May 2008 • MOP 30

The Big Squeeze In ’s VIP market

USPC’s Winning Hand Galaxy’s Star Performance More monetisation: Safe at Heights ESL Gaming Indices Eastbound Traffic

Hot Spots Data visualisation at work

CONTENTS May 2008 The Big Squeeze

7 The Big Squeeze

17 Hot Spots

20 Winning Hand

23 Star Performance

29 Safe at Heights

31 The Best Gets Better

32 ESL Gaming Indices

36 Eastbound Traffic

40 Regional Briefs 7 42 International Briefs 44 Know Your ’s VCL 29 44 48 In Praise of Progress 50 G2E Asia Exhibitor List

52 Events Calendar

17 2 INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING 3 Editorial

Who Are the Oligopolists?

Macau’s casino sector is characterised as an oligopoly—namely, a market dominated by a small number of sellers. The assumption is that six oligopolists “sell” casino gaming in the market. They are—in order of appearance of their first casino properties in the city—’s SJM, Sands Corp, Galaxy Entertainment Group, Wynn Macau, Melco PBL Entertainment and MGM Grand Paradise. Basic economic theory states two distinct outcomes can occur under oligopolistic competition. First, the firms can collude, either through a formal or unspoken agreement. The oil producing countries in OPEC collude formally as a cartel to restrict production and raise prices to achieve what are known as “abnormal” profits. If the collusion is informal, the firms may simply follow the pricing of an acknowledged market leader in order to achieve those profits. The second outcome is fierce competition between the firms, which can lead to a situation approaching that of perfect competition, where only “normal” profit—corresponding to the level of profit that only covers costs— is generated. The international entertainment industry is essentially an oligopoly, dominated by media giants such as Time Warner and News Corp. Other oligopolies include the beer, tobacco and Editor and Publisher automobile industries. Firms in these industries vie for market share on the basis of product Kareem Jalal development and differentiation. Gaming under a restricted-license situation could—and perhaps should—develop as an Director oligopoly in the media industry mould. Players will go to the most attractive or comfortable João Costeira Varela venues, or the ones they most identify with. When there is insufficient supply relative to demand, however, even weak brands will prosper. Immediately following Macau’s visitor and casino boom Business Development Manager in 2004, for example, even uninviting were packed because of the capacity shortage. As Matt Phillips capacity boomed, the undesirable properties have now fallen by the wayside and will eventually be rendered obsolete. Operations Manager In the VIP gaming market, Macau’s casino operators essentially offer space to junket operators to José Abecasis bring their customers to play in, since attempts by each new arriving casino operator to attract VIP customers directly have proved futile. Contributors During the monopoly era, casinos offered junket operators a commission rate of 0.7% on rolling Michael Grimes, Desmond Lam, chip sales, which brought Dr Ho’s company abnormal profits, especially since as a monopoly, it was Steve Karoul, Richard Marcus not compelled to invest in improved facilities or services in order to compete with other operators. Considering Macau’s new casino operators are investing heavily to create glitzy properties with Graphic Designer distinct brand identities, it would seem advisable for them to maintain an implicit understanding Brenda Chao not to also compete on the basis of commission. The casinos could seek to attract junket operators solely on the basis of product differentiation, while they informally collude to stick to the price of a Photography market leader—the leader would seem Stanley Ho, who pioneered the VIP market. Ike This, of course, is not what has happened, and commission rates have raised steadily since new casino operators arrived in Macau in 2004. Each successive attempt by an individual operator to increase market share by raising commission has quickly been followed by the other operators, eroding both that operator’s short- Inside Asian Gaming lived market share gains as well as overall margins and profits in the market. The latest escalation is published by was instigated by Melco PBL Entertainment, which had a distinct six-star brand proposition when Must Read Publications Ltd coming to market, so it is all the more ironic that it has now opted for the strategy of a commodity Suite 1907, AIA Tower, 215A-301 supplier attempting to increase sales. Av. Comercial de Macau - True, there is more to Melco PBL’s new arrangement than merely an increase in the commission Macau rate, and as discussed in our cover story this issue, the result could be that Crown Macau increases the Tel: (853) 6646 0795 size of the overall pie, in addition to gaining a larger share of it. Yet all the features of the arrangement can be replicated by the other operators, and when they do so, the VIP market will come closer to a For subscription enquiries, situation where revenues just cover costs. please email Last month, the Macau government announced it would not issue any new casinos licenses and [email protected] would put a freeze on approving new applications for additional gaming capacity. This boosted the stock prices of Macau casino operators, as it limits further competition in the market, at least in the For advertising enquiries, short term. Still, the balance of power in the VIP market appears to have already shifted away from please email the casinos in favour of the junkets. [email protected] Like the casinos, junket operators had seen their margins eroded as a result of intensifying or call: (853) 6646 0795 competition for players. This has resulted in the consolidation of the industry, and emergence of so- called junket “aggregators”—Melco PBL’s arrangement is with junket aggregator AMA Holdings. www.asgam.com By consolidating the major junket operators, the junket aggregators gain considerably greater bargaining power relative to the casino operators, who are essentially “buying” VIP business from the aggregators with their commission offering. In the VIP market, the junket aggregators have thus Printed by become the oligopolists, while the casino operators have been rendered essentially commodity Icicle Print Management (Macau) Ltd suppliers of venues for the aggregators to conduct their business within. Tel: (853) 2871 2818 Kareem Jalal Fax: (853) 2871 2898 www.icicleprint.com We crave your feedback. Please send your comments to [email protected] INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING 5 Market Outlook

6 INSIDE ASIAN GAMING | May 2008 Cover Story

The Big Squeeze What a difference a deal makes. After Crown Macau introduced a revolutionary junket arrangement—featuring a steeply higher commission rate—in December 2007, it has risen from an also-ran to clinch the largest share of the Macau VIP gaming market. Other operators look set to follow Crown’s lead, even though it is still not clear that the volume gains from raising commissions will make up for the resulting decline in margins

May 2008 | INSIDE ASIAN GAMING 7 Cover Story

owards the end of Stanley Ho’s 40-year casino operating monopoly in Macau, Tthe average commission rate on VIP rolling chip sales in Macau was 0.7%. As new operators started vying for a slice of the VIP pie, the rate had crept up to an average of about 1% by 2007. Melco PBL Entertainment (Macau) Ltd then decided to leapfrog the rest of the field by offering junket aggregator AMA International a staggering 1.35% commission rate on rolling chip sales at the high-end Crown Macau. Furthermore, Melco PBL gave AMA the further enticement of daily rather than the usual monthly settlement of that commission. The arrangement went into effect in December 2007 after Crown Macau’s gaming space was reconfigured and AMA and its junket collaborators moved in. There is more to the arrangement than just an escalation

A Macau VIP room

of the junket commission war, however. and taking on the sometimes troublesome The deal empowers AMA to drive greater task of enforcing the debts, since the Macau VIP gaming volume at Crown. Through a government only made it legal for casinos to convoluted business relationship, Hong extend credit in 2004. Kong-listed A-Max Holdings receives 80% Whereas luxury is the key defining of AMA’s profits (but is technically only an characteristic of VIP areas in casinos in the US “associate” company of AMA). A-Max uses its and Europe, the main feature of Macau VIP stockmarket listing to raise cash, which AMA Rooms is the provision of credit to players, then uses to buy VIP rolling chips in bulk especially those from mainland who from the casinos at preferential rates. AMA are unable to take large sums of cash out of passes on some of the savings to its nine their home country. The arrival of credit is junket collaborators, who obviously found it believed to have multiplied gaming revenue a good deal as they all agreed to bring their in Macau by a factor of five times or more. clients exclusively to Crown. Melco PBL must have reasoned that the Taking the VIP Crown increase in VIP gaming volume generated by The AMA deal propelled Crown’s its deal with AMA would more than make up VIP gaming revenue and market share for the inevitable erosion of its profit margin. skywards. VIP baccarat accounted for 69.7% AMA also boosts volume by extending credit of the city’s total casino revenue in the first to its junket partners, who in turn can extend quarter of this year, and by February, Crown more credit to the VIP gamblers they bring Macau had secured a 21% share of that to Crown. market—the highest share of any casino The rolling chip commission program— in the city. Crown’s share of Macau’s overall using “non-negotiable” or “dead” chips, which casino revenue rose from under 2% in May junkets are given a commission on when 2007 to 9% in December, then 18% by their clients purchase them to play with— February. According to Melco PBL, Crown’s was actually pioneered in the mid-80s in market share continued rising strongly in order to reward junket operators not only for March, suggesting it had reached or even bringing their clients to a particular casino, exceeded 20%. Crown Macau level 5 but also for extending credit to those clients Crown’s competitors are reeling from the

8 INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING 9 Cover Story

rapid fall in their market share—although There is a clear divide between high-rollers in “Jumbo sized” VIP facility, which will add a the loss of share was mitigated by the Macau and those in Vegas. A baccarat table is further 100 plus VIP tables at its flagship impressive 73.3% year-on-year jump in VIP pretty much all the entertainment a typical StarWorld property. To put that expansion in baccarat revenue in the first quarter. Still, if Macau high-roller needs. Around 20% or perspective, StarWorld currently has a mere they do not respond, there may be little to more of Macau’s casino revenue is currently 69 VIP tables. prevent Crown gobbling up further market generated within one of its smallest venues, The coming widespread adoption of share. Although Crown is a swanky property, supporting the view that operators will have higher rolling commissions and expanded and boasts some of the nicest rooms in a hard time drawing high-rollers without a VIP facilities will probably result in growth of town, its less-than-ideal location and lack of competitive commission offer. the VIP market continue to outstrip that of attractions beyond fine dining suggest it has Thus, the VIP rolling commission offered the mass market. When opened been grabbing greater share primarily as a by the other operators will probably soon in May 2004, becoming the first foreign result of the higher commission rate. follow Melco PBL’s lead. There are also plans operated casino in the city, many predicted Crown has a mere 216 hotel rooms, but to expand VIP gaming facilities at most the mass market would rise steadily to apparently that is enough to support the properties. Galaxy Entertainment Group overtake the hitherto dominant VIP market, highest-grossing VIP operation in town. Ltd announced it was planning a new seeing initial confirmation of their view

Multiplier Effect

“House of Cards” in the November issue of Inside Asian Gaming highlighted how competition between junket operators was becoming increasingly bitter. Columnist Octo Chang explained this led to the margins of junkets also being squeezed as they gave a higher percentage back to players. Although the junket operators only get a maximum of 1.35% commission, industry sources say they are giving players as much as 1.8% commission on rolling chip purchases. This is possible because of the multiplier, which is in essence a private arrangement between junkets and their customers, whereby whatever the value of chips placed on the table, the real value of the bet is understood to be multiplied by an agreed number. Various junket operators confided the multiple was commonly two times in Macau, and could even go as high as ten times. According to Octo Chang: “On the surface, the junket operators get 1.2-1.4% (depending on how candid the casino operators are with you). They in turn give the players 0.9-1.0% on the official bet. Taking the 0.9%, if a two-times multiplier is in effect, the players will get 1.8%, and the junket gets the rest of the pie on the side bet—with the casino and government tax effectively removed from the equation. Octo Chang postulates this could be why junket operators are now seeking to raise large sums of capital. “They are now operating a virtual casino—and a potentially more profitable one—in close parallel to the brick and mortar one they are operating inside.”

