April 2012 • MOP 30 • ISSN 2070-7681
A Decade Flies By Ten years on from the opening up of Macau’s casino market
In the Hunt The New Breed IGT Asia’s Mark Michalko CLSA on the Philippines
US Online Gaming Market Outlook: Chipping Away
INSIGHTS - Michael Mecca | Singapore Junkets: Incremental Entry Experience is Everything: Galaxy Macau’s High-Limit Slots | Matsui: Growing Grasp | Well Stocked: USPC
CONTENTS April 2012 A Decade Flies By
4 Ten Years of Change
12 In the Hunt 12 16 The New Breed 22 Growing Grasp
24 Experience is Everything
28 Incremental Entry
32 Well Stocked
34 INSIGHTS – Michael Mecca
38 Chipping Away
44 Regional Briefs
34 46 International Briefs
48 Events Calendar
32 Editorial
The critical mass Publisher The hot hand Macau’s gaming industry is playing thus Kareem Jalal far in 2012 is expected to continue this month, with a couple of important holidays—Ching Ming and Easter— Director falling within days of each other, followed by the unveiling João Costeira Varela of the first phase of Sands Cotai Central. The combination “should drive additional Mainland visitation,” CLSA Asia-Pacific Markets said in a recent Editor note to investors. James Rutherford “In addition, the Easter Holiday should induce additional Hong Kong weekend visitation,” the firm Operations Manager noted. “Accordingly, we are expecting a strong week Jessica Lai one to April GGR.” As for Sands Cotai Central, CLSA added, “We continue to believe [it] will drive visitation and more Contributors GGR growth, especially high-margin mass revenue, to Desmond Lam, Steve Karoul the Cotai side of Macau.” I. Nelson Rose, Richard Marcus The italics are CLSA’s, underscoring the consensus view Sudhir Kale, Jack Regan that as Cotai continues to be developed, Macau moves ever closer to realizing its potential as a true regional William R. Eadington tourism destination. If mass-market gaming is any indication, that process is advancing nicely. Growth in the mass segment, tables and slots, has outpaced VIP on a percentage basis the last Graphic Designer three quarters and counting, according to a recent report by Deutsche Bank. Through the first Brenda Chao three months of 2012, mass-market GGR revenue was up 36.3% year-on-year, versus 23.5% for VIP. The quarter saw daily mass revenue reach an all-time high—“a trend we believe can continue over the next several quarters following the opening of Sands Cotai Central,” DB’s Photography Carlo Santarelli and Kelly Knybel wrote. CLSA predicts 30% mass growth this year versus 17% Ike, Alice Kok, James Leong, for VIP. Morgan Stanley is forecasting 27% and 18%, respectively. Wong Kei Cheong Looking beyond 2012, the trend should continue as Macau draws closer to its principal feeder markets on the Mainland. The governor of Guangdong Province, Zhu Xiaodan, said earlier this year that the province would extend its inter-city rail network between Guangzhou Inside Asian Gaming and neighbouring Zhuhai to the Border Gate and to Hengqin Island. Macau’s Maritime is published by Administration, in the meantime, has been assessing proposals from a number of companies that could see the addition of three new ferry routes to the Pac On terminal on Taipa before Must Read Publications Ltd the end of this year, in addition to Sands China’s CotaiJet. Union Gaming Research Macau 8J Ed. Comercial Si Toi believes the addition of the new routes could bring to Macau 1 million more visitors annually 619 Avenida da Praia Grande and will be especially beneficial to the three operators with a presence on Cotai. Macau The portion of Sands Cotai Central unveiled this month should cement the company’s Tel: (853) 2832 9980 leadership in the mass market. It includes the first of two themed casinos (200-plus table games, 150 VIP tables, 600 slot machines, 200 live multi-game table positions) and two of its three hotels, a 600-room Conrad and 1,200-room Holiday Inn. The second casino comes For subscription enquiries, on line in the third quarter, together with a portion of some 4,000 Sheraton-branded hotel please email rooms. At full build-out, the complex will include 11 food and beverage outlets, more than [email protected] 28,000 square metres of meeting space, shopping and other non-gaming amenities and should cement Sands’ leadership in the Macau mass market. The company entered the year with better than a 34% weighted share of customers in the segment, according to Union For advertising enquiries, Gaming, followed by SJM Holdings (27.2%) and Galaxy Entertainment Group (20%). By please email property, Venetian Macao was by far the mass leader with 22%. Morgan Stanley’s Praveen K. [email protected] Choudhary and Katherine Sun expect Cotai Central to generate EBITDA of US$388 million for or call: (853) 6680 9419 Sands this year and $827 million in 2013. Good news for Sands, needless to say. But good news also for Galaxy and Melco. If there’s www.asgam.com downside, it’s for the three operators currently lacking a Cotai presence, as Morgan Stanley believes most of the early gains in the aftermath of the opening will be creamed off the peninsula’s market share. But how bad can it be when Macau continues to pump out numbers that astound? Give Inside Asian Gaming or take a hundred million, the market will be headed north of US$40 billion in the months is an official media partner of: ahead. Gross gaming revenue hit MOP74.31 billion in the first quarter alone (US$9.29 billion), an increase of 27% year-on-year. Upon seeing those results, Deutsche Bank’s Karen Tang revised her estimate of GGR growth for the year from 20% to 25%. Credit Suisse’s Gabriel Chan upped his from 18.9% to 24.6%. Morgan Stanley previously had forecast 15%, which they’ve since bumped to 20%. CLSA expects an increase of 21%.
James Rutherford http://www.gamingstandards.com We crave your feedback. Please email your comments to [email protected]
2 INSIDE ASIAN GAMING | April 2012
Ten Years of Change Looking back to when an industry and a city were set upon a path that would transform them beyond recognition
n 2002, on the 1st of April to be exact, jostling for territory, sometimes violently the government of the fledgling Macau so, in Stanley Ho’s lucrative VIP gambling ISpecial Administrative Region of the rooms. Having decided for the sake of his People’s Republic of China formally approved Nevada license and to mitigate his financial the new casino concessions awarded to risk that it was safer to enter the market as a Stanley Ho’s Sociedade de Jogos de Macao, manager rather than a developer of casinos, Hong Kong-based Galaxy Casino and Steve LVS found in Galaxy, which had come under Wynn’s Las Vegas-based Wynn Resorts. the control of Hong Kong construction and It was perhaps no more than a matter property magnate Liu Che Woo, a partner of administrative housekeeping—the three with pockets more than deep enough to having been chosen two months earlier, the handle the capital investment end. But the winners of a global tender that had drawn partnership foundered. LVS’ commitment more than 20 companies and investment to the development of Cotai was perceived groups—but it marked the beginning of by many at the time as a risky bet—a view Macau’s transformation from the sleepy, that Galaxy may have shared. In any case, seedy gambling town it had been in colonial it’s hard to see how it made sense from times—the “Monte Carlo of the Orient” was Galaxy’s vantage that as prospective builder the generous title appended to it—to a Cotai visionary—Sheldon Adelson and owner they would have to shoulder resort destination of worldwide significance; the lion’s share of the partnership’s costs the “Las Vegas of Asia”. the awarding of a separate concession to a and the attendant risks. The government, Nothing would be the same again, not second US operator, Las Vegas Sands. on the other hand, had bought into Mr Macau, not China, not the global casino LVS Chairman Sheldon Adelson had Adelson’s singular vision for the reclaimed industry, which could be said to be truly been one of the first to recognize the vast land between the former islands of Taipa multinational from that day forward. possibilities of the market as a play on China’s and Colane, and since Galaxy already had a The process of completing the contracts booming economy. He was wary, however, concession, a way had to be found to allow with the concessionaires would extend of taking the plunge on his own, influenced LVS to go forward independently. into June of that year, and as it happened, no doubt by Macau’s image as the Wild, Wild The accommodation that was reached, before the year was out, the playing field East, rife as it was at the time with reports of technically a “subconcession” under Galaxy— would be altered again, dramatically, with gangland influence and rival criminal clans in effect a fourth license—hadn’t been
4 INSIDE ASIAN GAMING | April 2012
Cover Story
The opening day stampede at Sands Macao on 18th May, 2004 contemplated back in 1999 when concurrent would fetch US$900 million. The buyers, The industry would grow from 11 casinos with Macau’s reversion to Chinese rule it Stanley Ho’s son Lawrence Ho and James in 2002 to 34, an average of two openings was decided to fashion a unique economic Packer, head of Australian media and gaming a year. The number of table games would identity for the new SAR by opening to empire PBL, would eventually take their joint increase from 339 to more than 5,300; slots international competition a casino market venture public on the Nasdaq stock exchange from about 800 to more than 16,000; annual that had been run as the monopoly of one as Melco Crown Entertainment. They would visitation from about 9 million to more than favored company or another since the open three casinos, among them the US$2.1 28 million—spurred by a gradual relaxation 1930s. The consequences would prove billion City of Dreams on Cotai. of restrictions on individual travel from just as momentous since theoretically LVS would go on to build the US$2.4 Mainland China, where disposable income the concession holders could develop an billion Venetian Macao on Cotai and invest has been growing at an average rate of 10% unlimited number of properties, subject to some $8 billion in the market to date. a year and much higher than that among government approval, and since the other The growth of the market in the last ten wealthier segments of the population. two concessionaires naturally would expect years, as well-documented as it’s been, is no The decade would see Macau’s the same subconcession rights. Which is less amazing in the retelling. The pent-up emergence as the largest pure gambling exactly what happened. demand unleashed by the 2004 opening market in the world. Gross gaming revenue In June 2004, a month after LVS opened of Sands Macao would blow away the most would grow more than tenfold, from the first of the new-competition casinos, optimistic projections. The doubling of the MOP22.18 billion, about US$2.93 billion at the US$265 million Sands Macao, SJM sold number of lead developers to six made current exchange rates, to MOP267.86 billion its subconcession for $200 million to a joint certain that capital investment would pour last year, the equivalent of $33.5 billion. That’s venture between Las Vegas-based MGM in in sufficient quantities to exploit it. Indeed, five times what the Las Vegas Strip took in Mirage (now MGM Resorts International) the building boom that ensued would see in 2011. At 28% per year, the annual rate of and Hong Kong businesswoman Pansy US$13 billion invested in the market in GGR growth since 2002 has been roughly Ho, daughter of the revered tycoon who the last five years alone. In addition, Melco twice the rate of GDP growth in China. The had held the casino monopoly for 40 years Crown, SJM, Wynn, LVS, Galaxy and MGM S&P 500 has delivered an annualized rate of and still dominated the market as SJM’s would all list their Macau operations on the return of 0.38% over the same period. managing director. The $1.25 billion MGM Hong Kong Stock Exchange, raising more VIP baccarat has been the dominant Grand Macau would open in 2007. than US$6 billion from eager investors, game throughout. It accounted for 74% of By 2006 the market had grown so their collective market capitalization today GGR in 2002. It dipped to 63% in 2005, a spectacularly that Wynn’s subconcession topping US$65 billion. period when the take from the mass-market
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Cover Story
When China opened the floodgates The “Individual Visit Scheme” was introduced on 28th July, 2003 to boost economic growth in the repatriated former colonies of Hong Kong and Macau. As the name suggests, it allows travelers from select cities in Mainland China to visit the country’s two self-governing “special administrative regions” on a limited basis as individuals. Previously, this required a business visa or membership in a group tour. Mainland Chinese are the fuel driving Macau’s red-hot gaming industry, and the IVS is the reason why. The IVS was enacted by the central government in Beijing as a means to offset the impact of the severe acute respiratory syndrome (SARS) epidemic, which took its toll in the first half of 2003 on the economies of both Macau and Hong Kong, with the latter already reeling from the effects of the Asian financial crisis. Hong Kong was the intended primary beneficiary of the scheme, following an unprecedented street demonstration by well over half a million people there on 1st July, 2003 (the sixth anniversary of the handover of the city to Chinese sovereignty). While the nominal focus of the protest was a proposed anti-sedition bill in Hong Kong, China surmised the city’s economic woes were the real root of the protestors’ dissatisfaction, and the IVS was one of a few economic gifts bestowed by Beijing in response to boost Hong Kong’s economy and appease its population. While Hong Kong was the targeted beneficiary, Macau and its tourism-dominated economy ended up reaping the biggest gains from the IVS scheme. Coming as it did the year after the first post-monopoly casino concessions were awarded, the timing couldn’t have been more propitious. To give you an idea of its impact, in 1999, the year Chinese sovereignty was restored, the Macau Statistics and Census Bureau counted 1.6 million Mainland Chinese visitors. In 2010, those visits totaled more than 13 million, 53% of all arrivals, and 5.4 million of them, or 41% of all Mainland visitors, made the trip on individual visas. Last year, Mainland Chinese comprised 57% of visitor arrivals, a surge of 17% year-on-year, and individual visas accounted for about 42% of that. Today, the IVS generates 70% of China’s outbound tourism. Currently, about 270 million residents in 49 cities are eligible to apply, including all 21 cities in Guangdong, the province bordering Macau and Hong Kong and the most populous in the country. IVS travelers pay dividends outside the casinos too. Because the scheme restricts the frequency and duration of their visits, Mainland visitors tend to stay longer and spend more—MOP2,039 per capita in Macau in 2010 versus MOP1,158 by visitors from other countries—and they constitute more than half of all hotel guests.
