AGBriefings October 2014 by Asia Gaming Brief

JURISDICTION UPDATES October 2014 Edition

MAINLAND CHINA: A BOTTOMLESS RESERVOIR?

World rolls out red carpet to China • Special Focus pg. 28 • Last Words pg.54

MACAU

Growth targets slashed, VIP revenue slumps p.08

JAPAN

Casino companies lift veil on IR plans p.14

SINGAPORE Pulling the plug on online gambling p.21

G2E LAS VEGAS ‘14 SPECIAL REPORT p.40

Asia Gaming Briefings | October 2014

MESSAGE 4

Vegas calling

acau is a long way from Las

greater efforts to lure Asian money into

Vegas, but the long journey for

their casinos. The crackdown by the Chinese

us (and others) is essential,

government on corruption is helping to send

not just because G2E is the

an increasing number of Chinese gamblers to

world’s most important gaming show, but

Las Vegas, and casinos are catering to their

because Asia and the USA are becoming

tastes in furnishings, services and cuisine.

increasingly co-dependent.

State governments are also eyeing regulated

Asia, and Macau in particular, has been

sports betting as a means of bringing in

the glittering jewel in the crown of global

public revenue through fees and taxes. Over

gambling in the last few years, offering a

$300 billion is bet on sporting events every

bright spot from more gloomy prospects

year in the USA, though most of this money

elsewhere. European and North American

goes to unregulated offshore operators.

companies have been keen to get in on the

In recent months Nevada and Delaware

act, through casino and resort operations,

have regulated online poker. New Jersey

equipment supply and distribution, or

allows online play of all casino games and

interactive and sports betting opportunities.

is also currently arguing that the Sports

Recently, however, Macau’s lustre has

Wagering Act provides sufficient legal basis

dimmed in the eyes of the financial markets

to authorize sports betting, despite a legal

at least, and the talk is of a revival in the

challenge by various sports leagues under

U.S. market.

the federal Professional and Amateur Sports

Gaming will continue to expand in North

Protection Act (PASPA).

America as additional states enter the

There’s no doubt that these are exciting

commercial casino business, the expansion

times, and G2E is the perfect place to witness

of Indian tribal gaming, the gradual opening

the innovations and partnerships that are

of the internet gaming market beyond the

changing the industry.

intrastate into other states, as well as the

Asia Gaming Brief will be there to be part of

continual convergence of traditional and

it all. l

Rosalind Wade

Luis Pereira

social gaming. As revenue from baccarat, the preferred game amongst Chinese gamblers, continues

On behalf of Asia Gaming Brief

to outpace overall growth on the Las Vegas

Rosalind Wade & Luis Pereira

Strip, U.S. operators are making ever

PUBLISHERS

www.agbrief.com OCTOBER 2014 EDITION SERIES II • ISSUE IV Jurisdiction updates october 2014 edition

MAINLAND CHINA: A bottoMLess reservoIr?

World rolls out red carpet to China • Special Focus pg. 28 • Last Words pg.54

MACAU

Growth targets slashed, VIP revenue slumps p.08

jApAn

Casino companies lift veil on IR plans p.14

Singapore Pulling the plug on online gambling p.21

G2E Las VEGas ‘14 sPECIaL REPoRt p.40

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Asia Gaming Briefings | October 2014

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Asia Gaming Briefings | October 2014

CONTENTS 6

SOUTH EAST ASIA

GREATER CHINA

MACAU

PHILIPPINES

INDOCHINA

VIETNAM

CHINA

MALAYSIA

THAILAND

HONG KONG

SINGAPORE

CAMBODIA

MYANMAR

SOUTH ASIA

NORTH ASIA

JAPAN

SOUTH KOREA

RUSSIA

G2E SPECIAL REPORT

SRI LANKA

US/ASIA SPECIAL FOCUS

CALENDAR OF EVENTS

AUSTRALASIA

AUSTRALIA

NEW ZEALAND

PACIFIC ISLES

LAST WORDS

you asked. we responded.

the new neTworkInG, eduCaTIon and BusIness InsIGHT. POWERED BY

Asia Gaming Briefings | October 2014

corporate sponsor:

GREATER CHINA 8

MACAU

Growth targets slashed as VIP revenue slumps The slowdown in Macau’s VIP market, prompted by a crackdown on corruption in China, has been more pronounced than expected, triggering a significant re-rating of growth prospects for the world’s largest gambling hub in 2014

Asia Gaming Briefings | October 2014

lobal gaming revenue fell for the first

“The VIP segment has been pressured recently

time for five years in June, declining

by tightening of junket credit and the corruption

3.7 percent. Much of the blame was

crackdown on the mainland. We think these

placed on the distraction from the

pressures are temporary and expect VIP to turn

FIFA World Cup in June and July. However,

back positive in early 2015 as year-on-year

when an expected pick up failed to materialize

comps get easier and as the mentioned pressures

in August, focus returned to the VIP sector.

subside, although the exact timing is hard to

Fitch Ratings has slashed its growth forecast for

handicap,” Fitch said in a note.

this year to a gain of just 4 percent, down from

President Xi Jinping’s attempts to stamp out

a July forecast of 10 percent, which had been

official corruption have spilled over into the

cut from 12 percent. Sterne Agee is expecting

broader economy, with high rollers deterred

growth of just 3 percent, while Nomura analysts

from ostentatious displays of spending amid

are among the most pessimistic with forecasts

concern about being singled out. This clampdown

for growth to eek ahead by between 2 and 3

is being felt not just in Macau’s VIP rooms, but

percent, below the consensus for growth of

also in the demand for luxury brands, liquors

between 3 and 6 percent.

and foods on the mainland.

Predictions are for a slump in the high teens

At present there is no sign of the campaign

for VIP traffic, while the mass market is still

letting up.

forecast to grow by a similar amount. Disruption

That said analysts remain bullish for a pick up

as casinos reconfigure their floors to comply with

from next year as new properties on Cotai begin

a smoking ban which takes effect on Oct. 6th

to open their doors, significantly boosting supply

and a lack of new supply to give added impetus

both of tables and more affordable hotel rooms.

are also blamed for the slowdown.

“We continue to view 2014 as a transition year

GREATER CHINA 9

GROSS GAMING REVENUE Y13 Y14 H1

$45.2b

+18.6%

$24.6b

Y15 E

$50.4b

+11.5%

Y21 E

$100b

Y14 ESTIMATES/REVISIONS FITCH STERNE AGEE -3% DEUTSCHE BANK

+4%

+12%

+3%

+5%

+2% NOMURA

+6.5%

+8.6%

Y15 ESTIMATES/REVISIONS BARCLAYS DEUTSCHE BANK

+5.5%

+9.9%

+11.3%

JUNE GGR

-3.7%

JULY GGR

-3.6%

AUG GGR

-6.1%

+13.2%

in Macau ahead of multiple years of sequential

It didn’t split out staffing costs as a separate

market growth driven by visible, high-margin

item. Meanwhile, MGM China’s interim report

MARKET SHARE

mass volumes,” Sterne Agee analyst David Bain

shows an 18.5 percent jump in staffing costs.

(as of end of Y14 August)

wrote in a recent note. “While we continue to

Unemployment in Macau is virtually non-existent

believe overall CY14 Macau market estimates

and the government imposes restrictions on

are too high, investor sentiment on its strong,

the import of foreign labor and the types of

longer-term mass secular story is excessively

jobs migrants are able to hold, with croupier

too low.”

positions for example reserved for locals.

The added Cotai supply is expected to benefit

Despite the rising labor costs, staff are still

the mass market in particular. The VIP share

pushing for better wages and conditions, and

has been on a declining trend and now accounts

have taken to the streets of Macau over the

for around 63 percent of total revenue. The mass

summer to push their demands. Workers at

sector is also much more profitable for operators.

SJM Holdings have staged industrial action,

One cloud hanging over the former Portuguese

working to rule, refusing overtime and turning

colony that does concern analysts is rising labor

up late for shifts.

costs, which showed big gains for the operators

Macau Chief Executive Fernando Chui Sai On,

in the second quarter.

recently re-elected for a second term, has said

SANDS CHINA (1928:HK) 25%

For example, Wynn China in its interim report

he will study the reform of migrant labour laws

MELCO CROWN ENTERTAINMENT (6883.HK) 13%

filing said staffing costs in the first half had risen

and has said he may potentially make casino

WYNN MACAU (1128:HK) 10%

by 28.8 percent to HK$1.5 billion, mainly due to

operators responsible for the accommodation and

wage increases and a new bonus scheme. Sands

transportation costs of their imported workers.

China operating expenses were up 18 percent

The labor strife comes against an expected

overall, partly due to a new staff bonus program.

massive surge in demand for new labor as the

SJM HOLDINGS (880:HK) 22% GALAXY ENTERTAINMENT GROUP (27.HK) 21%

MGM MACAU (2282:HK) 9%

Asia Gaming Briefings | October 2014

GREATER CHINA 10 mega resorts on Cotai begin opening their doors.

is scheduled to come online in 2015. The

In a recent report, Barclays Bank estimated the

expansion will nearly double the capacity

WYNN MACAU (1128:HK)

resorts will need to hire about 55,000 staff. Of

of the resort. Construction on Phase 3 and

has a 9.5 percent market share and

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

4 is expected to begin by the end of the year

currently has one casino at Wynn Macau

be dealers for gaming tables, while 35,000 will

with a total investment of HK$60 billion

and Wynn Encore. Its $4 billion Wynn

be non-dealer employees.

($7.7 billion). H1 revenue was HK$38,407

Palace development is scheduled to come

“Even if we assume: each major Cotai casino

million, up 25 percent. Adjusted EBITDA

online in the first half of 2016, with

due to open in 2015-17 receives 400 tables, that

was HK$7,288 million, up 26 percent and

approximately 2,000 rooms and 500 table

third-party casinos also receive 400 tables in

net profit attributable to shareholders was

games. Wynn Macau H1 diluted EPS fell

total, and that each table needs 5-6 dealers to

HK$5,971 million, a gain of 29 percent.

to $0.70 from $0.71. Casino revenue rose

operate, this would imply a total of 14,000-

Gaming and entertainment revenue gained

to HK15.35 billion from $13.99 billion.

17,000 new Macanese dealers needed for the

25 percent to $37.38 billion.

Adjusted EBITDA was $4.6 billion, up from $4.1 billion.

new openings,” the bank said. The bank says there probably is enough capacity in Macau to fill the dealer positions locally, either through retraining staff in other casino-related positions, or by poaching from other areas of the economy. Still, high double-digit wage inflation is to be expected, it says. However, Barclays does express concern about the ability of the tiny territory to absorb so many more migrant workers, with the likelihood an influx will put further strain on local housing and prices, which are already hot button issues among Macau’s population.

SANDS CHINA (1928:HK) has a market share of about 21.4 percent and

MGM MACAU (2282:HK)

has four casinos. Analysts say the company

has a 10.5 percent market share while

has had a lower room occupancy than rivals

operating a single casino in the peninsula.

in Cotai, meaning it has more potential for

Its new developments include the MGM

revenue growth if it fills the rooms. The

Cotai, which is a $2.9 billion project

company’s new developments include the $3

scheduled for completion mid 2016. HI

billion The Parisian that is scheduled to come

revenue rose 11.8 percent to HK$13.7 billion

online in 2015. It recently expanded retail

and adjusted EBITDA was up 16.8 percent

space at its Sands Cotai central property,

to $3.5 billion. Casino revenue rose to $13.6

with the addition of 150,000 square feet

billion from $12.1 billion. l

of space, with shops designed to appeal to

OPERATORS

families. Sands China reported a 25 percent jump in H1 net revenue to $5.1 billion. Profit was up 45 percent to $1.4 billion. Casino revenue rose 25 percent to $4.6 billion.

SJM HOLDINGS (880:HK)

Diluted earnings per share rose to 16.98 cents from 11.66 cents.

holds the biggest market share of 25.6 percent as of June with 20 casinos. Its

company has also indicated it may be

MELCO CROWN ENTERTAINMENT (6883.HK)

interested in opportunities in Japan. The

has three casinos and an 11.5 percent market

company is currently building The Lisboa

share. Melco recently awarded France’s

Palace on Cotai. The casino will have 700

Bouygues a $488 million contract to build a

gaming tables and over 1,200 slot machines

six-star hotel. The 39-floor building will be

across a gaming floor area of approximately

part of the City of Dreams and will have 783

27,000 square metres. The total production

bedrooms, a casino, restaurants, conference

cost is estimated at about HKD$30 billion

room and a sky pool. The company said

($3.8 billion), although the company

recently it’s increasing the budget for its

has expressed concern over costs. SJM

Studio City development in Cotai by about

H1 revenue rose 4.7 percent to HK$44.4

$300 million, taking the total cost to $2.3

billion, gaming revenue gained by the same

billion. Pre-opening costs rose to $0.9

percentage amount. Adjusted EBITDA was up

million in the three months to end March,

4.1 percent to $4.4 billion.

compared with $0.6 million in the same

$3.2 billion Palazzo Versace development is scheduled to come online in 2017. The

period a year ago. The company said the

GALAXY ENTERTAINMENT GROUP (27.HK) has a 21.5 percent

resort is on track for a mid-2015 opening. Melco is also considering a casino megaproject near Barcelona in Spain. H1 net revenues gained 4.8 percent to $2.56 billion.

market share with six casinos. The company

Adjusted property EBITDA rose 8.6 percent

is investing $2.5 billion in the second phase

to $701.1 million.

of its Galaxy Macau development, which

Asia Gaming Briefings | October 2014

“In view of a slowed growth in the Macau gaming sector, especially in the high roller segment, the group further consolidated its business resources and sought to expand its core business outside Macau to absorb the unfulfilled demand from high rollers in Asia, who are more willing to visit casinos outside Macau,” Amax International said in a filing. The average monthly wage of employees in Macau’s casinos was up 6.7 percent at the end of June compared with the same time a year earlier to MOP20,160 ($2,525), excluding bonuses, according to The Census and Statistics Department Survey on Manpower Needs and Wages. The average pay level for dealers in the industry was MOP17,530.

GREATER CHINA 11

GROSS GAMING REVENUE

MAINLAND CHINA

Lottery suppliers cash in on booming China market Gaming supply companies are competing for dominance in China’s lottery market, which has seen a surge in revenue this year, helped by betting on the FIFA World Cup in June and July

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%

The number of Chinese travellers visiting overseas destinations is likely to rise 18 percent in 2014, from the 98 million recorded in 2013, according to figures from the China Outbound Tourism Research Institute. The institute says mainlanders are visiting an increasing number of countries and their demands and expectations are also changing.

irst half revenue for the mainland’s two

Earlier this year, the Hong Kong-listed company

lotteries gained 19.2 percent to $28.78

said its Guangzhou San Huan Yong Xin Technology

billion, though in July alone sales leapt

unit won a joint bid for the Shanghai Welfare

53 percent to a total of $6.05 billion. That

Lottery New Sales and Management System

was down to a doubling in sales of Sports Lottery

and Technical Services Project with Beijing

tickets in the month to $3.2 billion compared

Bestinfo Cyber Technology Co.

with the same month a year earlier.

The contract wins and booming sales propelled

Industry observers say despite the healthy

a 35.2 percent jump in first-half profit, with

statistics, there is still significant room for

turnover up 34.8 percent to HK460.5 million.

growth in the mainland Chinese lottery market,

“China’s lottery sector has undergone over twenty

which remains under penetrated. It’s the second-

years of booming growth, and with the advent of

biggest market in the world after the U.S., but

the internet age, is currently facing unprecedented

only 8 percent of the population participates,

opportunities and transformations,” it said in a

pointing to huge potential for growth.

stock exchange filing announcing its earnings.

Add to that estimates of an illegal market worth

Meanwhile, China Vanguard entered into an

about $160 billion that has the potential to be

agreement with Chongqing Welfare Lottery

brought into the legal sphere with the right

Administration Centre and Chongqing Public

products and services.

E-Card, to establish and maintain a lottery sales

So far this year, China LotSynergy, China

platform for the Chongqing Welfare Lottery

Vanguard, AGTech and 500.com have all

Administration Centre.

announced an expansion of their business

The group said the signing marked an important

with China’s various provincial lottery bodies.

step in strengthening the cooperative relations

China LotSynergy said its Guangzhou Lottnal

between the group and the welfare lottery.

most of the provinces which concluded tenders

Terminal unit has won its second sports lottery

AGTech Holding, which plans a new marketing

during 2014, giving it a market share of annual

contract in the Chinese province of Anhui,

campaign to boost sales and distribution of its

terminals supplied of approximately 48 percent.

adding to terminal supply contracts this year

“e-Ball” game in Jiangsu province in the second

500.com, an online sports lottery service

with the Sports Lottery in Guizhou, Gansu,

half, said its virtual sports betting sales have

provider in China, signed a strategic partnership

Zhejiang and Anhui provinces. It sees further

shown “meaningful” improvement since the

agreement with China Mobile Limited to

expansion in the second half.

close of the second quarter this year and it’s

become the sole provider of online sports

In 2013, Sports Lottery sales in Anhui province

close to finalizing an acquisition in China.

lottery products to China Mobile Points Mall,

grew by 54.3 percent year-on-year, ranking as

The company has also completed a next

an online marketplace where China Mobile

one of the top 5 provinces nationwide by growth.

generation, high frequency game platform that

subscribers can redeem loyalty points. The

While in Zhejiang province they exceeded RMB 7

will allow the roll out of its Lucky Racing game

online sports lottery products provided by

billion for the first time in 2012, broke through

to other provinces beyond Hunan.