10 INSIDE ASIAN GAMING | May 2008 Cover Story

May 2008 | INSIDE ASIAN GAMING 11 Cover Story

when VIP baccarat revenue declined 3.1% assumptions, as most players do not bet result of luck, which cannot be relied upon in 2005 following Beijing’s crackdown on optimally (the optimal strategy is to simply to continue. Chinese government officials and heads of bet banker on every hand). state owned enterprises in Macau, Operators state their expected VIP The bull stands out while the mass market soared 48.2%. baccarat win percentage in their earnings While we have insinuated that an Since then, however, growth of VIP announcements, and although the laws of operator’s reported expected win percentage revenue has outstripped that of the mass probability do not vary across properties, may not always reflect that operator’s actual market by a steadily widening margin, there is significant variation among those expectation, it is notable that mild-mannered with VIP baccarat’s share of total casino assumptions. In case you are tempted to use Galaxy Entertainment Group gave an revenue rising from 62.7% in 2005 to the variations to gauge how realistic each expected range of 2.7% to 2.9% in Q4 2007, 67.2% in 2007. It further spiked to 69.7% in operator’s overall expectations are, bear in even though it was particularly lucky in the the first quarter of 2008. mind that there appears to be a correlation quarter, enjoying an actual win percentage Operators seeking to raise their between the actual win percentage of 3.3%. Ever-bullish Corp commission rates claim the strong growth achieved by an operator in a given quarter (LVS), on the other hand, does not offer a of VIP gaming revenue in the first quarter and the expected win percentage claimed range of values for expected win percentage, of 2008 was driven primarily by Crown’s in that quarter. opting to provide a single value instead. In higher commission rate, but another For example, when Wynn Macau reported Q4 2007, that value was 3.0%, giving LVS possibility is that it is merely a continuation a disappointing 2.4% win percentage over the biggest expected win percentage in the of the steady rise of the VIP market since the four months it was open in 2006, it stated market, although its properties presumably 2006. VIP baccarat revenue increased its expected win percentage ranged from do not have any unique inherent edge over 27.4% year-on-year in 2006 and 51.6% in 2.5% to 2.8%. A relatively lucky Q4 2007 led to players. Perhaps LVS just felt it fitting to 2007, while the mass market grew 15.5% a win percentage of 3.1%, and the company have the biggest expected win percentage and 37.4% over the respective periods. coolly raised its expected win percentage for in order to complement the city’s biggest the quarter to 2.7% to 3.0%. casino and construction pipeline. Skinny bottoms ahead? Owing to the intensity of the players As with any price war, rising commissions and sums involved, VIP baccarat in Macau could easily lead to losses. It could behove probably ranks among the world’s most the other operators to wait until Melco PBL volatile casino games for both house and releases its Q1 2008 results, due later this player. Expectations can be influenced month, and ascertain how the AMA deal has by new observations and experience, but affected Crown’s bottom line, before they unless the expected win percentage remains commit to aggressive commission rate hikes static, using it as a benchmark to comment and expansion of VIP gaming capacity. on the actual win percentage—which The likely impact on Crown’s margin varies with luck—is irrelevant. By arbitrarily can be roughly estimated. The theoretical raising the expected win percentage, an house edge on VIP baccarat is 2.52%, but operator suggests a high win percentage most operators work on higher win rate can be sustained, and was not merely the

Crown Macau level 5 The aggressive expected win percentage is a reflection of the lofty expectations LVS is trying to create for its projects, especially since its actual VIP win percentage for the quarter came in at a rather average 2.72%. LVS thereby wants us to believe that its Q4 2007 VIP revenue would have been better, had it not been for a run of bad luck (even though 2.72% is within most other Crown Macau VIP level 9 operators’ expected range). Unless all the

12 INSIDE ASIAN GAMING | May 2008 Cover Story

May 2008 | INSIDE ASIAN GAMING 13 Cover Story

other operators have got it wrong, such an win percentage. Macau’s steep tax on volume expansion. aggressive expected win percentage could gross gaming revenue claims 40% of all With Crown Macau having more than come across as a transparent attempt to casino revenue (35% as direct tax, and the doubled its share of casino revenue since boost the company’s stock price. remainder as mandatory social and welfare December, and considering at least some Melco PBL stated a flat 2.7% expected contributions). At a 2.7% win percentage, a of the strong volume growth in the first VIP baccarat win percentage in its Q4 2007 1% commission on rolling chip sales would quarter can be attributed to the AMA deal, results announcement. Although this makes claim a further 37% of revenue (leaving the it is possible that the new arrangement has Melco PBL the listed operator with the casino up to 23% of revenue after taxes had a positive impact on Crown’s earnings lowest expected win, that does not mean and commission are paid), while a 1.35% after discounting the margin decline (and it the company has proven itself to be prudent commission rate would take 50% (leaving is quite possible that Crown was previously or modest, especially since its actual win for only up to 10%). Thus, a 35% increase in the paying above the 1% assumed market the quarter came in well below expectations commission rate could theoretically reduce average, so the gains could be accompanied at 2.4%. This is reminiscent of Wynn Macau’s the share of revenue going to the casino by by a less pronounced margin decline). weak start, and it is likely that future lucky more than 50%. Once other operators introduce similar quarters will lead Melco PBL to also revise its Of course, unlike the constant 40% that arrangements and take back market share, expected win percentage upwards. goes to the government as tax, the share of however, the impact could turn negative for It is also noteworthy that as the VIP revenue that goes towards commissions all concerned. operator claiming the lowest expected varies according to the win percentage. win percentage, and after having just When the commission rate is 1.35%, a lucky Sympathy for Macau experienced such an unlucky quarter, 3% VIP baccarat win percentage would Pretty much every new casino operator Melco PBL was still so aggressive in raising leave the casino with up to 15% of revenue arriving in Macau, with the notable exception its junket commission rate. after taxes and commission are paid, while a of Galaxy, announced plans to cut out the To assess the impact of the new low 2.4% win percentage would only leave a middle men and draw VIP gamblers directly, commission rate, let’s assume Crown Macau maximum of 3.75%, which would probably before quickly realising it was simply too achieves the expected 2.7% VIP baccarat not cover operating costs, regardless of the difficult to do so. Crown’s latest move has proven that Macau’s VIP market is extremely price sensitive. Under such conditions, any Macau Gross Casino Revenue escalation of the commission rate by one 2004 2005 2006 2007 operator will soon be matched by the others, Total (MOP bn) 41.4 46 56.6 83.0 because they would otherwise simply continue losing market share. Year-on-Year Growth, % 44.3 11.3 23.0 46.6 Melco PBL may have adopted such a VIP Baccarat (MOP bn) 29.8 28.9 36.8 55.8 radical approach because it saw no other way to improve Crown Macau’s previous Year-on-Year Growth, % 34.3 -3.1 27.4 51.6 mediocre performance. Granted, the Share of Total, % 72.0 62.7 65.0 67.2 enabling of junkets to extend more credit to players could prove an enduring volume Mass Market (MOP bn) 11.6 17.2 19.8 27.3 booster, but any gains Crown achieved Year-on-Year Growth, % 78.5 48.2 15.5 37.4 from the commission rate hike could soon be eroded. Share of Total, % 28.0 37.3 35.0 32.8 Shifts in market share can grab headlines and move stock prices ahead of earnings being announced. While Macau’s VIP market is set to continue its rip-roaring ride, the heady revenue figures could become a less accurate indicator of how much money the city’s casinos are actually making as rising commission rates cut further into margins. Next time you read that Macau’s gaming revenue is now some surprising multiple of revenue on the , consider how little of that revenue casinos in Macau get to keep after paying commissions and taxes, while casinos in Vegas get to pocket a much bigger share of revenue that is mostly generated by undemanding slot machines and is taxed at less than 7%.

14 INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING 15 16 INSIDE ASIAN GAMING | May 2008 Data Analysis

HotHot SpotsSpots

Thermal-style visualisation shows what works on the casino floor

asinos put a lot of effort into their front-of-house operation to version of this is a program using the visual techniques of thermal create the right mix of games and the right service culture to imaging with ‘hot’ areas of human activity in a casino indicated in Cattract and retain players. red, cooling through orange and yellow to shades of blue to indicate Less publicised is the science that goes into calibrating and lesser activity or lower revenue generation. interpreting the behaviour of guests once they arrive and their When this technique is presented in animated form with a time relationship with their favourite games, offers and amenities. clock as a day, a week or even a month in the life of a casino, it serves as From the moment a player crosses a casino threshold, he or she a very powerful tool to help managers make sense of the numbers. is a walking, talking bundle of revenue potential. Operators want to Bally Business Intelligence Solution tools include Market Basket know not only what they play, how they play, when they play and of Analysis, offering at-a-glance representations of traffic patterns and course how much they wager, but also how they interact with the product purchases so that managers can optimise general floor different parts of the casino’s offer. They also want to know if they layout and positioning of merchandise, and devise effective cross stop playing or if their playing activity starts declining. Once that’s marketing and relocation strategies. identified and measured, the management works to understand what motivated it, and if necessary do something about it. Insights Player profiles can be combined with visualisations to give Making data count insights on issues such as: how products work on a floor to attract The challenge often for casinos is not a lack of information on and keep patrons; how far patrons will travel on the casino floor to players, but making sense of the information they’ve got. They need play their favourite games; the impact of traffic patterns on game to convert all the figures into valuable market intelligence that can play; whether differing types of patron groups are compatible; or be acted on in a coherent and timely manner. understanding whether community-style games justify their cost by Getting this right brings major financial benefits. US operator generating sufficient standalone revenue or attracting other players Harrah’s is on record saying tens of millions of dollars was added to its to that part of the floor. bottom line by utilising information from Bally’s visualization tool. Once customer activity is visualised and understood, operators The former Victories Casino and Hotel in Petoskey, Michigan (now have the option of either encouraging consumers to modify that Odawa Casino Resort) reported its revenue grew by US$6-8 million behaviour in ways beneficial to the property’s bottom line or within the first eight months of adopting these methods. modifying the floor to account for the behaviour. Colour-coded Easy-to-read For Bally, data visualisation comes in several forms, but principally Bally Visual Analysis uses programs that convert dense data on it involves representing human behaviour not in real action video topics such as foot traffic and time played and turns them into easy- or bar graphs, but in a hybrid of the two. One particularly striking to-interpret colour-coded maps.

May 2008 | INSIDE ASIAN GAMING 17 Data Analysis

“If you have a look at the statistical data on some of the key “If we then run the visualisation for a longer period we can see questions that every casino executive asks about the business, it’s this behaviour is consistent over time. You’re watching this happening stacked four inches high. Without data visualisation it would either but you’re not looking at any data. You’re looking at a visualisation of take you a long time to come to useful conclusions or you might the data, and it’s confirming that at any time of day the end of the not get there at all,” says Bally Technologies Senior Vice President of bank typically gets occupied,” says Mr Rowe. Strategy & Business Development Bruce Rowe. “If you have a choice of laying out games in an even number or an odd number, which one will make more money? It’s the odd number Fast results layout. Why? Because it creates more private spaces than an even The common question: ‘Do people like to sit next to each other if number of games,” explains Mr Rowe. they don’t know each other?’ can be dealt with “in less than a minute” “When you go to an airport, what’s the first thing you do when using data visualisation, says Mr Rowe. you sit in a chair? You put your briefcase on the left seat and your “With Bally BIS we can create AVI files visualising different times coat on the right. People don’t want to be near people that they don’t of day. Let’s take as an example a casino floor at quarter to four in the know. It’s just human behaviour. It’s not that different with slots. morning on a Sunday. At this time customers have a choice of any game on the floor to play. Which games have they chosen first? Human nature “When you run the visualisation you can see straight away it’s the “You always have more yield on a bank that’s made up of three games on the end. games than a bank made up of four games if you accept those By looking at one type of game placed both at the end of a bank principles of human behaviour. You can see that with visualisation and in the middle of a bank and then analysing play levels you can without having to examine any other data,” he adds. seek to improve the revenue levels of the middle games by increasing There are lots of other questions, however, where the answers are their attractiveness to players through things such as increasing the not so well known, even by the professionals. Hold percentage.” Where, for example, do women under 30 like to sit when playing slots? Who’s visiting the casino at 4am? Which postal districts are your most profitable players coming from? These questions and many others are real examples of issues tackled by Bally Business Intelligence Solutions.

Sample visualisation of a slot floor

Sample of Bally Visual Analysis of time played by females in a slots lounge Men versus women In one case study, casino managers notice from reports that two adjacent banks of games on the inside of a slot cluster were performing well, but they weren’t sure why. When they used Bally’s animated visualisation on activity they noticed that players ‘flip flopped’ from one bank to the other. When they ran a visualisation on who was playing, they found women under 30 played on one side, and men over 55 on the other side, with each group effectively creating their own ‘territory’ Because of this insight, the operator created a special area for women under 30, and direct mail marketing was focused on this Sample Bally Visual Analysis of slot rated coin in revenue customer group to publicise the fact. Within a year, this simple

18 INSIDE ASIAN GAMING | May 2008 adjustment increased revenue on the bank of games sufficient to generate a 100% return on investment for phase one of the system, says Mr Rowe. Tables to slots In another case study, data visualisation revealed which slot games table players liked. The casino in question already knew some table patrons liked high limit slots, but weren’t sure who they were and what they played. Once the players and games were identified, a bank of four of the relevant themed slot games were moved to the end of the pit frequented by most of the crossover players, and a direct mail with credit coupon was sent to them. The result was an aggregate improvement in daily win of US$200 compared to the slot games previously at that location. Visualisation techniques can even be extended outside the walls of individual properties and over a whole city to show which properties and which parts of a casino jurisdiction have the most intensive levels of play at any given time. Visualisation techniques can also be applied to a gaming jurisdiction’s hinterland. Areas identified as home to profitable players can be marketed more intensively than areas that are home to less profitable ones.