Rising expectations—Macau gross gaming revenue tables doubled to 23%. It climbed back to 73% in 2011. The years have seen some traditional 300 games fade in importance while others have come from obscurity to become bellwethers 250 of a more diverse and increasingly more mainstream player base. Machine gaming 200 has been the most notable. An insignificant sector in the monopoly days, slot GGR has 150 been growing since 2002 at twice the annual rate of the market as a whole. Last year, the 100 machines generated MOP11.42 billion, good Billions of patacas for 4.3% of total revenues. Only baccarat 50 earns more. Stud poker, unknown before 2003, took in MOP1.3 billion in 2011. Texas 0 Hold ’Em, a MOP54 million game when it 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 debuted in 2008, took in MOP277 million last year. GGR from electronic multi-games Source: DICJ has more than doubled to MOP311 million
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Cover Story
in little over a year. The changes wrought on society have been dramatic as well. Today, about 15% of Macau’s working population is employed in a casino, more than 22,000 of them as croupiers. Full-time casino workers earn the equivalent in US dollars of $2,090 per month on average, considerably more than workers outside the industry, who bring home a median of between $1,275 and $1,500. But then, before the gaming boom, they would have been fortunate to make $150 a week. Unemployment, which stood at 6.3% in 2002, was 2.1% last year, the fourth-lowest rate in the world (only tiny, oil-rich Qatar and the export-driven states of Thailand and Singapore were lower). Macau’s total working-age population of 347,000 or so can no longer supply the economy’s demand for able, qualified bodies in hospitality, construction and services. The number of non-resident workers has nearly tripled over the last decade, and authorities estimate “Then in December 2007, Melco Crown’s newly opened that 30,000 more imported workers will be Crown Macau (now Altira) threw the market into turmoil needed this year alone to sustain a labour force that could grow by as much as 10% in by announcing a deal to pay Hong Kong-listed junket the next 10-12 months. promoter Amax a record 1.35% [rolling chip commission]. But restrictions on foreign workers The effect on margins was so acute that within months the are a political fact of life, and there is widespread opposition to relaxing them. office of the chief executive weighed in with a proposal to It’s a volatile issue. Those who through roll back the rate to 1.25% and freeze it there by law.” lack of education or job skills have missed out on the general prosperity have made work together when confronted with crises the government finally drafted a regulation their discontent known on more than once that threaten to undermine the health of the to allow for the imposition of a cap, the occasion. Twenty-five police were injured industry—like the VIP commission rate war casinos had already agreed to enforce the in street protests on May Day 2006. Four of 2007-08. recommended 1.25% on their own. demonstrators were arrested. May Day The standard commission on rolling There are other challenges. The city 2007 was worse. A bystander was killed chip volume in the city’s VIP rooms had remains largely a day-trip market. Non- by a stray police bullet. Ten were arrested, been steadily climbing since the end of gambling spend continues to lag far behind 21 police were injured. Government has the monopoly era, when it stood at a spending at the tables and slots. Average been treading something of a high wire on manageable 0.7%. By the middle of the length of stay remains about where it’s this issue ever since, suspended between decade it was well above 1%. Then in always been, never moving much beyond the desire to encourage investment in December 2007, Melco Crown’s newly a day. A shortage of hotel rooms keeps Macau’s progress as a leisure destination opened Crown Macau (now Altira) threw rates high and discourages casual visitors and the need to temper it while the social the market into turmoil by announcing who tend to spend more and stay longer. infrastructure slowly catches up. In May a deal to pay Hong Kong-listed junket Developing the MICE trade is another key. 2008, then-Chief Executive Edmund Ho promoter Amax a record 1.35%. The effect On the plus side, development of Cotai announced a short-lived moratorium on on margins was so acute that within months is proceeding apace, the focus there on new gaming projects and licenses. More the government weighed in with a proposal more expansive resort offerings—more recently, a decision to cap the number of to roll back the rate to 1.25% and freeze it entertainment, dining and shopping for new table games at 3% a year has served there by law. By that time, though, under the masses—with several thousand new only to confuse everyone, especially with the auspices of the venerable Stanley Ho, rooms expected to come on line as more the government committed to continued the operators had begun meeting regularly development applications are approved large-scale resort development on Cotai. to discuss matters of mutual concern. Out over the next few years. Meanwhile, a The rapid pace of development has of those meetings came Macau’s first casino number of high-profile road and rail projects sparked competitive flare-ups among the industry trade association, the Chamber of are moving ahead that will speed access to casinos as well. At the same time, operators Macau Casino Gaming Concessionaires and the city from Hong Kong and extend its have shown an increasing willingness to Sub-Concessionaires. When in August 2009 reach even deeper into Mainland China.
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IGT
In the Hunt International Game Technology is determined to gain ground in Macau with a new head of sales for the region and a renewed focus on developing games Chinese players want to play
e’ve really revamped Asia,” says Mark Michalko, who took over “Was sales director of IGT-Asia in February. “I mean, it’s a complete overhaul in terms of the sales team, for sure, and some of the other things we’re doing.” Mainly, what he and the Macau-based division are doing is listening — a lot of listening, to operators, to players — not something IGT has done as well as it might have, according to some, with the result that the slot giant has yet to establish a presence on the peninsula’s casino floors that is anywhere near what it enjoys in other international jurisdictions. The problem dates back to the middle of the last decade, when massive foreign investment was beginning to transform the market, and US-based IGT sought a quick entry by leveraging games that served it well elsewhere, a tried-and- true formula but one that proved less than successful among the Chinese. As Michalko explains it, “We came here primarily with games from America or Australia. The good news is some of them worked, the bad news is others didn’t. They just weren’t as accepted as the products from some of our competitors. In fairness, we could’ve done things better perhaps. This is not a criticism of anything that happened. But I think we realize the market potential in Asia. I can tell you the shift right now has been pretty strong to very localized games.” The effort took a leap forward in December with the deployment of the first of a planned 140 Megabucks games in The Venetian Macao, Sands Macao and The Plaza Macao. The five-level wide-area progressive, the flagship of IGT’s popular MegaJackpot line, is being offered with a top prize of HK$50 million and a variety of engaging titles and line configurations, some available with advanced features like MultiPLAY, which allows up to three games to be played at once, and Step Up, where multipliers are kicked up from games one and two to the Mark Michalko Megabucks MegaGame. Sands Cotai Central
12 INSIDE ASIAN GAMING | April 2012
IGT
quarterly results were announced. and served as its first executive director, “After posting several years of declining has worked extensively in Asia, notably ship share, IGT is on track to record its first as a pioneer of the lottery industry in the year of market share gains on game sales Philippines. “Macau is an interesting place,” in over eight years,” Todd Eilers of Roth he says, “because you have a vast array of Capital Partners noted at a recent forum for segments of the market, depending on investors. what location you’re going into.” IGT’s In fact, analysts are casting 2012 as a goal, he says, is to figure what works for comeback year for IGT, which may sound all of them. “It’s very difficult to do in a strange on the face of it. The company particular machine or even two or three, still dominates North America with better but across a range of product offerings, we than half the continent’s installed base of can hit every segment of the market. At machines. But competition for floor share least that’s our objective.” is never less than intense, and advantages, both actual and potential, can easily slip “One of the things that I’m away. Outside North America, “cautiously trying to do is establish optimistic” was the official watchword that type of relationship at the close of 2011, but that brightened where we can bring considerably after the results from the first operators in while we’re still quarter were in. The company now expects the trend of the first 12 weeks to be sustained, in the development phase. with international business growing by And I think that’s good double digits in 2012, and Macau, and Asia for us and certainly good as a whole, playing a prominent role. “Our Macau customers are looking to generate for them as well. We will increased slot revenues,” President Eric Berg then bring products to the stated at the time, “and we are helping them market that are much more with creative and disruptive solutions.” Stand-out display—Four Great Chinese Beauties, How disruptive the effort will prove attuned, not just to the featured on the bluechip Neo cabinet, will be remains to be seen. As for creativity, if the general market here but showcased at next month’s G2 Asia Megabucks deal with Sands China can be to their particular properties taken as a reliable jumping-off point, it is well is slated to join the link this month. in evidence already. Growth in the Macau and the player base that IGT has enjoyed three straight quarters mass market continues to outpace VIP they have.” of revenue increases from its MegaJackpot growth, and with a weighted share of 34% of brands, and it’s largely been markets outside the sector, according to recent research by As you might expect with IGT, the North America driving them. Gaming Union Gaming Group Macau, Sands China is portfolio of themes available for showing Operations internationally, the division the mass-market leader. in Macau is extensive, about 100 currently, that includes WAPs and other participation Michalko, a 35-year industry veteran according to Michalko. Not that anyone and recurring-revenue games, was up 13% who helped launch the California Lottery at Asia headquarters is resting on it. The last year. In the most recent quarter, which ended 31 December, typically the slowest time of the year for slot manufacturers, Operations was up 29%. Across all its businesses, international revenues grew 24% in the quarter, while North America revenues decreased by 8%. Sales of new and replacement machines, which dipped 8% internationally in 2011, rebounded in the quarter to the tune of 31%. Obviously, the company wants that to continue and is taking steps to ensure that it does. “Internationally, we are making meaningful progress by positioning our sales teams closer to our customers and by equipping them with localized content,” CEO Patti Hart told analysts at the time the Life-changing link—Megabucks machines at The Venetian Macao
14 INSIDE ASIAN GAMING | April 2012 IGT
game payouts, and Super Stacks for bigger Looking ahead to next month’s G2E wins at the bonus level. Asia, Michalko hesitates to characterize it Success “has more to do with the as a defining moment for IGT in the region. specifics of the math model and the way He prefers to think of it a “coming-out the game is played as opposed to the pure party,” and doubtless one the company is theme,” Michalko says. The buzz phrase the anticipating as perhaps never before, given company likes is “market-attuned,” which that that first fruits of much of what it has means a lot of things but can be distilled learned about China over the last several down to the recognition that an appealing months will be on display. package, while important, doesn’t cut it “I’m very optimistic and anxious about if the game mechanics, the math and the the next generation of games that we’re cultural context aren’t sound. “That means going to be putting out there,” he says. “As not just Asian themed,” he says, “the colors we’re getting these new products, I think and the graphics and all that obvious kind of we’re going to be much better positioned thing, but really drilling down much further to win the business. It was a combination with different segments of the player base to of things that held us back in the past, but learn what their preferences are, what things I think we’re starting to put all the pieces in they want to see in games.” place. We’re very much in the spotlight at The company has another strong base IGT right now. The pressure is on a little bit, to work from with its innovative bluechip but that’s okay. We know what we have to Neo cabinet, a hit in Australia, SGB-ready, do, and I think we’re going to have the right TITO-enabled, with bigger, brighter screens, people and right products to make it work.” high-performance processors, an emphasis on player comfort and “Dynamic Buttons” IGT Asia Lda will be at Stand # 700 at that come alive with animation and graphics G2E Asia, held 22-24 May at The Venetian specific to the game being played. Macao.