500.com will be available in all of China’s 31

the RMB 8 billion mark in 2013, and reached

AGTech says its wholly-owned subsidiary, GOT,

provinces, municipalities and autonomous

RMB 4.93 billion in the first half of 2014.

was chosen as a supplier of lottery terminals by

regions. l

Mainland China’s big spenders are shunning Macau and Hong Kong in favor of more distant destinations amidst the countrywide anti-corruption and frugality drive. Fearful of attracting unwanted scrutiny in Macau, too close to Beijing eyes, China’s VIPs are traveling further afield, with Las Vegas as a top alternative destination.

Asia Gaming Briefings | October 2014

GREATER CHINA 12

GROSS GAMING REVENUE - HKJC Y13/Y14

HONG KONG

HKJClub expands commingled pools The Hong Kong Jockey Club says from next year it expects to expand its partnerships with other jurisdictions to increase the number of commingled pools it can offer

Racing turnover $13.4b

+10%

Football betting $8b

+23%

Mark Six $1b

+3.7%

Revenue to government $2.5b

+11.1%

Betting fraud monitor Sportradar said it has signed an accord to provide its fraud detection system to the Hong Kong Football Association. The system will provide the HKFA with intelligence about global betting on over 100 games per season until July 2017. Norwegian Cruise Lines, partly owned by Genting Hong Kong, is buying privately held Prestige Cruises International for $3 billion in cash and stock, to add higher-end trips to its fleet offerings. The deal will give the company control of Oceania Cruises and Regent Seven Seas Cruises.

he Hong Kong government amended

illegal gambling and from the growing number

the Betting Ordinance in 2013 to allow

of Asian countries planning to legalize casinos.

commingled pools. The HKJC said the

According to estimates, it said Hong Kong people

change was a major step forward in

lost about $31 billion ($3.99 billion) in Macau

combat the threat of illegal operators.

preventing the erosion of income from illegal

casinos last year alone and that trend may be

“Looking ahead, I am cautiously optimistic of

gambling, by reducing the opportunities for

exacerbated by improved transport links with

seeing continued positive growth in our racing

arbitrage between different countries. It also

the world’s largest gambling hub.

and betting operations, but competition in the

helped align the territory with international

“We see the opening of the Hong Kong–Macau

leisure and entertainment business is growing

practices.

Bridge, scheduled for 2016, as posing a further

all the time,” he added.

“Partnerships with Australia, New Zealand,

significant challenge,” retiring chairman T.

Turnover for the Mark Six lottery gained 3.7

Singapore, Macau and parts of Europe will get

Brian Stevenson said.

percent to HK$7.91 billion, generating HK$1.98

under way in the new season,” chief executive

In the 2013/2014 financial year, racing turnover

billion in lottery duty payments and commission

officer Winfried Engelbrecht-Bresges said in

rose 10 percent to HK$103.92 billion, producing

of HK$475 million for the Club.

the club’s annual results announcement. “This

a net margin for the club of HK$4.42 billion, a

Stephen Ip will replace Brian Stephenson as

will give hundreds of thousands of racing fans

7.4 percent increase.

chairman of the HKJC. Stephenson is retiring

across the globe the opportunity to bet into

On the football betting side, turnover rose 22.9

after four years in the role. Ip has been with the

Hong Kong pools, which have the world’s

percent to $62.2 billion helped by the 2014

company since 1973 and a voting member since

highest liquidity and highest average turnover

World Cup, for which 54 of the 64 matches fell

1992. He was elected to the board of stewards

per race at over HK$132 million.”

into the financial year.

in 1999. Ip was a practising solicitor until his

The HKJC posted a 10 percent increase in racing

However, Engelbrecht-Bresges said the

retirement from legal practice in 2004 and

turnover in the 2013/2014 financial year, but

tournament wasn’t the only supporting factor,

also served as president of the Law Society of

also warned it was still facing challenges from

with the club having taken substantial steps to

Hong Kong. l

Asia Gaming Briefings | October 2014

NORTH ASIA 14

JAPAN

Casino companies lift veil on resort plans With Japanese lawmakers expected to pass a bill to legalize casinos this Fall, international operators are beginning to reveal their hands in a bid to win a license in what is expected to be one of the world’s biggest gambling markets

Asia Gaming Briefings | October 2014

he promotional bill establishing

MGM says casino resorts in Japan could boost

framework legislation for a legal casino

tourism arrivals by about 5 million more than the

industry is being debated during the

government’s stated 2025 target of 25 million

Diet’s extraordinary session, which

and 10 million more than the government’s 30

convenes at the end of September and wraps

million target in 2020.

up by the end of November.

Most of the world’s major casino operators have

Out of the casino majors, MGM Resorts International

expressed interest in competing for a license

has been one of the most open in pursuing its

in Japan, which is expected to have about $20

ambitions in Japan, with President Bill Hornbuckle

billion in annual gaming revenue initially. Some

recently presenting the group’s project at the

estimates say the potential is for as much as

Mizuho Convention Centre, complete with images

$40 billion once all resorts are up and running.

of the planned ultra-modern luxury resort.

The current promotional bill allows for two IRs

The company intends to invest $5 billion in

in Metropolitan areas and two regional resorts.

a “uniquely Japanese”property in the city of

Other companies revealing glimpses of their

Osaka and not one that mirrors its properties

plans include Japan’s local railway operating

in Macau or Las Vegas.

company, Keikyu Corporation, which said it

MGM said it plans to team with a consortium

would form a project syndicate with trading

of leading properties to develop the resort,

houses, developers and local businesses to

which is likely to create 10,000 permanent jobs.

submit a large-scale proposal. It has proposed

It said the resort will be a multi-faceted

investment in the region of $4.8- $5.8 billion

entertainment center, with gambling just one

for an integrated resort featuring a casino, hotel

part of the equation. The company took the

and convention hall.

opportunity to stress that in some of its other

The company owns leisure facilities in Japan,

properties 70 percent of revenue comes from

including a marina and marine park, and also

non-casino sources.

operates hotels at stops along its private railway

NORTH ASIA 15

PACHINKO/PACHISLOT ANNUAL REVENUE major cities in the country. Las Vegas Sands has said it would be prepared to spend as much as $10 billion on a resort in Japan, while Wynn Resorts, Century Casinos, Boyd Gaming and Dynam Holdings are among the others who have also said they will throw their hats into the ring. In terms of potential sites, currently, the main contenders are Tokyo, Osaka and Okinawa. Osaka

PACHINKO/ PACHISLOT ANNUAL REVENUE

governor Ichiro Matsui and other Osaka officials

$234b

have been actively courting investment in the

(Source: Kinbasha Gaming international)

city, while Tokyo governor Yoichi Masuzoe has

CASINO GAMING VENUE ESTIMATE Y1

expressed reservations.

$10b

Samuel Yin, an analyst with Malaysia’s Maybank

(Industry median estimate)

Investment Bank Research, said in a recent note that the tiny island of Okinawa could be the first to see an IR in Japan.

CASINOS ESTIMATES $40b

“The Abe cabinet is reportedly studying the possibility of an IR in Okinawa as a bargaining chip with the locals in exchange for continued accommodation of the American base on the island,” he said. Still, the bill needs to grind through the regulatory

$18.4b $9.4b

process before the first shovel hits the dirt and that process has some way to go. The passage of that connects inner Tokyo to the Kanagawa

the current promotion law will be followed by

Prefecture. The company said it had been assessing

an implementation bill in the next 12 months,

potential sites for the casino including Yamashita

which will determine minimum investments,

pier which has good access to Yokohama, one

tax rates and problem gambling safeguards.

of the country’s largest integrated cities with a

After passage of the two bills, a selection

population of 3.7 million, as well as the Odaiba

committee will be established, and it will

district of Tokyo.

take another six months for the committee to

USJ Co. is counting on its cachet of turning

decide on the IR locations. After that, another

around a failing Universal Studios theme park in

12 months to select the winning operators.

Japan to win a partnership with a foreign casino

“Our estimated timeline assumes that the

operator. The operator of Osaka city’s 13-year-

construction of a Japanese IR will require the

old Universal Studios Japan is in talks with

standard 36 months that is the case for other IR

MGM, Caesars Entertainment, and Malaysia’s

operators. Japan will experience labor shortages

Genting for a possible partnership to run a casino

from construction of sporting facilities for the

resort, chief executive officer Glenn Gumpel told

2020 Tokyo Olympics. Not to mention that the

Bloomberg in a recent interview.

construction codes in Japan are much stricter due

“We have operational capacity, experience

to the risk of earthquakes,” Yin said, therefore

know-how, and I don’t think we would be

the 36-month target may be overly optimistic

stretched to participate in more than one”

and, taking all the above factors into account,

casino resort, Gumpel said.

an IR will only be able to open its doors in mid-

Melco Crown Entertainment is also eyeing a

or late-2020 at the earliest, said Yin.

license in Osaka and officials have met with

That will quash hopes of both the government

governor Ichiro Matsui to discuss the merits of

and operators of being able to capitalize on the

the city, which include a 24-hour international

expected influx of tourists when Tokyo hosts

airport nearby and cheaper land than other

the Olympic Games in 2020. l

Y20E

Y25E

Y30E

(CLSA)

(UBS)

About 5 million Japanese, or 5 percent of the adult population, may be addicted to gambling, according to a study released by the Health, Labor and Welfare Ministry. The figure is higher than in most other countries, where it is around 1 percent, local media cited the study as saying, adding it’s the first time such a statistic has been released in Japan. Dynam Japan Holding has extended a memorandum of understanding on a possible venture with Macau Legend for a second time, adding a further six months through to Feb. 2015. The Japanese pachinko hall company is in talks with Macau Legend to set up a pachinko area at the Macau Fisherman’s Wharf.

Asia Gaming Briefings | October 2014

NORTH ASIA 16

SOUTH KOREA

GROSS GAMING REVENUE

Jeju governor swims against the tide The governor of South Korea’s Jeju island appears to be holding out, bucking the trend towards a general warming to the

(Source: CIMB)

$2.8b

$2.7b $2.7b

Y13

$2.7b

Y14E

Y15E

Y16E

idea of more IRs in the country

he central government recently

However, that resort now appears to be facing

announced it supports the four

delays due to opposition from Governor Won,

existing foreigner-only IR projects in

Hee-Ryong, who was elected in June. Won is a

a bid to attract more tourism revenue

former national assemblyman and belongs to

CASINO VISITORS • 2.7m

5.7m

• FOREIGN CASINO VISITORS

and investment.

the ruling Saenuri Party.

“We will revise related regulations to foster

He has found himself at odds with the more

integrated resorts and draw up systematic

accommodative stance of the central government

measures,” the ministry said. “We will adopt

on casinos and wants to reform the regulatory

an open bidding system to give a preliminary

environment.

approval for establishment of integrated resorts.”

Jeju is currently home to eight casinos, the

There are currently 17 casinos in Korea with 16

biggest concentration in South Korea, but they

only open to foreigners. Kangwon Land, located

are loosely regulated.

in the remote mining town, is the only place

For instance, the sale and purchase of licenses

where Koreans can legally gamble.

do not require prior approval. Won has expressed

Foreign investors have expressed interest in

skepticism about the benefits of another casino

South Korea’s potential, though have faced

resort on the island and has said he will only

legal and other hiccups.

entertain the possibility of expanding the

Las Vegas Sands has said it would be interested

market after regulatory reform.

in building a resort in the country, but only if

The governor’s office is currently working with

locals were allowed in. The company recently

the Ministry of Culture, Sports & Tourism, as

proposed the construction of an IR in Jamsil, the

well as other relevant agencies to create an

site of the 1988 Olympic Games main stadium

international standard regulatory body, such

in the affluent southern Seoul area, Yonhap

as seen in Nevada or Singapore. Won has said

news agency cited George Tanasijevich, the

that process may take six months to a year.

managing director of global development, as

However, South Korean experts say that won’t

saying in an interview.

be an easy task, due to jurisdictional issues and

There are currently four proposed foreigner-

the need for a new law to be passed.

only projects in the country. Three are in

And while the central government has recognized

the Incheon area near Seoul, including a

the value of promoting more integrated resorts

$1.7 billion joint venture between Paradise

to achieve its tourism goals, it’s still publicly

Entertainment and Japan’s Sega Sammy, a $2

sticking by its foreigner-only stance amid

billion project between the Lippo Group and

concern about problem gambling, even though

China, according to the Korean Casino Market

Caesars Entertainment and Maruhan Corp’s

some provincial officials, such as in Busan and

Review by Kore Co.

$1.8 billion Dream Island project.

Incheon are calling for an open casino debate.

The total number of casino visitors exceeded 5.7

The fourth is a $2.2 billion venture planned for

“Of course, this itself is a huge progress when

million last year, with 2.7 million categorized

the southern honeymoon island of Jeju. Genting

noting that the ministry was very lukewarm to

as foreigners. The number of Chinese visitors

Singapore Bhd has teamed up with Chinese

IRs just a year ago,” an industry insider said.

continued to grow and accounted for 46.7 percent

property developer Landing International

Although many international investors want

of the total market. The report said the upswing

for the resort, which was scheduled to break

to see the market opened to locals, experts say

in China visitor numbers had been helped by a

ground in June.

growth will be driven mainly by visitors from

significant addition of baccarat tables. l

Asia Gaming Briefings | October 2014

FOREIGNER-ONLY CASINO REVENUE

$1.3b

China market share

46.7%

(Source: Kore Co.)

Paradise Co. in July raised 285.8 billion won ($281.2 million) through a block sale of treasury shares to raise funds for operations, or to fund an acquisition. The casino company offered 7.5 million shares at 38,100 won each, a 4 percent discount to the then share price. Moves to support development of IRs is a “huge progress,” industry insider says, noting lukewarm interest one year ago.

NORTH ASIA 17

RUSSIA

A tale of two gambling zones: how Crimea and Sochi stack up President Vladimir Putin has put his signature on a law creating two new gambling zones in the Olympic City of Sochi and the newly annexed Crimea with the hope of boosting tourism revenue

GROSS GAMING REVENUE Y08 $7.8b Illegal market GGRE $15b Primorye Y22E $5.2b Azov $300m

SUMMIT ASCENT GROSS GAMING REVENUE (Source: Goldman Sachs)

Y16E ut experts hold mixed views on the

Marriott International.

ultimate chance of success in either

However, one of the problems developers may

location. At a specially organized

face is that these hotels were not specifically

$375m

Y20E

$1.7b

conference in Yalta on August 22,

designed for gamblers, president of the Multitur

Russian gaming experts convened to discuss

company Aleksey Visokanov told Russian

the potential of Crimea. The consensus was

privately-owned news agency Interfax.

that, longer-term, Crimea may be the more

In 2013, about 4 million tourists visited Sochi,

successful of the two new zones, though both

with that number expected to have risen 30

face significant challenges.

percent in 2014 due to visitors coming to the

In Sochi, casinos will be located near the Olympic

Olympics. However, that number is forecast to

Village. However, the law specifies that casinos

drop off again next year.

can only be set up in Olympic facilities paid for

That said, in the longer-term, Marina Smirnova,

by private investors.

head of hotel industry and tourism at Cushman &

It will work in favor of companies controlled

Wakefield, sees greater potential for developing

by Russian billionaires Oleg Deripaska and

the Crimean zone. The region currently lacks

Viktor Vekselberg, Russia’s Gazprom and the

good quality hotels and new facilities can be

country’s largest lender Sberbank, which built

specifically tailored to create a purpose-built

many of the Olympic facilities.

gambling zone.

The move to create the gambling zone in Sochi

Crimea may also be a better long-term bet

came from a push from Sberbank head German

over Sochi partly because it has traditionally

Gref. Initially, Putin opposed the initiative, saying

been a more popular tourist destination and is

it will discourage families from visiting, but the

more affordable.

situation changed after the annexation of Crimea.

Under the new law, the Crimean authorities

Sochi is also scheduled to host the 2018 World

were empowered to freely choose locations for

Cup and gambling will add to the offerings

the gambling zone on the peninsula.

available to the expected wave of tourists

Crimean leaders have recently announced that

Despite the pessimism, Moscow is still

arriving for the games.

they do not plan to spread gambling facilities

hoping to boost the local economies with this

Russia’s Deputy Prime Minister Dmitriy Kozak

across the peninsula, but rather establish a zone

legislation, as well as to attract more tourists

recently said the gambling zone in Sochi already

in the resort area of Big Yalta, which stretches

and create new jobs.

has many of the necessary facilities and may be

70 km along the Black Sea shore.

Experts told Russian privately-owned news

operational as early as next May/June, in time

Big Yalta was home to the region’s casino trade

agency ITAR TASS that the appearance of casinos

for the next holiday season.

before the ban and had 283 gaming houses.

in Crimea could inflate the regional budget by

According to the head of Sochi, Anatoliy

Some local hoteliers said it may be more viable

up to $750 million annually.

Pakhomov, 49 new hotels (primarily four- and

to locate casinos within existing hotels than to

Out of Crimea’s 5.9 million tourists last year,

five-star) were built for the Olympics, some of

set up a special gambling zone, as the current

Ukrainians accounted for 3 million of them. This

which are controlled by foreign hotel operators,

tensions may make it difficult to attract the

summer this figure sank to 300,000 tourists

such as Fine Hotels & Resorts, Accor Hotels and

required investment.

following the annexation of the peninsula. l

An aide to Crimean Deputy Prime Minister Rustam Temirgaliyev says investors, including Chinese, have expressed interest in the area. He gave no names. Summit Ascent said the opening of its casino project in Vladivostok has been delayed due to “unforeseen obstacles” and the resort is not now expected to open its doors until the second quarter of 2015. Construction was originally scheduled for completion in April 2014.