Sample of Bally Visual Analysis of profitable player distribution map

“You can use the same kind of visualisation to find out where your customers are coming from and how effective your marketing is, and what games they play when they get there,” says Mr Rowe. “Just think if you knew that a group of profitable players— say females over the age of 55—come in between 10am and noon and like to play in a certain area on certain games and like to drink tea. You could enhance the area they already like by providing music they like or a tea cart service with extra hosts. Knowing that information and being able to act on it will retain these good customers and grow them into great customers. “There are times when reports are absolutely the only way you can answer questions. There are times when bar charts and graphs show you the things you need, and then there are other times when dynamic visualisation will answer questions either that couldn’t otherwise be answered or couldn’t be answered with the same speed.” 19 Vendor Profile

Winning Hand The United States Playing Card Company (USPC) is the leading supplier of playing cards in the Americas and has a solid and growing presence in Asia, where its BEE® brand has been sold for more than 100 years. Other internationally recognized brands in its portfolio include BICYCLE® and KEM®. Inside Asian Gaming spoke to USPC Director of International Casino Sales & Business Development Scott A. Madding about the company’s plans for Asia

IAG: How important is the Asian paper-base. The benefits of this include Focusing on casino cards, can you market to your business and why? the luxurious feel of the cards in players’ give us some facts and figures on the hands and the consistent performance life of an average USPC deck? How Scott Madding: The Asian market in shuffling machines. This provides a many games/days is a pack kept in is extremely important to our business superior gaming experience for players play? How many times is a single pack and we have committed a significant and operators alike. shuffled? Can you give us some idea amount of resources to growing in this We also continue to invest heavily of the criteria that casino operators region, from expanding our sales force in equipment that delivers preshuffled use when deciding when a pack is to our focus on research and product cards from our Cincinnati, Ohio factory ‘worn out’? development. The game of choice in to the casino floor. We began shipping the region—baccarat—requires the GLI Certified Random product about This decision is made by the use of so many cards which of course 12 months ago and have received very gaming facility but generally the drives demand for our products, and positive feedback; so much so that we amount of time cards are used depends this, combined with the growth of the are in the process of tripling our capacity on the type and speed of the game. gaming marketplace in Asia, provides this year. This serves the Asian market In the game of baccarat for example, an excellent opportunity for us in the particularly well given the increased where players can squeeze the cards, region. security one gains by removing the those decks are used once and then human element in the presence of destroyed. To the casual observer a playing card loose cards. Other games where tableside seems like a simple, low-tech piece shuffling machines are used and there of equipment. Please explain a little is little or no player interaction with the about the technical process involved cards, the cards are kept in play anywhere in making USPC products. from two to 24 hours for purposes of game protection. People would be surprised to learn of the significant amount of technology How does USPC work with operators that goes into making our cards which to reduce risk of crime and fraud in is one of the important reasons why our casino games? brands continue to thrive in markets throughout the world. In addition to our factory preshuffled First, we are the only producer of product, we are working with operators playing cards to manufacture our own for on-table technology to help secure card stock. We focus exclusively on this the high dollar tables that are at most single-purpose card stock to get the risk for fraud and cheating. Our “Bee” highest quality, most consistent material Baccarat dealing shoe is an example that forms the base of our best products. of this—as each card is dealt the shoe The paper we use to make our card stock identifies the value and announces the contains a blend of hardwoods native to results according to the game rules. North America as well as cotton linters. If the actual results do not match the When combined with proprietary paste expected results indicated by the shoe, and coatings, USPC card stock maximizes the issue is identified and action taken the benefits afforded by this type of Preshuffler by floor personnel.

20 INSIDE ASIAN GAMING | May 2008 Vendor Profile

Tell us how the ‘Iraq Most Wanted’ card project came about.

During the second Gulf War, some Coalition soldiers based in Iraq designed the deck to help identify friend from foe—much like our Airplane Spotter decks were used in WWII. The Gulf War soldiers had some decks handmade in- country and began distributing them to the teams seeking out those most wanted individuals. When word spread of this through the media, it was a big hit with the general public and we launched into production immediately with incredible success. While much of the deck was open to use and copying, to get a truly authentic replica of the original deck you had to obtain one of ours because of the joker they used in the original deck.

Do you know whether Saddam or any of his top officials were players in private and whether they had used USPC products? Are any of President George W. Bush’s cabinet USPC product users?

Well I don’t know about that but for the election year we currently have three styles of decks in distribution—a Blue Democrat deck, a Red Republican deck and a Purple Independent deck.

Please give us some examples of USPC packs used in famous games or by famous world figures.

From a historical standpoint, our In addition to supplying many of relationships to bring the best products Steamboat brand of playing cards was the great casinos of the world, we also to generations of players around the in use on the Titanic and I believe some manufacture the Tiffany’s™ playing world who have come to know and trust pieces of a USPC card deck were actually cards. our brands. recovered and are on display in various museums travelling about the US. Please sum up the qualities that If you were talking to a casino From a current events view, we define a USPC playing card and USPC executive, what would you say to them supplied the 2007 World Series of Poker packs. to make them either stay with your cards and are doing so again product or choose your product? this year. A USPC card cannot be matched for its feel and handling characteristics. Well the vast majority of them This is the product and benefit know our brands and our international of 120 years of history and even presence that comes with a company of more in combined experience. We our size and experience in the industry. continually seek ways to innovate We have the resources to ensure they and improve our products and will continue to receive the highest quality continue to rely on our customer products they’ve come to expect from

May 2008 | INSIDE ASIAN GAMING 21 Vendor Profile

us. It’s also important that they know and trust. For these reasons, USPC stands Is the growth of electronic/online table we are committed to continually above other products. Our customers games a challenge to your business innovating, as per the new products want to work with reliable partners who or an opportunity for licensing we’re introducing at G2E Asia. know their challenges, have the scale to agreements using USPC designs? deliver product in a timely and consistent Is card branding important to players fashion, and that design products that We are aware of these products and in casinos? What sort of feedback do meet their needs. are monitoring their development but you get from them regarding USPC All of our core brands including don’t see a significant impact on our products? our casino cards are manufactured in business. We view player interaction Cincinnati, Ohio USA. with playing cards as a crucial element of Absolutely. Our brands are the enthusiasm exhibited by gamblers in synonymous with gaming and have What is your general strategy for this market. A balance has to be struck become known to generations of maintaining the business and building between the adaptations I mentioned consumers around the world. When it over the next few years? earlier and the passionate form of they see BEE® or KEM® for example, gambling into which playing cards figure they know they’re playing with the best We’ll continue to add value to our heavily. cards in the business. In turn, operators playing cards that address the unique can differentiate themselves because security and operational needs of casinos, Please sum up your feelings about the they use our products, which the players whether that is through innovation with opportunities in the Asian market in note at every table they sit. the playing cards themselves or with the next few years. We hear comments all the time that related technology. We’ll also continue centre on the history of our brands, the to leverage the brand strength of We’re proud of the heritage we luxurious feel of the BEE® card, and the our portfolio that’s unmatched in the have here in Macau and throughout shared experience that comes from industry. the region and we will continue to knowing they are playing with the same utilise our BEE® brand and others cards as the high rollers in Las Vegas, What developments, if any, do you see to contribute meaningful solutions Macau, Korea, and elsewhere. in the casino card product market in to the unique challenges presented the next few years? when such a large market expands this You were very open about the fact rapidly. The numbers are staggering that a recent experiment with a I believe the focus will continue to and we are incredibly excited about the different card face known as “Poker be security and an effort to continue unprecedented growth of table-centric Peek” at the 2007 World Series of to improve efficiencies in table games properties throughout the region. Poker, wasn’t the success you had operations of this unprecedented size hoped it would be. Can you explain and scope. The amount of tables these Mr Madding will be at The United why the players preferred the more properties are installing is incredible and States Playing Card Company stand at traditional face? as playing cards factor heavily into their G2E Asia 2008, June4-5 at The Venetian day to day operations, the processes Macao. Our ‘original’ Poker Peek design, surrounding the tables will need to created in 2006, continues to be very adapt. popular with both professional and amateur poker players. However, we changed out the 2007 WSOP decks when we received feedback from a vocal minority that did not like them, so we worked with Harrah’s and the WSOP to make a change. We believe everyone came away satisfied with the quick resolution.

How does USPC manage to maintain or build market share when there are so many cheap Asian-made products around?

People want to play with quality products and brand names they know

22 INSIDE ASIAN GAMING | May 2008 Galaxy Results

Star Performance Jumbo junkets are Galaxy’s answer to Crown’s VIP challenge

he third quarter of 2007 could prove in the long run to have been a defining Tmoment in Galaxy Entertainment Group’s Macau adventure. In that quarter, revenue from VIP gambling at StarWorld Hotel & Casino, Galaxy’s flagship property and key earner, fell back after two consecutive quarters of growth following the property’s opening in late 2006. To put things in perspective, the fall was part of a trend across all operators and coincided with a short-lived policy initiative by the Guangdong government in neighbouring to reduce the number of visas for visits to Macau. Market leader In fact, in that quarter Galaxy claimed market leader position on VIP revenue in terms of win per VIP table per day. Nevertheless the fall in VIP volume must have reminded the company just how important the VIP trade is to its long-term success in Macau. Gross earnings on any operator’s VIP trade only tell part of the story of course. Margins on baccarat in general are known in the gaming industry for their volatility. The operator’s win on VIP business is also a lot lower than in the mass market, and in Macau those margins are further reduced by the commissions operators must pay VIP agents as an incentive for them to deliver high rolling customers to their tables. Even with all those caveats, a fall on the VIP gross at StarWorld in Q3 2007 clearly had alarm bells ringing within the company because of the pressure that an underperforming quarter can put on annualised market share and ultimately on profits. StarWorld competition between operators to retain moved into the Macau VIP market. VIPs rule or win the affections of VIP agents has Galaxy’s response in 2007 was to more Gross VIP earnings and their contribution been intensifying. Existing allegiances than double the number of VIP tables at to all gaming revenues have been going between agents and operators—some of StarWorld from 32 in January to 69 by year- up year-on-year in Macau despite the them formed over several years—can no end, and to sign up more VIP room promoters, introduction of more mass-market capacity. longer be guaranteed since VIP and junket taking the number from seven to 12. In these market conditions the consolidators such as A-Max Holdings The VIP operation revamp included the May 2008 | INSIDE ASIAN GAMING 23 Galaxy Results

opening in October of a Presidential Suite of HK$14.74 billion and a Macau market VIP gaming business rose steadily from with private gaming tables. share of 18%, compared to a 13% share in December 2007, accounting for 21% of 2006, when StarWorld was operational only Macau’s VIP take during February. Recovery from November. The result was that StarWorld’s VIP gross Crown jewels bounced back in Q4 2007, providing HK$1.62 Star performer Gabriel Chan, an analyst for Credit Suisse, billion—a 9.75% gain on the property’s Q3 StarWorld on its own contributed said recently he expected AMA International VIP gross. around 11.7% of Macau’s 55.76 billion to generate an average of US$6.3 billion in The performance helped StarWorld’s VIP patacas (HK$51.58 billion) in gross VIP rolling chip turnover per month for Crown operation to book HK$6.03 billion in gross revenues for 2007. Macau in 2008. revenues in 2007—amounting to more than But then Melco PBL Entertainment StarWorld achieved annual turnover 75% of StarWorld’s total gaming take for (MPEL) threw the cat among the pigeons at of HK$203.5 billion on its VIP business in the year of HK$8.01 billion. The StarWorld the end of Q4 2007 by doing a deal with the 2007 on gross gaming revenue of HK$6.03 property in turn accounted for 61% of all A-Max subsidiary AMA International Limited, billion and an average house win of group revenue in 2007. offering it 1.35% commission on rolling VIP 3%—translating to an average win per table It meant that by year end—including chip sales—up to a third higher than the per day of HK$331,000. contributions from Galaxy’s four CityClubs: industry average in Macau at the time—at A key question is whether Galaxy can Waldo, Rio, President and Grand Waldo—the MPEL’s Crown Macau property. protect or even build on its VIP turnover group was claiming gross gaming revenues As a result Crown Macau’s share of and market share in the face of tough competition and before the cavalry—in the form of Galaxy Mega Resort—arrives and starts making its contribution via its casino Summary for FY 2007 complex on in mid-2009. Commissions Total Revenue = HK$13,035 million Galaxy is likely to increase commission Group Revenue (in HK$m) rates to junket agents in light of intensifying competition in the VIP market, although 1,554 Group CFO David Banks indicated the 12% volume gains from doing so could be worth 3,470 8,011 the margin decline. 61% 27% Galaxy is also reportedly building the equivalent of a stockade to protect its VIP business by creating a facility of 100-plus new VIP tables at StarWorld. An announcement about the jumbo- sized facility is expected shortly. David Banks, Group Chief Operating Officer, said of the new VIP tables: “They StarWorld CityClubs Construction Materials will probably not be added in the first day but certainly up to 100 in a short period of time.” Total EBITDA = HK$1,460 million Consolidation Group EBITDA (in HK$m) Galaxy is expected to populate these tables by following the MPEL/Crown Macau 219 (49) model and doing a deal with a junket 175 15% (3)% aggregator. 12% 1115 Another piece of recent good news 76% for all operators was an announcement in late April by Edmund Ho, Macau’s chief executive, of a moratorium on new gaming projects and licences. Only those already in the building, planning or approval process would be allowed “for the time being” said StarWorld CityClubs Mr Ho. Construction Materials Net Corporate Cost Galaxy’s shares jumped 13% on the news, though what Mr Ho’s announcement

