) ships

also start sailing from Singapore in the winter

component attract a different kind of traveler

for the Asian market. The company also owns

season, marking the first time the line will

as Chinese tastes evolve, Hötzinger says “the

about 28 percent of Norwegian Cruise Lines.

offer year-round sailings from the island state.

size of the ship” and “the itinerary” are more

Carnival will be adding new ships to the China

Announcing the deployment of Quantum of

influential than the onboard casino when it

market, including the third ship, the Costa

the Seas in China, Royal Caribbean president

comes to the kind of traveler a cruise attracts.

Serena, under the cruise brand Costa Cruises

and chief operating officer Adam Goldstein

Carnival’s cruises bring guests to a different port

making for an industry-leading four ships in

said: “Every trend we are seeing in China tells

city every day. Salvador said this component

China next year.

us we can achieve real long-term competitive

appeals to a customer who is looking for “more

The company recently also said its chief operating

advantage and appealing returns on our

out of their gaming experience.”

officer Alan Buckelew would be relocating

investments in this fast-growing market by

Century Casinos tailor their casino services to

to Shanghai from Miami, underscoring the

accelerating our presence there. We will have

Chinese customers by using Chinese language and

importance of the China market to the $29

to be nimble, but the ability to move fast is one

Chinese lucky colors, while Carnival’s Princess

billion cruise ship industry.

of our strengths.” l

Asia Gaming Briefings | December 2014

GREATER CHINA 30

MACAU

Staffing costs outstrip revenues

Growth in labor costs at Macau’s casinos is now outstripping gross gambling revenue and the situation is likely to get worse before it gets better

Asia Gaming Briefings | December 2014

acau’s tight labor market, with

dealers earn in Las Vegas. Workers are aiming

unemployment running at just

for an increase in salary to about MOP 19,000

1.7 percent, has long ranked

- MOP 21,000, or $2,400 - $2,600 a month.

among the key concerns of gaming

The key Golden Week holiday, one of the

analysts. However, recent labor unrest, coupled

busiest times of year in Macau, was marked

with a massive upcoming round of hiring to fill

by industrial action from casino dealers in the

new casinos, is bringing the issue to the boil.

latest of a series of protests aimed at squeezing

According to Morgan Stanley research, total

higher wages and better working conditions

staffing costs for the six operators rose 19 percent

from operators.

in the first half year on year. That compares

Dealers in particular at MGM China Holdings and

with GGR growth of 13 percent.

SJM Holdings worked to rule by reporting late,

With revenue now down for the fourth straight

taking sick leave or refusing to work overtime.

month, that trend is likely to continue, the

While workers from labour unions sought to pause

investment firm said. It sees the negative spread

or stop table game operations for a number of

widening to 30 percent in the first half of next

hours. Operators shrugged off the action, with

year, based on a 15 percent decline in GGR and

MGM China saying its operations had remained

a 17 percent gain in staffing costs.

largely unaffected, saying “a vast majority of our

Macau maintains strict controls on imported

team members have reported to work and are

labor and only locals are able to work as dealers in

delivering their high level of service as usual.”

the casinos. Newly re-appointed Chief Executive

The protest was the ninth demonstration from

Fernando Chui Sai On has pledged that won’t

casino workers this year. Last month, 700

change. As a result, casino operators have been

employees protested against SJM Holdings,

forced to compete to attract and retain key staff,

demanding higher wages and better working

pushing up costs.

conditions. In the month prior to that, as many

Although casino dealers are better paid

as 1,400 workers also took to the streets.

than the average Macau worker, with wages

Aside from higher wages, staff are also

running at a 24 percent premium, they still

demanding that restrictions on sick leave be

earn comparatively less than their western

eased and arrangements during typhoons be

counterparts, contributing to the unrest.

implemented as part of improved working

Dealers from SJM Holdings, for example, earn

conditions. Other workers are protesting the

salaries of about MOP16,000 - MOP 19,000 or

high price of property in Macau, stressing the

about $2,000 - $2,400 a month - half of what

need for more public housing. Still others are

GREATER CHINA 31

GROSS GAMING REVENUE Y13 Y14 H1

$45.2b

+18.6%

$24.6b

Y15 E

$50.4b

Y20 E

+11.5% $100b

SEP GGR

-11.7%

OCT GGR

-23.2%

NOV GGR

-19.6%

MARKET SHARE (as of end of November 14)

looking for career growth opportunities and

However, the general slowdown in GGR has

upward mobility.

meant that increased productivity is no longer

Operators in Macau have made several moves

offsetting labor costs, Morgan Stanley says.

to respond to workers’ demands. Wynn Resorts

Morgan Stanley now sees the Macau market

recently gave employees shares of stock in

declining 17 percent in the first quarter of

addition to bonuses, awarding 1,000 shares to

2015 to $10.64 billion, compared with $12.84

each of its 7,500 employees; Galaxy Entertainment

billion in the same period in 2014. Fitch sees

promised to give workers company shares and

GGR this year growing 4 percent, compared

extra bonuses to those who agreed to stay with

with its earlier forecast for 10 percent growth,

SANDS CHINA (1928:HK) 22%

the company through 2017.

while Bank of America/Merrill Lynch sees no

GALAXY ENTERTAINMENT GROUP (27.HK) 19%

Melco Crown Entertainment, on the other hand,

growth this year, or next.

MELCO CROWN ENTERTAINMENT (6883.HK) 14%

has given its workers opportunities to attend

In the short-term, a huge increase in new hiring

management courses as part of their incentive

to fill integrated resorts coming online in Macau

packages. SJM Holdings announced that it will

means the situation is likely to get worse.

provide annual living subsidy increases for its

According to Barclays, casinos will have to hire

employees, which are set to take effect next

around 55,500 employees from 2015 onwards.

year. It also promised to pay double or 2.5 times

Of these, between 14,000 and 17,000 will have

summer bonuses if workers stay employed until

to be dealers for gaming tables, while 35,000

and that of the Macau average to continue

2018 or 2020, respectively.

will be non-dealer employees. While Deutsche

widening, given the potential for social unrest.