Asia Gaming Briefings | October 2014

SOUTH EAST ASIA 18

PHILIPPINES

Lawmaker seeks entry fee as locals debate continues A Filipino lawmaker has proposed charging an entry fee for locals as the country’s casino industry gears up for massive expansion, highlighting a debate around Asia on restrictions for residents and how important access is for operators’ profits

are allowed to enter casinos provided they are

Manila, said such a move would have a major

at least 21 years old.

impact on its business, as up to 90 percent of

oth Cambodia and Vietnam are

In a report earlier this year, analysts at Macquarie

its business are locals.

considering changing legislation to

predicted the Philippines will grow to a $4.8

The country’s regulator, the Philippine

allow residents to gamble, though

billion market over the next five years and will

Amusement and Gaming Corporation has yet to

details have not been finalized.

be driven 50 percent by locals and 50 percent

discuss the proposed bill at the top echelon level,

Vietnam may charge an entry levy, along the

by foreign visitors. As of 2013, the country had

according to Francis Fernando, vice president

lines of that established in Singapore and has

a population of about 98 million.

for the Licensing and Gaming Development

also mooted some kinds of potential means

A move to change the rules was put forward by

Department of Pagcor.

testing in draft legislation.

Representative Peter Unabia of Misamis Oriental

“Right now, no internal discussion on the matter

South Korea maintains its ban, apart from in

(Northern Mindanao), who stressed there is a

at my level,” Fernando told AGB.

one property, though casino giants such as Las

need to separate the Filipinos who have plenty

However, Gatchalian, does not believe the

Vegas Sands have warned that multi-billion

of money and those who can’t afford to gamble.

proposed bill of Unabia will gain supporters

dollar investments in the country would be

He claims the law would act as a safeguard

from fellow lawmakers.

contingent on having local access. Lawmakers

limiting the social impact of casino gambling

“It will frighten the investors. When these

in Japan are debating legalizing casinos, with

through restrictions on locals. Unabia claims

casino operators applied for their franchises,

some reports suggesting some are seeking an

30 percent of casino goers are locals.

there were no talks or agreements requiring the

entrance fee.

For the smaller casino resorts in the Philippines

locals to pay entrance fees. They came here both

As competition in Asia’s casino industry

moves to restrict local access could have a major

for the locals and the tourists,” he told AGB.

increases, having access a to large population

impact on business, while the effect on the new

The Philippine economy grew 6.4 percent in

with increasing disposable income is seen as a

multi-billion dollar resorts scheduled to open

the second quarter, making it one of the best

major lure, as well as a counterbalance to the

in Manila’s Entertainment City is less clear cut.

performing in Asia, while domestic consumption,

dependence on the Chinese high roller.

Sherwin Gatchalian, a lawmaker whose family

which makes up about two thirds of the economy,

Under the current law in the Philippines, locals

owns Waterfront Pavilion Hotel and Casino in

rose 5.3 percent.

Asia Gaming Briefings | October 2014

SOUTH EAST ASIA 19

GROSS GAMING REVENUE (Source: CIMB)

OPERATORS

games upon opening, catering to both the VIP

$4b $3.5b

and mass market and 950 hotel rooms.

$3b

Melco Crown Philippines posted a net loss

SOLAIRE RESORT & CASINO

of P1.4 billion for the second quarter and of P2.4 billion for the first half of 2014.

Bloomberry Resorts’ Solaire Resort

Pre-opening costs were P736.5 million for

& Casino was the first to open in

the three months ended June 30, 2014, as

Entertainment City and is now set to open

compared to P151.1 million year on year.

its 200,000 square-meter extension in October this year. The $400 million addon will feature more VIP gaming sections, 300 all-suite hotel rooms, a shopping center with 30 to 40 high-end shops, a 1,800-seat entertainment theater, 3,000 parking spaces, a nightclub and more restaurants. The initial outlay was boosted to $680 million, $60 million more than previously announced. “This is definitely going to drive visitation to Solaire not just from locals but more so from foreign VIPs going forward,” said Leo D. Venezuela, Director of Investor Relations at Solaire Resort and Casino. Bloomberry Resorts Corp. posted Q2 net income after tax of 846.6 million pesos ($19.3 million), up from 22.68 million a year ago. That works out at 0.08 a share, compared with break even a year ago. Revenue in the three months to June 30th surged 52 percent to 5.45 billion pesos. Gross gaming revenue for the second quarter of 2014 increased by 66 percent to P6.5 billion. Solaire has signed up about 56 junket operators to bring in foreign VIP players.

TRAVELLERS INTERNATIONAL HOTEL GROUP, a joint venture between Genting Hong Kong and Alliance Global Group, is scheduled to break ground by the end of this year on the $1.1-billion Resorts World Bayshore along Manila Bay. The opening has been delayed to 2018. The company is also pushing ahead with the expansion of Resorts World Manila. It has allotted $600 million for the second and third phases of the resort to boost retail space by 60 percent. It will add 1,100 rooms to the existing 1,226 rooms in Resorts World Manila’s Maxim’s, Marriott and Remington hotels. In a disclosure to the Philippine Stock Exchange in April, Travellers said Pagcor approved new gaming capacity of 420 gaming tables and 4,148 gaming machines. At end-2013, Resorts World Manila housed 287 gaming tables for the VIP and mass markets, 1,822 slot machines and 210

$2.2b

Y13

Y14E

Y15E

Y16E

Century Properties is seeking to mend ties with former partner Universal Entertainment Group over a deal to develop a $2 billion casino resort in Manila’s Entertainment City. The accord, which would have brought Universal into compliance with Philippine laws on foreign land ownership, collapsed in March. Century says it’s amenable to a partnership on the original terms. Berjaya Philippines, whose subsidiary BGMC leases online lottery equipment and provides gaming software support, posted first-quarter revenues of PHP6.5 billion ($146.2 million) up 8.7 percent. Net income fell 5.3 percent to PHP205 million.

electronic table games. Travellers says it has so far used about 1.11 billion pesos ($25.5 million) of the 16.8 billion pesos that it

CITY OF DREAMS.

raised through an initial public offering on

Belle Corp and Melco Crown are scheduled

and the Maxim’s Hotel and facilities.

the Phase 2 expansion of the Marriott Hotel

to open the City of Dreams casino resort

talks with Universal on their accord, which was terminated in March, on the original terms. Successful conclusion of negotiations

brand, Nobu to the Philippines, as well

MANILA BAY RESORTS UNIVERSAL Entertainment Co. Pagcor

as an educational entertainment center

chairman and CEO Cristino Naguiat Jr. has

land ownership.

in a venture with Hollywood studio,

said that Universal Entertainment’s Manila

The company is seeking to open its

Dreamworks. Melco has also teamed

Bay Resorts would not be allowed to open

$2-billion gaming complex by the third

with the Ault Group to add two renowned

its casino until outstanding issues were

quarter of 2015.

nightclubs -- Pangaea and Chaos

resolved, including foreign equity limits on

The casino will feature 2,000 rooms, state-

In June, Melco upped its estimate for the

land ownership and bribery charges filed

of-the-art gaming facilities, and an indoor

Entertainment City resort by about a third,

against Japanese billionaire Kazuo Okada and

man-made beach club covered by a huge

from $680 million to $832 million.

his companies.

glass dome, high-end and casual dining

The property will feature 365 gaming tables,

Former joint venture partner, Century

restaurants, upscale retail shops, trade halls

1,680 slot machines and 1,680 electronic table

Properties, recently said it wants to resume

and cinemas. l

project towards the end of this year. City of Dreams will also bring luxury

would put the Japanese company back in compliance with Philippine laws on foreign

Asia Gaming Briefings | October 2014

SOUTH EAST ASIA 20

GROSS GAMING REVENUE

MALAYSIA

Genting revamp ahead of schedule Genting Bhd’s RM5 billion ($1.6 billion) revamp of its 49-year-old Resorts World Genting property appears to be ahead of schedule, positioning Malaysia’s only casino operator for a pick up in earnings from next year, analysts say

Although Genting has the monopoly in Malaysia, expressed an interest in seeking a casino license. Billionaire Vincent Tan said he would invest 3 billion ringgit in the Berjaya Hills complex, neighbouring RWG, should he get a permit.

$1.6b

Y13

$2.1b

Y14E

Y15E

Y16E

GENTING Y14 Q2 Leisure & hospitality revenue RM 3.77b

-4%

Maybank Investment Bank Research forecasts total visitor arrivals to RWG will dip seven percent year-on-year this year due to the closure of the concert hall Arena of Stars from May-

he company is expected to see a drop

September 2014 and major sections of the First

in visitor numbers in 2014 as The

World Indoor Theme Park throughout 2014 for

Genting Integrated Tourism Plan

construction work.

Phase 1 will force the temporary

However, the arrivals will see a strong uptick

closure of many of its key facilities, such as

from next year onwards, “easily growing” by a

its theme park. However, analysts predict a

seven percent compounded annual growth rate

spike in visitor arrivals from 2015 thanks to

(CAGR), analyst Samuel Yin said. Assuming a 90

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

percent occupancy rate and an average of two

car park bays, and a theme park in partnership

visitors per room, this new hotel is able to take

with US-based studio Twentieth Century Fox.

in around 850,000 visitors per year, he added.

CIMB analyst Lucius Chong wrote recently that

According to Hong Leong Investment Bank

the entire 1,300-room hotel expansion had

analyst Grace Chew, RWG’s hotel occupancy

been expected to come on stream next year.

rate during the first quarter of this year was

However, Genting now expects the opening of

lower at 87 percent versus 92 percent in the

the first 500 rooms of that expansion by the end

corresponding period last year.

of the year and the remaining 800 rooms by

The new hotel and car park bays will collectively

mid-2015, which he says is a “positive surprise”

usher in three million visitors a year but after

and could be one of the reasons why the stock

deducting a 10 percent overlap, Maybank’s forecast

has been performing well recently.

for 2016 visitor arrivals is 20.9 million, which

“The key assumption that we have been making

it said is at the conservative end compared to

is that an additional 100 tables, or 20 percent

the management’s guidance of 24-25 million.

increase in gaming capacity, will be added with

The new Twentieth Century Fox theme park,

the 1,300 new rooms. The early introduction of

on the other hand, is expected to contribute

the first 500 new rooms therefore lends more

to higher visitor numbers in late 2016 or 2017,

support to the timing of our key assumption and

analysts said. Touted as the studio’s first theme

to our confidence in our FY15 numbers, which

park project, it will feature rides designed from

are 28 percent above consensus,” he wrote.

its titles such as Rio, Ice Age, Night at the

Genting Malaysia raised the budget on its

Museum and Alien vs Predator.

integrated tourism master plan last year,

“The Twentieth Century Fox theme park is

upping the total investment to RM5 billion in

slated to open by the first quarter of 2016. We

December from the RM3 billion announced in

believe that this target is rather aggressive.

July. The company, whose facilities are seen

Universal Studios Singapore in Resorts World

as ageing, is gearing up to meet increasing

Sentosa took almost two years to construct,”

competition from regional neighbours with

Maybank’s Yin said, adding it may delay opening

newer attractions and facilities.

to early 2017. l

Asia Gaming Briefings | October 2014

$2b $1.7b

some prominent local businessmen have also

its outdoor theme park since September 2013,

(Source: CIMB)

MALAYSIA Y14 Q2 Leisure & hospitality revenue RM 1.28b

-12%

Group pre tax RM 931m

-24%

Lottery operator Magnum Bhd said it expects the rest of the financial year to be “challenging,” as higher interest rates, the rising cost of living and aggressive discounting from illegal operators eat into its business. The group reported a rise in Q2 pre-tax profit to RM94.6 million ($29.9 million) from RM86.3 million in the same period a year ago, but noted that profit had been on a declining trend for two quarters because of lower gaming revenue. Gaming machine maker RGB International is seeking to enter new markets around Asia and to expand its business outside of Manila in the Philippines. Previously known as Dreamgate Corp Bhd, the company recently entered the Democratic Republic of Timor-Leste through the acquisition of a 30 percent stake in Timor Holding, Lda. and plans to place 210 bingo machines in the Philippines.

SOUTH EAST ASIA 21

GROSS GAMING REVENUE (Source: CIMB)

+3.8% $6.07b

SINGAPORE

$6.8b

$7.1b

$7.5b

Government pulls the plug on online gambling Singapore has banned online gambling and imposed criminal penalties under provisions of new legislation introduced in Parliament, effectively closing the market to international operators

operators will be following up on is the chance

Y14E

Y15E

Y16E

Pools or the Turf Club, since those businesses currently have very limited online gambling experience, software, platforms etc.” Singapore announced late last year that it was planning to regulate the online space, though some companies had hoped that it would bring clarity and include exemptions allowing them

Y13

of entering into a partnership with Singapore

to operate. nder the Remote Gambling Act

Pollins also called into question the attractiveness

2014, players gambling online will

of Singapore as a business location. “There is

be committing a criminal offense.

also a question mark for businesses who have

There is also a comprehensive set

considered locating their sales offices or servers

of preventative measures including website

in Singapore - to what extent will they be subject

blocking, payment blocking and a ban on

to the new rules?” he asked.

advertising.

Meanwhile, the island’s land-based operators

The act aims to “maintain law and order and

reported solid Q2 results, despite concern

protect young persons and other vulnerable

growth is plateauing.

persons from being harmed or exploited by

Genting Singapore, operator of the Resorts World

remote gambling,” the act says, details on

Sentosa IR, posted a 6 percent gain in revenue

which are still scant.

in the three months to end-June to $751 million

Matt Pollins, an Associate in the Singapore

(US$600 million). Gaming revenue gained 9

office of Olswang Asia LLP, an international

percent to $596.8 million, while non-gaming

law firm specializing in Technology, Media

revenue declined 3 percent to $153.5 million.

and Telecommunications, said many online

The gaming business benefited from from

companies may abandon Singapore as a market.

higher rolling volume and win percentage in

“It is going to become harder for international

the premium player business.

operators to target Singapore directly due to

Genting warned persistent uncertainties in

payment blocking and site blocking. For these

the global economy will continue to weigh on

operators, they will perceive Singapore as

Singapore in the second half. It said its Jurong

expressly ‘black’ rather than ‘grey,’ as it was

hotel development is progressing well and is

before, and I suspect many who still do will

on schedule for a soft opening in the second

stop targeting it altogether.”

quarter of 2015.

He noted that there would be some licenses

Marina Bay Sands Q2 revenue gained almost 9

issued to local operators, but all will be

percent to $804.7 million, with casino revenue

discretionary and will have to meet a “public

up 9.5 percent to $646.4 million. However,

interest” requirement. It seems unlikely

rolling chip volume showed a sharp decline of

that international, for-profits will be able to

27 percent to $10.4 billion. Non-rolling chip

meet this requirement to the Government’s

dropped 5 percent to $1.1 billion.

satisfaction.

Mass win-per-day increased 3.8 percent in

Those who were hoping for a limited opening

the quarter compared to the year ago quarter,

up of the market will probably be disappointed.

and reached a property record of $4.68 million

“The one opportunity that international

per day. l

Y14 Q1 tourism spending $6b

+5%

Gaming, entertainment receipts $1.3b

+19%

H1 VISITOR ARRIVALS

-2.8%

CHINA ARRIVALS

-30%

7.5m

“We are heartened to see an increase in Chinese visitors who visit Singapore as a single destination and stay for at least two days. This shows that we have been reaching out to the right target audience,” says Yap Chin Siang, the tourist board’s assistant chief executive for policy and planning, commenting on Chinese tourists staying longer and spending more in H1, despite an overall decline in visitor numbers. The average length of stay increased by 56 percent year-on-year to 4.2 days. Singapore’s anti-gambling body was globally ridiculed after an anti-gambling ad linked to the World Cup backfired. The ad, which showed a despondent young boy telling a friend that his father had bet his life savings on Germany winning the cup, was shown during the semi-finals when the team thrashed Brazil 7-to-1 before going on to win.

Asia Gaming Briefings | October 2014

SOUTH ASIA 22

Y12 TAX REVENUE $2.21m GDP Y14E

+7.8%

TOURISM TARGET Y16

2.5m

ARRIVALS TO END-AUG. Y14

CHINA ARRIVALS

SRI LANKA

Crown Sri Lanka project in legal limbo James Packer’s vision of turning Sri Lanka into the Macau of South Asia remains mired in red tape more than six months after gaining parliamentary approval for a $400 million integrated resort

he plan now faces months of new

Plans to incorporate a casino into new resorts

delays because of unspecified legal

on the island have run into significant local

issues, Reuters reported recently,

opposition, especially from conservative Buddhist

citing a government minister.

sectors of society, prompting mixed messages

+143%

Minister of Investment Promotion, Lakshman Yapa Abeywardena, says foreign direct investment related to John Keells’ IR project was coming into the country. India’s swelling middle-class to balloon to 580 million by 2025, with about 50 million likely to travel overseas by 2020, compared to just 4 million in 2000, providing huge potential for the Sri Lankan market.

“We have something to be sorted out from our

from politicians as to exactly what the stance

legal side,” Investment Promotion Minister

regarding casinos at the new resorts will be.

Lakshman Yapa Abeywardena told Reuters in a

Packer has touted Sri Lanka’s potential as being

1.5 million at the end of this year. In the year

telephone interview. He declined to say exactly

similar to that of Macau, given the island’s

through to August arrivals were up 23.1 percent

what the legal matter is.

proximity to a huge neighbouring country

to 1,001,643, driven by arrivals from China and

“There are some legal issues from our side

with fast-growing wealth, where gambling is

India. The number of Chinese tourists in the

once they paid the necessary fees for the land,”

currently mostly illegal, as long as the right

first eight months soared 143.5 percent.

Yapa said. “We have informed them to start

tourism facilities are put in place.

As well as Packer’s project, parliament has

the construction they have also some issues. It

Citing a McKinsey report, Packer last year said

approved two other plans for integrated resorts.

will take another two three months (to start).”