Super Stacks—Dangerous Beauty company is doing its legwork this time around, conducting extensive market research both independently and in concert with customers. “One of the things that I’m trying to do is establish that type of relationship where we can bring operators in while we’re still in the development phase. And I think that’s good for us and certainly good for them as well. We will then bring products to the market that are much more attuned, not just to the general market here but to their particular properties and the player base that they have.” Which is not to say there isn’t “Americanized” product that hasn’t performed credibly for IGT. Golden Goddess, among others, has been a standout. A graphically rich, Multi-Layer Display technology game fitted on the robust AVP platform, it offers configurable line options all in a single program and features Selective Stacking, which locks a Glittering line-up—Golden Goddess is among the graphically rich, Multi-Layer Display technology games on major symbol on each spin for larger base- the AVP platform
April 2012 | INSIDE ASIAN GAMING 15 Market Outlook
The New Breed CLSA’s latest report on Philippines gaming finds lots for investors to like in the new generation of integrated casino resorts
hilippines casino revenue could rise 130% in the next four years once three new integrated resorts (IRs) open in Manila, Psays CLSA Asia-Pacific Markets. The independent bank and brokerage’s report titled “Many happy returns—Integrated resorts draw interest” takes a look at the prognosis for the casino industry in the Philippines in the remainder of the decade and beyond. It states: “We expect gaming revenue to grow from US$1.3 billion in 2011 to US$3 billion in 2015 once three new IRs in Pagcor City [Philippine Amusement and Gaming Corporation’s Manila Bay project] are completed, representing a 24% Cagr [compound annual growth rate]. They are: Belle Corp’s Belle Grande Manila Bay; Bloomberry Resorts and Hotel’s Solaire Manila; and Universal Entertainment’s Manila Bay Resorts. “We estimate the three new integrated resorts to generate US$1.6 billion of gaming revenue in 2015, implying that each integrated
Way to go—Resorts World Manila is to be joined by three new integrated resorts The Philippines: Gross gaming revenue in Manila
3.5 (%) VIP Mass Slots 11-15 Cagr resort generates US$0.53 billion gaming revenue per year (versus 3.0 US$0.63 billion gaming revenue from Resorts World Manila in 2011),” 0.6 24% say authors Aaron Fischer, CLSA’s Head of Gaming Research; Richard 2.5 Huang and Raf Mercado. 2.0 0.7 25% CLSA says the four main drivers for this major jump in gaming revenue are: “….more gaming capacity, foreign and domestic 1.5 revenue growth and better infrastructure. We expect gaming tables 0.3 to increase from 1,072 in 2011 to 2,022 in 2015, which is the key driver 1.0 0.3 1.7 24% 0.1 0.2 to our US$3 billion forecast. We are also positive on the local market 0.1 0.2 0.5 0.1 0.1 given improving gaming penetration, the rise in domestic tourism, 0.5 0.7 0.4 0.4 an emerging middle class and favourable demographics.” 0.0 The report authors acknowledge that there are challenges for 2008 2009 2010 2011 15CL investors in the Philippines, including relatively underdeveloped Source: CLSA Asia-Pacific Markets infrastructure compared to some neighbouring jurisdictions and
The Phillippines: Gaming tables / slots
Tables 02 03 04 05 06 07 08 09 10 11 15CL 11-15CL Cagr (%) VIP 231 231 231 239 250 253 253 303 376 431 861 19 Mass 428 428 428 443 457 470 470 515 594 641 1,161 16 Slots 7,129 7,129 7,129 7,432 7,779 7,876 7,876 8,476 9,181 9,781 13,581 9 Win per table / slot (US$ per day) VIP 3,061 2,810 3,282 3,532 3,543 3,723 3,950 3,526 3,991 4,625 5,425 4 Mass 610 560 654 704 706 742 787 772 958 1,188 1,577 7 Slots 17 15 18 19 19 20 22 25 50 72 120 14 Source: CLSA Asia-Pacific Markets
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Market Outlook
Asia Pacific casinos: Construction capex (2011) Asia Pacific casinos: ROIC (2011)
7,000 45 (US$m) 41 6,000 40 35 34 5,000 30 26 23 24 24 4,000 25 22 17 18 19 3,000 20 15 2,000 10 1,000 5 0 0 CoD MBS RWS CoD MBS RWS RWM RWM Altria Wynn LV Wynn Oceanus Wynn LV Wynn Oceanus G. Lisoba Starworld Wynn MO Wynn Sands MO Galaxy MO Venetian LV Venetian Venetian LV Venetian MGM Macau Venetian MO Venetian Four Seasons Four Venetian MO Venetian Four Seasons Four Philippines IRs Philippines Source: CLSA Asia-Pacific Markets Source: CLSA Asia-Pacific Markets
the risk of trade interruptions due to flooding and other extreme average US$2 billion-US$3 billion in Macau and US$5 billion-US$6 weather during typhoon season. But they suggest equity prices billion in Singapore, we expect return on invested capital of 23%,” for real estate and gaming companies and consortia—and return adds CLSA.” on investment—are likely to be attractive compared to more CLSA points out that the Philippines government has identified developed markets. gaming as an important driver of GDP growth. CLSA points out that Resorts World Manila—the country’s first “The opening of the gaming market has had a remarkable impact integrated resort, located near Manila International Airport—has on the Macau economy, with GDP growth averaging 21% over 2004- produced good returns for modest outlay (under US$1 billion in 10. The unemployment rate has also declined from over 6% in 1999 project costs) and this has helped the developers to maintain a low to 2003 to an average of 3.6% in 2004 to 2010,” says CLSA. enterprise multiple. Resorts World Manila opened in August 2009 and was developed as a joint venture between Star Cruises (now Belle Grande Manila Bay Genting Hong Kong, a company listed in Hong Kong but traded in The report gives a snapshot of the project size and facilities at Singapore) and Alliance Global, a Manila-listed conglomerate headed each of the three new Manila IRs—factors that could help drive GDP by Andrew Tan. growth in the Philippines. “Alliance Global was the first among the four [IR] gaming-licence “Belle Corporation owns a six-acre site and is currently holders to complete its integrated-resort development. Valuations constructing the Belle Grande Manila Bay, which is anticipated to remain inexpensive with the gaming business at just 8x EV/Ebitda,” house 350 gaming tables, 1,900 slots, three hotel towers (with 1092 says CLSA. hotel rooms), residential tower and other amenities. The integrated Enterprise Value (EV) divided by Ebitda is a formula used to resort is scheduled for soft opening in 2Q12 and is estimated to cost establish the enterprise multiple. It assesses a business as a potential US$1 billion,” says the report. buyer would, because it takes debt into consideration—an item “Belle is a leading developer of high-end second-home gated that other multiples such as the P/E (share price to earnings) ratio do not include. CLSA adds that as well as modest equity pricing, the Philippine gaming market offers other attractions for investors. “Low tax rates and cheap construction costs underpin higher returns, with 23% ROIC [return on invested capital] keeping investors happy,” say the authors. “In 2011, we expect Resorts World Manila (RWM) to have delivered 34% return on invested capital (ROIC), which is higher than the recently opened Singapore and Macau casinos like Resorts World Sentosa (25%), Marina Bay Sands (23%) and City of Dreams (22%). Despite that, the investment return from RWM is still lower than that of the Macau casinos opened before 2008, which are yielding an average investment return of 40% to 133%.” The report adds that low project capex compared to Macau and Singapore strengthens the case for investment in Philippines IRs. “Taxed at a relatively low rate, we expect Ebitda [earnings before interest, taxation, depreciation and amortisation] margins to be around 38%. With attractive project costs of US$1 billion against an Artist’s impression of Belle Grande Manila Bay, due to open this year
18 INSIDE ASIAN GAMING | April 2012
Market Outlook
communities and golf and country clubs. Its flagship Tagaytay Highlands project is an iconic leisure development and well-known real estate brand in the Philippines. In September 2009, the company acquired a gaming licence from SM Investments to own and operate a casino in Pagcor Entertainment City. “Belle has no experience in operating casinos and has thus outsourced the management of the casino to Asia Pacific Gaming (APG) and Leisure & Resorts World Corp. (LR), with the company committed to paying rentals and royalties for owning the facilities and the gaming licence.” “LR has a substantial track record in the gaming sector and is currently the largest bingo operator in the Philippines with a client base of over one million patrons. LR has also engaged the services Artist’s impression of Solaire Manila of APG, whose principals each have at least 20 years of experience in setting up and managing casinos. APG’s principals have been is scheduled to complete in 3Q12, which would include 300 gaming involved in the opening and management of five casinos in Macau, tables, 900 slot machines, over 500 hotel rooms, convention including Galaxy’s flagship StarWorld Casino. Both LR and APG have facilities and live performance theatre. The complex is expected to developed strong relationships with junket operators in Asia and cost US$1 billion. plan to leverage these relationships to attract foreign VIP players to “The hotel complex is developed by Enrique Razon Jr, chairman Belle Grande.” of port operator International Container Terminal Services (ICTSI) and property developer Sureste Properties Inc. (SPI) and its subsidiary, Manila Bay Resorts Bloomberry Resorts and Hotels Inc. (BRHI).” CLSA also gives details of Japanese gaming entrepreneur Kazuo CLSA then presents some scenarios regarding the likely Okada’s Manila project. impact of new resorts and extra gaming inventory on the “Universal Entertainment Corporation (formerly known as Aruze Philippines market. Corporation) is a Japanese-based pachinko machine manufacturer, “With the significant addition of mass-market tables and strong which used to be the largest shareholder of Wynn Resorts (with expected inflows of gamers, we expect mass-market gaming 19.9% interest). Universal Entertainment’s Manila Bay Resorts is revenue to grow rapidly at 25% Cagr from US$0.3 billion in 2011 expected to include 500 gaming tables, 3,000 slots and 2,000 hotel to US$0.7bn in 2015. We also expect rapid VIP revenue growth of rooms. The integrated resort is also expected to have the world’s 24% Cagr from US$0.7 billion in 2011 to US$1.7 billion in 2015, largest oceanarium, The Manila Eye ferris wheel, a sports arena, a underpinned by inflow of higher-tier VIP players post opening of theatre and a museum. The construction capex for the entire project integrated resorts in [Pagcor’s] Entertainment City.” is expected to be US$2 billion.” CLSA says it bases its estimates on what it calls “back-tested growth assumptions” Solaire Manila “We derive our 2015 industry gaming revenue forecast of US$3.0 Last but not least, CLSA fills in some of the detail about the Solaire billion by using a bottom-up calculation. We combined the number project. of gaming tables expected in the market with our estimated win-per- “Bloomberry Resorts and Hotel investments have commenced table to calculate our industry gaming-revenue forecast. To ensure construction on its 8.3-acre land site. The Solaire resort and casino validity of our forecast, we have also cross checked some of our key
Renderings of Universal Entertainment’s Manila Bay Resorts
20 INSIDE ASIAN GAMING | April 2012 Market Outlook
Win per VIP table per day (2011) Win per mass table per day (2011)
Macau Singapore Singapore Macau Malaysia Malaysia Australia Korea Korea Australia Philippines (‘15) Cambodia Philippines (‘11) Philippines (‘15) Cambodia (US$) Philippines (‘11) (US$)
0 10,000 20,000 30,000 40,000 0 2,000 4,000 6,000 8,000
Source: CLSA Asia-Pacific Markets Source: CLSA Asia-Pacific Markets forecast variables with those of other countries. “We estimate win-per-VIP table to be US$4,625 in 2011 and expect Asia Pacific: Gaming tax rate it to grow to US$5,425 in 2015. Despite the significant growth, the 45% win-per-VIP table in the Philippines is still far lower than the current 40% win-per-VIP table in most of other Asian countries, which yielded an 35% average of US$10,000-US$33,000 per table per day. 30% “In the mass-gaming segment, we forecast win-per-table per 25% day to increase from US$1,188 in 2011 to US$1,577 in 2015, which 20% compares to US$2,291-US$6,717 in other Asian countries. 15% “We expect the size of domestic gaming revenue to also grow 10% rapidly from US$1.1 billion to US$1.7 billion, but it will still be smaller 5% 0% Philippines Casino: Win per table / slot Macau Malaysia Las Vegas Las Cambodia
(US$m) VIP - Korea
5,394 Pagcor Resorts World Manila - Mass Korea Singapore - VIP - Singapore Melbourne - VIP Melbourne - 5,000 VIP - Philippines Singapore - Mass Singapore Melbourne - Mass 4,171 - MassPhilippines 4,000 Source: CLSA Asia-Pacific Markets 3,000 2,466 “Similar to other Asian countries, a segregated gaming tax 2,000 regime is applied to Philippines casinos with 17% gaming tax applied to VIP gaming activities and 27% gaming tax applied to 831 1,000 mass-gaming activities. Blended gaming tax in Philippines would 0 come in at about 21%, which is higher than Singapore’s [blended] Win per VIP table Win per mass table 16% [22% for the mass and 12% for VIP], but significantly lower Source: CLSA Asia-Pacific Markets than 25% in Malaysia and 39% in Macau.” Underpinning the favourable business fundamentals is the than Singapore’s US$2.0 billion and Australia’s US$2.5 billion. Despite government’s political support for casino gaming as a motor for the rapid growth, domestic gaming revenue per adult population in general economic development in the country, states the report. 2015 will still be low at US$31 (versus US$20 in 2011), compared to “The success of integrated resorts in Asia has captured the China at US$33, Malaysia at US$102, Australia at US$149 and the USA imagination of the Philippines government. Eager to boost GDP and at US$268. employment, the Pagcor Entertainment City development in Manila CLSA also presents a best-case position it refers to as the “blue- Bay is at the forefront of its ‘more fun in the Philippines’ campaign sky scenario”. aimed at attracting repeat local and overseas tourists. “In a blue-sky scenario, the size of the Philippines gaming market “Economic development in the Philippines has lagged other could grow to US$6 billion [annually], which is in line with the developing Asian countries, with a relatively slower 5% GDP Cagr government target. In the ‘terms of reference’ document regarding over 2005-11 and higher unemployment rate (8% in 2011),” adds the Entertainment City published by Pagcor, it indicates that Pagcor CLSA. targets to increase annual income generation by US$1 billion when “Marina Bay Sands in Singapore is a prime example of the the Entertainment City is completed. With a blended tax rate of potential benefits of an integrated resort injecting vitality into a 21%, it implies the government expects the Entertainment City to country’s economy. Success stories in Macau and Singapore have generate incremental gaming revenue of US$4.9 billion, bringing the boosted the Aquino government’s confidence to undertake its size of the Philippines gaming market to US$6.0 billion, on par with Pagcor Entertainment City development in Manila Bay,” concludes that of Singapore. CLSA’s executive summary.
April 2012 | INSIDE ASIAN GAMING 21 Matsui
Growing Grasp Matsui has developed a strong following for its chips and other casino equipment across the region. Shigeki Machida, MD of Matsui Asia Ltd, explains why
atsui Asia Ltd, based in Macau, is one of Matsui group’s worldwide so far. five global sales offices, which also include branches in Apart from those products, recently we started distributing MManchester, Moscow, Las Vegas and Seoul. The group is a electronic table games from PokerTek, U.S.A. PokerPro—the leading supplier of gaming chips and other casino equipment and electronic Texas Hold ‘em poker table—is very popular in the operates two purpose-built manufacturing plants dedicated to Americas and Blackjack Pro, its BJ version, was just released. delivering quality products and speedy service. We believe these products will fulfil the increasing demand for Matsui claims to now supply the majority of casino operators in electronic gaming tables in this area. Asia with its value chips, wheelchecks, plaques and RFID products. Its product range also includes highly durable synthetic layouts, Can you please tell us about some of your recent product traditional wool layouts and innovative table accessories such as innovations? Carmanah LCD Table Signs. We will launch a new security feature for gaming chips at G2E Shigeki Machida, MD of Matsui Asia Ltd, spoke to Inside Asian Asia 2012. This new security feature is simple but very innovative and Gaming about his company’s progress in the region and what he sees reliable, while the additional cost for the end-user is very low. We are as the big potential opportunities in the near future also planning to launch several new chip designs at the show. They will be in our standard chip range, but with some special effects and IAG: What are the advantages for Asian casinos of using appearance. Our team is very excited about being able to introduce Matsui chips and layouts, rather than products supplied by those new products to our customers at G2E Asia. your international competitors? Shigeki Machida: We believe there are three big advantages we Probably the most important feature of gaming chips is can offer to our customers: quality, speed and accuracy. security. In what ways do you ensure your gaming chip We are committed to ensuring the quality of our products production process is secure, and how do you fight the surpasses customers’ expectations. This is not only achieved by using counterfeiters? the highest-class materials and a state-of-the art production facility, Yes, it has always been the most important task for chip but also with the experience of our craftsmen and our strong will to manufacturers to offer reliable security options. And this is one of supply only the best products to end users. the reasons many operators choose Matsui Chips as their casino We are committed to doing our utmost to respond quickly to on- currency. We have several different security options such as RFID, going daily service requirements and to cut the time between the security printing, magnetic chips which work with security gates, UV receipt of artwork and completion of production in order to save our marking, holograms with special effects, and so on. customers’ valued time and money. Another crucial point is our entire manufacturing process is And, needless to say, accuracy is required for all the work we carried out under tight control at our factory. We have invited many do, and we attach a great deal of importance to it as this is directly casino people to our production facility and they were all very related to customers’ satisfaction. impressed by the level of security at our factory itself.