Consequently, costs have soared. In their

Bank reckons the cost of labor for operators will

Eventually the additional revenue from the

latest earnings releases, Wynn Resorts and Las

probably rise 10 percent to 15 percent annually

addition of more capacity on Cotai should help

Vegas Sands reported a combined $50 million

in coming years.

re-balance the situation. The addition of more

in additional and unexpected labor-related

Melco Crown is expected to begin hiring for

hotel rooms on Cotai is expected to provide a boost

compensation costs. Las Vegas Sands CEO

its Studio City project by the end of 2014, as

to the mass market sector of the market, which

Sheldon Adelson says the group’s employee

is Galaxy for the next phase of Galaxy Macau.

is more profitable and requires fewer dealers.

compensation costs will exceed $1 billion this

“Assuming MOP25K/month all-in compensation

Analysts have said that the labor shortage

year, however, the expense rate is stable once

per dealer, 2,100 dealers (7 x 300 tables) and

could be helped by moving resident workers

measured as a percentage of revenue.

three months’ advance employment, this

from other non-gaming industries into the

In the past, providing salary increases, added

could add $20 million of staff costs per quarter

casino labor pool, while foreign workers can

benefits and annual bonuses meant an increase

per casino,” Morgan Stanley analyst Praveen

replace the original positions. Positions other

in casino workers’ productivity, which in turn

Choudhary wrote. However, the firm doesn’t

than casino dealers could also be filled in by

helped ensure revenue growth for casinos.

expect the gap between casino dealer wages

imported labour.

SJM HOLDINGS (880:HK) 23%

WYNN MACAU (1128:HK) 11% MGM MACAU (2282:HK) 11%

Asia Gaming Briefings | December 2014

GREATER CHINA 32 billion in the second phase of its Galaxy

in the first half of 2016, with approximately

Macau development, which is scheduled

2,000 rooms and 500 table games. Wynn

Holds 23 percent as of mid-October with

to come online in 2015. The expansion will

Macau Q3 revenues dropped 5.6 percent

20 casinos. Its $3.2 billion Palazzo Versace

nearly double the capacity of the resort.

to $942.3 million, while adjusted property

development is scheduled to come online in

Construction on Phase 3 and 4 is expected

EBITDA fell 1.1 percent to $325.5 million.

2017. The company has also indicated it may

to begin by the end of the year with a total

Table games turnover in the VIP segment was

be interested in opportunities in Japan. The

investment of HK$60 billion ($7.7 billion).

$25.1b for the third quarter of 2014, a 17.4

company is currently building The Lisboa

Galaxy Entertainment posted a 6 percent

percent decrease from $30.3b in the third

Palace on Cotai. The casino will have 700

gain in Q3 revenue, with gains seen in both

quarter of 2013. Table games win in the mass

gaming tables and over 1,200 slot machines

the mass market and VIP segment. The

market segment increased by 36.4 percent to

across a gaming floor area of approximately

group had quarterly revenue of $17.3 billion

$327.2 million. In Q3, it invested about $301.1

27,000 square metres. The total production

($2.23 billion). Adjusted EBITDA increased by

million in the Cotai project, taking the total

cost is estimated at about HKD$30 billion

1 percent in the same period to $3.3 billion.

investment to date to $1.4 billion.

($3.8 billion), although the company has

Total gaming revenue grew a market leading

expressed concern over costs. SJM Holdings

6.5 percent year-on-year to $17.1 billion

said its Q3 profit declined 16.4 percent and

driven by a 12 percent gain in mass market

its share of the Macau market slipped as

revenue to $4.8 billion. VIP revenue climbed

VIP revenues fell, while its mass market

5 percent to $11.8 billion.

SJM HOLDINGS (880:HK)

MGM CHINA (2282:HK)

Has a 9 percent market share while operating

performance lagged rivals. The company

a single casino in the peninsula. Its new

reported profit attributable to owners of the

developments include the MGM Cotai, which

company of $1.53 billion ($197.3 million).

MELCO CROWN (6883.HK)

is a $2.9b project scheduled for completion

Has three casinos and a 15 percent market

revenues came in at $794 million, down

revenue dropped 23.6 percent to $10.37

share. Melco recently awarded France’s

about 2 percent, and above the consensus of

billion, while mass market revenue edged

Bouygues a $488 million contract to build

$765 million. Q3 VIP volumes fell 19 percent,

up 3.1 percent to $7.35 billion. Slot machine

a six-star hotel. The 39-floor building

while mass revenue jumped 34 percent. MGM

revenue gained 5.4 percent.

will be part of the City of Dreams and will

China’s Q3 EBITDA was $213.8 million versus

have 783 bedrooms, a casino, restaurants,

the consensus of $191.6 million. l

Gaming revenue fell 14.1 percent to $18.1 billion. The company said VIP gaming

mid 2016. In the third quarter, Macau net

conference room and a sky pool. The

SANDS CHINA (1928:HK)

company said recently it’s increasing the budget for its Studio City development in

Has a market share of about 23 percent and

Cotai by about $300 million, taking the

has four casinos. Analysts say the company

total cost to $2.3 billion. Pre-opening costs

has had a lower room occupancy than rivals

rose to $0.9 million in the three months to

in Cotai, meaning it has more potential for

end March, compared with $0.6 million in

revenue growth if it fills the rooms. The

the same period a year ago. The company

company’s new developments include the $3

said the resort is on track for a mid-2015

billion The Parisian that is scheduled to come

opening. Melco is also considering a casino

online in 2015. It recently expanded retail

mega-project near Barcelona in Spain. In

space at its Sands Cotai central property, with

Q3, adjusted EBITDA and revenue both fell

the addition of 150,000 square feet of space,

10 percent due to a decline in rolling chip

with shops designed to appeal to families.