India’s middle-class could swell to 580 million by

Local business tycoon Dhammika Perera, another

The future of the project has been uncertain

2025, while about 50 million will travel overseas

prominent casino operator, plans to expand

since the government in April said it would

by 2020, compared to just 4 million in 2000.

his gaming empire with a $350 million resort

approve the resort, but without the addition of

That spells huge potential for neighbouring

and casino in Colombo. The “Queensbury,”

a casino. The waters were further muddied two

Sri Lanka, he said.

will feature a 40-storey resort, shopping mall

weeks later when officials said they wouldn’t

The government is striving to develop its

and convention centre down D R Wijewardene

oppose a casino if it operated in partnership with

tourism industry, which was hit hard by the

Mawatha. Sri Lanka’s top conglomerate John

a local, who already holds an existing license.

Asian tsunami in 2004 and the ongoing unrest.

Keells Holdings also plans an $850 million

Packer’s Sri Lankan joint venture partner,

A curfew was imposed on two southern towns

integrated resort and casino. In his annual

Ravi Wijeratne owns two casino licenses. The

in June amidst violent clashes between hard-

statement to shareholders, John Keells’ Chairman

businessman’s Rank Holding (Pvt.) Ltd. will

line buddhists and muslim communities,

Susantha Ratnayake said construction had

jointly develop Crown’s Sri Lankan project.

prompting a leading minister to warn that the

begun on the project.

The news agency cited analysts as saying the

island’s minority muslim population could

To attract the investment, the government

delays on the resort could extend until the

become radicalized.

awarded significant tax concessions to the

next presidential polls scheduled for January

Sri Lanka has a target to boost tourism arrivals

projects, granting a 10-year tax break despite

next year.

over the next two years to 2.5 million from

protests from opposition parties. l

Asia Gaming Briefings | October 2014

INDOCHINA 24

VIETNAM

Challenges loom as gambling bill nears The Ministry of Finance released a draft decree

To deter local players with modest financial

of the bill on August 14th, which provides at

capability and to mitigate the negative

least in part for access for locals - a provision

impacts of gambling addiction, Vietnam

keenly hoped for by foreign investors. However,

plans to impose an entrance fee, such as

on closer reading, the legislation as stands may

that used in Singapore.

prove unenforceable and may deter participation.

However, Vinh points out that the amount has

Under the draft decree, Vietnamese citizens

not been set yet. The draft decree suggests the

who are 21 years old or above will be able to

Prime Minister will determine the amount and

enter casinos in the country.

conditions for Vietnamese to gamble.

Article 10 of the draft decree stipulates Vietnamese

“There are some crazy discussions out there

citizens must have a minimum monthly salary

in the general public about the need to impose

of 15 million Vietnam dong ($700), and show

hefty entrance fees of $500 for each daily visit,

“financial competence” or some valuable assets

an amount that investors will certainly laugh

(saving books, etc.). Foreign passport holders

at and run away from the project,” he says.

and overseas Vietnamese can enter without

In addition to proofs of “financial competence”,

any restrictions.

local Vietnamese will also have to have no

Some of the stipulations in Article 10 of the draft

criminal record or tax debts.

decree have raised eyebrows with the vague

The draft decree, moreover, did not address

use of words such as “financial competence,”

a number of issues of particular interest to

he conference will seek input from

a requirement which will surely be difficult

investors and the public. Nobody knows if the

various ministries and the general

to enforce.

government will allow local Vietnamese to

public. After this, a revised decree

“No government agency at this point has the

enter the existing Grand Ho Tram casino and

will be ready for the Prime Minister’s

jurisdiction over the assessment of the players’

the two planned integrated resorts in Van Don

consideration and clearance from the National

“financial competence” and capabilities,”

and Phu Quoc islands, not counting the six

Assembly, which meets in late November. The

says Prof. Augustine Ha Ton Vinh, President

small casinos spread around the country and

Prime Minister is expected to sign the final

and CEO of Stellar Management Corporation,

a few dozen gaming parlors in five-star hotels.

version before the end of this year.

a management consulting and education

At this time, only Van Don has received some

However, the draft as it stands may not attract

company. “In reality, it’s impractical to assess

indications that locals are allowed to enter,

the major foreign casino investment the

the players’ financial capacity before allowing

Vinh says.

government has been seeking.

them to enter a casino.”

There are also other provisions in the draft that

Vietnam’s Ministry of Finance will host a conference in late October seeking input on its draft bill to legislate gambling in the hopes of boosting foreign investment and tourism and recouping revenue being spent by locals in neighbouring countries

Asia Gaming Briefings | October 2014

INDOCHINA 25

GROSS GAMING REVENUE Y13 MIN

$275m

MAX

$300m

DONACO Y14 Hotel/gaming revenue

+18%

VIP

+49%

Slot machines

+117%

Tourist arrivals to Aug, 2014 5.47m foreign investors may find hard to swallow.

consumption tax rates are around twenty five to

The integrated resort must be a $4 billion

thirty percent, in addition to corporate income

complex consisting of tourism, shopping,

taxes. The Prime Minister and his advisors will

convention center, entertainment, etc. and

have to strike a balance between the need to

under Article 24 of the draft law investors will

maintain various taxes to help the state budget,

have to disburse at least $2 billion before a

investorsâ&#x20AC;&#x2122; interests and the need to control local

gaming license is issued.

admission and gambling addiction.

The integrated resorts as contemplated by the

Some other restrictive terms in the draft decree

Vietnamese government will be located in special

involve the limited number of tables and gaming

and isolated economic zones. At this point two

machines. For any investment of $20 million,

areas have been identified and approved, one

the investors will be allowed to operate 1 gaming

in the Van Don island in Ha Long Bay, North

table and 10 electronic gaming machines. With a

Vietnam and the other on Phu Quoc Island in

registered capital of US$4 billion, the operators

Kien Giang province, South Vietnam.

will have a chance to operate 2000 machines

The requirement to commit at least 50 percent

and 200 gaming tables.

of the $4 billion investment up front was not a

Marina Bay Sands in Singapore, for about the

requirement for the Grand Ho Tram in Ba Ria-

same investment, features about 2,500 gaming

Vung Tau, an integrated resort about 2 hours

machines and 600 tables.

from Ho Chi Minh City. The Grand Ho Tram

The draft also has not touched on issues of

gaming license was issued in April 2013 and the

gross gaming tax and the length, conditions and

casino was opened in July the same year after

exclusivity of the gaming license. There is no

an initial investment of about $500 million. If

discussion about the need to establish a national

they have to stick to the terms of the new 2014

gaming control board or commission to help

decree, investors in new integrated resorts

steer the government in the right direction and

will surely consider the requirement an unfair

away from potential problems with investors.

practice, Vinh says.

However, Vinh says heâ&#x20AC;&#x2122;s optimistic the

There are also major question marks over

government is committed to ensuring the

taxes, which may be as high as 60 percent --

gaming industry is on a solid footing and will

a rate Vinh says will kill all investorsâ&#x20AC;&#x2122; desire

work to implement positive changes before a

to come in. The current gaming and special

final version is sealed. l

+12.2%

Donaco International is reporting brisk VIP turnover at its new Aristo International casino, which opened in May. In June and July turnover was up 74 percent despite headwinds from the World Cup, tensions with China and an earthquake across the border in Yunnan. The Australia-listed company also said its new slot business at the luxury resort had seen strong growth in the period and it was considering adding new machines. Banyan Tree Holdings is seeking a license for a casino at its Laguna Lang Co resort in the central province of Thua Thien-Hue, according to local media reports. Laguna Lang Co opened in March last year and includes the Banyan Tree and Angsana branded hotels and spas, an 18-hole championship golf course, private villas and residences.

Asia Gaming Briefings | October 2014

INDOCHINA 26

GROSS GAMING REVENUE STATE LOTTERY $1.3b

DOMESTIC HORSE RACING $258m

THAILAND

Lottery overhaul needed, as ticket prices surge

Y13 TOURISM ARRIVALS 26.73m

+19.6%

Y14E 26.3m ARRIVALS

Thailand’s military chiefs have taken aim at the popular state lottery, saying they are seeking to reduce street prices for the tickets, which are often as much as 40 percent above the official rate of 80 baht ($2.58)

he move is seen by analysts as a

and 16th day of each month. Of that amount 50

further populist step by the junta,

million are sold, with the remainder allocated

the National Council for Peace and

for “charity purposes.”

Order (NCPO), which took power in

The distribution of tickets is carried out by

(CUT FROM 28m) (Source: Spectrum)

The number of arrests made by Thai police for illegal gambling during the World Cup totaled at least 5,064, significantly higher than the 3,800 arrested in 2010, according to reports. More than 2,000 football gambling websites have been shut down.

May ending months of political conflict.

powerful underwriters who buy directly from

The lottery is overseen by the Government

the GLO through a quota system. According

Lottery Office (GLO) and permits two lottery

to local reports, ticket distribution has been

draws a month. It’s one of the few legal means

controlled by influential groups, known as the

of gambling in the Kingdom, where legislation

“Three Tigers” for some time.

on the industry dates back to 1935.

As a result these tickets eventually end up being

came out with a plan to do so but we were not

It has been a significant cash cow for successive

sold on the street for up to 110 baht ($3.55),

able to execute it for legal reasons at the time,”

Thai governments, though has been criticized

allowing for transport and other expenses.

he said without clarification.

for issues of transparency, and allegations the

Prizes in the state run lottery are largely based

He blames the way tickets are allocated. “The

draw may be fixed. Analysts said the system may

on the six digit tickets, but smaller payouts occur

structural problem is this. The way the system

need a much larger overhaul than bringing down

on tickets based on the last two and three digits.

works is that the GLO requires takers of each

street ticket prices to solve the problems and

The lottery has also led to a booming underground

series of lotteries (they) don’t allow takers to

to help reduce the attraction of the booming

lottery based on the final digits of the actual

re-sell them back to the GLO.”

illegal gambling market.

state winning lottery. The underground lottery

Part of the problem, Korn said, is that “there

NCPO chief, General Prayuth Chan-ocha, has

enables people to play for as little as 20 baht.

needs to be an underwriter - somebody who

threatened to refuse the renewal of lottery

A Chulalongkorn University’s Centre for Gambling

is willing to take on the risk of the whole

ticket distributor contracts in a bid to cap the

Studies survey has estimated 102 billion baht

tranche and that underwriter invariably has

prices at the official rate. In July, Prayuth in a

($3.29 billion) was spent on the underground

to be someone with very deep pockets”. The

weekly televised address, admitted the NCPO

lottery, 76.7 billion baht ($2.47 billion) on

Tigers’ distributors “basically provide a firm

was unable to force a reduction in street prices

the government lottery, 46.3 billion baht on

guarantee to GLO and in practise they are the

to the official rate, but called for cooperation

casinos, and 38 billion baht on football betting.

only people able to do so, and that’s why they

from vendors to “avoid selling tickets for more

Former finance Minister, Korn Chatikavanij told

get the quota.”

than 92 baht ($2.97).”

AGB in an interview that the army appears to

To ensure the lotteries are sold at the right

A people’s network for lottery reform in July

be seeking to please the population.

price the end customer needs to be able to buy

urged authorities to investigate GLO lottery

Korn, a member of the Democrat Party, and

directly from the government without there

spending. The network said GLO expenditures

finance minister from 2008 to 2011, criticized

being any middlemen, he said.

appeared to benefit certain politicians and raised

previous governments for failing to address

Such reforms would see customers purchasing

concerns over issues of disclosure, especially

the issue of lottery ticket prices.

lottery tickets electronically, such as through

regarding who received funds.

“It is a bad reflection on Thai governments -

ATM machines, essentially directly from the

Currently the GLO issues 72 million tickets

and I mean every government; and when I was

government. Individual traders could use hand-

for each draw, which is scheduled on the first

in office we made a move to correct this and

held devices to provide print outs of tickets. l

Asia Gaming Briefings | October 2014

SPECIAL FOCUS 28

MAINLAND CHINA:

“Bottomless reservoir” of gambling demand? Discussions of the revenue potential for integrated resorts in Korea and Japan focus on domestic populations and the underserved northeastern China market Matthew Landry *

hile most industry experts agree that

market in the Mainland. Visitation from this market

unmet demand does exist in the region,

is more than five times the national average. Beijing,

some consider China to be a bottomless

Shanghai, and Fujian are the only other regions that

reservoir. This dangerous assumption is

are above-average. In fact, many of the regions in the

not likely to be adopted by financial markets, warranting

northeast exhibit lower levels of penetration than Beijing

an evaluation. Although not necessarily demand related,

and Shanghai, as well as southeastern China. Overall this

the recent decline in Macau’s VIP revenue supports the

is indicative of an underserved market.

need for a calculated approach.

The table on the left shows the ratio of Macau visits to the

Clearly there are several factors other than demand

population for selected regions. In addition, an adjusted

which will impact the ability of Korea and Japan to attract

row shows visits originating in Taiwan to Macau and

Chinese gamers. These include the offering made by the

Korea combined. Residents of Taiwan generally require

operator and host government, the number of new resorts

a flight of approximately two hours to reach Macau. In

and gaming positions, the ease and expenses associated

comparison, Shanghai is about a three-hour flight to and

with obtaining visas, the availability of affordable and

from Macau and Beijing is four. Taiwan generates two to

convenient transportation, the ability to transfer currency,

three times as many population-adjusted gamer visits as

and any potential reaction by the Chinese government.

Beijing or Shanghai. While not demand related, it should

Each of these factors, and a host of others, clearly warrant

be noted that Taiwan’s more proximate distance only

* Matthew Landry

consideration for all stakeholders. This article, however,

explains part of this eased access difference, as residents

is the Managing Partner

focuses on demand.

of Taiwan do not require a visa to enter Macau.

of Strategic Market Advisors,

Indexed levels of visitation for regions within China to

In comparison, Beijing and Shanghai are between two

and an AGB Advisor.

Macau show that, as expected, Guangdong’s location

and three-hour flights to Seoul and Tokyo. While a subtle

adjacent to Macau is the most successfully targeted

difference in comparison to Macau, many industry analysts

Asia Gaming Briefings | October 2014

SPECIAL FOCUS 29

believe that three hours represents something

and along, with Tianjin, are significantly more

putting it among a middle-tier of provinces

of an inflection point in a leisure tourists’

likely to take advantage of the Independent

along the east coast. The lower tier lies inland

willingness to travel for a short vacation. This

Visa Scheme to reach Macau compared to other

and to the west with GRP per capita of 20,000 to

dynamic supports the premise that residents

parts of the country.

40,000 yuan. While some cost of living elements

of northeast China will visit integrated resorts

These factors demonstrate that urban parts of

may be higher in the cities and provinces along

in Korea and Tokyo.

northeastern China appear to be underserved

the eastern seaboard, there does appear to be

Recent experience demonstrates that Chinese

from a gaming perspective. Additional and

greater disposable incomes.

gamers may be willing to travel significant

particularly more accessible supply should

According to McKinsey and Company, in 2010, 8

distances to diversify their experience beyond

serve potential clients better than Macau,

percent of all households earned over USD$16,000

Macau. Chinese visitation to Las Vegas has roughly

the main existing option, and drive growth

annually. The vast majority of gaming in Macau

doubled since 2007, helping to offset a sluggish

in this underserved market. Using Taiwan

appears to come from this population segment,

North American market over that timeframe.

as a metric, participation in casino gaming

which is expected to grow to 57 percent of all

Since its two integrated resorts opened in 2010,

could grow two to three times with more

households in 2020. This level of wealth is the

Chinese visitation to Singapore has doubled

accessible supply. This is consistent with

estimated threshold for the middle class, where

as well. It is likely that many of these visits

observations made by marketing executives

a regional leisure trip is not out of reach. While

originate in Beijing and Shanghai, which are

and industry analysts.

this may sound low when compared to other

large and relatively wealthy populations with

Beyond unmet demand is the disposable

countries, it is important to note that the cost

international airports. Tourists from these cities

income and depth of the opportunity. China’s

of living in China is significantly lower than

are among the most independent in the nation

economy tripled between 2000 and 2010,

other countries.

making it the second largest economy in the

Statistics indicate that, for upper income

world. Between 2010 and 2020 the Chinese

families, approximately 60 percent of income

economy is expected to continue to grow at

is available for discretionary purchases.

an average annual rate of 7.9 percent. Rapid

Between now and 2020, the earliest that

urbanization is part of this story, as individuals

an integrated resort could reasonably open

and families move to eastern China’s cities

in Korea or Japan, the Chinese economy is

and seek out higher incomes and improved

expected to continue its meteoric rise. This

living standards. Some experts estimate that

dynamic is expected to lead to substantial

100 million more urban households will be

growth along the already wealthier east

established between 2010 and 2020.

coast, where the number of wealthy urban

Against this backdrop, the Chinese government

households is expected to increase four-fold

is encouraging consumption by improving

between 2014 and 2020. This growth in wealth

social security and service sector employment.

combined with the potential two to three-fold

Consumption is growing in several basic parts

increase due to unmet demand, implies that

of the economy, including improved basic living

the market potential for northeast China could

standards as well as increased discretionary

be approximately ten times its current levels

purchases. Chinese citizens are among the

in 2020. Visitation levels imply northeast

top consumers of luxury goods. Many Chinese

China was more than a $4.5 billion gaming

tourists specifically spend lavishly when they

market for Macau in 2013, and easily could

are abroad, purchasing luxury goods to avoid

have generated more than $6 billion between

import tariffs and noting that the savings offset

mass market and VIP play. This implies vast

travel expenses in some cases.

revenue potential from this region.