24 INSIDE ASIAN GAMING | May 2008 StarWorld lift lobby actually means in practice isn’t clear. “For StarWorld’s non-gaming revenue for the This, along with cash flow from StarWorld the time being” is sufficiently vague to year was HK$234 million. StarWorld’s hotel and the CityClubs, ensures the company has placate existing operators concerned had an average daily room rate of HK$1,090 sufficient funds to complete development of about pressured margins and China’s and occupancy rate of 84%. area 1 of the mega resort. leaders worried about social harmony, “Our focus in 2008 is to further increase The first hotel tower, which will contain while still holding out the promise of more StarWorld’s revenue and continue with the 1,500 rooms, has been topped out, and is licences to come. construction of Galaxy Mega Resort,” says Dr expected to open along with the casino Che-woo Lui, Group Chairman. podium in mid-2009, to be followed by the Key role second hotel tower with 700 rooms, suites Until Galaxy Mega Resort opens for Mystical Oasis and villas towards the end of the same year. business, StarWorld’s gaming operation The theme of the mega resort is to be In December, Galaxy announced an is essential to the group’s performance in a Mystical Oasis, with the resort podium agreement with Hotel Okura Co Ltd to Macau. featuring the largest wave pool in Asia and manage a 5-star branded hotel in the mega The group saw a dramatic reduction in its a 120-metre stretch of sandy man-made resort. It will be one of three luxury hotels in operating loss from HK$1.53 billion in 2006 beach. the first tower. to HK$502 million in 2007, largely thanks In light of the continued steady growth in Galaxy has a landbank of an additional to StarWorld’s contribution to a tripling Macau’s gaming and sectors, Galaxy 10.2 million sq. ft on Cotai, giving the in the group’s gaming and entertainment has decided to add another hotel tower and company ample room to expand to capture earnings before interest, taxes, depreciation larger gaming podium to the resort, bringing evolving market opportunities. The company and amortisation (EBITDA) to HK$1.22 billion the project budget to HK$10.5 billion. Galaxy notes that the landbank is not reflected on from HK$306 million in 2006. EBITDA of the had HK$8.3 billion in cash at the end of 2007. its balance sheet. group’s construction division, meanwhile, was up a modest 3% to HK$219m. Galaxy’s depreciation and amortisation costs leapt 115.6%, however, from HK$192 million in 2006 to HK$414 million in 2007. Finance costs went up 6.7% from HK$522 million to HK$557 million. Amortisation costs related to“intangibles” remained steady at HK$998 million. Mass market Mass table drop at StarWorld in 2007 was HK$9.88 billion; generating HK$1.54 billion in revenue and an average house hold of 15.6%. This translated into a monthly average win per table per day of HK$29,500. revenue was HK$190 million, averaging over HK$1,000 per machine per day with 476 slot machines. Of the total gaming revenue reported by StarWorld for the year, mass tables accounted for 19.9% and slots 2.4%, said the company Galaxy mega resort

May 2008 | INSIDE ASIAN GAMING 25 Cover Story

26 INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING 27 28 INSIDE ASIAN GAMING | May 2008 Feature

Safe at Heights The presale of lofty residences at Le Royal Arc has made the swanky casino hotel they are perched upon a relatively risk-free investment

he towering frame of the 56-storey Le For example, the sale of the mall space at first phase of Wynn Macau. Royal Arc dwarfs the big-name casino the recently opened Las Vegas Sands Corp Not that the three cash-rich investors Thotels that surround it, including (LVS) property covered 47% of in Le Royal Arc needed creative ways to Galaxy’s flagship StarWorld, Wynn Macau, the combined US$3.3 billion cost of The fund their project anyway. Angela Leung, and MGM Grand Macau. Le Royal Arc is set Venetian Las Vegas and The Palazzo. After a Macau legislator and the fourth wife of for a soft opening by the end of this year and all, not every casino developer can count casino mogul Stanley Ho, holds a 45% stake. there will probably be at least a two-year gap on the luck of Steve Wynn, who made a Another 45% is held by billionaire before the next casino property—Melco PBL cool US$900 million by hawking a spare Cheng Yu Tung, who heads the New World Entertainment’s ultra-luxe Trinity project— Macau casino sub-concession to Melco PBL, Development conglomerate, which has arrives on the increasingly crowded Macau covering three quarters of the cost of the interests in property, infrastructure and Peninsula casino scene. Le Royal Arc is unique in stacking a residential block atop a casino hotel. “Even MGM’s condos will not be in the same building [as the hotel and casino], but to the side,” points out Paul Tso, CEO of Arc of Triumph Hotel Management Company Ltd—the development was originally to be called Arc of Triumph, in recognition of the famous monument in Paris (honouring those who fought for France, particularly during the Napoleonic Wars) that inspired the distinctive arches that line the podium façade. Presumably Le Royal Arc was less of a mouthful. While the Arc in Paris bears no load, Le Royal Arc’s podium supports a hotel and apartment tower, in what turned out to be a canny configuration. Presales of the apartments, which will rise from the 22nd to 56th floors of the development, began in March 2007. Within five months, all units were sold. Although Inside Asian Gaming did not discuss the specifics of the proceeds from the apartment sales, the units were consistently among the highest priced residential property transactions in Macau last year. The sales would have covered at least a big chunk of the HK$11 billion (US$1.4 billion) paid for the land and HK$4.8 billion in estimated development costs. The sale of the apartment component of Le Royal Arc is another example of the growing trend among casino developers to use “monetisation” to fund their properties, as discussed in “Capital Ideas” in the October 2007 issue of Inside Asian Gaming. May 2008 | INSIDE ASIAN GAMING 29 Feature

along the —joining the hulking share-gobbling feat: “That one casino can Venetian Macao and its half-million square lock in 20% market share (possibly more) is— foot gaming floor. in a word—WHOA. Imagine that, the teeny Le Royal Arc also appears to have a tiny Crown... with a footprint about the size clearer idea of where it stands than the of the fountain/plaza outside of the Sands arriving behemoths. When LVS first entered Macao, in a location way the hell away from the local market in 2004 with Sands Macao, anything remotely interesting, luring in the ending Stanley Ho’s effective 42-year absolute cream of the junket crop—in turn casino operating monopoly, the company’s beating the living snot out of the big huge primary stated objective was to nurture Venetian, the fancy and beautiful Wynn, the the long-neglected mass market. Despite brand spankin’ new MGM, the breathtakingly massive investment in main gaming floor weird StarWorld and the entrenched SJM facilities, however, expectations that the monstrosity including its brand new cactus mass market would rapidly outstrip the shaped neon death star of a hotel tower. This VIP market have yet to be realised. In fact, is like MacauTripping taking over Google.” the latest trend has been in the opposite The capacity of Le Royal Arc and Crown direction. Following strong growth of the Macau are both of a manageable and— VIP market in the first quarter of this year importantly—reconfigurable scale. The on the back of rising junket commissions, mega resorts will simply not be as flexible VIP baccarat’s share of the city’s total in a market which has yet to wholeheartedly casino revenue reached 73%, up from accept the notion that bigger is better, as 67% a year ago. The rise in commissions resort-goers in the US have done. has been led by Crown Macau, which is Beyond taking the free shuttle bus to another modest-sized casino hotel with trample around the must-see canals of upscale aspirations. Crown has seen its Venetian Macao, the majority of Chinese telecoms. The remaining 10% is owned by share of local casino revenue rise from visitors don’t appear interested in the Macau businessman Chan Siu. 9% in December to 18% in February. resort’s retail or entertainment facilities. And The casino at Le Royal Arc will of course According to Crown operator Melco PBL, while Deutsche Bank analysts speculate be run under the concession of Stanley March saw the property “continuing to see that LVS could perhaps turn a US$1 billion Ho’s SJM. The hotel is also in good hands— upward growth,” which could indicate a profit on its US$16 billion worth of resort New World Development’s hotel portfolio share reaching or even exceeding 20%. Of development in the US and Asia by achieving includes the chic Grand Hyatt Hong Kong, course, the higher commissions will have all its mega-monetising possibilities (largely which is considered by many as one of the a detrimental impact on Crown’s margins, by selling adjoining retail space and upscale leading luxury hotels in Asia. The 5-star hotel but the sheer gain in volume could still residences), a potential regulatory minefield component of Le Royal Arc, dubbed New see its bottom line emerge in better shape in Singapore and even Macau could dash World Le Arc Hotel, will feature 301 rooms, when first quarter results are announced such optimistic forecasts, whereas Le Royal including a spacious presidential suite and in May. Arc has already taken its apartment sale six deluxe duplexes with adjoining outdoor One of the most insightful blogs on proceeds to the bank. gardens on the 11th floor. Macau casino developments that Inside Asian While we are loath to turn to parables to Mr Tso is clear about the positioning of Gaming has come across is MacauTripping. make our point, if Venetian Macao squats as Le Royal Arc relative to its glitzy casino hotel com, maintained by “ChuckMonster”, whose a goliath among new Macau casinos, then neighbours. “I think we have to say we’re appellation belies the depth of his analyses. Le Royal Arc would appear a tall but slender much better than StarWorld. That’s not our He writes of Crown Macau’s recent market David by comparison. target. Our target is to be among the MGM and Wynn level.” Subsidised pedestal Le Royal Arc’s mass gaming floors will occupy the ground and first floors of the development, while VIP gaming rooms will operate on the second. Current plans call for the modest-sized casino to open with 153 mass gaming tables, 36 VIP tables and 400 slot machines. It appears, therefore, that despite the impressive stature of Le Royal Arc, the casino within will not contribute to feared overcapacity as much as the string of mega resorts set to open from next year

30 INSIDE ASIAN GAMING | May 2008 The Best Gets Better Asia’s most important gaming exhibition and conference—G2E Asia 2008—returns to Macau next month in a bigger, more exciting format

Macau is Asia’s pre-eminent gaming destination and contin- ues widening its lead with an unrivalled rate of growth. The city is the natural stage for the region’s most influential gaming event, G2E Asia, which is expanding this year in line with Macau’s spec- tacular development. Last year’s G2E Asia was limited by the size of the then largest ex- hibition facility available in the city, the Macau Tower Convention & Exhibition Centre. This year, the event moves into the practically limit- less confines of the newly availabe Cotai Strip Convention & Exhibition Center, within Asia’s largest building, -Resort-Hotel. The show portion of G2E Asia 2008 runs June 4-5. There will be at least three times as much floor space for exhibitors this year compared with last year’s inaugural event, say the joint organis- ers, the American Gaming Association (AGA) and Reed Exhibitions. More than 135 exhibitors from 23 countries have signed up for space on the 7,900 sq. m show floor, representing a 75% increase in the number of exhibitors at last year’s show. The exhibitors include: slot machine manufacturers; bill and coin validator producers; card sorting and shuffling equipment makers; integration software and interactive gaming suppliers; player and slot tracking experts and table games and accessories manufactur- ers. A full list of exhibitors appears on page 50. Eight-track conference The conference portion of this year’s G2E Asia will be held June 3-5, running a day longer than last year’s conference in order to ac- commodate an expanded list of guest speakers. “By providing an extra day of conference content and a more diversified program, G2E Asia 2008 will provide gaming profes- sionals with increased opportunities to learn from the industry’s leading figures and discover how to maximise their success in the Asian markets,” says Frank J. Fahrenkopf Jr., president and CEO of the American Gaming Association. The conference will have a new structured track format fea- turing eight tracks, with sessions in each track highlighting a spe- cific area of gaming. This year’s conference tracks include: Asian Markets, Casino Design, Corporate Social Responsibility, Gaming Floor, iGaming, Macau, Marketing, Security & Surveillance, and a Wild Card track featuring “everything else.” The six Asian Markets sessions will not only discuss develop- ments in all the major regional gaming jurisdictions, but also the progress of countries such as Japan, Taiwan and Thailand towards legalizing casinos. Paul Steelman, the brains behind Sands Macao’s highly-suc- cessful stadium-style design, will speak at a seminar titled: Build- ing Excitement: Asian Style and Beyond—one of the two Casino Design sessions. One of the six Macau sessions is VIP Rooms: Behind Closed Doors, which will be moderated by Kareem Jalal, editor and publisher of Inside Asian Gaming. The session aims to provide an insight into the city’s most important but least understood driver of gaming rev- enue. This issue’s cover story, “The Big Squeeze,” highlights some worrying recent developments in Macau’s VIP market. The other conference tracks feature a broad range of topical sessions, highlighting major international developments as well as providing Asia-specific insights. Falling under the Wild Card track, Finding Financing: Asian Gaming Equity will discuss several issues including opportunities for private equity funding and cross border merger and acquisi- tion in the wake of the global credit squeeze. 31 ESL Gaming Indices

Last Month Top/Bottom 10 Performers in ESL AGI ESL Gaming Indices 68% Sino Strategic 48% Two Way Limited 46% AGTech Holdings Starting this month, Inside Asian Gaming brings readers a regular 45% Astro Corp snapshot of Asian gaming stock trends via ESL’s Gaming Indices. 35% Tencent Holdings ESL, the creator of the indices, is an Asia-focused online and 32% Esun Holdings 23% Keihanshin R/E interactive gaming company. Its services include management 16% RTG Ve ntures and marketing of and poker rooms, live videostream 16% The9 Ltd-ADR 16% Dreamgate Corp gaming and mobile and . -9% CY Foundation Two ESL indices will be featured every month in IAG: the Asian -10% Vo done Ltd -11% Galaxy Ent Gaming Index (AGI) and the Global Gaming Index (GGI). ESL has also -16% Adores created several other indices charting the market movements of -17% Royal International gaming stocks in other specific sectors. -22% Abilit Corp -24% Asian Gaming Index Progressive Gaming Inside Asian Gaming points out that the publication of the indices -24% Period 1 Month Mark Sensing Average Return 5.93 and the accompanying commentary is not an endorsement of any -33% Base Currency USD Dore Holdings particular stock nor a solicitation to purchase any such stock. Neither -38% PacificNet Inc ESL nor its employees, parent company, associated businesses and agents, nor IAG, its employees and its publisher accept any Legal gaming in Asia is still in its infancy, both in the land-based responsibility for any financial losses or other liability incurred by any and online format, and a lot of people are likely to make a lot of person taking a position in such stock. money from it in the coming years. Those investors who watched and waited during recent gaming ESL Asian Gaming Index (AGI) company IPOs, but are considering buying now, are likely to be rewarded with value and excellent growth when markets recover ESL Asian Gaming Index (AGI) their confidence. 1800 Last Price 1339 For Asia-facing gaming firms that were already well capitalised High 10/30/07 1700 1700 Low 03/20/08 1246 and had benefited from an equities windfall during more bullish Last 12 Months -7.45% 1600 times, even the short-term picture looks quite positive. That sort of resilience has been a trademark of Genting Berhad. 1500 The investment and management holding company for Genting 1400 Group, with diverse interests in casino resort management, casino resort development, cruise operation, plantations and real estate, has 1300 performed well in the year to date, showing a 2.4% rise in its share 1200 price in the last 30 days after a bumpy 12 months that saw nearly