revenues. Net revenue was $1.12 billion down

Sands China total net revenue for Q3 was

from $1.25 billion for the comparable period

down 0.4 percent to $2.33 billion, while net

in 2013 and in line with estimates. Adjusted

income rose 4.3 percent to $644.6 million.

property EBITDA was $305.7 million

The company’s Venetian property saw a 10

compared to $339.0 million in the third

percent gain in non-rolling chip turnover

quarter of 2013. Reported net income was

to $2.2 billion, though rolling chip volume

$132.2 million, or $0.24 per ADS, compared

dropped 28 percent to $10.1 billion in the

with $179.4 million, or $0.33 per ADS, in the

quarter. At the Sands Cotai property rolling

year ago quarter. Adjusted EPS was $0.28,

chip volume was down 32 percent, while mass

missing the consensus view by one cent.

market revenue jumped by 32.3 percent.

GALAXY GROUP (27.HK)

WYNN MACAU (1128:HK)

Has a 7 percent market share and currently

Has a 23 percent market share with six

has one casino. Its $4 billion Wynn Palace

casinos. The company is investing $2.5

development is scheduled to come online

Asia Gaming Briefings | December 2014

The border crossing between Macau and Zhuhai will be open on a 24-hour basis from December 18, with the Lotus Bridge Cotai Frontier Post linked to Hengqin Island the first to benefit. Macau government spokesman, Alexis Tan, said another key access point, the Border Gate linked to Gongbei will see the hours extended to open at 6 am and close at 1 am. China Star Entertainment said it has reached a deal to sell the Lan Kwai Fong hotel in Macau for $2.23 billion ($287.5 million). The company said in a Hong Kong Stock Exchange filing that it may be entitled to a further bonus consideration of as much as $1.93 billion. The bonus is related to the Macau government granting rights to develop four parcels of land.

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GREATER CHINA 34

GROSS GAMING REVENUE

MAINLAND CHINA

Investors seal lottery deals Foreign investors continue to eye China’s booming lottery market, with several recent deals aimed at gaining a slice of an industry that’s forecast to reach $73.3 billion in sales by the end of 2015

.K.-listed DJI Holdings said recently

Value, positioning itself for potential growth

it has won an exclusive contract

in China’s mobile lottery market.

to supply Xinhuacai Technology

Score Value is also involved in quality assurance

Company, a unit of state-run news

and the sale of handheld lottery sale equipment,

agency Xinhua, with a technology platform

as well as the design of lottery games and system

and a range of mobile lottery games and lottery

development.

services.

John Sun, chairman and CEO of AGTech said in

Xinhuacai is seeking to become a leading provider

a statement to the Hong Kong Stock Exchange

and distributor of lottery products in China and

that the purchase was a “major milestone” for

in particular is focused on the mobile lottery

the company.

market. The Chinese company is seeking to

Nevada-based XcelMobility, a mobile internet

secure appropriate licenses and approvals from

application development and marketing company,

the relevant lottery authorities and government

has also expanded its presence in China with

departments throughout China.

an accord to buy Silver Creek Digital’s online

“To be selected by one of China’s most important

sports lottery business.

institutions is both very exciting and we see this

“We’re very excited about the growth opportunities

as a key strategic development for our group,”

that can quickly develop once we incorporate

DJI CEO Darren Mercer, said. “We believe that

Silver Creek’s online sports lottery business

our technology platform, marketing expertise

within our existing online mobile platform,”

and tailored lottery games for both Welfare and

said Ronald Strauss, executive chairman of

Sports lotteries, along with Xinhua’s position

XcelMobility. “Silver Creek has been using our

in China, will provide an ideal platform to

cloud network in China for over a year and we

capitalise on the rapidly expanding market for

have already witnessed the growth that can be

mobile lottery sales.”

achieved by combining our resources. We are

The Chinese lottery market has experienced

confident that their proven success to date

strong growth in recent years as a result of

and established key relationships in China will

positive macro trends in China, such as robust

drive our ability to strongly penetrate the very

economic growth, increases in disposable income

new and fast-growing online lottery business

and a more positive shift in public perception

in China.”

towards the lottery business. Total lottery

Meanwhile, China’s own companies are also

sales in China are projected to be $61 billion

getting in on the action. China LotSynergy said

in 2014 and $73.3 billion in 2015, according to

last month that a unit of China’s Tencent has

an iResearch Report. The report projects online

agreed to take a stake in the company for about

sales for sports lottery products to be $2.2 billion

HK$445.5 million ($57.4 million).

and $3.2 billion in 2014 and 2015, respectively,

China LotSynergy said it will use the proceeds

representing a gain of 47.3 percent and 44.8

for working capital and for investments should

percent increase from the preceding years.

the opportunity arise.

In November, AGTech Holdings said it paid

“The board considers that the subscription

HK$489.5 million (US$63.12 million) to buy

lays a good foundation for future cooperation

research and development company Score

between the group and Tencent,” it said. l

Asia Gaming Briefings | December 2014

Y13 Lottery sales $51.1b

+18.3%

Y14 H1 $28.78b

+19.2%

July sales $6.05b

+53%

July Sports Lottery $3.21b

+93%

July Welfare Lottery $2.84b

+23.5%

August sales $5.13b

+28.1%

AGTech Holdings said it’s expanding further in China through its subsidiary, GOT, after winning competitive tenders to supply Henan, Jiangsu, and Yunnan with sports lottery terminals. GOT won bids at provincial/municipal sports lottery terminal tenders, reinforcing its place as a leader in the Chinese sports lottery terminal market. AGTech said the sports lottery market in China has an installed base of approximately 140,000 terminals and GOT has “a leading share” of the maket New York-based Carnival Corp said it has signed a memorandum of understanding with China’s State Shipbuilding Corp. aimed at exploiting growth in China’s booming cruise ship industry, which is expected to balloon to 4.5m passengers a year by 2020. The two parties are considering potentially forming a shipbuilding joint venture. This may evolve into a three-way arrangement involving Fincantieri of Italy, the world’s largest cruise ship building company. Carnival, the world’s biggest cruise ship operator, would work closely with CSSC and Fincantieri to help define the first-ever, world-class cruise ship built in China.