Not only is the number of urban households

This demand could support development in

growing, but they are also becoming more

both Korea and Japan, provided the proper

wealthy. Gross regional product (“GRP”) per

market structure were adopted. Primary

capita is significantly higher in China’s cities

considerations include the need to develop

when compared to other regions. Beijing,

reliable parameters for domestic play;

Tianjin, and Shanghai all enjoy GRP per capita

reasonable tax and regulatory structures,

over 85,000 yuan ($13,844), putting them in the

inclusive of junket operation; and the eased

top category. The combined GRP of these three

flow of tourists and capital. If both Korea and

REGION

VISITS/POPULATION

Beijing

0.017

Shanghai

0.022

Taiwan

0.043

Taiwan (inc. visits to Korea)

0.3%

0.047

2% 1%

63%

82%

51%

36% 34.7%

10% 2000

2010

7% 2020E

POOR (<$6.000)

VALUE ($6K TO 16K)

cities is about 90 percent of Guangdong’s, which

Japan meet these market-based needs, the

MAINSTREAM ($16K TO 34K)

AFLUENT (>$34.000)

has a GRP per capita of just over 54,000 yuan,

game of picking real winners can begin. l

Asia Gaming Briefings | October 2014

SPECIAL FOCUS 30

U.S. operators benefit from China crackdown

or some time now, U.S. operators have been

Genting has pledged to outspend all competitors in New

making efforts to lure Asian money into their

York. Its proposed Sterling Forest Resort would be located

casinos and recent statistics show why. Revenue

"just 35 miles from the George Washington Bridge." It

from baccarat, the favored game amongst

has proposed a $1.5 billion integrated resort with a 5-star

Chinese, rose 16 percent in July, far outpacing overall

hotel that would cater to "VIP players from the U.S., Asia

growth on the Las Vegas Strip of 4.8 percent.

and the World.” Specifically, they noted that there are

To enhance the trend, operators have made efforts to

over 540,000 Chinese tourists who visit New York City

tailor their offerings, using targeted marketing and even

annually. Genting touts its excellent relationships with

changing aspects of interior design to reflect Asian tastes

the various unions involved and claims that the project

and superstitions. Casinos have also been promoting food

would create over 4,900 jobs.

fare from top Asian chefs.

The application also said that it would "not preclude a

These efforts continue, however we have also begun to

second gaming facility in the Catskills" that would attract

see a new phenomenon.

"a more mass-marketing customer."

Players from Macau are coming because of a government

In case the "Board may decide that it is in the best

crackdown on money movement by Chinese and Macau

interests of the State to place a casino closer to a distressed

officials that so far shows no sign of slowing.

community", Genting proposed Resorts World Hudson

The campaign has dampened luxury spending in China,

Valley, in Southern Orange County. The proposed $830

affecting items from brand-name goods to sharks’ fin

million project which includes a four-star, 600-room hotel

soup, and has been directly linked to a slowdown in VIP

with 19 restaurants, would "create nearly 3,400 jobs.”

revenue in Macau as high rollers seek a low profile.

Genting’s ambitions may be derailed, however, by concern

The U.S. offers advantages.

that an Orange County casino would render a casino

Gamblers, especially high rollers, often take legal loans

further north in the Catskills unprofitable. Gambling has

to skirt Macau limits on the amount of cash that can be

long been seen as a key to economic revival in the area.

brought into the territory. In Nevada the player has easier

Only three developers are competing for a license in the

access to cash since it´s easily accessible from any part

Catskills; six are contending in Orange County.

of the world with no limitations and U.S. gamblers don’t

Genting has also purchased about 30 acres of land in

have to go through the complex process of repatriating

Miami for $236 million in 2011, which it plans to develop

cash as they do with Macau winnings. Nevada also has

into a mixed-use complex with residential, retail and

a more favorable tax rate than Macau, 6.75 percent on

hotel facilities. In addition, Genting acquired the Omni

gross gaming revenue and 1 percent of taxes on fees.

center near Biscayne Boulevard, raising its investment

It has also become easier to get a visa to travel from China

in Florida to more than $420 million.

to the U.S. than in the past.

However, Genting’s efforts to change Florida law to

While a growing number of their clients look to the U.S.

allow full-fledged casino gambling in Miami have so

market, Asian operators have followed the money and

far failed despite heavy lobbying when state regulators

are seeking opportunities in North America.

denied a proposal to allow Gulfstream Park to use the

None has been as active or ambitious as Malaysia’s Genting.

racetrack’s authority to offer slot machines on the

However, the group’s prospects for getting approval for a

waterfront site because its permit couldn’t be moved

planned mega-resort in the small Orange County Village of

under state law.

* Frank Catania is senior

Tuxedo, New York, are not as positive as they had seemed.

Australia’s Crown Resorts also has U.S. ambitions. Crown

partner in Catania Gaming

Assemblyman Gary Pretlow (D) stated that Orange County

Resorts has announced that a majority owned subsidiary

Consultants, counsel

casino proposals “are causing everyone a lot of angst.... I

has acquired a 34.6 acre plot of land on the Las Vegas Strip

to the Law Firm of Catania

am totally concerned. Any casino that has that proximity

for a total of US$280 million. The site, formerly occupied

& Ehrlich, and an AGB Advisor.

to New York City would be detrimental to casinos north

by the New Frontier casino, was acquired via a foreclosure

and west of it.”

auction initiated by lenders to the former site owner. l

Frank Catania*

“ASIAN OPERATORS HAVE FOLLOWED THE MONEY AND ARE SEEKING OPPORTUNITIES IN NORTH AMERICA”

Asia Gaming Briefings | October 2014

SPECIAL FOCUS 31

Asian manufacturers look for growth in North America

Robert W. Stocker II *

sian companies considering approaching

owned lotteries established by each Canadian province.

the North American market should

Provincial governments own the casinos, which are in

consider a number of factors, including

some cases operated via management contracts entered

(1) which market i.e., the United States

into with a commercial gaming company. At the present

or Canada and (2) the nature of the business activity

time the best business opportunities arise out of doing

directed at North America, e.g., whether it is a casino

business with the provincial lotteries. Provincial gaming

development or casino interest acquisition (the most

authorities have working knowledge of Asian business

highly regulated), a gaming equipment manufacturer,

customs and legal requirements.

a parts or software supplier, or a non-gaming goods

There are two more very important considerations

and/or services provider.

that should be taken into account before making the

Commercial gaming in the United States is generally a

move to enter North America – (1) selection of the

matter of state law, which means that there are 50 separate sets of state laws, plus the District of Columbia. There is a limited amount of federal jurisdictional oversight. State law governs licensing requirements, and the state courts enforce the state gaming laws. Many of the commercial gaming states only require vetting of the casino operators, gaming equipment manufacturers and gaming software developers, leaving the vetting

most tax-efficient jurisdiction in which

“AN ASIAN COMPANY SHOULD NOT AUTOMATICALLY ASSUME THAT THE FIRST POINT OF ENTRY INTO THE NORTH AMERICAN MARKET IS NEVADA”

of other suppliers to the individual casino

to operate and (2) implementation of an ownership structure that separates the parent company from the North American business operation. In the United States, this includes consideration of (1) the applicability of a United States Tax Treaty, as well as federal, state and local tax structures and (2) the availability of tax and business development incentives at the state and local level. Similar considerations apply in Canada.

operators and/or the manufacturer.

So where should an Asian company providing goods and

In the United States, Indian (i.e., tribal) gaming is

services to the gaming industry place its focus when first

primarily driven by the Indian Gaming Regulatory Act, a

entering the North American market? Simply stated,

federal statute authorizing two categories of casino-style

identify the state, province or Indian tribe that has the

gaming (Class II gaming, such as bingo and non-banked

best combination of (1) demand for the products and

card games, and Class III gaming, which is traditional

services offered by the company, (2) minimal taxation

commercial casino gaming). Class II gaming is regulated

and (3) ease of regulatory compliance.

by the individual tribes, with minimal federal oversight by

An Asian company should not automatically assume that

the National Indian Gaming Commission. Class III tribal

the first point of entry into the North American market

gaming is ostensibly regulated by the individual tribes;

is Nevada. Some gaming-related businesses have found

however, the National Indian Gaming Commission has

the Indian gaming market to be an excellent starting

regulatory approval powers over management contracts,

point for entry. If the commercial market is the focus,

and individual states have very limited oversight authority

then the choice should be the state market that can

based upon the terms of the tribal-state compact concerning

offer the best business opportunity and has the lowest

the operation of the tribal casino.

barrier to entry. For the Canadian market, selecting the

In a few states, the Indian tribes have agreed to permit

appropriate province and provincial lottery is typically

* Robert W. Stocker II is Chair,

a state regulatory agency to oversee the licensing of

the key starting point.

Gaming Practice Group,

companies providing goods and services to the tribal

This may sound like it is a very complex undertaking.

Dickinson Wright PLLC,

casinos, which may impact which Indian tribes the Asian

It really is not that complicated if you are working

and an AGB Advisor.

company should select to do business with.

with knowledgeable professionals before entering the

In Canada, gaming activity is conducted through government-

marketplace. l

Asia Gaming Briefings | October 2014

SPECIAL FOCUS 32

Century Casinos eyes Asia expansion, focus on Japan

Colorado and Austria-based Century Casinos, which owns 30 casino resorts around the world, is now eyeing Asia, Latin America and in particular Japan for further international expansion

he company was formed in 1992 as an international casino

additional entertainment options and through its ability to promote a

entertainment company, developing and operating casinos

specific market or region to its best customers at its other casinos around

in well regulated markets worldwide and now has resorts

the world, as well as on the luxury cruise ships -- another growth area

in Europe, Canada, the U.S., in the Caribbean and on board

for the company.

luxury cruise ships.

“Operating casinos on luxury cruise vessels is an exciting niche and we

The mid-size resorts offer a wide variety of popular gaming tables and

are the worldwide market leaders in that niche. Currently, it accounts

machines, hotels, restaurants, bars, show-lounges, sports and concert

for about 10 percent of Century Casinos’ overall business and we plan to

venues, and a comedy club. In early 2015, Century will expand its offerings

add another one or two cruise ship casinos next year,” said Hoetzinger.

to include a horse racing track at one of its properties in Calgary, Canada.

The new ships will cruise worldwide, in the Caribbean in winter and in

The company said it made substantial progress in 2013 in boosting shareholder

the Mediterranean and Alaska in summer.

value and improving financial flexibility, putting it in a strong position

Century’s shares have been listed on the Nasdaq stock market since

to pursue new development and acquisition opportunities worldwide.

1994. Despite sometimes challenging economic conditions, the company

In 2013, revenues increased by 46 percent year-over-year and net profit

has delivered a compound average annual growth rate of more than 30

was up by 51 percent. In the first half of 2014, Century Casinos continued

percent over the past 20 years.

its international growth, increasing revenue by another 31 percent.

The company attributes a large part of its success to a focus on personal

“We see substantial organic growth at our larger properties in the

service, variety and convenient locations. As a result, Century has built

USA and Canada, as well as in Poland,” says Co-CEO Peter Hoetzinger.

up a loyal clientele base with a high degree of repeat visitation.

“Our focus for new projects lies in Asia and South America. Japan is a

“My Co CEO and I are fast decision makers and we have a strong focus on

market we are particularly interested in, as our operating model and

delivering a quality product with consistent customer service throughout

international marketing reach to increase tourism seems very well

our portfolio of casinos. For example, we have been voted “Best Casino

suited for that market.”

in Denver, Colorado” three years in a row, thanks to the player loyalties

Japan’s parliament is expected to pass a bill establishing a framework

we can establish.”

for legalizing casinos before the end of 2014. The legislation has the

The company employs more than 1,600 people from 32 nationalities.

backing of Prime Minister Shinzo Abe, who is seeking to boost tourism

The experience and diversity of its people enables the company to cater

numbers in the country.

specifically to each local and tourist market, giving all its casino resorts

Century plans to focus on applying for two or three mid-size, regional

that special, local flavor and character.

IR’s to spread the economic benefits outside of Tokyo and Osaka.

“The year started out well for us, we have an internationally diversified

It believes its employment record fits well with Abe’s “Womenomics”

portfolio, which is profitable and growing despite a challenging economy,”

policy, which aims to bring more women into the workforce by improving

Hoetzinger said. “With one of the healthiest balance sheets in the casino

gender equality. The company currently has a 51 percent female workforce.

industry and a globally experienced management team that is flexible

It also has a successful track record of partnering with local investors

to undertake projects in any well-regulated casino market worldwide,

and companies, keeping the majority of profits in the host country.

we are specifically looking forward to opportunities in Japan and invite

Century says its casinos can help stimulate tourism by providing

local companies to contact us for potential partnerships!” l

Asia Gaming Briefings | October 2014

INDOCHINA 34

CAMBODIA

GROSS GAMING REVENUE

Roxy targets Vietnam, Naga eyes China mass

(Source: CIMB)

$0.4b

Y13

Y14E

Y15E

NAGACORP Cambodia’s biggest casino operator Nagacorp has stepped up its efforts to attract Chinese mass market players, while the country’s newest entrant, the Roxy Casino, is counting on Vietnamese traffic and online gambling for growth

Y13 GGR $325m

+25%

in an effort to recoup some of the lost funds. Meanwhile, Nagacorp says its new junket

H1 GAMING REVENUE

+27%

gambling law that will allow locals to gamble

incentive program has been paying off, leading to a jump in VIP revenue in the first half. Gross gaming revenue increased by 27 percent in the six months ended June 30, 2014 to $180.3

$180.3m

Y14 TOURISM ARRIVALS H1 2.2m

+5.2%

million. Net profit was US$67.6 million for 1H2014, 8 percent higher than the same period last year. Mass market revenue rose almost 20 percent,

while VIP revenue jumped 61.3 percent, a he Roxy Casino says it has turned

notable increase compared with Macau where

a “modest” profit since its soft

VIP revenue has been declining rapidly. VIP

opening on May 26th, with a grand

rollings gained 20 percent to $2.4 billion in

opening taking place a few months

the period.

later in August.

The company added 47 more VIP tables in July.

Owned by Australia-listed Cell Aquaculture,

Nagacorp recently purchased two Airbus 320

the casino is located on Highway 1, in Bavet

jets to further increase the number of overseas

City, some 87 km from Ho Chi Minh City

gamblers visiting its property, allowing them

in south Vietnam and 160 km from the

to fly gamblers from cities where there is

Cambodian capital Phnom Penh.

currently no direct link to Phnom Penh.

The company says its profit so far has been

The airline will, through collaboration with key

mainly due to sports betting during the FIFA

Chinese travel agents, increase flights

2014 World Cup, however, it said it has noted

to Phnom Penh, targeting mass market players

that a count of gamblers at tables showed an

with packaged accommodation at NagaWorld.

average of 550 patrons a day. The casino boasts 15 tables and 9 online tables

The Board declared an interim dividend of

offering baccarat, two-card poker, three-card

2.07 cents per share (HK$0.16), representing a

poker and four-card poker. It has a sports

payout ratio of around 70 percent of net profit

betting area and 14 slot machines.

generated for the period. The dividend will be

Roxy also launched its online casino on July 22,

paid on September 17, 2014.

which it sees as being particularly important in

The company’s flagship, NagaWorld, is

targeting the nearby Vietnamese population.

Phnom Penh’s only integrated hotel-casino

Out of Vietnam’s 92 million population, there

entertainment complex, and enjoys a 70-year

was a 39 percent internet penetration rate as

casino license that will run until 2065, as well

of the beginning of this year, while that figure

as a 41-year monopoly within a 200km radius

soars to 145 percent for mobile devices, it says.

of Phnom Penh that expires in 2035. Some

Gambling for locals is currently illegal in

analysts have said that exclusivity in one of

Vietnam and residents regularly flock to casinos

the most prime areas of the country may deter

in border areas with Cambodia, costing the

new entrants.

Vietnamese government an estimated $800

As at 30 June 2014, NagaWorld had 169 gaming

million in lost revenue a year. However, the

tables and 1,544 electronic gaming machines

government there is currently drafting a new

in operation. l

Asia Gaming Briefings | October 2014

China arrivals Y14 H1

+19.1%

TOURISM ARRIVALS Y20 ESTIMATES

7.5m

The Cambodian government has announced an advertising ban of gambling in local media including print, TV, radio or online. The Ministry of Information told media outlets they were not allowed to “attract Cambodians to the game by promoting betting on football, horse races and online games.” Legal action will be taken against any media that flouts the ban. The government is considering an overhaul of gambling legislation to legalize online betting to broaden its revenue base and attract investment from major U.S. and Macau operators. It may also consider allowing locals to gamble.

INDOCHINA 35

LOTTERY TAX REVENUE $24m TOURISM ARRIVALS 7m 5m

Y13

MYANMAR

Junta eyes gambling bill to promote investment After decades of economic and political isolation, the Myanmar government is seeking to boost tourism and attract foreign investment, with a law legalizing gambling potentially on the table

exchange, or place illicit bets on English football. That translates into a huge loss of potential revenue for Myanmar, which lags far behind

Y15E

Y20E

Foreign mobile network providers are due to start selling SIM cards and airtime by late 2014, with a possible jump straight to 4G, giving an expected boost to the number of internet users in Myanmar and facilitating a switch to an online lottery system. An estimated 70 percent of Myanmar’s population is estimated to gamble illegally, with games based on Thailand’s lottery and stock exchange, or illicit bets on English football.

its Asian neighbours in terms of economic growth due to economic sanctions on the former military regime. The country had gross domestic product per capita of $1,740 a year in 2013, putting it at 161 in a global ranking, according to International

the visa process. The system is available to 41

Monetary Fund figures, between Zambia and

countries, including southeast Asia and will

We haven’t issued any licenses for

Tanzania.

soon be extended to cover all European Union

casinos yet as it’s still considered

However, since the country’s regime allowed

countries.

a type of illegal gambling”, The

the formation of a civilian government in

The country is famed for its temples and

Myanmar Times cited U Myo Win

2011, tourism has been on the upswing and

culture, which are seen as major tourist draws.