What are some of the other things you supply beyond chips Do you work with customers on customizing your chips and and layouts? layouts? In addition to gaming chips, layouts and related items, which are Yes, we do. Not many customers come to us with their design our core products, we also handle table accessories such as playing concept already finalised for chips and layouts. Our sales and design cards, roulette wheels, winning result displays, etc. One of the very teams help them come up with the best designs which satisfy their unique items we supply is the Card Shredder Machine, which is used requirements. Since we are in the same time zone as our Asian to destroy playing cards in the back of house. It shreds approximately customers, we can offer them very speedy service throughout the 30 decks of playing cards in one minute. We developed this machine process. Any requests for small amendments or changes to the especially for playing cards and we have sold hundreds of units artwork are completed very quickly.
22 INSIDE ASIAN GAMING | April 2012 What major recent sales of your chips, layouts and other products have you made around Asia over the past few months? In Macau, we have delivered more than 300,000 chips to new projects in Cotai in 2011 and 2012. This includes value chips, tournament chips and wheelchecks. Outside Macau, we have supplied millions of chips throughout Asia over the last couple of years. This includes Singapore, where we are one of the only two gaming chip suppliers who are approved [by the Casino Regulatory Authority] there. We also have very stable business in other countries, such as Korea, Cambodia, Myanmar, Vietnam, Laos and India. For layouts, we supply to more than 10 properties in Macau now and the number of casinos using our layouts has been increasing rapidly. We have many regular customers for both our wool and synthetic layouts. We delivered more than 5,000 layouts last year only in Asia.
What do you see as the major opportunities for your business in Asia over the coming years? Obviously there will be a lot of opportunities for our industry in Asia. Some countries will open up their gaming markets, very possibly in the next few years. We expect Vietnam, Myanmar, Laos and India will be very good markets for us. We already have a significant amount of established business in those places, and we feel that the scale of the business of our clients there is growing very quickly. And maybe we will have another very big opportunity in Japan, where our company’s head office is located. We still don’t know when, but we are sure Japan will step into the Asian casino race soon.
Do you foresee any threats to your business, such as increased competition from other Asian suppliers? Yes, there are always many new companies trying to break into the market. Some companies offer their products at very low prices. That gives us certain pressure to lower our pricing, even though the costs of material and labour have been increasing. I guess this is good for customers and it makes the industry healthy. However, most of those newcomers disappear in a short period of time. There must be several different reasons for that, but I guess the main ones are a lack of quality control, poor service and the fact they are only able to offer a very limited product range. So although the price offered by such newcomers may seem attractive initially, you should always consider the quality and the continuity of the business very carefully. Otherwise, you will end up paying more at the end of the day.
April 2012 | INSIDE ASIAN GAMING 23 Feature
Experience is Everything Galaxy Macau says it’s treating premium mass slot players like the electronic VIPs they really are
ompetition for Macau’s high-stakes slot players—those using bet Cdenominations of HK$1 to HKS10 (US$1.29)—appears to be getting more intense. They are an important and profitable group to have as customers. High-stakes slot users account in some casinos for 60% or more of total slot revenue, according to industry sources. That was reflected by the launch, in late March, of The Pavilion High Limit Slots at Galaxy Macau—described by management as a “by-invitation-only” facility. Previously, Galaxy Macau’s high-limit slots area was open to anyone who bet the minimum level required. Whether the introduction of an invitation policy will move the needle in Actor Michael Tse samples the high life at Galaxy’s The Pavilion High Limit Slots launch terms of slot revenue growth will show over relaxation areas. Privilege Rewards Club because of the time. But it’s a common human trait to want “We live today in the experience amount they drop per visit are the sort of to belong to a club that by definition excludes economy,” Michael Mecca, President & Chief people who can expect an invitation to The someone else. Galaxy’s move follows the Operating Officer of GEG told Inside Asian Pavilion High Limit Slots. opening in December of a new mass-market Gaming at the launch event. “When we look at the database we high-limit area at the neighbouring Venetian “It’s not about providing products any know there are certain people that are pre- Macao, including a 5,000-square-foot high- more, it’s about providing a great experience qualified to be Pavilion [slots] members,” limit slot section. for every guest at every tier that they would says Raymond Yap, Galaxy’s Senior Vice All casino marketing all over the world like to enjoy. President, International Premium Market is about segmentation of players and “We have 9,000 incredibly enthusiastic Development—a job description particularly rewarding them in different ways depending team members that each day serve our focused on mainland China on their level of contribution to the bottom guests in a very personal, attentive, style. “The [Pavilion] area is segmented by the line. That’s the science. The “art” part in That’s what attracts our guests to us first denomination of the machine. So mostly the casino marketing is to package the reward and foremost—the people of Galaxy machines start at HK$1, HK$5 and HK$10,” as an experience—and one that’s distinct Entertainment. “ adds Mr Yap. from the competition. A popular noodle bar next to the main These are modest denominations Galaxy Entertainment Group (GEG), gaming floor has been sacrificed to make compared to minimum bets on live mass- the owner and operator of Galaxy Macau, way for the new, private slots section, though market table games, which can go as high believes it is doing something different for Galaxy’s management says the noodle house as HK$300 dollars or more during peak Macau players with its The Pavilion High will be coming back—in a different location. periods. It’s difficult therefore to label Limit Slots. This is to give what are effectively The Pavilion High Limit Slots is an extension high denomination slot players as “VIPs” premium mass players the level of service of Galaxy Macau’s existing premium mass the overall Macau gaming context. But on they could expect in VIP table gaming rooms. offer. Pavilion High Limit, Pavilion North and modern slot games with 25, 50 or even 100 That includes being able to order food from Pavilion South are the live table gaming part lines, such multiples add up to high stakes any restaurant in the resort and having it of Galaxy Macau’s premium mass offer. per game. And the pace of electronic game brought to the machine, and having the Slot lovers who are already Gold, play is much faster than in live dealer games. option of private gaming salons and private Platinum or Black members of Galaxy’s Some of these premium mass slot players
24 INSIDE ASIAN GAMING | April 2012
Feature
are dropping significant sums per session higher player reinvestment; and thus lower relative to their peers in the main mass slot margins compared to main mass-market segment. table gaming. That slight reduction in margin is compensated for by the betting volumes “We live today in the involved—just as with “true” VIP table experience economy. gaming. But even with the slight reduction in margin, premium mass is still a more It’s not about providing profitable business dollar for dollar than VIP. products any more, it’s And there are a lot more people eligible for about providing a great the segment. That’s why everyone in the industry is chasing it. experience for every guest Until the opening of Galaxy Macau’s at every tier that they would Pavilion slot offer, it can be argued that like to enjoy.” Macau’s casino operators have in essence managed their high-end slot players as In many markets around the world, slot premium mass customers when it comes play is chiefly associated with the grind to denominations and drop, but glorified market and time on machine. But Macau main mass customers when it comes to reflects the fact that Chinese slots players player comforts and rewards. The best and table players alike love volatility. As that most high-stakes slot players have expected, Aristocrat’s best-performing been able to hope for in terms of playing games such as 5 Dragons and its more experience is a screened-off area, a slightly interactive cousin 5 Dragons Deluxe are more comfortable chair and a better staff- High-limit slot attraction—5 Dragons Legends popular with Pavilion players. to-player ratio than on the noisy mass floor. “The new generation of players Given that some of them are dropping tens benefits, more lifestyle benefits in our are very much computer-savvy,” states of thousands of Hong Kong dollars per Privilege Club than any other club in the Raymond Yap. trip—a few even more—it’s not surprising industry.” “You can see that from the way the some players would like a little more love The most obvious area of casino slot machine is evolving into some sort of and attention. It seems GEG has listened and competition on slots visible to the public very interesting interactive game with a is treating the top segment of premium mass is the size and frequency of jackpots in lot of entertainment elements inside. It’s slot players as the VIPs they undoubtedly the mass and VIP segments. When you like playing a computer game at home. So are—by judging them in the context of the have a relatively small number of VIP we think the computer-savvy generation slot market rather than in the context of the players in the first place—as compared to is going to pick up slots as a form of live table market. the mass market—those big players have entertainment.” “We believe we have the most innovative a strong need to see big jackpots go off In the Macau table gaming context, affinity programme in the casino resort on a reasonably regular basis in order to “premium mass” normally indicates three industry,” explains Michael Mecca. keep coming back. This is another area things—higher betting stakes; slightly “There are more benefits, more varied where Galaxy Macau thinks it has an advantage over some of its rivals—both in the mass market and its new premium mass Pavilion offer. Peter Johns, Vice President of Electronic Gaming at Galaxy Macau, told IAG at The Pavilion High Limit Slots launch: “As we speak, the Pavilion jackpot is HK$7 million. Other operators here in Macau might have a base jackpot of tens of millions of Hong Kong dollars open to all segments of players, but it might only go off once a decade. That’s fine if you want to churn through players. But if you want them to keep coming back then you need to offer them regular, good-size wins. The VIP players like to celebrate their VIP launch—from left to right: Paul Ng, VP Gaming Marketing, GEG; Janette Kendall, SVP Marketing wins. It’s quite a competitive thing among Communications, GEG; Raymond Yap, Senior VP International Premium Marketing Development, GEG; actor them. They also told us they wanted to have Michael Tse; Michael Mecca, President & COO, GEG; Eileen Lui, Director, Human Resources and Administration, somewhere away from the main floor where GEG; Tim Lowe, VP Table Games, GEG; Andy Duggan, SVP Finance, GEG; and Peter Johns, VP Electronic they could relax. We’re responding to their Gaming, GEG needs and they seem to like it.”
26 INSIDE ASIAN GAMING | April 2012
Entrance to the casino at Resorts World Sentosa Incremental Entry Experts are cautious on the impact of Singapore’s licensing of two junket operators for Resorts World Sentosa
ingapore’s decision to license two project development across Asia, the IMAs applied to criminal and civil court matters in junket operators for one of its are two Malaysian junket operators who many jurisdictions—that the prosecution or Scasino resorts—but to choose ones currently specialise in supplying Southeast plaintiff must prove its case. Instead it seems understood currently to have no existing Asian players to Resorts World Genting the new junkets will actively and regularly players from mainland China—looks like (formerly known as Genting Highlands), the have to prove they are acting with probity. an attempt to exert maximum control over Genting-owned casino resort in Malaysia. On that basis, it seems likely the licensing this most controversial aspect of the Asian The CRA signalled its desire to retain of junkets in Singapore will not provide casino scene. tight control over the process by giving the revenue “big bang” that some industry The two junkets chosen by the Casino each named IMA only a 12-month licence, observers had expected. Regulatory Authority (CRA) for Resorts stipulating they cannot offer services to Speaking at a Macau press conference World Sentosa (RWS) are headed by Huang Singapore citizens, and issuing revised last month to preview the Global Gaming Yu Kiang and Low Chong Aun. They are to regulations that specifically prevent the Expo Asia to be held in Macau in May, Mr be known in Singapore as International sharing of junket commissions with parties Lee gave some more details about the newly Marketing Agents (IMAs)—possibly to get not licensed in Singapore. This is understood permitted junkets. away from the connotations the term “casino to be an attempt to close the back door to “This will no doubt drive incremental junket” has in Macau and the wider world. Macau-China junkets getting involved in business for Resorts World [Sentosa in According to Ben Lee of iGamiX Singapore via association with the newly Singapore],” said Mr Lee. Management & Consulting, an expert in VIP licensed entities. It seems the CRA has also in “My company has had direct dealings gaming with experience in operations and effect reversed the normal burden of proof with these gentlemen,” he added.