SUPPLIER SPECIAL REPORT 36 ARUZE

ASPECT GAMING

Opportunities amidst global consolidation

Created by locals for locals

BALLY TECHNOLOGIES

Driving the market

hile there is a trend in consolidation among suppliers, Aruze Gaming

sees a window of opportunity and the company considers its flexibility as an edge. Many believe that suppliers will benefit from consolidation particularly in terms of resources but Aruze thinks that it will take some time for the companies involved to standardize corporate practices, and that creates a window of opportunity for regional and local players to be more aggressive in the market. “When you are not as big, you are more flexible,” said Albert Yu, assistant general manager, “there is a window of opportunity for Aruze to be more aggressive in the market.” Aruze underlines the diversity of its product base, ranging from an array of ETGs to Lucky SIc Bo and Lucky Big Wheel, and these products are on every casino floor in Macau. To get the company prepared for such opportunities, Aruze has some brand new product plans for the next two years. At the MGS show, Aruze exhibited Cube X for the first time in Asia and new titles in both the G- DELUXE and G- SERIES video lines, the Ultra Stack series, and both stepper lines of Innovator and I-Deluxe. Also on display was the G-Series line and the G-Deluxe platform, with new additions that incorporate 5-reel video game play. l

Asia Gaming Briefings | December 2014

spect Gaming has a market presence in Southeast Asia and the United

States, but still prioritizes Macau as a key

ally Technologies sees the emerging premium mass market and the

growth of electronic gaming as key factors

lab to understand the evolving tastes of

driving the Macau market.

Chinese players.

“Asia is growing at a very fast pace,” said

Following its internal motto, “Created by

Ken Jolly, the company’s vice president

locals for locals,” Aspect Gaming has spent

- Asia. “Just look at the new openings in

considerable time studying retail lottery

Macau, the Philippines or even growing

outlets in Mainland China and baccarat

markets such as Cambodia.”

tables in Macau to understand Chinese

Although the Macau gaming market has

players, who the company describes as

recently slowed, Jolly still sees value in

“dynamic.” Take WinTrack as an example:

the premium mass sector, which has

it is designed with a “decision-making”

higher margins than the VIP market.

aid, allowing players to easily track wins

He is also confident about the growth

and losses and make playing and betting

of electronic games. Asked about the

decisions based on their conclusions.

competition among suppliers to target

CEO Justin Nguyen sees “agility” as the

new properties, Jolly showed confidence

company’s strategic advantage and he takes

in Bally’s products and said: “We ensure

pride in Aspect Gaming as being one of

our focus and target are to the right

the first companies to offer 1.1 compliant

audience when we bring our products to

games in Macau. Aspect Gaming has an

the market. Duo Fu Duo Cai is a classic

aggressive plan for developing social

example that we built particularly for the

casinos and the company seeks to use its

Macau market. It’s been very successful

social casino as a platform for some online

here and we’ve also been rolling it out

to offline initiatives in the coming months.

into other markets in Asia.”

At this year’s MGS show, Aspect Gaming

At the MGS show, Bally showcased its

launched Grand Orient Casino for Android

game line-up including Dancing Drums

and showcased Sheng Xiao Chuan Qi – the

on the Equinox cabinet, Fine Diamonds

launch title for its Super Ruby OneWall

and Striking Stars on the Pro Wave cabinet

video wall technology. l

as well as TableMaster Fusion, featuring the Chinese version of Ultimate Texas Hold’em. Also on display were the MD3 blackjack and baccarat card shuffler; i-Deal Plus, the next generation i-Deal with improved card reading and reliability; the DeckMate 2 poker room card shuffler; and the i-Score Plus baccarat viewer. l

SUPPLIER SPECIAL REPORT 38 BETCONSTRUCT

Counting on Asia for future growth

BMM

Growing to add a personal touch

CPI

Innovation in the pipeline

ith strong emphasis on reliability and efficiency, Crane Payment

Innovations will launch its new innovation SCR note recycler in early 2015. CPI takes pride in its new SCR note recycler that combines the performance and reliability of SC Advance technology with the benefits of two-denomination note recycling as part of a total cash management solution. Currently the new SCR note recycler has been performing well in beta trials and it is slated to launch in early 2015.

the East.

land-based & online gaming, product and

“Asia is a market with huge potential for

technical standards training and operator

growth for us” said commercial director

services along with an increasing number

George Voyatzis, “Over the past twelve

of regulated gaming jurisdictions around

months, we have been working closely

Asia Pacific.

with a number of Asian partners, and have

BMM takes pride in having the largest

been present at all the main exhibitions

footprint of Compliance Testlabs in Asia,

in Asia, in turn learning a great deal about

while the company also provides services

this vast market.”

to many existing and emerging Asian

While BetConstruct is also present in the

gaming technology manufacturers in other

US, as well as having been granted or in

global locations. Kirk White, executive

the application process for licenses and

vice president & general manager -

certification in Europe, due to regulatory

International, said that the expansion

changes, Voyatzis expressed optimism

of BMM’s Asian operations has added a

about the huge potential for growth in

personal touch to its service as “the Asian

Asia. However, Voyatzis said the Asian

manufacturers appreciate the convenience

market is more price-sensitive compared

of working with a lab and testing experts in

with most markets in Europe and can be

their same language and timezone.”

highly competitive.

