LAST WORD 78
Is the pie big enough? Sharon Singleton
Managing Editor, AGB
As investors dip into the tasty pie that is the Asian gaming industry, producing integrated resorts from Nepal to Vladivostok, some analysts are beginning to sound a sour note.
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The problem is exacerbated by the fact that many illions of dollars have been invested over the past decade into new resorts, or property jurisdictions across Asia ban, or restrict, locals from gaming, upgrades and that’s even before Japan comes meaning most will be relying on foreign visitation for online. Those competing for a license there have growth. The Philippines is a notable exception, as casinos pledged to build world-beating resorts, with a price tag there enjoy solid, mass market local support. However, the sector of the market that has been growing the fastest of $10 billion and maybe beyond. Macau’s main building boom is coming to a close in recent years has been the VIP, which accounts for now, with just SJM Holdings in the pipeline to open about 28 percent of GGR at private casinos and which its Lisboa Palace on Cotai towards the end of this year. is vulnerable to heightened regional competition. Without a doubt, the China outbound tourist will But South Korea has several multi-billion projects in the works in the Incheon area and on the southern continue to be the most targeted demographic for the island of Jeju, as does the Primorye Gaming Zone foreseeable future. More than 200 million are expected to be travelling abroad from 2020 and the number of near Vladivostok in Russia. Cambodia reported a 53 percent jump in casino Chinese passing the threshold that makes travel affordable licenses granted last year, while neighbouring Vietnam is surging, with 240 million to hit the income distribution hump in the next seven years, saw the debut of the Corona according to research from Jefferies. Resort & Casino in January and The bulk of those, however, will see the entrance of the $4 won’t be VIPs and analysts agree billion Hoiana later this year Billions of the best-positioned operators will to name but a few. dollars were be those with the largest exposure In the Philippines, President to the mass market rather than Rodrigo Duterte has curbed the invested in the last the volatile VIP segment. enthusiasm of casino investors decade to build All of that said, the Chinese by putting a moratorium on new aren’t the only game in town. licenses, but there is still plenty casinos that cater Household incomes are rising of new development taking place to wealthy Chinese across the region creating alternative from those who slipped in before markets for operators prepared the cap was put in place. consumers in to cast their net wider. Australia has a new six-star APAC. Thailand has always been a IR in Sydney under construction, source market for border casinos as well as new properties in in Cambodia, but wealthy Thais Queensland, while Singapore recently announced it would permit an S$9 billion are increasingly being courted by higher-end properties expansion of its two gaming resorts, the first major in both Vietnam and Cambodia. Donaco’s Star Vegas in Poipet has been adding junkets to rebuild its VIP business growth since the IRs opened in 2010. Asia is undoubtedly now the world’s largest gaming and saw its main hall turnover treble in Q1, propelled region, producing revenues north of $80 billion by the introduction of mass tour groups from Thailand. Bangkok is seen as underserved and improved from those licensed casinos that report their figures. The trouble is, some analysts see these resorts as all transport links, such as flights between the Thai capital and Sihanoukville, will expand horizons beyond a competing for the same clientele. “Billions of dollars were invested in the last decade dusty drive to the border. And, then there’s India, with its vast and largely to build casinos that cater to wealthy Chinese consumers untapped potential. in APAC,” Fitch Ratings said in a recent report. India’s middle class is set to grow rapidly from up “The premium segment has already plateaued in markets such as Singapore and Australia but investment to 80 million today to 580 million people – or about is continuing across the region, even as China’s economy 41 per cent of the population – by 2025. Competition is rising in Asia, but so is the pie and goes through a structural slowdown,” it adds. The ratings agency forecasts China’s GDP will grow 6.1 with the right property and marketing strategy there percent in 2019 and 2020, down from 6.8 percent in 2018. should still be enough to go around.
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Asia Gaming Briefings | May 2019