28 INSIDE ASIAN GAMING | April 2012
Feature
“Mr Huang is probably in the top three Lodging, Restaurant & Leisure Management at Las Vegas Sands’ Marina Bay Sands. The in terms of junket operations in Malaysia. Access Forum in Las Vegas by saying he junkets will receive one-year licences. He drives his customers to Resorts World had personally blocked a US$5 million We note that the CRA’s language is quite Genting, Cambodia, and now Singapore. Mr transaction between Macau and Singapore forceful, suggesting licensees will be Low is probably somewhere in the top ten from a named person not previously continually subjected to suitability tests [in Malaysia] and has a very similar profile to identified as a high roller, stating the person upon pain of revocation. A condition of Mr Huang. Both have had very little exposure was “obviously a junket rep”. the approval is that junkets only target to junket players outside Malaysia. In any case, analysts differ on the short foreigners—suggesting that locals are off- “Malaysian junkets already have funds term impact of the legalised junkets to the limits. We think junket approval will remain transfer channels between Singapore and market. slow and small.” Thailand—consisting of the Indian money- John Oh of CLSA Asia-Pacific Markets Cameron McKnight, Senior Analyst at changer network that dominates these said in a note: “More important, though, is Wells Fargo, said: “In our view, junkets in three countries. The funds channelling the signal that the Singapore administration Singapore are unlikely to play the pivotal network in China, Macau and Hong is not averse to allowing IMAs to operate role they do in Macau, and their activities are Kong is completely different and made in the market, and this in our view is the likely to be very tightly controlled. There are up predominantly of southern Chinese beginning of more IMAs being licensed several reasons for this view: [participants]. over time. It remains highly academic to “Singapore’s strict licensing criteria and “Though there are some channels already quantify the potential impact to either Las extensive background checks will likely in place for funds transfer from Malaysia for Vegas Sands or Genting Singapore for now, limit the pool of potential junket operators. [casino] players going to Macau, there are but rest assured that we expect VIP rolling The fact that only two new junkets were no real channels [currently] for Chinese Rmb chip volumes to take on a new trajectory approved but the applications of 12 were going into Singapore [for gambling]. “ of growth and will reinvigorate Singapore’s rejected bears this out. Singapore’s very strict Sheldon Adelson, Chairman of Las Vegas gaming market, which has been otherwise gaming regulations are designed to protect Sands Corp, the developer and operator of labelled as “flatish” and “boring”. We forecast its position as a key Asian financial hub. Singapore’s other integrated resort, Marina that Singapore gaming revenue will grow by “Singapore junkets will be unable to Bay Sands, hasn’t— to Inside Asian Gaming’s +15% from US$6 billion in 2011 to US$6.9 plug into Macau junket networks. The CRA knowledge—actively spoken against having billion in 2012, of which hold-adjusted VIP released revised regulations that specifically Singapore junkets. But unlike RWS, he hasn’t revenue will grow 11% this year.” prevent the sharing of junket commissions applied for them either. Grant Govertsen of Union Gaming with unlicensed parties. Effectively, this But Mr Adelson did claim last year that Research Macau sounded a note of caution means that registered junkets in Singapore illegal junkets were already operating in on the impact of the IMAs. will not be able to act as a shop front for the Singapore market. In April last year, “At this point, the CRA has not yet Macau-based junkets or tap into their he caused ripples at a JP Morgan Gaming, approved any junkets who wish to operate networks or capital bases.”
30 INSIDE ASIAN GAMING | April 2012
USPC
Well Stocked The United States Playing Card Company is well-positioned to gain ground in Asia, says Scott Madding, the company’s Director, Global Casino Sales
he United States Playing Card Company (USPC) produces the world’s most recognised brands of playing cards, including TBee®, Bicycle® and Congress®. The company is proud of its manufacturing heritage, dating back to 1885, but recognises the need to marry the values and traditions of its founders with the latest technology. While USPC’s primary competitor in supplying cards to the Asian casino industry prides itself on its labour intensive production process, USPC believes its own more highly automated process offers greater security and reliability. USPC cites as its other strengths a reliable supply line through controlling manufacturing facilities on two distant continents (including a facility in Spain run by its sister company, Fournier), and the support of large and well-endowed parent company, the Jarden Corporation. Inside Asian Gaming spoke to Scott Madding, USPC’s Director, Global Casino Sales, about the company’s value proposition and Certified random—USPC preshuffle production line plans for Asia.
IAG: Can you explain the key differences between the supply risks—from geopolitical concerns to currency fluctuations. various brands of playing cards supplied by USPC? Our USA-based suppliers provide us with a stable, predictable supply Scott Madding: For over 125 years, The United States Playing chain. Card Company has been the leader in production and distribution Additionally, our materials and processes are green—our paper of premium playing cards. Well-known and reputable brands such is derived from trees grown in environmentally managed forests as BEE®, BICYCLE®, KEM®, ARISTOCRAT®, AVIATOR®, FOURNIER®, and does not contain any plasticizers. Using water based inks and and HOYLE® are the results of our passion. Each brand has unique coatings combined with our new state of the art manufacturing differences in card stocks, artwork and geographic preference. equipment minimise consumption and waste.
How are USPC cards different from those of other Something not everyone is aware of is USPC also supplies manufacturers? dice. What are the key differences between your dice and Unlike other manufacturers, our attention to detail even starts those supplied by other manufacturers? with the card stock. Making our own playing card stock provides Our attention to detail and quality-assurance process is second us an unprecedented amount of control to make secure playing to none. We deliver precision, razor edge dice for superior balance cards that we can customize for our customers’ unique and varied and weight distribution. climates. Our finishes also help differentiate our products. Our proprietary What advantages can casino operators gain Cambric® Finish combines our exclusive card stock with from working with USPC? proprietary coatings and embossing rollers. Our state-of-the-art facility We apply the Cambric® Finish after has the latest in card printing the printing process which allows and finishing technology. We are the feel and durability of USPC dedicated to meeting customer cards to stand out, and maximise requirements and providing high- performance whether hand- or quality products. We listen and work machine-shuffled. with our customers to provide them USPC paper casino cards are meaningful solutions with the goal made in the USA from materials to increase play time and decrease found and or made in the USA. Our operating costs while keeping the supply chain is unaffected by overseas player experience in mind.
32 INSIDE ASIAN GAMING | April 2012 Stable base—USPC’s global headquarters in Erlanger, Kentucky
The Macau casino market is the most intensive in terms of card utilization in the world—and currently, it’s dominated by a rival manufacturer. What are you doing to build your presence in Macau? We are excited to have incorporated our company in Macau in November of 2011 and hired Adam McGregor as our regional sales executive based there. Three traits will make Adam successful for USPC: his experience on the casino operations side of the business, his experience with the supply of casino products, and his dedication to delivering the best customer experience possible. Along with Austin Ao, a USPC veteran of three and a half years with excellent technical and customer service skills, the USPC team is positioning itself for the long term in Macau and Asia. To that end, we are expanding our operations by adding another GLI-certified random, factory preshuffle production line. These lines, custom-made for USPC, remove as much of the human element of card production as possible and provide for the most secure, highest quality factory preshuffle cards available.
What do you see as the big growth opportunities in Asia for your company over the next few years? We are focusing on all the major licensed markets in Asia. Of course, the sheer size of Macau along with our abilities to supply the products and required volumes to service that market has us focusing there. With our history, manufacturing capabilities and our dedication to listening and delivering to the customer, we’re confident we can quickly provide solutions to this and any other market that requires a robust and reliable supply chain to protect their investments.
What will you be highlighting at G2E Asia? We invite everyone to our booth at G2E Asia at the end of May to see our next generation baccarat dealing shoe as well as providing our team the opportunity to meet with the operators and discuss how genuine BEE™ gaming products can deliver security and quality to casino card games.
USPC will be at Stand # 842 at G2E Asia, held 22-24 May at The Venetian Macao. INSIGHTS
INSIGHTS – Michael Mecca In the latest instalment of Inside Asian Gaming’s new series of video interviews with leading members of the Asian gaming community, Galaxy Entertainment Group President and COO Michael Mecca discusses his company’s strong financial performance and expansion potential
ast year’s mid-May opening of the results. Has the performance here pool, restaurants, the Banyan tree Spa, it’s dazzling HK$16.5 billion, 550,000-square- at Galaxy Macau exceeded your an amazing 13-acre lush, green complex. So Lmeter Galaxy Macau resort catapulted expectations? with all of the amenities of Galaxy Macau, Galaxy Entertainment Group to a record set Michael Mecca: During the planning of and especially featuring the ‘World Class, of financial results in 2011. GEG believes it still Galaxy Macau we intended on presenting Asian Heart’ service of our entire team, has a long way to grow, however, as group to the community a set of game-changing we had a great planning exercise, we had President and COO Michael Mecca tells IAG amenities in a new style resort. We truly incredible vision by our Chairman and publisher Kareem Jalal. wanted Galaxy Macau to be the first our Vice-Chairman, and we presented on The INSIGHTS series—produced in integrated destination resort in Macau, and opening day, May 15th, almost one year ago, collaboration with Aomen TV, a member to do that we have a great set of amenities. we presented just a great resort. And we’re of the Ignite Media Group—can be viewed We have 50 food and beverage outlets. We just very, very pleased with the reception of online at www.asgam.com. have three great Asian-centric hotels. We Galaxy Macau throughout this community have a resort deck that is second to none in and throughout mainland China and Asia. Kareem Jalal: You recently released the world—the largest outdoor wave pool, a very impressive set of financial the great Banyan Tree pool, great Okura Obviously the rising tide of Macau’s
34 INSIDE ASIAN GAMING | April 2012 INSIGHTS
come to Macau, to listen to all of the guests that come to Galaxy Macau and build our next phase to the requests and the desires of the guests that come here. So the master planning goes on. Actually, the master planning for phase two is well advanced, and there will be some significant news about the specific amenities of phase two soon.
Unlike the other Macau casino operators who seem to be making ever-larger dividend payments, Galaxy has decided not to offer a dividend to shareholders. Is that part of a strategy to maintain a strong Fine-dining draw—Belon, Banyan Tree Macau’s signature restaurant cash position to fund this further development and growth? gaming industry is lifting all the believe, the most spectacular casino resort As you know, we have a significant cash operators’ fortunes. But what have you in the entire world. position because of the great performance done in particular to improve margins of StarWorld, our City Clubs and Galaxy and drive operating efficiencies to There’s been a lot of speculation Macau. We have always intended to ensure strengthen your financial position? about who will get permission to build a great return to our shareholders, and You know, in a property the scope of on Cotai next. But one thing that’s we also want to make sure that in the Galaxy Macau, there is a ramping up period. sometimes overlooked is that Galaxy development of phase two that we use our It took several months to open all of our Macau sits on the largest land bank capital very wisely. 2,200 hotel rooms. It took a few months on Cotai and you’re free to expand it to open all of our food outlets and to in additional phases? understand the flow of our guests through You’re exactly right. the casino. And through that process, the effectiveness of the opening and making What have you got planned in terms sure that our “World Class Asian Heart” of additional development on Cotai? service was presented in every area became As we have been master planning the a process of becoming more efficient as entire piece of land that we have, you made well. And through the ramping up process, the point that Galaxy Macau, as significant through understanding the resort, through as the scope of this resort is, it sits on only understanding our guests and the flow of one-third of the land base. It gives us a great our guests through this magnificent resort, opportunity to understand the market and the efficiencies started coming into play. grow with the market. It gives us a great Pan-Asian Heart— lobby of Hotel Okura at Galaxy And we can see over this period of time, opportunity to listen to the guests that Macau over this first year of operation, the ramping up of efficiencies, the margins have become greater. And we are very pleased that the progress that we have made in becoming not only a great, spectacular destination resort, but a more efficient resort as well.
Are you still ramping up, or do you feel you’ve hit your stride? Well, I think, as you know, recently with the opening of our nine-cinema complex, with the red carpet event of the new Jet Li movie, and with the opening of China Rouge, the most spectacular live performance venue anywhere, we are now completing all of the amenities of phase one. We are still adding new restaurants, we are still adding more retail to phase one, but phase one has evolved and has become, we Still growing—Galaxy Macau
April 2012 | INSIDE ASIAN GAMING 35 INSIGHTS
Chic Retreat Considering that Galaxy Macau is booking well more than HK$1 billion a month in revenue from its VIP rooms, it seems only right that all those high rollers should be gifted with a place to party worthy of their lavish betting habits. With the opening of China Rouge, now they have. Galaxy unveiled the sumptuous 1,600-square-meter members-only club at the end of March with three days of appropriately amped-up festivities. There was a press tour. There was a photo shoot. There was a “media roundtable” with Alan Chan, the award-winning Hong Kong artist and designer who created the club’s décor, and the club’s executive manager, Noel Furrer, a European-trained chef and habitué of the Hong Kong jet set. There was a press conference hosted by Galaxy Entertainment Group Vice Chairman Francis Liu. There was not one but two red carpet ceremonies. But then it’s not like Galaxy to do things in a small way. Billed as an “ultra-sophisticated retreat for power brokers and society’s elite”, China Rouge doesn’t want to be perceived as merely another dimly lit space for the closeting of big players away from the prying eyes of the rest of us. Rather, the aim has been to fashion an ambiance that with a bit of imagination will transport the legendary spenders who get to go inside— access is invitation-only—back in time to eras legendary for their sinful elegance: Belle Époque Paris and Shanghai of the ’20s and ’30s. “It has been an amazing project to work on, and I must applaud the determination of Galaxy Macau to create something truly exceptional,” said Mr Chan, who conceived of the room’s palatial spaces, selected its appointments, and filled it with original works commissioned from some of China’s most celebrated contemporary artists and several pieces he created exclusively for the club himself. “One of my passions is the fusion of Asian and Western design,” said Mr Chan. In this manner, China Rouge is being trumpeted as another elucidation of Galaxy Macau’s “World Class, Asian Heart” theme. “The opening of China Rouge continues our track record of bringing exciting, new and unique experiences to the Macau market,” Mr Liu said. “And everything we do is underpinned by our commitment to being the only authentically Asian resort of its kind.” Officially, the club seats 165, with standing room for 400. It will feature live Asian and Western entertainment in a showroom overlooked by a mezzanine floor. The food is gourmet, of course, the wines the finest, the liquor the top of the top shelf. Dress is “casual chic”. Recently named one of the “Top 10 Resort Hotels of China” by the prestigious China Hotel Starlight Awards, China Rouge will add to that reputation a lustre of its own.