Nyunt, a director from the Ministry of Hotels

economic sanctions have been eased. The

It also shares a long border with China and

and Tourism as saying recently.

country welcomed 2 million foreign arrivals to

also India. However, transportation and other

He added the Ministry of Home Affairs is

the country last year, about double the number

infrastructure is lacking.

currently working on a gambling law.

in 2012 and is targeting 5 million for 2015.

Myanmar is also revamping its creaking lottery

His comments followed reports on social

The possibility of legalized gambling in

system, with paper tickets to be replaced by an

media in the country that three and four-star

Myanmar was floated in the Myanmar Tourism

electronic system.

hotels along the borders were being allowed to

Master Plan, which was published in 2013 and

Aung Bar Lay is the Burmese name for the

operate foreigner-only casinos.

which envisions allowing casinos as part of an

monthly state-run draw that sells around 30

Although gambling remains illegal in Burma,

overall plan to attract around 7 million tourists

million tickets priced at 200 kyats (20 U.S.

some estimates suggest that around 70 percent

a year by 2020.

cents) each, and contributes $2 million a

of Myanmar’s adult population play illegal

To help achieve its arrival targets, the country

month in revenue to state coffers, once prize

games based on Thailand’s lottery and stock

has introduced an e-visa scheme to facilitate

money is doled-out. l

“

Asia Gaming Briefings | October 2014

AUSTRALASIA 36

AUSTRALIA

Aquis pitches to China market lodged and the six-week period for comments

Plans for the A$8.15 billion ($7.6 billion) Aquis Great Barrier Reef Resort, one of the world’s largest integrated resort projects, are full steam ahead

has now passed. Several infrastructure upgrades will be needed in terms of road, water, power and sewage improvements. Originally the plan was to create a community stadium in the resort, but the company acknowledged that it might not be the best place and is considering creating a community fund for projects in the city centre. In terms of positioning, Fung is clear that the Aquis will be at the forefront of the growing mass gaming sector, as compared with Crown Resort’s new casino at Barangaroo in Sydney

for example, which will provide a more urban

CASINO GAMING REVENUE (Source: CIMB)

Y13 Y14E Y15E

$3.5b $3.6b $3.7b

Crown Resorts has reached an accord amending its Melbourne Casino License, including permission to increase fully automated table game terminals from 400 to 440 and the number of gaming machines from 2,500 to 2,628. A Super Tax on interstate and international VIPs will be removed from FY15. Australia’s lotteries are likely to perform slightly better over the next five years given higher per capita spending on gambling activities, but sales are likely to still lag those of sports betting and horse racing, according to a study from IBISWorld. In 2014-15, revenue is estimated to increase by 1.6 percent, to reach $6.7 billion.

he project is the brainchild of Hong

entertainment offering targeting VIPs.

Kong-investment family dynasty,

Fung’s aim is to create a gaming hub, recognized

the Fungs. The family has been

the world over as a desirable destination in its own

vacationing in Australia since 1998,

right due to its privileged location. According to

buying their first property in Noosa on the

TripAdvisor’s TripBarometer study, Australia is

Sunshine Coast in Queensland.

in the top three desired destinations for Chinese

When they came across the site for the

travelers, and also topped the “must visit” list for

proposed Aquis resort and casino they knew

families. However, it is currently only 11th on the

it could be turned into an iconic destination

list of actual countries visited, signifying room for

if they could obtain a gaming license. The

considerable growth given the right incentives.

theatres, and convention and exhibition facilities.

340 hectare site is only 12 km from the major

Queensland Deputy Premier Jeff Seeney recently

The Queensland Government expects to make

international airport of Cairns, with direct

toured the Aquis site for the first time to

a final decision on whether the Aquis Resort

flights from Hong Kong.

encourage locals to make their submission on

will receive a casino license in 2015.

The land is the site of a failed marina project,

the EIS. Mr Seeney said the proposal had the

Critics of the proposed resort projects in

privately owned by the same individual since

potential to create up to 20,000 jobs in the long

Queensland, including that proposed by Aquis,

1947. It is now a sugar cane field and has been

term and it could serve as a “major shot in the

say they risk becoming white elephants if they

deteriorating for the last ten years. Environmental

arm” for the tourism and construction sectors.

don’t succeed in attracting Asian visitors as the

concerns mean that there will be no direct

“Predictions that this proposed resort could

local population is too sparse to support such

access from the property to the ocean and the

create over 3,700 new jobs during the first

large developments.

Great Barrier Reef, but guests will be able to

stage of construction, 3,500 during the second,

The latest tourism figures for Australia show

use other tour operators for trips to the Reef.

and up to 20,000 ongoing jobs is clearly an

strong growth in visitor numbers and spending

The Aquis group said it has identified a few

exciting prospect for Cairns and the Far North

from China, though overall tourism growth was

“quality individuals” to join what Justin Fung,

Queensland economy,” he said.

slowest in Queensland at just 1 percent in the

Tony Fung’s son, calls the Dream Team from

He said that the State Government was in “strong

year to March. Overall, visitor numbers from

all corners of the globe, including Las Vegas,

support” of the project, but it was subject to

China increased 14 percent to 697,000, nights

Macau, Singapore and Australia.

approval from the Coordinator General (CoG).

increased 2 percent to 29.9 million and trip

There has been a lot of publicity regarding the

Gaming facilities at the Aquis Resort would include

expenditure increased 15 percent to $5.1 billion.

environmental impact of the resort. A 4,000

750 gaming tables and 1500 gaming machines.

The Queensland government is offering three

page Environmental Impact Assessment, which

If it proceeds, the resort will also include eight

casino licenses. Two regionally and one for the

took one and a half years to prepare, has been

hotels, high-end retail shopping, an aquarium, two

downtown business district in Brisbane. l

Asia Gaming Briefings | October 2014

ADVERTORIAL 37

A taste of luxury in Australia

hen The Star entertainment precinct underwent an $870 million transformation that was completed in 2012, it positioned Sydney on the global socialite map. With a wide selection of shopping and entertainment options combined with stunning water vistas, the crowds gathered and they haven’t looked back. The culinary heart of the precinct was one of the many visions of the redesign – and today people flock to the epicurean district to tantalise their tastebuds with all kinds of global cuisine specialities. Chinese-themed The Century is one of the most popular eateries in town and it’s run by the eminent Wong family, who also own the Golden Century in Sydney’s lively Chinatown – a crowd favourite and late-night hangout since 1986. The Century is just one of many award-winning restaurants onsite, with other restaurants headed up by big gastronomy names such as David Chang (Momofuku Seiobo is one of Sydney’s most talked about fine diners) Teage Ezard (the best steak in town is found at BLACK by Ezard), Stefano Manfredi (Balla is a little piece of Italy with the addition of a picturesque Sydney view) and dessert king Adriano Zumbo’s contemporary patisserie to name a few. It’s not just the extraordinary food, but also an undeniably electric Sydney atmosphere that has people talking. The Star sits confidently in prime

real estate overlooking the stunning Sydney harbour and water views are fundamental to the design. Although the harbour vistas were always present, the revitalisation involved capitalising on them. Restaurants were developed in such a way as to take advantage of the viewpoints and several al fresco leisure areas were weaved into the exquisite design. Guests also have a choice of accommodation at The Star between two luxurious hotels – The Darling or Astral Tower & Residencies – with everything from single rooms to lavish suites and penthouses available. The Star is one of three luxury properties in Australia owned and managed by Echo Entertainment. The other two complexes are located in Queensland and next in line for a revitalisation is Jupiters Hotel & Casino, positioned on its own private island in the iconic gold Coast. The $345 million revitalisation, scheduled for completion in 2018, is inline with the transformation that saw The Star reconfigured to maximise on views and al fresco spaces. The highlights of the revamp include the founding of a sumptuous six-star luxury hotel tower and the development of a plethora of new restaurants, complete with exciting culinary concepts. The thriving entertainment precinct is already home to some of the best views of the famous coastline (luxury ocean terraces come with unsurpassed panoramas that capture the essence that is seaside Australia) and the complex already houses some of the best restaurants on the strip (Zen, an always-bustling eatery, has long held a reputation as being one

of the best Chinese restaurants on the Gold Coast), and this makeover will see the popular destination resort reach even superior heights. While contemporary enterprises suit selected locations, other projects shine in the ability to retain their former glory. Echo Entertainment’s third Australian property, Treasury Casino & Hotel in Queensland’s capital Brisbane, is one of those. The splendor about this property is the two heritage-listed Edwardian-Baroque buildings that encompass it. The two majestic structures overlook the serene Brisbane River and are separated by the beautifully maintained Queens Park. One building houses a magnificent hotel, complete with grandiose rooms that seem almost imperial because of the furnishing items purposely chosen to accentuate the history constituent of the location. The other building is the entertainment complex. This is where guests will find a range of perennially pulsating restaurants and bars. The Queensland Echo Entertainment properties are famed for their buffets and at Gold Coast’s Jupiters Food Fantasy is the place to line up for succulent seafood and all kinds of gastronomic delights. At Treasury’s Market Buffet guests are able to indulge in globally inspired cuisine prepared from fresh and local produce, with Friday and Saturday nights particularly popular for their seafood selections. For those who prefer to order a la carte, Marco Polo features a tempting Asian-inspired menu, while celebrity chef Luke Nguyen’s Fat Noodle is always abuzz with gastronomes sharing tasty Vietnamese fare, with scatterings of Chinese, Thai and Malay flavours to reflect Luke’s culinary ethos.

Asia Gaming Briefings | October 2014

AUSTRALASIA 38

GROSS GAMING REVENUE Pokies spend FY14 $692m

-2.4%

Casino spend Y13 $421m

+2.1%

Lottery spend $350m

+3.1%

SkyCity FY14 profit $99.7m

-22%

NEW ZEALAND

NZ gambling industry gets election reprieve New Zealand’s government will continue to be led by the National Party following a general election in September, which means the country’s gambling industry will likely escape the overhaul threatened by the opposition parties

tourism company Skyline Enterprises Ltd. The policy of gradually reducing the number of gaming machines (pokies) in pubs and clubs will also continue, a move which will benefit SkyCity. Its deal with the government to build and pay for a new international convention centre next to its existing hotel and casino in downtown Auckland allows it to install more pokie machines. It also won an extension of its license to 2048, 10 percent more gaming

tables and machines, and other concessions, owever,

the

anti-gambling

including cashless gambling.

undercurrent remains strong,

The “convention centre for pokies” deal

leaving little room for further

attracted a great deal of criticism at the

major expansion.

time, and opposition parties strenuously

Lawmakers in New Zealand have backed a bill that would make match-fixing a crime of “deception” under the Crimes Act. Offenders would be punished by a jail term of up to seven years in prison. The bill has passed its first reading in parliament and could become law by the end of the year. SkyCity Entertainment has boosted the Asian expertise on its board with the appointment of former Melco Crown chief development officer Richard Tsiang as a non-executive director. “Given his ethnicity, Richard will also bring to the boardroom valuable consumer insights into our prime client base, our international business strategy and digital developments in the gaming space,” Chairman Chris Moller said.

Prime Minister John Key’s National Party

opposed the passage of enabling legislation

increased its representation in Parliament

in Parliament.

from 59 seats to at least 61 seats and could now

A Labour/Greens government would have

govern alone. However, Key has said that it

banned internet gambling and tightened

will renew arrangements with its three small

controls on the gaming industry. The parties

support parties which will mean it controls 65

had earlier promised to reverse the SkyCity

seats in the 121 seat Parliament.

convention centre deal, but their official

The main opposition Labour Party has 32 seats

election manifestos made no mention of this.

The government currently funds a range of

(down two) after its worst electoral result in

New Zealanders spent more than $2 billion

services to help problem gamblers, including

over a hundred years, while Labour’s left wing

($1.6 billion) on gambling in 2013, down by

telephone counseling and has introduced

ally, the Green Party, also lost ground.

almost 19 percent in real terms from the 2004

tougher new obligations on operators to

There is now likely to be no significant change

peak.

maintain “good host” policies.

to New Zealand’s gaming laws. The freeze

Anti-gambling groups say non-casino pokies

In 2013, the National government announced

on the issuing of new casino licenses will

are the biggest problem, because they are more

a review of harm minimization systems to

continue. Currently N.Z. has six casinos, five

common in poorer communities with Maori

enhance protection for problem gamblers. The

owned and operated by New Zealand’s only

and Pacific Islanders three to four times more

review, which is not yet complete, is looking

listed gaming and entertainment company

likely to be problem gamblers.

at the benefits and costs of pre-commitment

SkyCity Entertainment Ltd.

There’s one pokie per 465 people in wealthy

systems and other types of harm minimization

The other license is held by locally owned

areas but one per 75 in poorer zones.

technology. l

Asia Gaming Briefings | October 2014

AUSTRALASIA 39

PACIFIC ISLES

CNMI TOURISM

Acrimony over Saipan license award continues While Best Sunshine International forges ahead with preparations for a $7.1 billion casino resort on the Northern Marianas island of Saipan, the acrimony that surrounded the license bidding process continues

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 would vote had the issue gone to a referendum,

est Sunshine, a unit of Hong Kong-

with the community divided. Some see the

listed Imperial Pacific beat rival

economic benefits, while opposition is being

bidder Marianas Stars Entertainment

fueled by reports of corruption.

to win the license in July.

Meanwhile, Best Sunshine continues to evaluate

JULY ARRIVALS 37,253

-5%

RUSSIA ARRIVALS

+59%

CHINA ARRIVALS

+57%

DFS Galleria in Saipan—now rebranded as T Galleria Saipan has held initial discussions with casino developer Best Sunshine about constructing a new $100 million plus hotel in Garapan on Saipan. DFS plans a 350-room luxury hotel in Garapan, close to the site formerly known as Samoan housing. However, they may need about two hectares of public land for the plan to move forward. Saipan’s first electronic gaming facility, Club C, is reporting brisk business and recently ordered an extra 18 machines. Club C opened in June and has about 120 machines out of a total permitted of 175. Ben Lee, CEO of Strategic Gaming Solutions, which invested $5 million in the venture, said so far business has been “fantastic.”

The award was dogged by controversy, with

one of three sites for the luxury casino resort.

both sides trading accusations of bias and

The company is eyeing the current site of the

Marianas Stars seeking a court injunction to

Mariana Resort in Marpi. Its public land lease

stop the whole process.

expires in four years, but the owners want a

However, despite promises made in its campaign

new 40-year lease.

to provide handouts to all residents in the form

Under the terms of the Best Sunshine license

of a $10 million contribution to be distributed

accord reached in August, the company has eight

through cash vouchers, Best Sunshine still

years to fully complete the project, though the

faces local opposition.

the agreement sets out a detailed timetable for

A group known as Citizens for a Cleaner CNMI

a phased implementation.

has distributed anti-casino pamphlets around

Within 24 months, it needs to develop an initial

the island, accusing the company of talking up

gaming facility consisting of a five-star 225

its share price and calling tax breaks given by

room hotel. Within 36 months, it has agreed to

the government unheard of.

construct an 800-room four or five-star luxury

The group had sought 16,000 signatures to force

hotel, a $100 million themed entertainment

a referendum overturning the decision. It’s

facility, a wedding chapel and 10,000 square

resort. An inconsistent power and water supply

unclear who is behind the campaign, though

metres of gaming space, among other facilities.

may create further challenges.

some sources said it was bankrolled by Hee K.

On completion, the complex will have at

The Marianas Visitors Authority estimates that

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

least 2,229 hotel rooms, 200 villas, 17,000

the 2,000-hotel room integrated resort could

The group claims Imperial Pacific profited by

square metres of gaming space, 23 food and

have a $1.8 billion economic impact to the CNMI

making statements about its intentions for

beverage outlets, 1,050-square metre fitness

if the hotel rooms are fully booked. The IR will

a casino on Saipan in February, before a bill

area, 1,900-square metre spa facility, and the

double the current available rooms. MVA projects

was even introduced to legalize casinos. 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 other direct

may find a serious shortage of labor to staff the

gaming businesses. l

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 40

GLOBAL GAMING EXPO 2014

Bigger, bolder, better

The 14th annual edition of the gaming industry’s trade show in Las Vegas will be its largest in five years, showcasing more than 450 exhibitors from around the world

Asia Gaming Briefings | October 2014

lobal Gaming Expo (G2E), taking

In addition to announcing new Hollywood

place from September 30 to

and other entertainment-themed slot

October 2 at the Sands Expo and

machines before they hit casino floors across

Convention Center in Las Vegas,

the country and world, G2E will feature

will feature the largest expo floor since 2008.

conversations with industry leaders on the

G2E delivers the most comprehensive look

most important industry topics, such as:

at the international gaming and hospitality

Skill-based gaming trends and consumer

industries to date with five days of exclusive

behavior; Capturing the millennial customer;

launches, trend forecasting, cutting-edge

and Big data and cyber security.

discussions and industry-leading speakers.

“G2E has always been an event ‘by the

The exhibition floor will feature everything

industry and for the industry,” said Mike

from gaming security to gaming devices to

Johnson, industry vice president at Reed

video gaming technology to slot ticketing

Exhibitions. “The improvements brought

innovations to marketing solutions. G2E

to this year’s seminars and exhibitions are

pavilions will demonstrate iGaming,

a direct response to meet the needs of the

entertainment, security and food and

diverse gaming industry.”

beverage options.

Global Gaming Expo (G2E) 2014 also

The G2E Conference will also unite the

introduces an expanded roster of networking

greatest collection of industry leaders in the

opportunities as part of a broader effort

show’s history this fall, including Sheldon

to provide attendees with more valuable

Adelson, Thomas Graf, Patti Hart, Jim

and unique opportunities, to make solid

Murren, James Allen, David Baazov, Jamie

business connections and share insights and

Odell, Pat Ramsey and Steve Wynn.

experiences.