However, “Asia’s potential in online

Despite keen competition, Voyatzis

gaming is yet to be realized as regulators

highlighted the company’s personal

are reviewing the best possible way to

approach as an edge. He said: “In Asia,

regulate their online gaming markets”

customers prefer face-to-face meeting

said White. “iGaming removes

to virtual communication. That is why we

geographical restrictions on access to

are here in Macau to meet our current and

gaming products. For this reason most

potential clients. We have plans to open

countries that have not yet legalised

a representative office in Asia and will be

iGaming are moving ahead with caution to

ever present in 2015”

ensure they fully understand and are able

At the MGS show, BetConstruct presented

to mitigate against any social impacts of

its newly developed OGWIL game and

this broader reach.”

Fantasy Sports as well as other products,

At this year’s MGS, the executive team

such as Retail and Online Sportsbook, RNG

of BMM Australia and Asia shared their

and Live Casino, Poker, Virtual Betting and

expertise and training services with

Skill Games, Agent and Affiliate Systems. l

visitors who attended the show. l

iven its reputation in Central Asia and Asia’s potential for growth,

BetConstruct has increasingly focused on

Asia Gaming Briefings | December 2014

MM been expanding its operations in the region on the back of increasing

testing demand for compliance testing in

“The reliability of payment systems has a profound effect on an operator’s profitability and reputation,” said Graeme Lewis, CPI vice president Asia Pacific, “reliable technology results in greater machine uptime, fewer maintenance requirements and, accordingly, a lower cost of operation.” He added: “Therefore, as capital remains constrained at the property level, operators these days are looking more closely at their peripherals, placing greater emphasis on the value of reliability.” At the MGS show, CPI showcased the combination of MEI’s SC Advance note acceptor, EASITRAX Soft Count system and PPM Advance support tool, as well as the CashCode SM BackLoad note acceptor and a range of Money Control coin hoppers. l

SUPPLIER SPECIAL REPORT 40 EVERYMATRIX

Brave new games

EZUGI

New live casino builds momentum

GCA

Acquisition makes King of Kings

veryMatrix launched its 2000th game on its casino engine this year and

s Global Cash Access announced plans to acquire Multimedia Games,

GCA expects the merger will take both

the software supplier is ready for more momentum in the year ahead.

companies to the next level. “This merger

Ian Sherrington, head of sales Asia

is expected to provide economies of

commented: “Our games have been

scale, breadth and depth of knowledge,

evolving over the past years and the

and ultimately, should help customers

major changes have been around content

increase the velocity of gaming across their

development and technical delivery. While

entire casino floors resulting in higher

the constant advancement of technology

margins,” said Jason King, vice president,

enables more innovations, content,

international business. He added: “It will

graphic and features of games have been

also result in the combination of a global

improving massively.” EveryMatrix is now working aggressively on the sports betting market. To enable EveryMatrix to better compete in key jurisdictions, including Australia, the company has teamed up with B2B software and data services company Sporting Solutions, which allows EveryMatrix’s OddsMatrix to add games such as Australian Rules football to its service, as well as increasing the number of markets on popular sports like football, basketball and tennis. EveryMatrix also signed social sports betting platform Favourit, which gives users a global community of betting experts, real-time betting data and analytics and other user-friendly functionalities. The platform is also available in multiple languages and on multiple channels including online, mobile and tablet. Asked about the highlights of EveryMatrix in 2014, Sherrington said: “EveryMatrix has been continuously expanding our portfolio offering a wider range of choices and our team in Asia is growing in order to provide better services to our customers. ” At this year’s MGS show, EveryMatrix sponsored the official iGaming reception

zugi is launching a new live casino studio in the Grand Dragon Casino,

Cambodia and expects to further expand its live dealer studios across Asia. The company has teamed with the Dai Long Company, one of Cambodia’s largest groups. The live casino studio will be launched at the Grand Dragon Resorts casino, which is located in Chreythom, Kandal Province. Ezugi will be utilizing its casino streaming technology to broadcast live and direct from the gaming floor, including baccarat tables and VIP tables along with proxy/ telebetting. Kfir Kugler, chief executive of Ezugi commented: “Live casino streaming is increasingly popular with players as those off-site players can see, hear, and interact with actual tables and dealers in a live and interactive environment.” Ezugi takes pride in being “the only provider with live dealer studios across three continents in Europe, South America and now a live gaming floor broadcast experience from Asia.” Kugler said that the company “looks forward to its partnership with Grand Dragon Resorts in delivering the highest standards for the live gaming experience as possible.” l

leader in cash access services with the fastest growing U.S.-based manufacturer and supplier of gaming machines and systems with an overall product portfolio that would be extremely differentiated.” With the acquisition announced in early September of this year, GCA expects the transaction to be completed by late December 2014 or early 2015. While GCA takes pride in its capability to collect certain aspects of player demographics, frequency and monetary value transaction metrics in the North American market, the company seeks to provide similar services in Asia. “We view the use of transactional player data as a huge strategic opportunity to optimize our customers’ marketing spend and allow them to foster a more intimate relationship with their top players,” King commented. At this year’s MGS show, GCA exhibited its multi-functional suite of fullservice kiosks,

hosted by Asia Gaming Brief and Sports

award-winning

Betting Community.l

NEWave Audit Manager and gaming patron credit bureau Central Credit. l

Asia Gaming Briefings | December 2014

SUPPLIER SPECIAL REPORT 41 INSPIRED

Expanding online and mobile

JCM

Consolidation a natural progression

KONAMI

Anticipated debut in 2015

growth in the Asian online and mobile

aspires to position itself as the most

space for the year ahead.

comprehensive provider of component

specifically for Asian players.