1100 a quarter of its value wiped out. The company has been praised by bankers for the profitability of the group’s Malaysian casino and 1000 entertainment park property Genting Highlands Resort. It is, however, 900 arguably in a regulatory and demographic cul-de-sac in its home Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2006 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 market of Malaysia, where the majority of the population is Muslim and barred from visiting casinos. Genting Berhad has instead been Last 12 Months Top/Bottom 10 Performers in ESL AGI positioning itself in new markets in anticipation of the huge revenue 585% Berjaya Land potential from Asian gaming consumers. 195% Berjaya Corp Bhd 179% Prime Gaming Genting International PLC, the group’s international project 179% Advani Hotels developer, is currently working on the Resorts World at Sentosa 136% Galileo Holdings 103% China Va nguard casino resort in Singapore (due to open in 2010). It also showed 88% Comtec Systems a welcome recovery, up 4.3% after falls of just under 30% in the 75% Tencent Holdings previous 12 months according to data gathered for the ESL index. 70% Astro Corp 61% Manila Jockey Club Some of the initial falls were probably linked to bearish sentiment -57% AGTech Holdings around Singapore-based development schemes following rises in -59% Esun Holdings -62% Two Way Ltd project costs linked to commodity inflation. -63% Abilty Corp For any long term investor in the Asian gaming market, buying -66% Mark Sensing -67% Odyssey Gaming back into GIL is likely to be an attractive option, especially after GIL’s -68% CY Foundation Asian Gaming Index parent Genting Berhad announced its potential involvement in -70% Period 12 Months Vo done Ltd Average Return 5.93 a US$15 billion casino and entertainment city at Manila Bay in the -72% Base Currency USD PacificNet Inc -81% Sino Strategic Philippines. Analysts have, though, expressed some reservations about the robustness of the ROI model for GIL’s casino resort in Some of the best valuation opportunities in Asian gaming stocks Singapore, given that the government there has placed restrictions recently have come from smaller cap companies trading under on the amount of gaming space and the number of tables and slots value. allowed on site. This undervaluation has little to do with underlying potential and Prices for Tencent Holdings stock are less immediately attractive a lot more to do with general market sentiment tied to the credit after gains of 84.7% in the last year, and a whopping 23.8% rise in crunch caused by the US sub-prime mortgage market. the 30 days to 21st April alone. Nonetheless for anyone thinking they 32 INSIDE ASIAN GAMING | May 2008 ESL Gaming Indices

may have missed the boat, the fundamentals of Tencent look strong. Konami Corporation, which listed on the New York Stock The Hong Kong-listed company, founded in 1998, claims to be Exchange in September 2002, is a Tokyo-based producer of slot China’s largest and most used Internet service portal. machines, arcade cabinets and video games as well as toys and trading The number of regular Internet users in China has grown fourfold cards. The company has seen a very small downward correction in the since 2002 and currently stands at 210 million, says the Ministry 30 days to 21st April of 0.26%, but a gain of 25.19% in the previous 12 of Information Industry. Tencent claims, however, that as of 31st months. It too could benefit from the development of a home grown December 2007, it had 300.2 million active users of its QQ Instant casino market because of consumer familiarity with its brand. Messenger service and more than 714.7 million registered users— around half the country’s population. QQ Games counted more than Top Ten Constituents of ESL AGI by Market Cap 3.8 million users simultaneously on-line. Name Ticker Market Cap Price Change Price Change Despite the potential for some regulatory and political risk to (USD) Last 12 Months Last 30 Days Internet service providers in China, investors are likely to look for new TENCENT HOLDINGS LTD 700 12172.40 +84.73% +23.80% value via research and development. Tencent claims more than 60% GENTING BHD GENT 7526.98 -24.71% +2.41% of its staff are working on R&D. CROWN LTD* CWN 6942.69 -22.63% -1.21% Sega Sammy Holdings, the Japanese amusement centre RESORTS WORLD BHD RNB 6375.59 +1.80% +7.59% operator, has had a bit of a bumpy ride recently. In March, it announced it was dissolving a Korean subsidiary and scrapping plans for a new MELCO PBL -ADR MPEL 5423.03 -29.28% +2.67% amusement complex in Yokohama, near Tokyo. KONAMI CORP 9766 5388.45 +25.19% -0.26% Sega Sammy, which also makes machines and other KANGWON LAND INC 035250 4607.48 +11.51% 4.12% game equipment, posted a ¥15.8 billion net loss in the nine months GENTING INTERNATIONAL PLC GIL 4269.04 -29.90% +4.31% to 31st December, compared with a ¥49.4 billion profit a year earlier. SEGA SAMMY HOLDINGS INC 6460 3256.21 -56.23% +15.87% In March, the company reversed its forecast for a full-year profit to a ¥26 billion net loss and announced it would cut 400 jobs. The ARUZE CORP 6425 2562.34 -15.91% +10.65% company saw its valuation fall 56.2% in the year to 21st April, though *only since de-merger it put on 15.9% in the last month. Its earnings potential could improve dramatically if Japan decides to legalise domestic casino gaming. Launched on June 6th 2005 with a base value of 1000, The ESL AA SureSure BetBet

Log onto www.asgam.com for the latest industry intelligence and a subscription to our digital edition — all absolutely free.May 2008 | INSIDE ASIAN GAMING 33 ESL Gaming Indices

Asian Gaming Index (AGI) comprised 76 companies as of 21st April Last Month Top/Bottom 10 Performers in ESL GGI

2008, the cut-off date of the data featured herein. 99% Big Stick Media To be eligible for inclusion on ESL’s AGI, a security must be 55% GameKing PLC 52% Gaming VC Holdings publicly listed, i.e., permitted to offer its securities (stock, bonds etc.) 43% Fireswirl Tech for sale to the general public with on average more than 80% of 35% Tencent Holdings 34% Redbet Holding revenues derived from gaming related activities in Asia, excluding 23% Partygaming PLC New Zealand and . 23% Betsson AB Closed-end funds, convertible debentures, exchange traded 22% Fortuna Gaming 22% Scientific Gaming funds, preferred stocks, rights, warrants, units and other derivative -10% WinWin Gaming securities are not included. If at any time a component security no -11% Betbull PLC -13% Ebet Ltd longer meets the above criteria, the security becomes ineligible for -17% SKRM Interactive inclusion in the Index and is removed. -23% DQE Designed -26% Playsafe Holdings

-27% Global Online Index Players Network ESL Global Gaming Index (GGI) -29% Period 1 Month Miobet AG Average Return 6.24 -30% Base Currency USD Angelciti Ent ESL Global Gaming Index (GGI) -38% PacificNet Inc 1500 Last Price 1023 Australia’s Crown, a 38% shareholder in Melco PBL Entertainment, High 10/30/07 1346 1400 Low 03/21/08 860 a joint Macau venture with Hong Kong-listed Melco International, Last 12 Months 2.29% had already steadied at only 1.2% down for the month, before 1300 the positive Macau government announcement. Crown has been significantly discounted since the demerger though, down 22%. 1200 Karen Tang, an analyst at Deutsche Bank, said in a research note the move was good news for the existing operators who could 1100 potentially have faced fresh competition from a new round of

1000 licence issuing within a few years. “We believe this is medium-term positive for Melco and Galaxy as a potential competitive threat is

900 now removed,” she said in the note. Edmund Ho, Macau’s chief executive, said the only exception to 800 the casino moratorium would be for projects that had already been Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2006 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 approved or were already in the approval process. No further land would be granted for the building of casinos, “for some time” he Last 12 Months Top/Bottom 10 Performers in ESL GGI added, without explaining exactly what that meant in practice. 151% Betsson AB Some European gaming stocks on the list have also managed to 136% Galileo Holdings buck the bear. Opap S.A., the operator of the Greek national 100% Boss Media 82% Waltech PLC and football betting games, saw a 13.2% fall in valuation over the 75% Tencent Holdings past 12 months, linked in part to analysts’ reports questioning high 55% Boldt SA 49% Redbet Holding distribution costs seen in Q4 2007. In the last month, though, its stock 28% Gaming VC Hlgds price rose around 20%, making it one of the GGI’s better performers. 25% Players Network 25% 888 Holdings Top Ten Constituents of ESL GGI by Market Cap -68% CY Foundation -68% Neteller PLC Name Ticker Market Cap Price Change Price Change -71% Miobet AG (USD) Last 12 Months Last 30 Days -72% PacificNet Inc -73% Youbet.com LAS VEGAS SANDS CORP LV S 23108.61 -16.67% -21.56% -77% New Motion Inc -80% Betbrokers PLC MGM MIRAGE MGM 13999.06 -27.05% -22.37% Global Gaming Index -83% Period 12 Months Fireswirl Tech Average Return -16.24 OPAP SA OPAP 12141.19 -13.19% +20.00% -87% Base Currency USD Diamond I Inc -94% WinWin Gaming TENCENT HOLDINGS LTD 700 12172.40 84.73% +23.80% Since ESL’s GGI for April was compiled, a number of the Macau INT’L GAME TECHNOLOGY IGT 10966.77 -8.08% -24.15% casino operators on the list—including Las Vegas Sands Corp., MGM LTD WYNN 10722.37 -6.53% -10.94% Mirage and Wynn Resorts—have seen their shares benefit from ‘the GENTING BHD GENT 7526.98 -24.71% +2.41%

Macau Bounce’. CROWN LTD CWN 6942.69 -22.63% -1.21% Wynn Resorts rose 7.4%, Las Vegas Sands gained 9.2% and MGM RESORTS WORLD BHD RNB 6375.59 1.80% +7.59% Mirage added 3.4% on news that the Macau government would be capping expansion of Macau’s gaming industry. MELCO PBL -ADR MPEL 5423.03 -29.28% +2.67% Before the news, the stocks of operators with Macau interests had experienced subdued trading in the first quarter of 2008 and Launched on June 6th 2005 with a base value of 1000, The ESL significant falls in the case of LVS (down 21.6% in the previous 30 Global Gaming Index (GGI) comprised 271 companies as of 21st days and down 16.7% for the year) and Wynn Resorts (down 10.9% April 2008, the cut-off date of the data featured here. To be eligible for the month and down 6.5% for the year). This was probably due for inclusion, a security must be publicly listed, that is permitted to to the ‘double whammy’ of general credit crunch woes and concern offer its securities (stock, bonds, etc.) for sale to the general public about rising overheads and pressured margins in Macau. significantly involved in gaming related activities. 34 INSIDE ASIAN GAMING | May 2008

Market Outlook

Eastbound Traffic Gaming expansion in Massachusetts and other eastern states puts pressure on the region’s established casino markets

or more than a decade, the discussion of casino gaming in the northeastern FUnited States started and ended with two states: New Jersey and Connecticut. New Jersey is home to Atlantic City, long the pre-eminent gaming centre for the region, and is currently home to 11 resort-style casinos that traditionally cater to customers from the New York City and Philadelphia metro areas. Casino gaming in Connecticut took hold during the 1990s, when the Mashantucket Pequot and Mohegan tribes successfully negotiated with the state to install Las Vegas- style slots at gaming facilities—Foxwoods Resort Casino and Mohegan Sun, respectively. These properties have grown to become two of the largest and most successful casino resorts in the world, pulling in a constant stream of people from the population-rich New York City to Boston corridor. Over the years, the gaming primacy of Foxwoods Resort Casino these two markets has been encroached upon in a variety of ways. The Connecticut the Atlantic City marketplace, with casinos community of Middleboro. casinos have had to compete with tribes reporting US$4.9 billion in gaming revenue Potential competition from Massachu- opening gaming facilities in upstate New during 2007, a drop of 5.7% from the US$5.2 setts comes at a bad time for the Connecti- York, and with racetracks and parimutuel billion the properties took in 2006, the first cut casinos, which saw state slot revenue outlets in New York and Rhode Island decline in revenue since casinos opened in decline 7% last October and 3% last Novem- winning the rights to house slot-like gaming 1978. Slot machine revenues for Atlantic City ber, a result of high gasoline prices and an machines (video lottery terminals, or VLTs). dipped by 8.9% to US$3.46 billion during unsteady regional economy, reported the Atlantic City has been tested by the spread of this time period as well. New York Times. The prospect of Massachu- gaming machines to parimutuel operations “What happened to the industry in 2007 setts casinos has Connecticut officials un- in West Virginia and Delaware. For the most was clearly the result of new competition derstandably nervous. The two Connecticut part, both Atlantic City and the Connecticut and a partial ban on smoking in Atlantic casinos posted about US$2.5 billion in rev- tribal casinos have managed to shrug off City’s casinos,” said New Jersey Gaming enue last year, and it’s estimated that about these contenders and continue to dominate Casino Control Commission Chairman Linda 30% comes from Massachusetts. casino gaming in the region. Kassekert in a prepared statement. “What we’re seeing is, with consumer Now, however, these markets are facing While Atlantic City casinos contends confidence down and people feeling not their greatest challenges to date. For Atlantic with Pennsylvania, the Mashantucket Pequot so good about their own net worth, people City, the threat comes in the form of casino and Mohegan gaming properties may have are spending less. Declines are somewhat and —combined race track and to come to grips with casino resorts in unprecedented for us,” Mitchell Etess, chief casino—legalization in Pennsylvania. The Massachusetts, where Gov. Deval Patrick has executive of the Mohegan Tribal Gaming Keystone state currently has seven gaming proposed establishing three such facilities in Authority, told the Times. facilities up-and-operating, with the goal yet-to-be-determined locations throughout For both Connecticut and Atlantic City, of establishing seven more—including the state, already accounting for tax revenues continued gaming expansion in New York slot parlors in the cities of Philadelphia raised from the proposed project in this looms as a potential hindrance as well. and Pittsburgh—in the next few years. The year’s state budget. The Massachusetts- Gov. Elliot Spitzer has thrown his support existing Pennsylvania gaming operations based Mashpee Wampanoag tribe is also behind the establishment of tribal gaming appear to have already taken a bite out of pushing for a massive casino resort in the facilities in the Catskills, an area less than a 36 INSIDE ASIAN GAMING | May 2008 Market Outlook