“We’re thrilled to bring together an

Ron Rosenbaum, chief operating officer for

impressive group of industry leaders who

the AGA, commented, “Our delegates “Our

have helped to lead the growth of our

delegates have made it clear that they are

industry into the economic engine it is

looking for G2E to provide venues allowing

today,” said Geoff Freeman, president and

them to meet with industry colleagues

CEO of the AGA. “We look forward to hearing

to network and share best practices.

from each of our speakers about how we can

Our attendees will have no shortage of

strengthen gaming in the years to come.”

outstanding opportunities to network.” l

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 42 ALFASTREET

Showcasing innovation in booth design

ARUZE

BALLY TECHNOLOGIES

Building on proven success

Consolidation strengthens diversification

s announced in August, Scientific Games plans to acquire Bally in a $5.1

billion deal. The combination is expected to diversify its products and services offerings across distribution channels and platforms. Last November Bally completed its $1.3

lfastreet will have a new booth design

billion acquisition of SHFL entertainment, ruze, which has offices and facilities

and recently the company also closed on a

in North America, Australia, South

deal to buy an online social casino company

Africa, Macau and Japan, said it has seen

Dragonplay.

significant results this year in both the

At this year’s G2E Las Vegas, Bally will be

which it intends to use to showcase its

U.S. and Asia when it comes to installing

demonstrating solutions for the complete

most recent innovations and to provide

its Ultra Stack video on casino floors.

gaming floor for the first time in its massive

visitors with a teaser of its projects for the

In Asia, Aruze has a strong presence in Macau,

25,756-square-foot two-level booth – the

year ahead.

with products installed in Las Vegas Sands

show’s largest exhibit.

Celebrating its 20th anniversary, the company

group properties, including Sands, Venetian

Products to display include a wide range

has been working full swing on new machines,

and Sands Cotai Central. The company’s

of powerhouse brands, new trailblazing

including the new 32 inch touch-screen single

ETG, Lucky Sic Bo, is also common in Macau.

cabinets, proprietary table games, utility

terminal WIKY and the mechanical horse

Aruze has also become more aggressive in

products, electronic table systems, robust

racing machine, Alfastreet Royal Derby, which

targeting the European market, especially

systems lineup and mobile and online

is now in final testing stages.

France.

solutions.

Since last year’s G2E Las Vegas, Alfastreet has

At this year’s G2E Las Vegas, Aruze will

“This is a special G2E for Bally as it’s the first

carried out extensive updates of equipment in

introduce a third generation of its 6-station

time we’re demonstrating solutions for the

various casinos and will bring its upcoming

G-Link communal video game. This G-Link

complete gaming floor,” said Bally’s chief

new products, as well as the R4 4-station

game will focus on group player interaction,

executive officer Richard Haddrill. “We are

automated roulette to some premium

while offering numerous features and bonus

confident that our casino partners will see

locations in Asia.

events.

how they can ‘go all in’ with Bally.”

While Southeast Asia alone has generated

The company will also exhibit its G-Station

Bally Technologies recently won five out of

a couple of thousand gaming stations for

game, Lucky Big Wheel, which is an innovative

seven honors in the 2014 International Table

Alfastreet, the company also sees the U.S.

electronic version of the popular table game

Game Awards. Bally’s senior vice president

as an extremely important market because

with heightened levels of interaction.

of table and utility products Roger Snow.

of its gaming infrastructure and influence

To put a new twist on some of Aruze’s existing

“These awards are recognition of the hard

on other regions.

G-Station games, Aruze will also display

work by our talented engineers to create

At this year’s G2E Las Vegas, Alfastreet

Shoot to Win Craps at this year’s show.

products that meet the needs of our casino

will be showcasing its special addition of

Also available will be over 50 additions to

customers. We are committed to providing

the R4 4-station automated roulette, the

the G-Series line, including titles with newly

operators with products designed to increase

R8 8-station automated roulette and some

created play mechanics, bonus features, and

player excitement and revenues to deliver a

projects for the year ahead. l

appearances. l

strong return-on-investment.” l

ALFASTREET WILL BE AT STAND 3639.

ARUZE WILL BE AT STAND 1253.

BALLY WILL BE AT STAND 1126.

for the world’s biggest gaming show,

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 43 FUTURELOGIC

JCM

Beyond transactions to connection

Opening a new chapter with new technology

iven the legacy of JCM Global as a peripheral supplier trusted globally for its secure transactions, the company will showcase

thought leadership by taking the gaming industry beyond transactions to connections. JCM is aggressive in all markets it targets for product placement but it highlights Macau as “an excellent market for JCM with both bill validators and printers”. The company is optimistic about expanding in this market on the Cotai Strip. Since JCM’s success at last year’s G2E Las Vegas, this year’s G2E Asia and AGE shows, the company has reported tremendous and growing interest in its iV8 table game bill validator because of its speed, accuracy and strengthened security. For instance, the Star Casino in Sydney currently has iV8 approved for a trial on its floor. Other JCM products are also moving from the tradeshow floor and into trials in Australia, Macau and Singapore. Prior to this year’s G2E, JCM finalized the acquisition of FutureLogic and the deal’s closing is expected to strengthen JCM’s edge as a leading supplier of peripheral products to several industries, including gaming. JCM’s exceptional line of peripheral component products now includes

utureLogic, which is opening a new chapter in its 15-year history after the acquisition by JCM Global, plans to demonstrate at G2E

Las Vegas how casinos can benefit by adding the full power of its TITO

world-class currency validation technology; innovative printing

technology to tables.

technology by FutureLogic and Nanoptix, such as PromoNet and

Ticket-in, ticket out technology (TITO), a technology that enables

PayCheck 4, as well as groundbreaking system solutions like DNA,

casinos to link promotional couponing across slots, tables and online

TicketXchange and Tickets2Go.

operations, has long been a signature of FutureLogic. However, this

“This is an exciting day for JCM,” JCM global vice president of sales

year the company has decided to bring its “After TITO” technologies,

Mark Henderson commented on the acquisition. “With this acquisition

an advanced version of the technology, to the show.

finalized, we are able to expand our portfolio to further increase our

The TableXchange TITO printer/scanner, for example, helps casinos

level of customer service. Now we are better equipped than ever to

identify valuable crossover players, and enhances the casino/property

provide industry-leading solutions to our customers in the diverse

experience.

industries we serve around the world.”

Also showing will be the couponing solution PromoNet. The system

JCM will showcase a wide range of exclusive transaction technologies

allows operators to identify and reward high-value players instantly,

that not only help operators conduct business transactions, but

eliminating delays.

also build a personal connection. The highlight - Dynamic Network

Last but not least, FutureLogic will also display the GEN3 Evolution, a

Applications (DNA) system - provides real-time health and event

new generation of TITO printer with capacity to eliminate paper waste

monitoring of all peripheral components used inside an EGM, utilizing

and maximize printing speed.

either a wired or wireless connection to a local server Also on display

FutureLogic takes pride in holding the majority share of the Asian

will be the iVIZION and iPRO bill validators; the iV8 table game bill

market, particularly in Macau, however it has also been expanding

validator; a collection of bill validators; advanced printer and couponing

in other areas. The company brought TITO to table games in Latin

technology for a variety of applications in gaming including the

America and was selected as preferred supplier of TITO printers for

advanced and award-winning PayCheck 4, GEN2 Universal and GEN3;

three casinos in the Russian Gaming zone Azov City, including Casino

and JCMedia, a total solution for digital media, including displays,

Shambala, Casino Nirvana, and Oracul Casino.

controllers and production content capabilities. l

Plans for the acquisition by JCM Global were finalized last month. l

JCM WILL BE AT STAND 3633.

FUTURELOGIC WILL BE AT STAND 4753.

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 44 BMM

COLOSSUS BETS

Record year with global expansion

The giant at the door

Getting ready for Japan

perator of the world’s biggest bet, ‘The £10,000,000 Colossus’, will participate

in the world’s biggest gaming show for the first time.

CPI

Since last year, Colossus Bets has signed

s Crane Payment Innovations (CPI) was formed in December 2013 after

the Crane Co. purchase of MEI, this year is

MM will be bringing staff and executives

sixteen B2B partners, along with its pools

the first time that MEI and Crane Payment

from its 13 global locations to this

already live with BETDAQ, Betfair, Boylesports

Solutions products will appear on the same

year’s G2E Las Vegas to celebrate its global

and Sportsbet.io. Although Colossus Bets

booth at G2E.

expansion with both new and current clients

values football (soccer) as the “only truly

While CPI pursues a diverse range of markets

in the global gaming market.

global betting medium”, it also plans to offer

worldwide, the company has a focus on Asia

At this year’s show, BMM will be promoting

continent-specific sports, such as US sports

Pacific. CPI sees tremendous potential for

its gaming technology compliance and testing

for the North American market.

growth in Macau and foresees that “Tokyo

services for both land-based and online,

In Asia, Colossus Bets has partnered with

may become one of the biggest casino

such as its training and education program,

Ladbrokes Australia and offers multi-million

markets in the world” if Japan legalizes

the BMM Academy, as well as its new “BMM

AUD prizes every race day commencing with

gambling.

Certified” logo.

the Australian Spring Carnival of Horse

To date, CPI has a strong presence in all

Martin Storm, BMM’s president & CEO

Racing. The company also makes its B2C

jurisdictions in Australia and New Zealand

commented: “2014 has been a record year for

website available in both simplified and

particularly in New South Wales, Queensland

BMM globally. We opened offices in Bologna

traditional Chinese and is in conversation

and Victoria. The company also takes pride

and Vienna earlier this year and have recently

with a number of Asian-based operators

in its large share across Asia with major wins

added 10,000 square feet to our testlab in

in relation to the distribution of its pools

in Singapore, the Philippines and Macau.

Las Vegas.”

products.

CPI not only sees G2E Las Vegas as “an ideal

BMM takes pride in its largest footprint of

At this year’s G2E Las Vegas, Colossus Bets

platform” to showcase its robust product

Compliance Testlabs in Asia including Macau

will be demonstrating its flagship product The

portfolio, but also intends to highlight its

and Singapore and its Compliance Testlabs

£10,000,000 Colossus and other lottery-sized

recent partnership with TransAct at the

network indicates a growing testing demand

sports jackpot pools including Fractional

show. Such partnerships allows operators

for online, training and operator services

Cash-In technology.

to purchase both note acceptors and printers

driven by an increasing number of regulated

“This is our first time at G2E,” Bernard

in one go.

gaming jurisdictions around Asia.

Marantelli, founder and CEO of Colossus

At this year’s show, CPI will be exhibiting

Kirk White, executive vice president &

Bets said, “With the USA already flicking the

the CashCode one and CashCode one 3000

general manager, Australia & Asia Pacific

switch at a state level to online lottery and

note acceptors, the Money Controls Ardac

added: “The Asian manufacturers appreciate

intrastate gaming, we expect lottery, fantasy

Elite note acceptor and Universal Hopper and

the convenience of working with a lab and

sports and land based casino operators and

several MEI products, including SC Advance,

testing experts in their same language and

even sports right holders, to be forming a

the EASITRAX Web cash management system

time zone.” l

line to talk to us.” l

and the new SCR note recycler. l

BMM TESTLABS WILL BE AT STAND 2423.

COLOSSUS BETS WILL ATTEND THE SHOW AS A GUEST.

CPI WILL BE AT STAND 4747.

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 45 DLV

GCA

GLI

Latvia company targets new markets

Wrap up 25th anniversary celebration

Cashing on the NEWave

April,

GCA

acquired NEWave,

a compliance and efficiency software supplier whose solution is used by more than 250 casinos worldwide. GCA takes pride in NEWave’s

broad

portfolio of software solutions that help

LV sees G2E Las Vegas as a way to find new partners and clients for an

opportunity to promote its products further

casinos manage compliance, aming Laboratories International (GLI)

streamline operations, increase efficiency

is wrapping up a year-long celebration

and protect the bottom line.

of its 25th anniversary and is opening a new

At this year’s G2E Las Vegas, GCA will exhibit

to different markets.

chapter that goes beyond testing.

its flagship products including a multi-

At this year’s G2E Las Vegas, DLV will be

As a test lab, GLI’s mission is to help suppliers

functional suite of full service kiosks Xchange

exhibiting its cabinets, jackpots and multi-

get their products on the floor and to help

Kiosks, NEWave Anti-Money Laundering

games including Dragon Jackpot, and the

regulators guarantee compliance and public

software, NEWave Audit Manager, and

most recent Diamond Games Premium 8

trust. Their offering also includes IT security

gaming patron credit bureau Central Credit

among others.

audits and exclusive tools.

among others.

“Europe is in deep crisis and coming out of

GLI is focused in particular on the global

“We are delighted to showcase our total

this crisis might be a lengthy and painful

trend of convergence, under which the game

suite of cash access solutions and related

process,” Julia Barbakadze, advertising

and the system, whether land-based or

services, including NEWave services, at this

manager of Latvia-based DLV previously

online, are converging, from a technological

year’s Global Gaming Expo,” commented

told AGB.

standpoint.

David Lucchese, executive vice president of

She added: “Regions such as Latin America

To date, the company has grown to 21 offices

client operations.

and Asia Pacific, on the contrary, follow

on six continents with 850 plus employees

GCA also eyes opportunities in the East as

the course of active development, and

serving more than 455 jurisdictions.

Cotai Strip in Macau and Entertainment City

these regions are receiving significant

In Asia Pacific, GLI takes pride in its strong

in Manila will bring more casinos to Asia.

investments.”

and growing presence in Australasia, with

Currently GCA provides Galaxy Entertainment

Despite the crisis in Europe, DLV has installed

three full service labs in Australia (in

Group casinos with credit card cash advance

more than 500 machines in Latvia and Peru

Adelaide, Melbourne and Sydney) and another

and debit card withdrawal services. Patrons

where DLV has an office.

lab in Macau.

at GEG’s casinos are also using QuikCashPlus

In Asia, DLV focuses on the Philippines,

Recently the company added 18 new staff to

Web, GCA’s web-based service that intends

Cambodia and Singapore but the company

its three labs in Australia in order to keep

to streamline transactions and improve

also keeps its eyes on other Asian countries. l

pace with growing demand. l

customer service. l

DLV WILL BE AT STAND 3225.

GLI WILL BE AT STAND 4430.

GCA WILL BE AT STAND 4440 AND 1435.

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 46 GTECH

GPI

Taking Gemaco front and centre

INTERBLOCK

All Together in Las Vegas

Building momentum

ith the “All Together GTECH” theme, GTECH will present its comprehensive

gaming portfolio at this year’s G2E Las Vegas. At the show, GTECH will showcase a full array of games, cabinets, systems and interactive solutions, including an expanded library of True 3DTM titles for the North American market and beyond. For the North American market, GTECH provides a diverse portfolio of core games with a balanced mix, including the evolution of perennial successes, new and innovative

concepts, and games specifically designed his year’s G2E Las Vegas will be the first

for high denomination play.

show for Gaming Partners International

GTECH will exhibit a number of additions

(GPI) since the completion of its acquisition

to its True 3DTM game library including e

of Gemaco.

Bejeweled 3D, Dragon’s Temple 3D, Dreams

In July, GPI finalized the purchase of Gemaco

of Asia 3D and Aladdin’s Fortune 3D.

Inc. and GemAsia LLC, including their

Also on display will be GTECH’s new

operations in the U.S. and in Asia. As a result,

community games from its licensed brand

GPI now offers its customers the full line of

library such as Bejeweled Community and

Interblock sees Asia as a strategic part

Gemaco-branded playing cards among its

Zuma Adventures, as well as DEAL OR NO

of its business and currently its products

product line-up.

DEAL franchise, with the newest version in

are installed in The Philippines, Vietnam,

At the show, GPI will exhibit its table game

the series, DEAL OR NO DEALTM Las Vegas!.

Singapore, Malaysia and Macau.

product range, including its B&G chips,

GTECH will also showcase a range of products

At this year’s G2E Las Vegas, Interblock will

plaques and jetons and its Paulson and Bud

specifically for the Latin American market

focus on nurturing customer relationships

Jones chip brands.

including a jackpot PERUVIAN RICHES, a

and re-modeling the way the company

The company will also showcase several chip

range of GALAXISTM modules for all areas of

handles service.

security features designed to help customers

casino management, a jackpot system JP2Go

Interblock will showcase its G5 Product

better protect their casino currency from

and a slot system SYSTEM2go.

line, including the smallest 5-seat product

counterfeiting and other threats.

For international customers, GTECH is

available in the market, the G5 MiniStar

Also on display will be a new injection-molded

featuring linked products such as ACTION

Roulette, its new LED signs replacing previous

chip line to its B&G brand, with new plaque

JACKPOTSTM, brand-new game suites for the

static products, the G5 IB-HG 55” LCD with 05

materials and new standard plaque designs.

diversityTM multi-game as well as a selection

G5 Play Stations and the G5 Starbar product.

“With our wide range of table game products

of new core games.

“Every year it is our goal to step up the quality

and our unmatched casino currency portfolio

There will be a social area called the Orange

of the products showcased in our booth,

on display, we look forward to G2E and

Lounge, where GTECH’s customers can

Interblock CEO Tom O’Brien said. “Attendees

getting the industry’s feedback on these new

connect with their favorite social networks.

will experience all new products designed to

products,” commented GPI vice president of

GTECH will also do live updates through its

fit on any size casino floor, entertain their

sales Rob Jackson. l

social media and blog. l

players and maintain ROI.” l

GPI WILL BE AT STAND 4040.

GTECH WILL BE AT STAND 1264.

INTERBLOCK WILL BE AT STAND 1439.

Asia Gaming Briefings | October 2014

nterblock is taking pride in its successful G2E show in Asia and seeks to keep the

momentum going in Las Vegas.