36 INSIDE ASIAN GAMING | April 2012 INSIGHTS
a 16% growth over the prior year. So we we all agree that in order for Macau as a are pleased with the continued efforts of destination to continue to evolve and our team members at all of our City Clubs, become more and more popular, it’s very and again they continue to be a genuine important that any new property follow contributor to our company. the model of Galaxy Macau. That any new property must add value to the proposition of Macau as a great holiday destination; for gaming, certainly, but what our guests tell us about Galaxy Macau is that it’s a property where they can choose to come here for a holiday with their family. Where you can arrive at three great hotels, and you can arrive at beautiful, different lobby areas that present the theme and the Punching above its weight—StarWorld Hotel & identity of those three great hotels. Where Casino you can go to any one of the 50 food and beverage outlets, you can come to the Now StarWorld boasts one of the most fabulous resort deck in the world, highest returns on investment of any Still contributing—Rio Hotel & Casino is one of and if you choose to go to the casino, casino property in the world. Obviously Galaxy’s four city clubs in Macau that is your decision. But what needs to Galaxy Macau is a totally different happen in Macau, and all of us agree, is kind of property, different scale. But Your earnings are still primarily driven that any new resort must add value to that how are you doing in terms of ROI so by VIP gaming, even though you now proposition and again follow the lead and far on this property? have this great mass market property the model of Galaxy Macau. As you said, StarWorld and Galaxy Macau in your portfolio. What are you doing are two very special casino resorts, but very to drive higher-margin mass market And what would you like to see from different casino resorts. As StarWorld opened play, and what segment of the mass the government towards helping a bit over five years ago, we celebrated our market are you most interested in? further growth of the market? fifth anniversary at StarWorld in October, Well, we’re interested in all segments of We have a great relationship with with our team members and with our the market at Galaxy Macau and at StarWorld. the government. The government is very guests that have been amazingly loyal to And through the ramping up of Galaxy supportive in every area of the business of the process. We celebrated with over 3,000 Macau, our mass business has continued the resorts in Macau. And we all know that of our team members that are over five-year to evolve. Each month our position in the with the low unemployment rate in Macau, team members. Their loyalty to this company mass-market arena has grown, and in the that new team members for the ever- is remarkable. fourth quarter of last year we had the most growing set of resorts is an issue that is a StarWorld was built for a price of significant percentage growth in mass concern, but we have great faith and in all around 3.4 billion, Galaxy Macau was business of any resort in Macau. We have a of our conversations with the government, around 16.5 billion Hong Kong dollars. So fabulous team that is very focused on the they appreciate all of the challenges that the they are very different resorts. The return mass business, and most recently we have industry faces, and they work very closely on investment for StarWorld is possibly opened our Pavilion Club concept. Just a few with us to resolve those issues. the best in the entire industry at about days ago, we opened The Pavilion High Limit 86%. So as Galaxy Macau ramps up, as Slots area, we feel the most luxurious high our business model evolves, the margins, limit slot room in the industry, and we have the cash flow, the return on investment three Pavilions on the mass floor that are continues to grow as well. devoted to mass and premium mass table games. So we have given great attention to You mentioned the City Clubs. They a very special style of service through our were a great entry into this market. Pavilion Club, we have a fabulous team that But profit growth at the City Clubs has is devoted to the mass business, and we’re lagged that of the rest of the group pleased that the growth of the mass business recently. What is your strategy in terms at Galaxy Macau is the most significant in of the City Clubs? the industry. The City Clubs continue to be a very valuable contributor to our company. What would you like to see from the The four City Clubs Waldo, Grand Waldo, other Macau casino operators towards President and Rio, are performing very well. furthering growth of the market? Last year they contributed HK$185 million You know, we talk to the other to the company’s total EBITDA, and it was concessionaires regularly, and I believe Surf’s up—the wave pool
April 2012 | INSIDE ASIAN GAMING 37 Chipping Away It looks like online poker will be the entrée for gaming operators and vendors looking to exploit the potentially lucrative Internet gaming space, as discussed in this special report by Casino Journal’s Paul Doocey
t the 11th annual Gaming Laboratories enforcement oversight. The AGA revised this poker operators, commonly referred to as International (GLI) University policy in the light of several developments “Black Friday.” Perhaps the most important ARoundtable, held last month at the over the past few years—improvements in of all was the December decision by the Treasure Island Hotel & Casino in Las Vegas, geo-location and verification technologies, Department of Justice that the Wire Act—the a room of over 300 gaming regulators the success the United Kingdom, France, law that had been used to suppress all forms and executives witnessed something that Italy and other first-world nations had in of online wagering in the United States— would have been highly unlikely just two licensing Internet gaming operators, and the only applied to sports betting, clearing the short years ago—Frank Fahrenkopf Jr., the US government crackdown on large offshore way for states and the federal government president and CEO of the American Gaming Association (AGA), the national trade group US Online Gaming Historical and Forecasted Growth for the commercial casino industry, actively campaigning for the legalisation and federal Current trajectory regulation of online poker. The Conventional Wisdom Projected growth with libersalisation “There are now 2,000 offshore poker US online gross yield 15.6 sites accepting bets from 10 to 15 million +29% p.a. 14.0 Americans each day,” an animated Mr 12.1 Fahrenkopf told the audience. “Most of these Potential liberalization sites don’t provide consumer protection or UIGEA’ bill passed 10.2 care about issues such as underage and 8.1 responsible gaming. Creating legislation that +1% p.a. legally brings this industry onshore allows it +31% p.a. to be policed and regulated, in addition to providing tax revenue and jobs.” 6.1 5.0 4.8 This is a far cry from the stance the 3.8 4.2 4.7 4.4 4.4 4.3 AGA had on all forms of Internet wagering 2.8 as recently as 2010; essentially a blanket 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 opposition based on the fact that the technology did not exist to properly *2006 Unlawful Internet Gambling Enforcement Act regulate Web gaming with appropriate law Source: H2 Gambling Capital, Morgan Stanley Research
38 INSIDE ASIAN GAMING | April 2012
In Focus
to legislate and regulate Web gaming. insure no one type of gaming, no matter of Internet gaming, but would originally be And a number of state and federal how strong its political or lobbying restricted to poker. Only previously licensed legislators responded by introducing power, will have an advantage over California-based tribes and racetracks will Internet gaming bills and proposals, most another in the Internet realm. be allowed to have online poker licenses. In involving online poker, the most politically • Clout—A federal presence will make New Jersey, S1565 would permit Atlantic City palatable of the Web wagering options. certain the rights of those states that do casinos to offer online “approved games” to “I am a practical man…. the only hope of not want to be part of the online poker state residents. getting any legislation through this Congress business are respected. Also, federal “I think we should be an epicenter for that that deals with online gaming is poker,” Mr agencies are better equipped to maintain business, but I want to do it right—I do not Fahrenkopf said. “There will be no appetite the rule of law on the borderless Internet want to rush and get legislation that either from some of the people we have to get on than most state police forces. Finally, doesn’t pass state constitutional muster, or board for anything beyond poker. You can’t federal regulators are much more likely creates other problems for us,” New Jersey get any more than this now.” to work with the government on reform Gov. Chris Christie told Reuters when the bill Although poker may lead the charge, and bolster the Wire Act and the Unlawful was introduced in January. most believe the Internet components Internet Gaming Enforcement Act of all forms of popular wagering will (UIGEA), primarily to keep unregulated eventually be allowed and regulated in the offshore operators from preying on US US “It is not a question of ‘if’ but ‘when’ with poker players. [expanded] Internet gaming,” said James So far, the only federal bill that directly Maida, president and CEO of GLI, at the GLI tackled Internet poker regulation is HR Roundtable. “Internet gaming is going to 2366, sponsored by Congressman Joe Baton happen in the US. We don’t quite know how (R-Texas), which would license and regulate just yet, but we know it is coming.” online poker operators under the Secretary of Commerce. Only licensed gaming Control issues establishments (commercial and tribal Indeed, the jury is still very much out casinos, racetracks, card rooms, etc.) would over who will have the ultimate control of be considered for the Web poker licenses. the creation and regulation of Internet poker The bill currently has 27 sponsors. in the US, but the field has been whittled Mr Fahrenkopf said HR 2366 “is a little down to two primary candidates—the bit closer to where we think it ought to be,” federal government and the states. At the when compared to other Internet gaming Online advocate—New Jersey Gov. Chris Christie very least, all sides agree that regulations legislation, but the AGA has chosen to remain for online poker should insure that the neutral on the measure. Mr Fahrenkopf If one of these bills comes to fruition, games are fair, that the sites offering poker admits the gaming industry will need to they will also have a state model of Internet operate with integrity and law enforcement be “lucky” to have any federal online poker poker regulation to emulate. oversight, that payment systems are secure, regulation pass this year. “I am still hopeful This past December, the Nevada Gaming that underage and problem gamblers do not that before this Congress is over, a new piece Commission approved and released rules have access to the games, and states’ rights of federal legislation will be introduced,” he companies would have to adhere to in regarding online poker play be observed. said. “I wish I could tell you it is going to order to receive licenses to operate Internet The AGA and its brick-and-mortar casino happen. I hope this Congress will come up poker sites within state borders. According members would prefer these regulations be with something that will solve the problem. to the Las Vegas Review Journal, companies administered on a federal level. Among the But it is not easy to draft something that will with other Nevada licenses would have the reasons: do all that.” new title attached to their licenses while • Uniformity—Instead of a hodgepodge All of which means if Internet poker is to companies new to Nevada would be vetted of Internet poker regulations from state be legalised and regulated this year, it will with full licensing investigations, which and tribal governments, there would likely happen at the state level. A number usually take several months. Among the be a single uniform set of rules for the of states, primarily looking to bolster tax requirements for the license: operators gaming industry to follow and law revenue and generate high-tech jobs, have have to show they can limit play to state enforcement agencies to regulate. introduced online poker or some form of residents of legal age; detect money • Reciprocity—There is no guarantee Internet gaming legislation. This list of states laundering and other forms of fraud; and that states and tribes will work or even includes California, Connecticut, Hawaii, have a large enough cash reserve to cover communicate with each other when Illinois, Iowa, Maryland, Massachusetts, money deposited by customers. it comes to reciprocal issues such as Mississippi, New Jersey and New York. A number of well known gaming licensing and law enforcement. A federal Of the measures focusing on Internet operators and suppliers already announced oversight will provide common ground poker, those from California and New Jersey they would be applying for Internet and insure vital information is shared appear to have the best chances of actual poker licenses. This list includes Caesars across borders. passage. The California bill, SB 1436, calls Entertainment, Boyd Gaming, MGM Resorts • Transparency—Federal oversight will for licensing, regulating and taxing all forms International, Bally Technologies, Spielo,
40 INSIDE ASIAN GAMING | April 2012
GLI University shines light on Web regulatory issues
Cantor Gaming, IGT, Aristocrat and WMS. Upping the ante Much like the states, gaming operator and vendor interest in Internet poker is largely due to, well, money. Indeed, no matter who you listen to, it appears online poker and Internet wagering in general can be quite lucrative. Union Gaming Group Analyst Bill Lerner told the Review Journal James Maida, GLI president and CEO, welcomes Jan Jones, vice president of communications and regulators. government relations for Caesars Entertainment, that a legal US online poker market could delivers a keynote. immediately generate US$5 billion in yearly revenue. Rick Bronson, chairman of U.S. he impact pending online gaming legalisation would have on the US regulatory Digital Gaming, tabbed the yearly revenue Tcommunity was a topic very much on the minds of many of the attendees at the 11th results substantially higher at $12 billion annual Gaming Laboratories International (GLI) University Roundtable, held last month at a year. At the iGaming North America the Treasure Island Hotel & Casino in Las Vegas. conference, Steve Rittvo, chairman of the The two-day event drew 365 regulators from 32 states, four Canadian provinces and Innovation Group, unveiled a survey that two Caribbean jurisdictions. American Gaming Association (AGA) president and CEO Frank estimated a legal US online gaming market J. Fahrenkopf, Jr. gave the first day’s keynote address, in which he updated the audience could produce $15.6 billion in yearly on the latest finding of the AGA’s Regulatory Reform Task Force before launching into his revenue by 2017. take on recent online gaming events. Mr Fahrenkopf reiterated the AGA’s support of online “Online poker is an important business poker, so long as it is federally legalised and regulated. for casinos going forward…it offers one of “There are now 2,000 offshore poker sites accepting bets from 10 to 15 million Americans the best growth opportunities available each day,” Mr Fahrenkopf said. “Most of these sites don’t provide consumer protection or given current market factors,” said Jonathan care about issues such as underage and responsible gaming. Creating legislation that Halkyard, executive vice president legally brings this industry onshore allows it to be policed and regulated, in addition to and CFO for Caesars Entertainment providing tax revenue and jobs.” Corporation at the iGaming North America Mr Fahrenkopf then spoke out against recent newspaper articles that said efforts to conference that took place last month in establish federal regulation were dead for this year, and that Internet poker legalisation Las Vegas. “Worries about cannibalism are would likely occur in a piecemeal, state-by-state fashion. “I am still hopeful that before this unfounded. Caesars bought the World Congress is over, a new piece of federal legislation will be introduced,” he said. “I wish I Series of Poker [WSOP] in 2004 and it had could tell you it is going to happen. I hope this Congress will come up with something that a grand total of 800 players in the final. By will solve the problem. But it is not easy to draft something that will do all that.” 