two hour drive from the city. grandstand into a 2,500 slot machine community of Grantville, Hollywood However, before we write off Atlantic facility to the track that includes Casino at Penn National opened earlier City- and Connecticut-based casinos, the 2,500 slot machines, electronic table this year. The facility consists of a emerging northeast gaming markets still games, restaurants and bars. The track 365,000-square-foot state-of-the-art have a number of hurdles to cross before is seeking county approval to build a integrated racing and gaming operation they become casino juggernauts. 225,000-square-foot gaming complex and was forecast to employ a work that would include 4,000 slot machines, force of approximately 1,000 persons. It Pa. problems restaurants, a conference center and a features live thoroughbred racing and Two years ago, the enabling legislation ballroom. full-card simulcasting throughout the for Pennsylvania casinos called for the ≈ Harrah’s Chester Casino & Racetrack— year. The initial phase of operations also establishment of five stand-alone slot Located south of Philadelphia, Harrah’s includes a food court with four outlets, parlors, each of which is permitted to house Chester Casino opened January 2007 a sports bar, bar, trackside dining, and upwards of 5,000 slot machines, two resort- with 2,700 slot and machines lounge and entertainment areas on based licenses for a limited amount for in a 100,000-square-foot space that the gaming level. The facility opened slot machines and the right for the state’s includes bars, restaurants and a state- with 2,000 slot machines and is sized to seven parimutuel facilities to offer slot of-the-art simulcasting viewing and accommodate 3,000 machines. A five- machines as part of their gaming mix. So wagering area. Live harness racing also story parking garage with valet service far, the have sprinted ahead of the began at the track this past September. parking is connected to the complex. gaming pack, with six of them already up ≈ Presque Isle Downs—The Erie-based and operating as of February 2008. This list racino opened a gaming facility in In addition to these racinos, Pennsylvania of open facilities includes: February 2007 that includes 2,000 slot unveiled its first non-racetrack gaming ≈ Mohegan Sun at Pocono Downs— machines, four themed lounges and a property with the October opening of Owned and operated by Connecticut- variety of dining options. Future plans call Mount Airy Casino Resort in the Pocono based Mohegan Tribal Gaming Authority, for the establishment of a thoroughbred Mountains. The facility houses 2,500 slots, Mohegan Sun at Pocono Downs currently racing complex. The property is owned four restaurants and an entertainment offers 1,203 slot machines in a remodeled by MTR Gaming, which operates area. A 188-room hotel, nightclub and a spa portion of the racetrack’s clubhouse. The wagering facilities in West Virginia, Ohio, facility are expected to open by the end of two-story edifice also includes smoking Minnesota and . the year. An additional 212 hotel rooms, a and non-smoking gaming areas, bars ≈ The Meadows Racetrack & Casino—This pool area, retail shops, a conference facility with video poker machines and a variety Cannery Casino Resorts facility, located and more slot machines are all in the works of eating and entertainment options. The near Pittsburgh, opened a temporary for development at later dates—the soonest facility also offers live harness racing and 1,738-slot casino in June. A permanent being by the end of 2008. simulcast wagering from tracks across casino is under construction in a For the most part, slots at these various the country. grandstand overlooking the racetrack facilities have performed well. Combined, Pocono Downs has also broken ground and, when completed in 2009, will the gaming properties generated US$722 on Project Sunrise, a US$180 million include space for 3,000 slot machines, million in gross terminal revenue for casino and entertainment complex VIP boxes, a simulcast and wagering the seven month period ending Jan. 31, scheduled to open this summer. The area, 12,500 square feet of multifunction 2008, according to figures released by the facility will include 2,000 slots, a high- space, dining facilities and entertainment Pennsylvania Gambling Control Board. limit gaming area, restaurants, lounges, options. Future plans call for the addition Market leaders include Harrah’s Chester, bars, nightclubs, retail and additional of a 200-room hotel and spa, and an which brought in US$186 million in gross parking spaces. outdoor swimming pool. terminal revenue, followed closely by ≈ Philadelphia Park Casino—Greenwood ≈ Hollywood Casino at Penn National Philadelphia Park with US$177 million and Gaming converted an existing Race Course—Located in the mid-state The Meadows with US$128 million. Some facilities also boast a stellar win- per-machine average, according to a report released by Spectrum Gaming. Pennsylvania casinos actually hold four of the top five spots on the East Coast for this statistic, led by Mohegan Sun at Pocono Downs which generated US$403 per slot machine per day this past fall. However, properties in more seasonal locations, such as Presque Isle Downs, have seen slot revenue decline dramatically as winter set in, and have lessened employee hours to compensate. The Meadows Racetrack & Casino Despite the success of these current

May 2008 | INSIDE ASIAN GAMING 37 Market Outlook

operations, the Pennsylvania gaming the Ohio River in Pittsburgh, has also hit market is still in somewhat unsettled some snags. The good news is that the shape. To start, only one of the five lucrative project has broken ground but only after stand-alone slot casinos, Mount Airy Casino having struck various traffic easement deals Resort, has opened. Unfortunately for the with the city and its Pirates and Steelers state and its nascent gaming industry, the sports franchises. owner and gaming license holder of this So far, the only city-based slot parlor that property—Scranton area businessman seems to have smooth sailing is the Sands and banker Louis DeNaples—was recently Bethworks currently under construction in charged with four counts of perjury by Bethlehem. The project, owned by Las Vegas a Dauphin County grand jury following Sands, broke ground last May, and the first a seven-month investigation. Dauphin phase of the 126 acre development will County District Attorney Ed Marsico alleged feature a 300-room hotel, 200,000 square DeNaples lied to the state Gaming Control feet of retail, 3,000 slot machines and a Board regarding past ties with organized variety of dining and entertainment options. crime figures. Sands Bethworks will also be home to the DeNaples appears to have slipped National Museum of Industrial History, an through the license process due to a quirk arts and cultural center, and the broadcast in Pennsylvania that denies law home of the local PBS affiliate. enforcement powers to the gaming board’s MGM Grand at Foxwoods “Not only are we are on track to develop Bureau of Investigations and Enforcement revoke the license altogether. a property that the region will be proud of, (BIE), the agency that conducts background What weight Mayor Nutter’s actions but we are confident that everyone will checks on license applicants. BIE reportedly have remains to be seen. The move came on enjoy the myriad options available. With thought DeNaples was lying during its the heels of a December 2007 decision by so many entertainment options featured investigation, but without enforcement the State Supreme Court to approve zoning under one roof, guests will be amazed powers, could not ask the FBI or state police and other necessary permits for SugarHouse, as they are presented with top-notch to share information with them. knocking down city council objections to shopping, dining and entertainment,” said “How do you investigate prospective the project, saying they were little more Brad Stone, executive vice president of gaming applicants and not have law than delaying tactics because the state had Las Vegas Sands Corp., at the time of the enforcement authority? If you go across the already approved the development. groundbreaking. “Also, as promised, it will river in New Jersey, that was one of the first Meanwhile, the second area casino— contain varying components that will allow things they did,” Fed Martens, the former the US$560 million Foxwoods Casino us to keep the integrity of the Bethlehem head of the Pennsylvania Crime Commission, Philadelphia, also located along the Delaware Steel buildings, preserving the industrial told The Times Leader newspaper. “It makes River but in South Philadelphia—has also giant’s place in history.” no sense in the world the way it was set up. It found the local approval process arduous. is a scandal waiting to happen.” Local legislation in support of the project Mass. movement The state gambling control board was finally filed in January, after the projects Compared to Pennsylvania, the casino immediately suspended DeNaples’ gaming owners—the Mashantucket Pequot Tribe of plans for Massachusetts seem somewhat license. The board is considering appointing Connecticut—agreed to consider tougher modest. The legislation, as outlined by Gov. a trustee to oversee Mount Airy until the ordinances regarding public safety, traffic Patrick in the September, calls for three case is settled. congestion and sewer lines. City Councilman state-licensed casinos, one in the Boston This is not the only black-eye suffered by Frank DiCicco, a longtime opponent of the area, one in the western part of the state and the slot parlor portion of the Pennsylvania project, actually introduced the enabling one in the southeastern part of the state. The gaming industry. Two massive 3,000 legislation, saying the previous decision governor’s office estimated that the measure slot machine casinos have had a hard by the State Supreme Court regarding would create 20,000 permanent jobs, along time getting established in Philadelphia. Sugarhouse forced this move. with thousands of construction jobs. SugarHouse casino, a proposed US$450 “Although I disagree, I have heard and Each of these projects will cost an million mixed-use project located along the have heeded the Supreme Court’s opinion of estimated US$1 billion to develop, which, Delaware River waterfront area, recently had the council’s failure to act on gaming matters,” surprisingly, has not dimmed casino operator its license revoked by Philadelphia Mayor DiCicco said in a prepared statement. “The ardor for Massachusetts casinos. Las Vegas Michael Nutter, primarily due to quality of introduction of this legislation is not a Sands, Wynn Resorts, Harrah’s Entertainment life complaints from local residences and shift in my position. I still have serious and and Trump Entertainment Resorts are just a environmental impact issues. SugarHouse reasonable concerns about this project that few of the well-known casino development had 30 days to appeal the action and ask the must be addressed. This bill helps guarantee companies rumored to be gearing up for a city to reissue the license, which it will only that they are.” Massachusetts license bid. do after an extensive review process. PITG Gaming, the Don Barden subsidiary Massachusetts expects to realize State and city lawmakers have also that is attempting to establish a US$455 hundreds of millions of dollars annually petitioned the State Supreme Court to million, 400,000-square-foot casino along from the three licenses, with US$400 million