Harmen Brenninkmeijer, SVP Asia and

solutions to several industries, including

Konami takes pride in its customization

Strategic Markets said: “Online and

gaming. Kunal Mishra, general manager

– ranging from game play to artwork and

mobile expansion in Asia is going to be

of new business development, JCM Global

from functions to features - to the Asian

vast in 2015 and beyond, especially if the

commented: “Products of JCM Global

market.

regulators give the suppliers the ability

and Future Logic are complementary and

John Gomes, general manager, Singapore

to do so, as it would generate substantial

there is no overlap between the product

noticed that Asian players are serious

revenues for them as well.”

lines. The merger is very clear, as the

players, who value rewards more than

Inspired takes pride in being one of the

product from each side is very distinct.

entertainment. As such, Konami puts

first suppliers in the industry to launch

The merger also brings the credibility of

emphasis on the incentive mechanism in

new games simultaneously on VLT,

both companies together. We believe it’s a

their games targeting Asian audiences.

online and mobile, and the company will

very positive development of our supplier

Currently Konami has several titles that

announce the launch of a number of new

business.” Speaking about the recent wave

have been updated in accordance with

games in the Asia Pacific market in 2015.

of consolidation among suppliers, Mishra

Macao’s new EGM Technical Standards and

Currently, Inspired’s Virtual Sports

described it as “a natural progression”

the company expects DICJ approvals, new

lottery products are supplied to the

of the industry’s maturity. “Asia is a

releases and a market debut in early 2015.

National Sports Lottery (NSLAC) in China

booming market, and Europe, as well as

At this year’s MGS show, Konami

through AGT, AGTech’s joint venture with

the US markets, are very solid. What we

presented a selection of new products

Ladbrokes.

have to do is to combine our resources and

such as the UltraReels series, which are

Inspired has also just announced a

manpower. We have to think of more and

designed specifically for Asian markets.

long-term agreement for its virtuals in

more innovative ways to serve customers,

New standard game themes such as King of

the Philippines with the DFNN Group of

while maintaining optimum efficiencies,

the World, Great Luck Great Profit, and Red

Companies, to provide various virtual

so that our customer’s bottom lines remain

Fortune also feature Asian-inspired design

games to Philippine Amusement and

healthy.” With more casinos coming up

elements.

Gaming Corporation-approved locations

in Macau and the Philippines, JCM Global

Konami also exhibited Rapid Revolver

across authorized and regulated land-

expresses optimism about the region’s

with its debut release theme Rising

based retail betting locations across the

future growth. Next year JCM Global expects

Dragon, a new premium product targeting

country.

to launch the DNA product suite, which

surrounding markets. l

Brenninkmeijer added: “As we look

provides peripheral management including

ahead, we anticipate a popular take-up

monitoring and firmware downloads. The

of Inspired’s Virtual Sports across retail,

company also plans to commercialize

online and mobile channels in AsiaPac

its table suite of products such as ticket

over the next year and beyond.” l

exchange, iV8, Ticket2Go and PromoNet. l

nspired Gaming Group plans to launch new games to capture the huge expected

CM Global this year finalized the acquisition of FutureLogic and now

s Konami Gaming increasingly values the importance of Asia, the company

has been focusing on developing games

Asia Gaming Briefings | December 2014

SUPPLIER SPECIAL REPORT 42 LT GAME/ IGT

Betting on social casino market

PLAY’N GO

Bringing Asian casinos online

SEGA SAMMY

Macau takes priority

ENCHANTED MEADOW The fairies delight in this fanciful 5-reel, 15-line slot. The enchanted tree is wild. It substitutes for most other symbols and magically grows to cover all three positions on reel 3 when it can help to comprise winning combinations. When two or more Fairy Queen symbols appear, the player is granted a special scatter prize. When equipment both a 3 reel wild tree and two gold medallion halves appear, T Game, a Macau gaming wedish gaming specialist and developer the entire “tree reel” will remain wild and trigger a free-spin sequence. When three flower PAYOUT supplier, to on launch a new GOgrant haseither achieved significant symbols bloomplans anywhere the reels, the player searches for hiddenPlay’n fairies who a bonus prize or a free spin on which prizes are worth 2-5 times more. product and enter the booming social growth in its customer base and is now The player is advised to avoid the angry wasp or the bonus round comes to a painful end! Players can try to multiply any prize in the optional Gamble round. casino market. targeting regulated operators in the Asian

While LT Game has no plan for online

market.

ega Sammy’s preparation for product approval in Macau is in full swing and

the Japanese company expects its SIBO BONUS JACKPOT to be among the first products in its line up.

casinos, the company expects to launch Play’n GO takes pride in its capability and WWW.PLAYNGO.COM

Sega exhibited at the MGS show for the

social games that will be both for mobile

expertise in developing smart systems

first time this year and the company

and Internet and will be casino based slot

and content especially designed for

mainly focused on promoting its new Sic

or table games.

performance on mobile phones, tablets,

Bo product through video, catalogue and

“It’s basically for the loyalty points as

game terminals and websites including

some additional entertainment.

there’s no cash involved,” said chairman

mobile casino games and e-gaming

At the show, Sega had the opportunity to

Jay Chun.

platforms.

meet with casino operators who sought to

At this year’s MGS show, LT Game and IGT

To date, more than 60 licensees are using

expand their offerings.

had a joint booth and presented a “Total

products from Play’n GO. Its games are

Sega’s corporate vision is to up the fun

Casino Solution” for visitors and casino

available in 30 languages and especially

aspect of gaming machines to lure more

operators. LT Game has an accord with IGT

adapted for use on smartphones and/or

customers and help grow the industry.

to distribute products in North America

tablet devices using Apple iOS, Android &

As a result Sega designed its booth in

since this year.

Windows 7/8.

an interactive way that provided a fun

LT Game also showcased LMG-6, which

Robert Skogh, director of business

experience for customers.

allows two game players to bet on one

development, described 2014 as a year

Asked about the company’s game plan for

terminal simultaneously, and Intelligent

of great growth in which the company

the year ahead, CEO Hisao Oguchi said:

Game Tables such as the E-Baccarat

signed 16 new operators, released a total

“Our primary focus for now is Macau and

Table, and the Intelligent Cash Access/

of 25 games and launched in the regulated

creating a market presence is our main

Redemption Solution among others. l

Italian market. The company’s next focus

priority.”

will be Asia, according to Skogh.