2007, that number grew to 7,000, despite James Maida, GLI president and CEO, acknowledged the growing importance of the fact online poker was thriving. In my Internet wagering in the US and throughout the world. To help prepare GLI customers mind, each business reinforces the other for the upcoming regulatory onslaught, the company recently purchased TST, a global without question.” leader in Internet gaming systems testing. TST will be rebranded and incorporated into A number of gaming properties GLI as GLI Interactive. The company is also in the process of hiring 100 new engineers have already taken steps to insure a and support staff. space at the online poker table. For “The Internet is everywhere and everybody wants in on it,” Mr Maida said. “And we are example, Michael Gaughan, owner of way ahead of the curve of helping our clients meet their goals in this area.” the South Point Hotel, Casino & Spa in Mr Maida and Patrick Moore, director of compliance for GLI, also held a discussion Las Vegas, created SouthPointPoker. on 10 gaming technology trends to watch for in 2012 and beyond. Making their list was com, the first free-play site approved for Cloud computing, persistence gaming and the threats of bots and collusion in the online a Nevada regulated casino in the United wagering realm. States. Hosted on a Zen Entertainment The second day keynote was Jan Jones, the former mayor of Las Vegas and current vice platform, SouthPointPoker.com will offer president of communications and government relations for Caesars Entertainment, who a $10,000 Main Event seat every week discussed the impact Las Vegas and New Jersey had on modern gaming regulation. with daily qualifying tournaments; up to In addition to the keynotes, there were a series of panel discussions that touched on an additional $100,000 in cash and prizes topics such as the latest tools of the trade that help regulators avoid common security each month; and daily tie-in promotions pitfalls; how regulators and operators can share common ground; the complex challenge allowing players to win online. of implementing a multi-jurisdictional strategy for internet-based lottery, bingo, sports Meanwhile, Golden Nugget and betting and casino-style gaming; the legal challenges gray-area games have caused; and Chiligaming, an international developer how regulators might make the most of the Cloud. and operator of multi-platform social games “The feedback we received from regulators was extremely positive,” Mr Maida said. “We and gambling products that was recently appreciated how many regulators from jurisdictions far and near told us that this event and purchased by Bally Technologies, have the knowledge they gain here is a critical part of their business.” entered into an online gaming partnership,
42 INSIDE ASIAN GAMING | April 2012 In Focus
with a free play Web site due to launch “MacroView provides you with a Casino is the world’s largest virtual this spring. Golden Nugget has selected platform; when you design content, casino and one of the top four social Chiligaming as its exclusive online gaming that platform can take care of it on media games in 2011 as rated by partner in anticipation of the legalisation of all sorts of mobile devices, not just Facebook. According to AppData.com, online gaming in the United States. the iPhone,” said Ramesh Srinivasan, DoubleDown Casino currently has 4.7 Chiligaming’s proprietary iGaming president and chief operating officer, million monthly active users, up from 3.3 platform, which enables it to connect to any Bally Technologies, at the company’s million in October 2011. With a broad and poker platform or gaming content provider, recent user conference in California. expanding portfolio, Double Down offers is a central feature of its US proposition and “This is cutting-edge technology. It blackjack, slots, slot tournaments, video is designed to both facilitate swift entry into is not just a matter of putting games poker, and roulette to social gamers all the market and maximise options for the for free play on mobile devices. This is around the world. Golden Nugget as the US regulatory and about providing marketing solutions The addition of Double Down provides vendor landscape takes shape. for you and your patrons and to build IGT instant size and scale in the fast Many other companies are emulating relationships with them.” growing world of casino-style social the free play/social gaming strategy with Srinivasan called Chiligaming “the most gaming and is expected to broaden poker and other popular casino games, open platform available in the Internet IGT’s popular gaming titles beyond the with the thought that once real-money space today,” making it is easy to create physical casino to Facebook, the world’s online wagering sites are allowed to go live interfaces from any front-end solution largest social network with over 800 in Nevada and elsewhere, they will already that you choose; bingo, poker, slots, live million global users. This distribution have built-in and loyal audiences. tables, etc. model is anticipated to provide IGT an Other operators have opted to go the • Aristocrat Technologies has actually opportunity to entertain players with acquisition/merger route to improve online teamed up with Bally to offer the consistent, ubiquitous, thrilling gaming offerings. Last year, bwin.Party, the parent same third-party poker networks as experiences across multiple platforms. company of the Party Poker online franchise, part of their business-to-business • Shuffle Master acquired Ongame formed a joint company with MGM Resorts (B2B) Internet-gaming solutions for Network from bwin.party Services International and Boyd Gaming to launch an US operators. Working together, the (Austria) GmbH. Ongame is one of the online poker offering. Caesars International companies will be better able to more world’s largest poker providers to online and 888 Holdings formed a similar alliance quickly and effectively offer attractive gaming operators, with a global network last year as well. and credible online poker games that that includes more than 25 of the Caesars Entertainment plans for the will provide stronger player experiences iGaming industry’s strongest brands and online medium are quite ambitious, with and functionality and greater poker operators, as well as regional networks in its 888 Holdings arrangement, the ongoing liquidity for both Bally and Aristocrat’s France and Italy. online marketing and expansion of its casino-operator customers. The acquisition aligns with Shuffle WSOP franchise and its recent purchase Both companies are offering iGaming Master’s strategy of expanding its of Playtika, a well-known company in the platforms with an integration to their online product offerings to capitalize social games space. back–end core system solutions, while on regulated online gaming, while “We are firmly convinced that the providing operators with the flexibility operating purely as a B2B provider and expansion of online gaming offerings for to choose best–in–class applications not providing gaming content directly to real money, for fun, and for social and mobile from multiple suppliers around the players. mediums will benefit our land based casino world; Bally through its recently “I am confident that Ongame will fit portfolio due to further brand enhancement, announced acquisition of Chiligaming’s seamlessly into our ongoing interactive customer acquisition in these new channels iGaming platform, and Aristocrat initiatives of delivering our renowned and marketing arrangements including through its exclusive collaboration with brands to online gaming operators, incorporating our Total Rewards cash back GameAccount Network. partner Web sites, social networks and points program into our online gaming Under the strategic alliance, Bally and mobile platforms,” said Gavin Isaacs, CEO offerings,” Mr Halkyard said. Aristocrat will secure arrangements with of Shuffle Master. “Poker is a natural fit Vendors are also pursuing acquisitions leading poker providers, who will then for our table centric online offerings and and partnerships to make sure they are be integrated into Bally’s and Aristocrat’s our many jurisdictional licenses present relevant in the Internet poker and online iGaming platforms. Advanced discussions a compelling opportunity for our current arenas. The list of companies active in this with several poker providers are currently and future online customers.” space includes: underway. If online poker earns anywhere near the • Bally Technologies has launched an • International Game Technology amount of money industry observers Interactive Gaming division composed (IGT) recently purchased Double Down predict it will, chances are more vendors of mobile, Internet and social media Interactive LLC—a leading online social will find a way to fit the game into their applications. It has been bulked up by gaming company and developer of the line of products, natural fit or not. two key acquisitions; MacroView on the popular DoubleDown Casino found on mobile side and Chiligaming on the Facebook. Reprinted with permission from Casino Internet gaming end. Launched in April 2010, the DoubleDown Journal
April 2012 | INSIDE ASIAN GAMING 43 Briefs
Kenji Tamura, chairman of the DPJ’s Cabinet section and of his Regional Briefs party’s casino IR (integrated resort) working team, presided over the session in a meeting room at the House of Representatives. Toru Mihara, a guest professor of Osaka University of Commerce, gave lawmakers a presentation on IR schemes in other countries. Another Chinese high-speed rail network extends to Shenzhen speaker—Akira Kurita, from one of Japan’s biggest advertising agencies, Hakuhodo Incorporated—described the success of casinos in Singapore. According to GCM some DPJ lawmakers did voice opposition to the casino plan. In Japanese politics it’s usual for governments to seek political consensus before introducing major policy changes—unlike in the West where governing parties often rely on a house majority or internal party discipline to push changes through. Japan’s approach means it can take longer than in the West to achieve a big change in policy direction. But the country’s recent natural and nuclear disasters coupled with an economic slowdown and an ageing population has created an urgent need for fresh sources of economic growth and government revenue. International tourism has been identified as one such source and integrated casino resorts as a catalyst for increasing inbound tourism. During the meeting, government bodies including the National An extension of China’s high-speed rail network was opened on Police Agency, Japan Tourism Agency and the Ministry of Health, 1st April, with service now running from Wuhan to Shenzhen (via Labour and Welfare were invited to submit comments on a proposed Changsha and Guangzhou), with an end-to-end journey time of four casino bill and to indicate if they would be willing to have official hours and 15 minutes, as reported in a note from Union Gaming roles in the administration of a casino industry. According to GCM, Research Macau. Wuhan is the capital of Hubei province in central the organisations agreed to provide official responses at the next China while Changsha is the capital city of Hunan province in south- briefing meeting. central China. The previous terminus of the high-speed rail line was the Guangzhou South railway station. This line will ultimately connect directly to Hong Kong through the Guangzhou-Shenzhen- SPIELO International expands sales team in Asia Hong Kong Express Rail Link, scheduled to open in 2015. The new SPIELO International’s Casino Systems Wuhan-Changsha-Shenzhen direct service is part of China National and Asia Sales groups are working together high-speed rail grid (4+4), and carried 440 million passengers in 2011. to increase the company’s presence According to Union Gaming: “We believe the more direct new in the Asian gaming market with two route to Shenzhen (as opposed to Guangzhou) could have a positive appointments, effective this month. impact on Macau visitation as Chinese tourist often tack on a Macau Marc Attal, Managing Director for SPIELO visit in conjunction with a Hong Kong trip. In 2011, the provinces of International Casino Systems, has appointed Hubei and Hunan (Wuhan and Changsha, respectively) accounted Lai Fatt Chiang as General Manager of Casino for just 1.6% and 1.9% of Macau visitation, respectively.” Systems for Asia Pacific. Based in Malaysia, Lai Fatt Chiang has 10 years’ experience in all aspects Lawmakers from Japan’s ruling party briefed on casino plans Maria Garcia of the gaming industry in Asia. His past Parliamentarians from Japan’s governing Democratic Party of experience includes his role as Group Japan (DPJ) were given a special briefing recently about the plan to General Manager at RGB International, as well as three years with introduce one or more casino resorts to the country according to SPIELO International’s games division (previously ATRONIC). Gaming Capital Management (GCM), a consultancy. The plans have “SPIELO International strongly believes in maintaining close been developed by a special steering group of the DPJ and by a cross- relationships with its customers, and in understanding cultural party lobby group and are now being presented to all the lawmakers differences among operators and players. This is the basis ofour for their responses. approach to the diverse Asian market,” said Mr Attal. The briefing in Tokyo was led by those members of the DPJ “The appointment of Lai Fatt Chiang, who reports to Casino with responsibility for the Cabinet, the Ministry of Justice and the System’s International Sales Director Fivos Polymniou, demonstrates Ministry of Land, Infrastructure, Transport and Tourism—the three SPIELO International’s ongoing commitment to increasing support departments of national government that would have the key for its existing casino systems customers in Asia. Our intent is responsibilities when it comes to enabling legislation for casinos and to strengthen the partnerships with our established in-country for overseeing their development and operation. distributor channels throughout the region. Future appointments The DPJ lawmakers were updated about a proposed casino bill will add further expertise to this growing team.” and on cross-party discussions held by the Diet Member Alliance for Lai Fatt Chiang graduated from the University of Southern Promotion of Integrated Resorts. Queensland, Australia, in Accounting and Finance. He speaks fluent
44 INSIDE ASIAN GAMING | April 2012 Briefs
English, Malay, Mandarin, Cantonese and Hokkien. In addition, Marcel Heutmekers, SPIELO International Senior Director and General Manager, Asia and Latin America, has announced the appointment of Maria Garcia as Director of Sales for Asia (Casino Games). Based in Macau, Ms Garcia has been a well-respected distributor for several slot manufacturers in the region since 2006. Her most recent role was as Sales and Marketing Director for Asia Pioneer Entertainment Ltd. “We’re excited to have a well-known name in the industry on board. Maria understands the typical characteristics of the Macau Casino Royale Goa is the state’s largest casino vessel market very well. We believe she’ll become a key person in our long- term strategy for the Asian market,” said Mr Heutmekers. applies to all visitors in which Rs 1,500 ($30) is reimbursed in the form “We are happy and proud to have such an experienced and skilled of gambling chips. person joining us as part of this important journey in this region.” Union Gaming’s view is that “While the lowered entry fee could Ms Garcia graduated with a diploma in Event Management from generate more tourist entries, we believe a law that excludes locals the Hong Kong Management Association in 2004. She is fluent in from gambling could result in a marginal visitation benefit for other English, Portuguese, Cantonese and Mandarin. Asian gaming jurisdictions like Cambodia, Malaysia, Macau and Singapore. In 2011, around 170,000 and 870,000 visitors came to Macau and Singapore from India respectively. This represented 0.7% Galaxy Entertainment Group profit more than triples and 6.6% of Macau’s and Singapore’s total visitation.” Galaxy Entertainment Group Ltd said its 2011 net profit more than tripled, fueled by the May opening of its new US$2 billion flagship Cotai resort, Galaxy Macau, as well as the overall surge in PAGCOR forecasting US$10 billion Philippines casino market gaming revenue in Macau. Galaxy said its net profit for the year ended 31st December was HK$3 billion (US$387 million), up from HK$898.5 million a year earlier. Revenue more than doubled to HK$41.2 billion from HK$19.26 billion, set against a 42% rise in 2011 gambling revenue in Macau to a record US$33.5 billion.