38 INSIDE ASIAN GAMING | May 2008 Market Outlook

bandied about as an early estimate. That’s enabling legislation is still far from a sure Mohegan tribes, protection comes in the from gaming revenues estimated at about bet. Indeed, previous attempts to liberalize form of facility expansion. Although it is US$1.5 billion annually. Massachusetts gaming law have vaporized already home to six casinos that collectively “The estimate is US$400 million in in the state legislature, the most recent being offer more than 7,000 slot machines and 400 revenue,” a spokesman in the governor’s last year’s bill seeking slots at racetracks, table games, Foxwoods has broken ground office said. “Of that, US$200 million is to go which failed in the House by a 100-55 vote. on MGM Grand at Foxwoods, a US$700 to tax relief, and the other US$200 million is House Speaker Salvatore DiMasi is reportedly million mixed-use project that will add 2 to be used for transportation and rebuilding “skeptical” about the state’s casino plans, and, million square feet of additional gaming, the infrastructure.” according to the Associated Press, warned entertainment, meeting, dining and retail In addition to this long-term revenue, Patrick against including projected licensing space to the resort. This new development is the state expects to generate a one-time fees from three resort style casinos in his scheduled to open this year. windfall of US$800 million in licensing fees budget, saying Patrick shouldn’t “put any Mohegan Sun is also undergoing a generated by the public auction of the rights money in [the budget] that you hope you’re massive expansion. The US$740 million to develop and operate the casinos. Of this going to get.” Project Horizon will be completed in phases sum, US$300 million will be dedicated to Much like Massachusetts, New York through 2010, and will include the Casino of solving projected 2008 shortfalls to local looks toward expanded casino gaming to the Wind which will house 960 slot machines aid revenues, with the rest going toward help cover projected budget shortfalls and and a new 1,000-room hotel. transportation projects. provide a much-needed economic boost to Both tribes are also developing gaming The fact that Patrick has already included depressed areas within the state. However, complexes in Pennsylvania, and are likely casino licensing proceeds in this year’s instead of initiating a potentially bruising to expand elsewhere in the region as budget hints of the confidence he has that battle with the state legislature over opportunities arise. this plan will soon be approved by the state commercial casino legalization, Gov. Spitzer Despite a decline in overall casino Senate and House of Representatives. is instead working with state gaming tribes A number of factors appear to be seeking to develop off-reservation casinos, working in favor of casino legalization. To showing a willingness to sign-off on state/ start, one of the licenses can be used to tribal gaming compacts in return for a share placate the recently-recognized Mashpee of slot revenue. Wampanoag tribe, which is well on its way The deal that has garnered the most to developing its own Massachusetts casino. attention is with the St. Regis Mohawk Tribe, The tribe has already reached a deal with the which is attempting to build a US$600 southeastern Massachusetts community million casino in the Catskills area of the of Middleboro, where they have secured a state. The Stockbridge Munsee of Wisconsin 500-acre parcel of town land and plan to and Seneca-Cayuga Tribe of Oklahoma also construct a US$1 billion resort. The resort sought to build casinos in the region. will include a casino large enough to house However, Spitzer and tribal plans have 4,000 slot machines and 125 table games, run into a major roadblock. To be legal, a 1,500 room hotel, 20 shops, a 10,000 seat land on which the Catskill casino was to be arena and a 36-hole golf course. However, developed had to be placed into trust status A crowded slot bank at Mount Airy Casino the land for the casino must be placed into by the federal government’s Department of Resort trust status by the federal government and a the Interior. The DOI recently ruled against revenues, a number of new casino projects gaming compact signed between the state all three projects. The decisions were based are planned for Atlantic City, including a and the tribe before casino development on a new Bureau of Indian Affairs policy ground-up development from Pinnacle can begin, a process that could take years. that virtually eliminates any chance of off- Resorts. The Borgata, Trump Taj Mahal and The Mashpee may consent to a state- reservation gaming. other established casinos are also looking to controlled gaming license if it offers speed Until the BIA policies are changed, casino expand both rooms and gaming space. for their new casino. gaming coming to the Catskills, and closer “While this is the first year that revenues The casino legislation also comes at an to the Connecticut and Atlantic City casinos, have decreased, the future for the industry auspicious time, when the state, and the appears unlikely. is very bright,” Kassekert told the Newark rest of the nation, appears to be headed for Star-Ledger. “Right now, existing operators an economic downturn. Local unions have Home protection and new developers are investing well over already come out in support of the casino Although future success is far US$10 billion into new or expanded casino plan because it generates thousands of from certain, attempts by New York, hotels. That kind of investment shows that much-needed jobs for the state. “We have Massachusetts, Pennsylvania and other the industry and the investment community to fight at least as hard as the governor eastern states to establish or expand casino remain bullish on Atlantic City.” is going to fight on this,” Louis Ciarlone, or slot device gaming have forced both president and business manager of IBEW Connecticut and Atlantic City operators to By Paul Doocey, International Gaming and Local 123, told the Boston Herald. take steps to protect market share. Wagering Business (IGWB) magazine. Special Despite this support, passage of casino For the Mashantucket Pequot and to Inside Asian Gaming.

May 2008 | INSIDE ASIAN GAMING 39 Briefs

speculation that the group would launch a mandatory general offer bid for Landmarks if the casino project in Bintan eventually takes off. Regional Briefs Genting itself is building an integrated resort on the Singapore resort island of Sentosa. Doubts Over Bintan Casino Venture New Taiwan President Could Legalise Casinos Taiwan President-elect Ma Ying-Jeou is in favour of introducing casinos in the island nation by revising the current Statute for Offshore Island Development. The former mayor of Taipei will be sworn into office on May 20 and has said he wants to allow local county governments the right to issue gaming licenses. Such a move is expected to benefit the archipelago of Penghu. For several years, the small group of islands in the Taiwan Strait has been petitioning Taipei to allow gaming within its jurisdiction—including the setting up of large scale casino resorts—in order to boost its sluggish economy by attracting mainland Chinese tourists. Subject to approval by the country’s parliament, Bintan Hong Kong-born Ma stated that he is ready to grant Following reports that Malaysia-based Landmarks Bhd had licensing authority to local obtained permission to develop gaming facilities on the Indonesian governments in the islands island of Bintan, further reports emerged alleging the authorities and added that Makung have yet to give the go-ahead to allowing gaming on the island. airport in the island chain Bintan is the largest island in the Riau archipelago, just south of will be among the first Singapore. airports in Taiwan to operate Landmarks, which is apparently backed by Asia’s biggest direct flights from China. Taiwan President-elect Ma Ying-Jeou gaming company Genting Bhd, announced it planned to build resorts, condominiums and villas in Bintan over eight years, at a cost Four Seasons Set for Q3 Opening of S$2 billion. Antoine Chahwan, the general manager of the soon-to-open The “objective is to develop a new destination for Indonesia,” chief Four Seasons Hotel on Macau’s Cotai Strip, said the property will operating officer Lim Boon Soon said in an interview withBloomberg . open in the third quarter of this year, rather than in June, as was He was also quoted as saying that “five years down the road, having announced last year. a casino won’t be special.” The Macau Daily Times quoted Mr Chahwan as saying: “June was According to Lim, Landmarks plans to sell five so-called integrated the target date but we have always said we were going to be around resorts lots of about 25 hectares each to investors. Each would come the third quarter of 2008. We can only estimate [an opening date], I’m with a “casino offering.” not personally putting everything in that building.” However, an Indonesian official in charge of development The Four Seasons is one of eight parcels being developed by planning in Bintan said the casino plan was rejected “a long time Las Vegas Sands Corp (LVS) along the Cotai Strip. While the building ago,” as the community was against the idea, the Singapore Straits construction and interior are on target for third quarter completion, Times reported. Landmarks has yet to respond to the statement. In a circular to shareholders, Landmarks said it had yet to obtain all the required approval for the project. A detailed application on its plan for the project was to be submitted in the third quarter of this year. Landmarks also said the zoning of the area as an exclusive integrated tourism zone (EITZ) earlier this year allowed the company to conduct licensed activities like medical tourism, multimedia and information technology hosting, as well as games and entertainment—including gaming—within the project. But the latest comment by the Indonesian official underscores the risk of setting up the first casino in the predominantly Muslim country. Indonesia has a tough anti-gambling law, and any casino project would likely result in strong opposition from local communities. Genting owns a 30.3% stake in Landmarks, and there is some The Four Seasons

40 INSIDE ASIAN GAMING | May 2008 Briefs

the hotel has yet to recruit the majority of the 1,000 staff it needs opened last August. The company is also spending more than $12 and secure a license—a step that has been hindered new hotel billion to build 11 hotel-casinos with almost 20,000 rooms on the developments, according to the newspaper report. Cotai Strip region of Macau. Owing to the lack of experience among staff in the region, the Whether LVS ends up having to pay Mr Suen, the suit “could cost hotel will need a higher ratio of staff to rooms. The hotel plans to the casino operator millions in damaged reputation and potential have upward of 2.5 staff per room, while Four Seasons properties shareholder action,” reported the Las Vegas Review Journal. in Australia and the US generally have a ratio of about 1.7 staff During the trial, 74-year-old Mr Adelson apparently testified per room. that he has a debilitating rare neurological disorder and in 2001 was The hotel complex will include a 130 table casino, four restaurants, dependent on pain medication that left him “asleep” and absent a bar and luxury shopping mall linked by a bridge to the Grand Canal from the company’s dealings that year. Furthermore, at one point Shoppes at the Venetian Macao. Mr Adelson said LVS President Bill Weidner may have breached his fiduciary duty, but later attempted to clarify those comments. Asian Poker Tour Names Tournament Director According to the article: “Weidner committed his own faux The Asian Poker Tour (APT) announced that Matt Savage has pas. While attorneys argued over whether an internal company signed on as tournament director for the APT’s Manila Main Event to document could be entered into evidence, he said Las Vegas Sands be held from May 27 to June 1. [sic] was projecting ‘$312 million less than was forecasted in 2008’ Mr Savage served as tournament director for the World Series of while discussing the contents with Judge Michelle Leavitt. Poker (WSOP)—the world’s blue ribbon poker event—in 2002 after “‘That slip,’ said James Cox, a Duke University corporate securities working his way up the poker ladder. He oversaw a boom in prize law professor, ‘may cause the most trouble’. Cox, who reviewed money at the tournament from £6 million to £25 million. He has coverage of the trial, said the document, which adjusts the company’s worked on more than 300 televised poker shows and in 2003 was financial outlook for 2008, ‘can’t just be brushed aside.’ awarded the inaugural Benny Binion award for outstanding service “Cox said Las Vegas Sands may have been obligated to release in the poker industry. the forecast to shareholders as soon as it was produced. As the tournament director for the Asian Poker Tour Manila leg, “‘If you issue a forecast and have reason to believe it’s influencing Mr Savage will oversee six days of poker action which is expected investor behavior, and then you come to a realization you might not to attract around 400 players from all over the world. A third of the be able to meet that forecast, you have a duty to update shareholders,’ participants are expected to come from the Philippines, which has Cox said.” seen poker’s popularity surge in recent years. After the Philippine leg, the tour moves on to events in Macau, Oceanus Axed South Korea and Singapore. The buy-in at all four events is US$2,500 and the prize pool will be a guaranteed $1 million. Alongside some of the world’s best players will be a host of internet qualifiers competing for the money at all the venues. These qualifiers will be making their way to the main event by wayof online satellite tournaments. The prize packages awarded from these satellites are worth US$6,000 and cover hotel and travel expenses. For the APT Manila event, online satellites are currently being held on most iPoker-powered poker rooms such as DafaPoker, Tila Poker, ChiliPoker, Titan Poker, Betfred and VC Poker. In addition, some of the world’s biggest and most popular poker rooms, including PartyPoker.com and PKR, will be running satellites for seats into the Oceanus tournament. The proposed Oceanus project—a rendering of which is pictured Fallout from LVS Trial above—has been definitively axed, according to former monopoly A lawsuit by a Hong Kong businessman Richard Suen seeking casino operator Stanley Ho, whose Sociedade de Jogos de Macau compensation for allegedly helping Las Vegas Sands Corp (LVS) (SJM) was to have developed it. with its bid for a Macau gaming license in 2002 kicked off in County Dr Ho’s announcement that Oceanus would not proceed comes District Court last month. in the wake of a recent announcement by the Macau government The case was filed in October 2004 by Mr Suen and Round that it would put a halt to issuing new casino licenses and approving Square Co. Mr Suen claims he introduced LVS Chairman Sheldon new casino projects, given growing concerns that expansion of the Adelson to high-ranking officials in the Chinese government who gaming industry is getting out of hand. Dr Ho said he welcomed the figured prominently in the company’s acquisition of a Macau gaming government’s decision, which was prompted by pressure from the concession. Mr Sun also alleges that he was promised a US$5 million central government in Beijing. success fee plus 2% of the net profits from the Macau venture. However, SJM will go ahead with the redevelopment of the LVS, which won a shared gambling concession in 2002 from the shopping mall and ageing Jai Alai casino on the site where Oceanus Macau government, operates the Sands Macau, which opened in was to have been built, with application for the re-development May 2004 and famously recouped its initial investment within a year already having been submitted to the government, according to of operation, in addition to the US$2.4 billion Venetian Macau, which the company.