“The first product lineup up we are

Another focus for Play’n GO would be

expecting is the Sibo Bonus Jackpot,” he

its e-gaming platform Gaming Account

added.l

Toolkit, which gives the operator freedom and flexibility to integrate other third-party game providers, business intelligence solutions and localized payment options. At this year’s MGS show, Play’n GO sponsored the official iGaming networking reception hosted by Asia Gaming Brief and Sports Betting Community. l

Asia Gaming Briefings | December 2014

SUPPLIER SPECIAL REPORT 43 SPINTEC

Technology for the New Year

WDTS

WEIKE

Paying baccarat the RFID way

New products underway

alker Digital Table Systems (WDTS) is focusing on Baccarat in Asia and

is seeing interest from markets from Macau to Australia. “Baccarat lends itself well to the application of our technology and our business is focused on delivering incremental value in and around the game of Baccarat in this region,” said Neil Crossan, general manager Asia operations. “Our first implementation was at RWG, Malaysia, and placements have continued to grow since the Perfect Pay system was implemented about two years ago.” He added: “We are currently actively

hile Spintec found success in its Karma platform for card and dice

games, the company is developing new technology solutions for the year ahead. In collaboration with Century Casinos, Spintec has completed the installation of Karma on cruise ship Mein Schiff 3. “We are very proud of Karma’s performance and its extraordinary acceptance by players,” said Petra Remec, regional sales manager. “Our unique design and the possibility of customization are immense which opens the market for cruise casinos around the world.” In the Macau market, Spintec has submitted the certification of its products in accordance with Macau EGM Technical Standards V1.1 and ETG Technical Standards V1.0. Their products are now compliant with the new standard. Spintec signed new deals at MGS and the company increasingly values the show

involved in projects across the region in Macau, Manila, Australia and on cruise liners.” In addition to Baccarat, WDTS is experiencing a pull for its PJM technology to enhance security and transparency in other areas of gaming. PJM technology is deployed in gaming chips, and for transactional verification and validation at casino cash desks in a number of operations in Macau. At this year’s MGS show, WDTS exhibited its RFID-enabled Perfect Pay networked table system. WDTS argues that its Perfect Pay tables system that delivers multiple innovations and benefits to the Baccarat Table in the Macau market. Crossan commented: “The system provides the operator with greater game transparency, security and efficiencies. Given the importance and prevalence of the game here, all of those factors are significant in this market.” l

ingapore-based supplier Weike Gaming Technology has signed BG&T as a new

distributor in the South Korean market and has a new product pipeline for 2015. “We see great potential with our South Korean distributors,” said Peter KupFerroth, vice president of product marketing. “BG&T has built a solid reputation with a number of customers through previous casino system projects.” While Weike has a new product in the pipeline for 2015, the company will be releasing updated products in line with Macau’s latest electronic technical standards in December. With roulette as part of its product portfolio Weike sees potential for growth particularly in the Southeast Asian markets. Kup-Ferroth said: “We find that the majority of the South East Asian markets generally have a slight preference for

as a platform to showcase its products in

Roulette compared to Baccarat and this is

“the most important gaming center of the

where we see growth in the region.”

world.” l

Given a well-developed player base in some markets such as Vietnam, Cambodia and Laos, the company is optimistic about the trend in the medium term. At the MGS show, Weike showcased its new multi-featured progressive link – Victory - an integrated 4-level progressive jackpot specifically targeting Weike’s core player base – and standalone games such as Knight Legends and The Grand Voyage.l

Asia Gaming Briefings | December 2014

SUPPLIER SPECIAL REPORT 44 AINSWORTH

Sights on Macau’s slot market

GLI

GOLDEN-RACE

Opening a new chapter

Focus on Asia regulations

aming Laboratories International (GLI) marked its 25th anniversary at

this year and now intends to open a new chapter that goes beyond testing. As a test lab, GLI’s mission is to help suppliers get their products onto the floor and to help regulators guarantee compliance and public trust. Their offering also includes IT security audits and exclusive tools. GLI is focused in particular on the global trend of convergence, under which the game and the system, whether landbased or online, are merging from a technological standpoint. To date, the company has grown to 21 offices on six continents with 850 plus employees serving more than 455 jurisdictions. In Asia Pacific, GLI stresses its strong and growing presence in Australasia,

ustralian slot equipment manufacturer Ainsworth Game Technologies says

it’s planning on international expansion to fuel further growth and expects Macau slot sales to rise. Ainsworth released its newest range of link progressives for the Asian market, including Lucky Treasure, Treasure Storm and Oriental Fortune at this year’s G2E Las Vegas show. Ainsworth’s Group General Manager Strategy and Development, Scott Clarebrough, said the company’s new line up was a combination of innovative game

with three full service labs in Adelaide, Melbourne and Sydney. It has another lab in Macau. GLI said its lab in Macau has achieved major success in lottery testing and certification. Meanwhile, with its GLI Link technology, suppliers are able to test their devices remotely instead of having to shop for them all over the world. At this year’s MGS, GLI presented its services beyond testing with an emphasis on services related to iGaming, including standards, project health check and recovery and security reviews. l

alta-based Golden-Race aims to treble its business in the years ahead,

partly by focusing on Asia, which it sees as the world’s largest gaming market. Golden-Race says it will continue to focus on flexibility and to develop products specifically for the Asian market. The company says its 3D Virtual Football, pre-recorded video dog racing, live streaming lottery and keno have achieved major success in Africa and Asia because its product format, configuration flexibility allows operators to choose from a wide selection of national and league teams and game formats. Despite huge growth potential in virtual betting, Golden-Race sees ISP blocking and the banning of payment gateways as an obstacle for operators. To unlock potential in the region, the company thinks that local authorities need to offer a clear legal framework that offers better access to the market. If that were

mechanics and hardware, coupled with

to happen, operators could double their

exceptionally entertaining math models to

business revenue easily, it says. l

provide the best player experiences. Ainsworth saw MGS as a stage where it could “demonstrate its tailored products, innovative game mechanics and hardware, entertaining math models and commitment to being a major player in Macau.” l