Melco Crown net revenues rise 45% year-on-year in 2011 Casino Filipino-Heritage Hotel Melco Crown Entertainment, a Nasdaq-listed Macau casino Union Gaming Research Macau reported in a note that the developer and operator, said in a filing to the New York Stock Philippine’s government casino-operator-cum-regulator, the Exchange that net revenues for the year ended 31st December, 2011 Philippine Amusement and Gaming Corp (PAGCOR), will relocate were US$3.83 billion, an increase of US$1.19 billion, or 45.0%, as two of its casinos in Pasay city (a part of metro Manila), one at the compared with US$2.64 billion the previous year. Heritage Hotel and another near Ninoy Aquino International Airport, Net income attributable to Melco Crown Entertainment was after their gaming licenses expire in 2013 and 2014, respectively, to US$294.7 million in 2011, as compared with a net loss of $10.5 million reduce the impact from the opening of the Entertainment City in in 2010. nearby Parañaque City. The 100-hectare Entertainment City project Adjusted EBITDA in 2011 was US$809.4 million, representing an is expected to be fully operational with four integrated resorts in increase of US$379.0 million, or 88.1%, compared to $430.4 million 2016. Belle Corp., Travellers Hotel International Group Inc., Universal in 2010. Entertainment and Bloomberry Resorts and Hotels Inc. have all been granted licenses to build. Union Gaming offers its view on the development: “PAGCOR Proposed rule change in Goa could benefit Macau and executives are forecasting that Entertainment City will generate in Singapore excess of US$10 billion in GGR by 2016, which is approximately 1.5x The chief minister of the state of Goa in India is proposing 2011 GGR in Singapore and about one-third of Macau. We believe a stringent law similar to the one in Singapore to discourage its that the estimate is optimistic given several factors, including relative residents and those under the age of 21 from entering the casinos by geographic inaccessibility, given that Manila is a 2.5 hour flight from imposing a heavy surcharge, Union Gaming Research Macau said in Guangdong, China, which is the primary source of gaming revenue a recent note. At the same time, Chief Minister Manohar Parrikar also for Macau and it is a 3.5 hours flight from Singapore/Indonesia. proposed a reduction in the entrance fee for visitors to both onshore Furthermore, most of the operators at Entertainment City have a and offshore casinos from Rs 2,000 (US$40) to Rs 500 ($10). Goa is less-experienced track record when compared to the Macau and India’s richest state (GDP per capita at 2.5x the country average) and Singapore operators. Lastly, the Philippines are often perceived as the only state where gambling is legal. The existing Rs 2,000 entry fee unsafe, which could dissuade some customers.”
April 2012 | INSIDE ASIAN GAMING 45 Briefs
Pennsylvania Supreme Court rejects Foxwoods International Briefs license appeal The Pennsylvania Supreme Court appears Aristocrat tops in US survey to have dealt the final The results of an independent survey blow to efforts by conducted by Goldman Sachs of slot Foxwoods’ investors to hold on to their Philadelphia casino license. managers from across the United States Frustrated by delays, the Gaming Control Board revoked showed that Aristocrat has the best game and Foxwoods license in December 2010. Last year, Commonwealth the best slot system. Court upheld the license revocation, and now the state Supreme Aristocrat’s Buffalo™ video slot was rated Court has denied a petition by Foxwoods investors to hear an appeal the best slot game. Buffalo’s position at the of that ruling. top of the list marked the first time in the But it is not clear whether the city of Philadelphia will ever have survey where an Aristocrat game ranked a second casino. number one. Additionally, Aristocrat’s Whales At legislative budget hearings earlier this year, the chairman of of Cash™ game was ranked in the top 10 of all the gaming board said that if the state high court rejected the appeal, slot games. the board would move forward with awarding a new license but Aristocrat’s Oasis 360™ was also named probably not right away, because state lawmakers are considering as the best player tracking system. Oasis 360 legislation that would open up the license to statewide competition. is the most widely installed system in North Meanwhile, the chairman issued a statement saying that while America and is now monitoring devices at current law designates the license for Philadelphia, it would be more than 280 casinos in North America. “prudent and responsible” for the board to allow a bit more time to “What this survey shows in hard, black- allow the legislative process to unfold before starting a new license and-white numbers is what we knew all Top slot—Aristocrat’s proceeding along—that Aristocrat has the industry’s top Buffalo™ performing games and top performing system. Hearing this from slot operators means even more,” said Aristocrat Americas President Rank ends talks with Gala Coral Nick Khin. Bingo, casino and online gaming company Rank Group has ended The survey forecast that the future will continue to be bright for discussions with Gala Coral Group about a potential acquisition of Aristocrat, with operators indicating they will buy at least the same Gala’s casino business. Rank said the talks have ended after it “became amount from Aristocrat this year as they did last year and that the clear that the proposed terms of the acquisition would not serve the main reason given for buying more was performance. best interests of Rank’s shareholders”. The two parties have been In the systems area, Aristocrat was at the top of the list when in talks since January of this year. In a statement, Rank’s Chairman asked, “Which manufacturer do you plan on switching to?” Aristocrat and Chief Executive Officer Ian Burke commented: “Rank remains earned 38% response, with its closest competitor earning 29%. committed to delivering sustainable growth in shareholder value; According to the survey’s methodology, the 12th annual slot the proposed terms of the potential acquisition did not achieve this manager survey was based on interviews with slot managers from objective. We will now concentrate on delivering our organic growth 125 casinos in 24 states. The survey was commissioned by Goldman plans, including the delivery of 12 more G casinos by 2015.” Sachs and conducted by a third-party market research firm. Calls were made over several weeks, starting 4th January, 2012, and ending 8th February, 2012, for a total of 150 calling hours. MGM Resorts to seek alternative Massachusetts location MGM Resorts International has abandoned a proposed LVS names global operations executive casino site in Massachusetts, Las Vegas Sands has brought in a long-time hotel executive to but plans to seek an alternative fill a newly created position overseeing the company’s property location in the western part of operations in Las Vegas, Macau, Singapore and Pennsylvania. the state, reported the Las Vegas Chris Cahill, who spent two decades with Fairmont Raffles Review-Journal. International, has been named executive vice president of global In a statement, the casino operations for Las Vegas Sands Corp (LVS). He will report to company operator said there were “too Inaccessible—the proposed MGM President Michael Leven. many complications” in pursuing Resorts casino site near Brimfield The position runs parallel to LVS President of Global Gaming a hotel-casino development on Operations Rob Goldstein, who oversees the casino side of the a 150-acre site near the town of Brimfield, which is about 65 miles company’s business. west of Boston. MGM Resorts announced plans to pursue the project Mr Cahill led Fairmont Raffles and its predecessor organizations in January. through several mergers as both president and chief operating While the land is adjacent to the Massachusetts Turnpike, it does officer. not have any direct access from the highway, which posed a major
46 INSIDE ASIAN GAMING | April 2012 Briefs
obstacle to construction. MGM Resorts had said it would seek to build a new highway off-ramp leading to the casino development. “The unique nature of MGM’s plans for an all-inclusive world-class resort on the Brimfield site, and our growing understanding of the needed scope for its infrastructure, simply do not allow us to pursue the comprehensive MGM resort originally envisioned here,” MGM Resorts Chief Marketing Officer Bill Hornbuckle said in a statement. The company had signed a contract with Rolling Hills Estates Realty Trust to buy the remote site. The working name for the development was Rolling Hills Resort. MGM Resorts had not announced the scope of the project, only that it would create an estimated 3,000 permanent direct jobs, several thousand indirect jobs, and several thousand construction- related jobs. Western Massachusetts is where one of three resort-style casino licenses authorised by that state will be located. “MGM remains committed to developing (a) project in Western Revel is marketing itself as a lifestyle resort, a vacation and Massachusetts and we are actively pursuing other potential meeting mecca that just happens to offer casino gambling as well. development sites,” Mr Hornbuckle said. It’s in keeping with the new thinking in Atlantic City, the nation’s Other companies expected to bid on the single license in Western second-largest gambling market that has taken a pounding over the Massachusetts include Las Vegas-based regional gaming operator last five years from the recession and a slew of new casinos popping Ameristar Casinos and Penn National Gaming, which owns 25 up all around it in neighbouring states. racetrack casinos, regional casinos in 18 jurisdictions, and M Resort Gambling revenue has fallen from US$5.2 billion in 2006 to $3.3 in Las Vegas. billion last year. Given that, Atlantic City is trying to remake itself into Lawmakers and the governor approved three casino licenses; a place where gourmet restaurants, top-name concerts, spas and one each in Boston, western Massachusetts and southeastern luxurious hotel rooms are just as important as slot machines and cards. Massachusetts. Caesars Entertainment Corp. and Wynn Resorts Ltd. Gambling is only part of Revel; it also has a spa, 14 restaurants, are bidding for the Boston casino while a Massachusetts Indian tribe 10 pools and a theater with 5,050 seats that will host Beyoncé on is expected to be awarded the southeastern casino license. Memorial Day weekend. Local voter approval for the projects are required under the It has 2,450 slot machines and 160 table games. Its hotel, when Massachusetts law. The governor, attorney general and treasurer have fully open later this year, will have 1,898 rooms. Revel will employ appointed a five-person gaming commission to oversee licensing. about 5,500 full- and part-time employees. It is Atlantic City’s only non-smoking casino resort and the only one to fully embrace the ocean, with floor-to-ceiling views of the WMS applies for Nevada online poker licence coast that are considered a no-no in other gambling halls. Slot machine manufacturer WMS Industries announced last Located at the extreme northern end of the Boardwalk, next to month it has applied for an interactive gaming license with the US the Showboat Casino Hotel, Revel is the first Atlantic City casino to state of Nevada. open since its main rival, the Borgata Hotel Casino & Spa, debuted WMS joins the more than two dozen casino operators and in 2003. With its angular slanted roof and its giant white light-up ball gaming equipment manufacturers that have filed applications with atop the 47-story structure — the second-tallest in New Jersey at 710 the state Gaming Control Board. feet — Revel is already an iconic presence in the city. WMS President Orrin Edidin said the Illinois-based company plans to supply content to the online gaming sites planned by casino operators. Playboy Club to close at Palms in Las Vegas “Just as we develop and produce innovative gaming content The Playboy Club at the and gaming machines for our customers’ land-based casinos, WMS Palms Casino Resort in Las is committed to assisting our customers in establishing strong Vegas will close in June. A interactive gaming relationships with their patrons in the casino, at statement released last month home or on their mobile devices,” Mr Edidin said in a statement. by the casino said the parting Mr Edidin added WMS has made “significant progress” in was amicable. The club at the developing content for online gaming. Palms opened in October 2006, with women dressed as bunnies Bowing out— the Playboy Club at the dealing cards. It represented Revel casino opens in Atlantic City Palms the first Playboy Club to open The sun rose on a new era in Atlantic City on 2nd April as the since patriarch Hugh Hefner US$2.4 billion Revel casino resort opened its doors with a blueberry closed the last one in 1988 in Lansing, Michigan. smoothie toast at sunrise and a rush of gamblers eager to try out the Meanwhile, the Playboy Club in Macau closed its doors last city’s 12th casino, according to a CBS News article. month.
April 2012 | INSIDE ASIAN GAMING 47 Events Calendar Events Calendar 11 - 12 April, 2012 27 - 28 June, 2012 FADJA 2012 - Andean Gaming Trade Show SAGSE Gaming Panama Corferias - Centro de Convenciones, Bogotá, Colombia ATLAPA Convention Center, Panama City The trade show component of FADJA 2012 offers a Since 2006, the South American Gaming Expo and Congress comprehensive collection of the world’s leading gaming (SAGSE) Panama has been attracting gaming professionals suppliers and their latest product releases, while the conference from the world over. It showcases the latest innovations in the sessions, supported by the Colombian Federation of Casino and gaming and entertainment industry sector and brings together Bingo Entrepreneurs, provides a thorough picture of the gaming operators and regulators for two days of technical sessions and landscape in the Andes. interactive meetings. Website: http://www.fadja.com/ Website: http://www.sagsepanama.com/ 24 – 26 April, 2012 19 - 20 September, 2012 Global iGaming Summit & Expo Caribbean Gaming Show & Conference The Westin San Francisco, USA Renaissance Santo Domingo Jaragua Hotel & Casino, GiGse is the definitive iGaming Summit & Expo for North America. Santo Domingo, Dominican Republic It brings together senior executives and decision-makers to discuss The Caribbean Gaming Show & Conference is the largest gaming how to take advantage of the emerging North American i-gaming exhibition in the Caribbean. Taking place in Santo Domingo, the market. The 12th annual GiGse will look beyond regulation and show hosts gaming manufacturers, distributors, consultants, help attendees plan their i-gaming launch in North America and and regulators, as well as top gaming executives representing be commercially ready for when the market opens. It will help more than 60 casinos and major sportsbook operators from the attendees create strategic partnerships for exchange of expertise Dominican Republic and surrounding countries. and the quickest way to market possible. Website: http://www.caribbeangamingshow.com/ Website: http://www.gigse.com/ 22 – 24 May, 2012 1 - 4 October, 2012 Global Gaming Expo 2012 (G2E) Global Gaming Expo Asia (G2E Asia) Sands Expo and Convention Center, Las Vegas Cotai Expo, Venetian Macao, Macau G2E is the premier trade show and conference for the Global Gaming Expo Asia (G2E Asia) is the premier trade worldwide gaming-entertainment industry. It’s the best place show and conference for the Asian gaming market. This event to see and learn what’s new and what’s next so you can gain highlights the remarkable growth in Asian gaming and gives the information you need to succeed in gaming’s fiercely you access to new products and the latest trends, delivering competitive marketplace. Join us to see leading exhibitors qualified buyers, and fostering optimal networking in the showcasing the latest products/technologies, learn from Eastern hemisphere to ensure you can grow your business experts in the four-day world-class conference, and network in this rapidly growing market. As part of the G2E portfolio with the Who’s Who of gaming. of events, G2E Asia is an event by the industry and for the Website: http://www.globalgamingexpo.com/ industry and it evolves each year to keep pace with industry demands and the latest industry trends. Website: http://www.g2easia.com/
denotes events where Inside Asian Gaming will be available. To list your event here and on our website, email [email protected].
48 INSIDE ASIAN GAMING | April 2012