G2E 2014 SPECIAL REPORT 47 IGT

INSPIRED

Exciting year with GTECH tie up

Expanding virtual sports

KONAMI

Just for Asia

abby Gill, senior VP of international sales at IGT has described 2014 as “very

exciting” for the company, highlighting the merger agreement with Italy’s GTECH as “the biggest announcement of last year.” GTECH and IGT have entered into a definitive merger agreement pursuant to which GTECH

fter success in China’s lottery market, Inspired Gaming Group now plans to

onami Gaming said customers were given a preview of some of its new

products designed specifically for the Asian

expand its Virtual Sports products across Asia.

gaming market at G2E Asia and in Las Vegas

will acquire IGT in a transaction valued at $6.4

While Inspired sees all of Asia “as a significant

they will now get a more complete view of

billion. Gill believes the merger will “lead to

driver of growth for the gaming industry,”

the range.

an exciting new chapter for the company.”

the company is focused on China and the

The company said it takes pride in its

While IGT sees each market as unique, the

Philippines.

extensive study of the preferences of the Asian

company highlights Macau, Singapore, and

Take “Lucky Racing” for example: the Virtual

markets and its market-specific products

Korea as of paramount importance.

Motor Racing rapid draw lottery game has

fully comply with gaming regulations in the

In view of the historical prominence of

been live in 1,700 lottery-betting shops in

region, including Macau’s version 1.1. Konami

pachinko in Japan, Gill believes that there

Hunan since 2011. Sales have totaled more

is planning to launch new product next year.

will be “a great opportunity for success there

than $132 million since launch and bets on

In Asia, Konami’s main targets are Macau

with slot machines” if legislation on gaming

Lucky Racing now make up 36.3 percent of

and Singapore. Given the growing number

is passed.

all lottery sales in Hunan Province.

of installations in Macau, the company is

To unlock business potential in Asia, IGT has

The company’s Virtual Football game, also

optimistic about its forecast for the Southeast

also announced two distribution agreements

known as “E-Ball”, is also now live in Jiangsu

Asian market and beyond.

with LT Game for the Macau market and with

Province – the largest sports lottery market

At this year’s G2E Las Vegas, Konami will

Matsui for the South Korean market.

in China with a 14.6 percent market share.

feature more than 100 Konami games

At this year’s G2E Las Vegas, IGT looks forward

With “cross-channel entertainment” as

running its comprehensive SYNKROS casino

to the debut of the extension of its Wheel of

the key theme of 2014, Inspired intends to

management system, including Konami’s

Fortune brand and will showcase several

showcase this growing sector at the show

new ROKUREEL 6-reel product.

new spins on this title, including Wheel of

with Virgo – its Remote Game Server – and

Konami will also showcase new standard game

Fortune Jackpot Paradise, a refreshed version

a variety of other games.

themes such as King of the World, which can

of the time-tested brand, on its CrystalCore

Inspired, which expects online and mobile

be used on Podium Upright, Podium Slant

hardware.

expansion in Asia to be vast in 2015 and

and Podium Goliath cabinets.

In addition, there will be a dedicated section

beyond, said it will exhibit its new mobile

Also on display will be Rapid Revolver, a new

at the company’s booth for IGT’s portfolio of

HTML5 games, such as White Knight and

premium product for Asian markets.

culturally enriched content, including games

Goddess of the Amazon.

Eduardo Aching, vice president, international

developed specifically for the players in the

Also on display will be its 11th Virtual Sport

sales commented: “G2E is our opportunity to

Asia Pacific region.

‘Virtual Basketball’, and its Multi-Screen

meet with customers from across the world,

Also on display will be its new tokidoki video

Virtual Football product, new slot games for

and provide a glimpse of some of the latest

slot, which is anticipated to resonate with

its Video Lottery (VLT) market and multi-

products that they can expect for today,

players particularly in Macau and Singapore. l

game Sabre Synchro slant. l

tomorrow and beyond.” l

IGT WILL BE AT STAND 2139.

INSPIRED WILL BE AT STAND 2016.

KONAMI WILL BE AT STAND 1154.

Asia Gaming Briefings | October 2014

G2E 2014 SPECIAL REPORT 48 MATSUI

Expanding to meet demand

LT GAME

NMI

Seeking new markets

A toast for Canada in Las Vegas

ith it’s market share in Macau increasing, LT Game is now looking

to expand to other Asia Pacific markets and North America. Recently, the company signed a strategic partnership agreement with Ainsworth Game Technology, which will distribute its products in the clubs of New South Wales in Australia. LT also has an accord with IGT to distribute products in North America.

On 30th June, 2014, LT Game’s Live Table Multi atsui has recently launched new RFID

Games System was granted approval from the

chips and won the bidding to supply

Nevada Gaming Control Board (NGCB) for

Mi seeks to showcase the fruits of its expansion in Canada during a sponsored

cocktail reception at one of the world’s largest gaming shows.

Kangwon Land, the largest casino in South

installation throughout Nevada in the U.S.

Korea.

LT Game said it values G2E Las Vegas as a

The company said its Matsui chips are

platform to introduce its products to North

now used by most major casinos in Asia

American customers and plans to exhibit its

and Oceania and it has been expanding its

new LT Live Table Game with a new cabinet

manufacturing capabilities to meet demand.

and touch screen, as well as new games,

Matsui will introduce chip security “M.G.

including LT Power Tournament on Live Table

Eye”, striking new marble color chips and

Multi Games System and LT Power Dragon.

“Premier Decal Chips” in Plaque style.

LT Game will also showcase its newly

Matsui’s group company, Las Vegas-

developed E-baccarat Table that allows 5-10

based Matsui America Inc. which has been

players to play on the table simultaneously

expanding especially in South America, will

and others to play from betting terminals.

host customers from America and beyond

Also on display, will be its Intelligent Cash

at the show.

Access Solution. This cash and ticket handling

At this year’s G2E Las Vegas, Matsui will

solution differentiates itself by its reduced

exhibit its latest product from Matsui Chips,

security risks, lower costs, fewer errors on

Matsui Synthetic Layout and other table

cash handling and the functionality of putting

accessories. l

multiple notes in at the same time. l

company’s international portfolio. Also, its

MATSUI WILL BE AT STAND 2835.

LT GAME WILL BE AT STAND 3816.

new, larger facilities. l

Asia Gaming Briefings | October 2014

NMi has seen strong business growth in Canada and has been investing to establish a presence there across all provinces. It’s sponsoring the Canadian Gaming Association’s (CGA) G2E Cocktail Reception. NMi positions itself as a customer-driven service provider and says it’s servicing an increasing number of customers within Asia and delivering content in Asian markets. NMi said it’s committed to making resources more available worldwide to ensure its customers are fully equipped for the next major push in these new emerging markets. In Europe, the Republic of Srpska, Croatia, and Bulgaria are the latest jurisdictions to have been accredited to NMi, and that enriches the headquarters in the U.K. has expanded into

G2E 2014 SPECIAL REPORT 49 NOVOMATIC

“We have done our homework”

SEGA SAMMY

Bring on the fun

TCSJOHNHUXLEY

Gaming Floor Live in Las Vegas

ovomatic, which reported the highest turnover in its 34-year history in the

first half of this year, sees G2E Las Vegas as a must attend event for the international gaming community. Revenue for the company was up 15 percent, while it added 1,700 employees. No fewer than 10 NOVOMATIC companies from across the region will be represented

at the show. Novomatic will showcase new gaming attractions, including cabinets, games, game-mixes, systems and jackpots.

CSJOHNHUXLEY will launch new Gaming Floor Live platform and related products

at this year’s G2E Las Vegas.

Highlights include NOVO LINE Interactive

The highlight - Gaming Floor Live - collects

games presentations, LINE Interactive

real-time data from all table devices and

multi-game mixes, and The NOVOMATIC Reel Tournament among others.

helps operators deliver opportunities to ega Sammy Creation sees a growing focus

increase revenues as well as highlighting non-

on the entertainment aspect of casinos

optimal game play and dealer inefficiency.

and so aims to up the fun aspect of gaming

TCSJOHNHUXLEY takes pride in the first

and the innovative hybrid jackpot JEWELS

machines to lure more customers and help

innovation of its kind in the table game sector

FACTORY, Lotus Roulette as well as Panther

grow the industry.

with over 900 + tables installed in Macau.

Roulette.

Hisao Oguchi, CEO commented: “Our strength

TCSJOHNHUXLEY will also exhibit its

Also on display will be electronic live games,

lies in our ability to provide the highest forms

established portfolio such as the benchmark

such as NOVO LINE Novo Unity and a range of

of entertainment possible. This is made

Chipper Champ 2, Saturn Roulette wheel and

online and mobile applications and content

possible by utilizing all of our resources,

e-FX display products which are connected

across multiple channels.

leading technology and rich experience and

to the new platform.

“G2E Las Vegas, as the major North American

sensibilities cultivated from both Sega and

Also on display will be Floor Wide Event and

gaming show, is a traditionally important

Sammy. We have applied these assets to the

Mystery Progressive platform GFL Bonusing

event for the NOVOMATIC Group”, said

development of gaming machines.”

Solutions and display solutions for live

Jens Halle, managing director AGI and CEO

At this year’s G2E Asia, Sega Sammy unveiled

gaming GFL Media.

NOVOMATIC Americas.

its three games, including Sic Bo Bonus

Cath Burns, Group CEO said, “We are very

“We have done our homework, listened

Jackpot, Baccarat and Triple Wheel.

excited about the launch of Gaming Floor Live

closely to our customers’ needs and their

As Sic Bo Bonus Jackpot has received approval

and the impact it will make to our customer’s

guests’ wishes and are now in a ‘green light’

from BMM against GLI standards, Sega

businesses. This is the first time it’s possible

position to present an initial and growing

Sammy’s preparation for the sale of Sic Bo

for table game products to communicate with

U.S. portfolio that also caters to special

Bonus Jackpot is underway. Sega Sammy says

one system to provide vital information such

market requirements such as the Illinois

it will exhibit at the Macao Gaming Show and

as reporting, analytics, optimization and

VGT sector.” l

hopes to make a good impression. l

accountability.” l

NOVOMATIC WILL BE AT STAND 2653.

SEGA SAMMY WILL ATTEND THIS YEAR’S G2E LAS VEGAS.

TCSJOHNHUXLEY WILL BE AT STAND 4433.

Novomatic will also exhibit its jackpots and roulettes, such as the Magic Joker Jackpot

Asia Gaming Briefings | October 2014

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Suite 1104, 11/F, First International Commercial Centre, 600E Av. Dr. Rodrigues, Macau SAR, P.O. Box 1139. | October 2014

CALENDAR OF EVENTS 52

OCTOBER BIG AFRICA SUMMIT 6-8 October 2014 Emperors Palace, Johannesburg, South Africa www.bigafricasummit.com

EIG

21-23 October 2014 Arena Berlin, Germany www.eigexpo.com

BALKAN ENTERTAINMENT & GAMING EXPO

NOVEMBER INTERNATIONAL MASTERS OF GAMING LAW (IMGL) AUTUMN CONFERENCE 5-7 November 2014

Florence, Italy www.gaminglawmasters.com/conference/ autumn2014

RUSSIAN GAMING WEEK SOCHI 5-6 November 2014 Sochi, Russia www.rgwsochi.ru

21-22 October 2014

6TH ANNUAL MALTA IGAMING SEMINAR

Inter Expo Center, Sofia, Bulgaria www.balkangamingexpo.com

11-12 November 2014

MOBILE & TABLET GAMING SUMMIT USA 27-28 October 2014 Bally’s, Atlantic City, New Jersey, USA www.mobilegamingusa.com

INTERNATIONAL ASSOCIATION OF GAMING REGULATORS (IAGR) ANNUAL CONFERENCE 29-31 October 2014

Marriott Downtown, Philadelphia, USA www.iagr.org

The Hilton, Malta http://www.maltaigamingseminar.com/

11-13 November 2014 Buenos Aires, Argentina www.monografie.com/sagse_bsas/ingles/ index.php

MACAO GAMING SHOW 18-20 November 2014

The Venetian Macao Resort, Macau www.macaogamingshow.com

NATIONAL ASSOCIATION FOR GAMBLING STUDIES (NAGS) 24TH ANNUAL CONFERENCE

Marriott Downtown, Philadelphia, USA www.theiaga.org/iaga-summit

Jupiters Hotel Gold Coast, Queensland, Australia www.nags.org.au

26-28 November 2014

SUMMIT OF IGAMING MALTA

2-3 December 2014 New Mexico, USA www.egghart.com

FEBRUARY 2015 ICE TOTALLY GAMING 3-5 February 2015

ExCel Conference Centre, London www.icetotallygaming.com

MARCH 2015 IGAMING ASIA CONGRESS & MOBILE GAMING & SOCIAL CASINO SUMMIT 17-19 March 2015

Grand Hyatt, Macau www.igamingasiacongress.com

MAY 2015 G2E ASIA

19-21 May 2015 The Venetian-Macao-Resort-Hotel, Macau www.g2easia.com

30 October - 2 November 2014 InterContinental Hotel, Malta www.maltaigamingsummit.com

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Asia Gaming Briefings | October 2014

TRIBAL GAMING REGULATORY UPDATE

SAGSE LATIN AMERICA

INTERNATIONAL ASSOCIATION OF GAMING ADVISORS (IAGA) ANNUAL CONFERENCE 28-31 October 2014

DECEMBER

ALL ASIA DEALERS’ CHAMPIONSHIP M AY 2015

FROM MACAU TO THE GAMING COMMUNITY

INTRODUCTION

PURPOSE

A REGIONAL TOURNAMENT providing an international platform for croupiers to showcase their talents and skills

TO HONOR THE FRONT LINE OF THE INDUSTRY and recognizes dealers’ achievements on a global stage

DEALERS TO BE JUDGED IN 3 GAMES:

Baccarat, Roulette, Blackjack

TO BRING THE INDUSTRY TOGETHER and forge relationships between local associations, government regulators, and stakeholders

F O R M O R E I N F O R M AT I O N W R IT E T O: E N Q U I RI E S @A GB RI E F. C O M

AGBRIEF.COM

OPINION 54

LAST WORDS

Mass is the new gold *Sharon Singleton

ost have been describing the recent

Table capacity has been running at about 50 percent for

downturn as a blip in a more positive long-

VIPs and many mass tables are also closed, indicating

term picture, or as a period of structural

any supply constraint is linked to this lack of hotel

transition for Macau before new supply

capacity and not, as sometimes cited, due to table caps,

comes on line to kick start growth.

says Morgan Stanley.

While the overall story linked to massive unmet demand

However, recently red flags have been raised. Although

in China remains intact, some are now acknowledging

the longer term trend to a more mass market dominated

that the bump in the road might prove to be a larger

market is expected to be profitable for operators, the

pothole than initially thought. Gross gambling revenue dropped for the first time in five years in June, mainly due to the distraction of the FIFA World Cup. But that decline continued into July and August, revealing deeper than expected cracks in the VIP market. China’s President Xi Jinping has been on a wide-spread anticorruption crackdown that has

HEADING INTO CHINA’S GOLDEN WEEK HOLIDAY, ONE OF THE MOST IMPORTANT PERIODS FOR GAMBLING REVENUE IN MACAU, ANALYSTS ARE BEGINNING TO SOUND A LITTLE MORE CAUTIOUS IN THEIR PREDICTIONS FOR FUTURE GOLD IN THE WORLD’S BIGGEST GAMBLING ENCLAVE

had a severe impact on luxury

* Managing Editor, AGB

addition of so many new hotel rooms may not spark the immediate gold rush some investors had been hoping for. Analysts point to the potential negative impact on pricing from the additional supply at a time when costs, and in particular labor costs, are rising and nearterm demand less assured. After tripling over the past three years, Macau’s mass table yield

spending on the mainland, affecting everything from

peaked at $12,900/day in 1Q14. In 2Q14, mass table yield

liquor sales to sharks’ fin soup, with high-rollers shying

declined 3 percent quarter on quarter to $12.300/day,

away from conspicuous consumption.

according to Deutsche Bank, which sees a 5 percent fall

There has also been a general slowdown in the economy

in mass table yield in 2015 and 9 percent in 2016. The

and the property market, which has had an impact on

new resorts scheduled to open are likely to need between

junket operators’ ability to collect gambling debts as

6,000 and 8,000 employees each and with staffing costs

punters have not been able to readily monetize assets.

rising at more than 10 percent a year that could result in

As a result, Morgan Stanley sees VIP growth down 16

a severe margin squeeze.

percent in Q3, down 26 percent for Q4 and falling 24

The labor shortages in Macau, where unemployment is

percent in Q1, 2015 and warns that the VIP market may

running close to zero, coupled with increasing activism

be saturated in Macau. Deutsche Bank, which cut its

on the part of employees seeking higher wages means

overall forecast for 2015 GGR to 1 percent, sees VIP down

those pressures are unlikely to abate any time soon.

5 percent next year.

Then there’s the changing tastes of the mainland Chinese

The importance of the VIP sector in Macau to overall

tourist and an increasing choice of integrated resorts

revenue has been declining from its peak of nearly 80

opening around Asia. While most studies show that the

percent in Q2, 2011, to about 63 percent at the end of

Chinese still prefer locations within two to three hours

Q1, in favor of the more profitable mass market sector.

flying time, there is evidence pointing to a growing

The conventional wisdom has been that new supply

number of more adventurous, independent travellers,

coming on line from the multi-billion dollar projects in

favoring destinations further afield, such as Las Vegas

Cotai will accelerate that trend providing more affordable

to name but one.

hotel rooms for the Chinese mass market, which has

As a result, the current transition-phase in Macau may

been priced out of Macau.

be longer and more painful than first expected. l

Asia Gaming Briefings | October 2014