Asia Gaming Briefings | December 2014

SUPPLIER SPECIAL REPORT 45 INTEPLAY

Land operators eye online space

aming platform and solution provider Inteplay sees land-based operators’

growing appetite for online business as

MATSUI

Expanding to meet demand

ORTIZ

Online boost to come

atsui has recently launched new RFID chips and won the bidding to supply

Kangwon Land, the largest casino in South

offering huge potential for the iGaming

Korea.

industry.

The company said its Matsui chips are

Inteplay says that Macau’s slowing casino

now used by most major casinos in Asia

market has made more and more land-

and Oceania and it has been expanding

based operators interested in building

its manufacturing capabilities to meet

their presence in the digital space,

demand.

while iGaming operators are constantly

Matsui has introduced chip security “M.G.

looking for new content, or new forms of

Eye,” striking new marble color chips and

entertainment.

“Premier Decal Chips” in Plaque style.

market.

Inteplay says that both online and offline

At this year’s MGS, Matsui exhibited

Roberto Regianini, Vice President of

operators are eager to define their mobile

its latest product from Matsui Chips,

Sales and Head of Asian Gaming Division

strategy to catch the wave of mobile

Matsui Synthetic Layout and other table

comments: “Mobile gambling is expected

Internet.

accessories. l

to grow to double-digit rates and to reach

ith the growth of Internet and smartphone audience, Ortiz Gaming

foresees a boost in its online games

With the ambition to become one of

over 40% of the total online gambling

the best iGaming solution and service

market by 2018 as the number of mobile

providers in Asia, Inteplay plans to open

gambling user’s is expected to exceed a

its office in Manila after having established

hundred million.”

offices in Macau, Hong Kong and Mainland

While Ortiz takes pride of its land-based

China. l

games that have achieved major success in Asia, the company has developed online and mobile versions of its latest games and presented them at this year’s G2E. Regianini adds: “The growing acceptance of the digital devices is another trend which will impact online gambling and we are following this trend and forecasting it to ensure we are bringing the evolution of Bingo to a new generation of players.” Despite anticipated growth in the iGaming market over coming years, Regianini finds it difficult to “predict political and legislative action” for now but he believes that “sooner or later the trends will be a very regulated and stable market worldwide.” l

Asia Gaming Briefings | December 2014

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OPINION 50

LAST WORDS

Macau down but not out

*Sharon Singleton

hen Macau GGR turned south for the

For sure the market is undergoing a shift. The high roller

first time in five years in June, analysts

segment had already been on a decline and the latest

said it was a short-term blip due to the

downturn is speeding that process. However, for the

distraction to gamblers from the FIFA

operators that is seen as a good thing as the margins for

World Cup punting phenomenon.

the mass sector are far higher without the need to pay

However, the expected bounce after the tournament

out junket commissions and other perks associated with

never came, with the decline accelerating to the worst

bringing in a relatively small number of big spenders, a

drop on record in October as the VIP segment collapsed.

highly volatile section of the market.

The declines have not only left analysts scrambling to revise down their earnings estimates for this year and next, and even the one after, but have also raised question marks over the longerterm future of Macau and in particular the VIP junket system that helped to catapult the former Portuguese colony into the world’s biggest gambling hub. Some have raised doubts about the pace of growth,

Casino operators are reconfiguring

FOR SURE THE MARKET IS UNDERGOING A SHIFT (...). HOWEVER, FOR THE OPERATORS THAT IS SEEN AS A GOOD THING AS THE MARGINS FOR THE MASS SECTOR ARE FAR HIGHER WITHOUT THE NEED TO PAY OUT JUNKET COMMISSIONS AND OTHER PERKS ASSOCIATED WITH BRINGING IN A RELATIVELY SMALL NUMBER OF BIG SPENDERS

with comparisons to the boom and bust pattern seen

* Managing Editor, AGB

floors to position themselves better for the changing profile, with the number of high roller tables at Las Vegas Sands for example down by 20 percent in Q3 compared with the year-ago quarter. The Chinese market is also still under penetrated and Fitch Ratings in a recent report said it expects new supply and infrastructure development to support further growth. Despite the current slowdown, it says the Chinese economy is likely to continue to grow by 6.8 percent in 2015 and 6.5 percent in 2016 anchoring mass market demand.

in Las Vegas as a result of massive overbuilding. Instead

Visitation trends to Macau also support the theory that

of fueling further growth, a few dissenting voices are

there still remains significant interest in visiting the

questioning as to whether the multi-billion dollar projects

territory, even though not as much money is being spent

set to come onstream in Cotai will pay for themselves,

in the casinos. The number of tourists entering Macau

at least in the way that had been hoped.

in October was up 11 percent year-on-year to 2,654,180.

Among them Daiwa Securities, which claims that as

Visitors from Mainland China surged by 20 percent year-

revenues fall, the extra capacity will result in increasing

on-year to 1,824,719, mostly from Guangdong province.

competition, lower table yields, and margin erosion.

The majority of analysts also still argue that adding

For now, however, those are still the dissenting voices.

more capacity will provide a boost to growth, with Melco

The majority still believe that the fundamental drivers

Crown’s Studio City and Galaxy Entertainment’s Phase

that have helped create a market seven times the size

2 set to open in 2015. However, these properties are still

of Las Vegas are intact.

not likely to be “cheap.” l

Asia Gaming Briefings | December 2014

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