May 2008 | INSIDE ASIAN GAMING 41 Briefs

Transact Wins Default Status at IGT International Briefs TransAct Technologies, a global leader in market-specific printers for transaction based industries, announced that IGT has selected Transact’s Epic 950® printer as the default Ticket-In Ticket-Out printer for all new IGT games. The term of the default status will begin IGT Announces Server Based Gaming Initiatives immediately and extend through June 30, 2010. IGT and WMS entered a new era of cooperation with an agreement Bart C. Shuldman, Chairman, President and Chief Executive Officer that provides for a wide-ranging, non-exclusive cross-license of each of TransAct Technologies, said, “This is a historic win for TransAct and it other’s intellectual property and patents associated with realizing comes just as we believe the upgrade cycle for server-based gaming the benefits of server-based gaming for their customers in an open is about to begin. We truly appreciate the opportunity IGT is giving architecture environment. In addition, both companies affirmed us. We thank them for their decision and confidence in TransAct.” their commitment for product interoperability and the advent of an TransAct’s Epic 950® combines groundbreaking marketing enterprise-wide networked gaming environment. capabilities, sophisticated technical advances, and robust engineering The agreement between IGT and WMS covers certain patents in a single printer. IGT’s decision to select the Epic 950® as its default and intellectual property that address fundamental capabilities for printer is a validation of TransAct’s technology, support, and product computer and server-based infrastructure in the gaming industry, development as best-in-class. including IGT’s Alcorn authentication and encryption patents. Both companies are members of the Gaming Standards Association (GSA) CryptoLogic Releases Street Fighter II Slot Game and are committed to the open architecture of the GSA standards Innovative online gaming and open network protocols. software provider CryptoLogic has TJ Matthews, Chief Executive Officer of IGT, said, “This agreement launched a slot version of the Street will provide the momentum for both companies to achieve their Fighter II arcade game, which had common vision—a revolution in networked gaming applications, a massive following among hordes player features, and casino entertainment. The agreement accelerates of teenagers, particularly in Asia, in the introduction of innovative, value-add applications previously the late 80s and 90s. The game is announced by IGT and WMS, such as IGT’s award-winning sb™ available through the company’s (server-based) Service Window.” WagerLogic subsidiary. IGT is developing a complete set of individualized sb™ (server- Exploding onto the scene based) products and services to maximize profitability across the in 1987, Street Fighter is widely entire casino enterprise. With IGT sb™ Products, operators will be credited with launching the able to weave in all their amenities for increased profitability. fighting game genre into the On the heels of the agreement, IGT went on to sign a mainstream. The Street Fighter memorandum of understanding with the upcoming MGM MIRAGE series has sold more than 500,000 CityCenter development in Las Vegas to install a server-based coin-operated units and more network and related IGT sb™ and gaming management system than 24 million console games products at the development’s massive resort casino, scheduled to worldwide, generating more than open in late 2009. US$1bn in revenue. In the slot version, famous characters including This would be the first floor-wide installation of a system of Ryu, Guile and Chun-Li face off against the evil Bison in a high-payout this kind. The Service Window will be accessible to players via slot re-spin feature. machines and eventually table games to link them to their MGM MIRAGE Players Club accounts and to various services. According to Station Plans Mega Vegas Project a press release, IGT and CityCenter look forward to working closely Station Casinos is designing a multibillion-dollar development, with Nevada gaming regulators to make this advancement a reality. which would be the most ambitious project in its 32-year history, CityCenter is an US$8 billion mixed-use development jointly according to the Las Vegas Gaming Wire. owned by MGM MIRAGE and Dubai World. It will sit in the heart of The company says it is planning a mixed-use development, the Las Vegas Strip between tentatively titled Viva, for 110 acres on Tropicana Avenue, on the and Monte Carlo current site of the Wild Wild West hotel-casino and some restaurants, resorts. The development retail shops and warehouses. combines approximately The project could eventually cost as much as US$10 billion, 2,650 luxury residences, overshadowing MGM MIRAGE’s CityCenter project, and will be built two 400-room non-gaming in phases. The first phase is expected to have three hotels with 5,200 boutique hotels (one of hotel rooms and a large casino. The company is also discussing which will be managed by building an arena on the site. luxury hotelier Mandarin Station Casinos President Lorenzo Fertitta said the gaming Oriental), a dramatic 61-story, company has been master planning the project for the past year and 4,000-room resort casino, and it is “on top” of the company’s development list. a 500,000-square-foot retail It may take a while for construction to begin, however, considering and entertainment district. CityCenter it took four years for the US$925 million Red Rock Resort to go from

42 INSIDE ASIAN GAMING | May 2008 Briefs

the planning stage to breaking ground. The device is manufactured by Cantor Gaming, a leader in the “It takes years to get a design completed,” said Chairman and CEO mobile gaming industry. Cantor began developing the device for the Frank Fertitta III. “Point of fact is we’re going to be in a position where US market five years ago, and helped push through the bill in Nevada’s CityCenter is going to be open. We’re going to have some visibility Legislature in 2005 to legalise mobile gaming devices. Cantor worked on how they’re doing before a project like this is even going to be in with regulators for two years to craft regulations, investing tens of the ground.” millions of dollars in research and development. During the three-month field trial of the device, low-limit bets will occur under the supervision of the Nevada Gaming Control Board. If the technology works as expected, the Venetian and other Nevada casinos will be allowed to enable the devices in all public areas, such as convention centers, shopping malls, restaurants and the pool. However, players will not be allowed to use the devices outside the casino’s property, and hotel rooms will be off-limits. Cantor Gaming, a subsidiary of the global bond trading giant Cantor Fitzgerald, is the developer of a successful mobile financial trading platform with minimal transaction fees. The mobile casino gaming platform offers basic strategy recommendations, such as which poker hands to hold and discard. Harrah’s to Assume Caesars Title Nearly three years after spending US$9 billion to acquire rival casino operator Caesars Entertainment, Harrah’s Entertainment announced it plans to change its name to Caesars Entertainment Corp. The switch requires regulatory approval in the states where the company operates casinos. Hotel & Casino The Harrah’s name will be retained, however, becoming one of Station Casinos’ planning on the project comes while other the company’s three primary casino brands, along with Caesars and projects such as Crown Las Vegas, Cosmopolitan and Tropicana, Horseshoe. being led by newcomers to the market, have met financial trouble. In June 2005, Harrah’s completed a buyout of Caesars, which at However, Deutsche Bank gaming analyst Bill Lerner said the time was the largest gaming industry merger and created the Station should have little trouble raising capital because of its world’s largest casino operator. reputation. “When you have land and you have expertise, money Harrah’s was founded more than 70 years ago in Reno as a small will follow,” Lerner said. “The good news is they don’t have to raise parlor by gaming figure Bill Harrah. The name has long been the capital for it right now. The credit market will work itself out associated with middle-market gamblers. The Caesars name is more over a period of time.” upmarket and associated with high-rollers. The Caesars name is on Lerner also noted that Station’s new status as a private company three Harrah’s-owned casinos, in Las Vegas, Atlantic City and Indiana. could help immunize the project from financial market turmoil. “If “Adoption of the name Caesars Entertainment will provide they were public when this was announced, it is a project Wall Street our company with greater prestige and help attract strategic would have taken exception to,” Lerner said. “It is outside of what is business partners as we pursue expansion opportunities in new viewed to be their core locals market niche.” jurisdictions,” said CEO Gary Loveman said. However, in recent Station Casinos went private after a US$5.4 billion buyout closed weeks Harrah’s withdrew from potential hotel-casino projects in in November. The company is now owned by a partnership between the Bahamas and Slovenia. the Fertittas and Los Angeles-based real estate investment firm Harrah’s has more than 50 Colony Capital. casinos worldwide and over Station Casinos has other plans in the works, and is set to open 87,000 employees. In Las Vegas, the US$675 million Aliante Station in North Las Vegas by the end of Harrah’s operates the iconic the year, and will soon break ground on another Vegas project. (the lobby is The company owns and operates nine hotel-casinos and is a pictured here), Bally’s, Paris Las joint-venture partner on another. It also owns and operates three Vegas, Flamingo, Harrah’s Las stand-alone casinos, co-owns two stand-alone casinos and manages Vegas, Imperial Palace, Bill’s an American Indian casino outside Sacramento, Calif. Gamblin’ Hall and the Rio. The name change will mark Mobile Gaming Trial at Venetian Vegas the second time Caesars has been After years of research and design and regulatory approvals, the adopted by a casino company. In first field-trial of a mobile gaming device in Las Vegas is being carried 2004, Park Place Entertainment, out at the Venetian. The handled device, encased in hard rubber with which had acquired Caesars a touch-sensitive screen, allows gamblers to place bets while walking Palace, took on the name Caesars around the casino. Entertainment.

May 2008 | INSIDE ASIAN GAMING 43 Casino Marketing

Know Your Casino’s VCL Casino marketing consultant Steve Karoul explains why everyone in the casino industry should be aware of the concept of “Volatility Comfort Level”

You may be tired of hearing me constantly repeat that the casino hard time creating value. business is about creating value rather than making money. Value Given the recent consolidation in the US casino industry, new is a nebulous term that can relate to both the customer and the casino developments in Asia and the unsteady US economy and casino. It can even relate to a public company’s shareholders or to financial markets, VCL is become increasingly important. a Native American Tribe’s members. “Volatility Comfort Level” (VCL) Given the recent spate of consolidations in the US casino is one of the many variable factors that can affect value. Therefore, industry, it is worth observing how industry giants make decisions it is important to review the concept of VCL and clear up the many around on VCL. For example, Harrah’s, which is known to have a misconceptions out there. relatively low VCL, recently acquired Caesars Palace, which has a very Do you know your casino’s VCL? For that matter, do you know high VCL. This is comparable to the situation when low VCL Circus your own personal VCL? For example, if you went to a Circus—which is basically a grind casino with low VCL—decided to Table, would you be comfortable betting $1,000 straight up on a build the higher-end Casino, which has a relatively number that pays 35 to 1 odds? This represents high risk but high high VCL. More recently, MGM Mirage Corporation acquired both potential reward—a high VCL. Would you be more comfortable Mandalay Bay and Circus Circus. Thus, Harrah’s and MGM Mirage are betting only $10 on Black or Red, which is an bet with two industry giants with properties within their respective portfolios minimal risk but also minimal potential reward—a low VCL? Simply that have diametrically opposed VCLs. stated, VCL is tolerance of risk relative to the potential value that The big question is what will happen next? can be gained. As I mentioned previously, it is one of the subtle Will Harrah’s operate Caesars Palace with a very high VCL? factors that can have a dramatic influence on value They could downgrade the VCL of the property, but by doing or perceived value in a casino. It can also influence so they would denigrate Caesars Palace’s cachet as a high-roller profitability. Without property. Instead, Caesars recently adopted an even higher VCL by profit, a casino announcing the highest betting limits in Las Vegas. would have a Another option would be to spin off Caesars Palace and sell the property and thereby keep the Harrah’s corporate VCL consistent throughout the company. This would simplify various marketing programs and yield cost savings on some of their marketing efforts. The same could be true for MGM Mirage, which will also have to decide what to do with grind properties such as

INSIDE ASIAN GAMING | May 2008 Circus Circus. Companies that offer corporate Players Club cards such as Harrahs and MGM Mirage will face new problems, challenges and expenses as their customers try to figure out where they receive the best “value” from their membership. Operations run by strong-minded individuals, such as Steve Wynn or Benny Binion, often tend to have high VCLs. Steve Wynn has always had a very high VCL, as observed at his new properties in Las Vegas and Macau, where the table maximums are all USD$10,000 or higher. Benny Binion’s strategy to attract high-rollers to a non- high-roller property—the no-frills Binion’s Horseshoe Casino—has become the stuff of legend. Binion would accept a maximum bet of any value from a player, so long as it was the player’s first bet. The first bet would then become the maximum bet. High risk, high reward is also synonymous with many casinos in London. Most of these casinos are small, with 15 or fewer table games. British gaming regulations are also quite restrictive and prohibit the casinos from explicitly advertising gaming. Therefore, many London casinos have accepted a very high Volatility Comfort Level (VCL) in the hopes of attracting more high-roller play to their tables. They understand the volatility and accept it as a consequence of high risk, high reward. Mitigating risk in Macau Some of the highest-stake betting in the world takes place in Macau’s VIP rooms, where you can bet up to US$250,000 a hand at Baccarat. However, there is one big difference worth mentioning. Most of the VIP Room operators in Macau use what is known as a “Table Differential” to lower or control their VCL and still allow very low VCL. They can also accept a customers to wager much higher amounts of money. A Table much higher VCL and go after a Differential is the amount that the casino will set as the difference much higher payout by betting on between what is bet on Banker and what is bet on Player at the straight up numbers for 35 to 1 odds. same table. Therefore, a US$100,000 Table Differential is the Volatility Lottery operators face the lowest VCL Comfort Level (VCL) of that particular operator. In other words, the of any gaming company while lottery ticket buyers operator is willing to accept a maximum of US$100,000 worth of have the highest VCL of any gambler, since their odds of risk on every hand wagered, even if the actual bets placed are much winning—and hence potential value—are so low. Even Poker, which higher. For example, you could have two players playing against each is red hot right now, has a very low VCL for casinos, since players play other on the same table with one betting US$500,000 on Banker, as against each other and not the casino. The casino takes the “rake”, long as the other player did not bet more than US$600,000 on Player. which is a small percentage of the amount wagered, giving the The VCL or differential for the table is US$100,000 per hand. casino a low risk, low reward revenue stream. Cruise ships used to always have very low VCLs until Star Cruises, owned by Genting in Malaysia, started to operate high- Back to basics level shipboard casinos offering land-based casino betting limits. Whether you are directly employed in the casino industry, or This set a new trend for VCLs for casinos on cruise ships and you merely interested in it, you need to understand as much as possible can now find gaming cruises or sea-going gaming junkets on board about Volatility Comfort Levels for many reasons. Your boss may major cruise lines such as Star Cruises, Norwegian Cruise Lines and ask you about a big player and whether or not to book his action. Carnival Cruise Lines. Alternately, you want to be comfortable that you make the right We have also witnessed VCL changes through the introduction of decision when investing in risk-taking businesses such as casinos, new table and slot games. For example, Caribbean Stud Poker reduces which can be extremely volatile—high limit Baccarat, for instance, can a casino operator’s VCL since the game basically accrues money from dramatically affect a casino’s earnings. In addition, many high-rollers other players of the game and then pays out on big winning hands. will ask for things in advance such as pre-payment of their airfare or Customers like these games because they have a chance of earning chartering a private jet or helicopter to fly them in to play at your a big payout with minimal investment. The same is true of slot casino. That is why you need to understand a bit about how standard machines with large progressive jackpots. IGT’s Megabucks Jackpot, deviations work at estimating your probability of beating a particular for example, allows a casino to market huge jackpots with minimal player for a certain amount of money to cover your expenses and risk, thereby lowering the casino’s VCL since the huge jackpot gets also make a reasonable profit for your casino. There are programs paid out of accrued funds rather than the casino’s coffers. available that will compute this for you. All you need to do is plug in Games such as Roulette allow players to decide their own personal the game, the time period, their average bet, the house advantage for VCL. By placing even money bets on the game, players can choose a that game and number of hours to be played.

May 2008 | INSIDE ASIAN GAMING 45 Casino Marketing

Impact of different average bet sizes on volatility under an identical $50,000 casino theoretical expectation

Probability of “Player A” Winning $300,000 Name Game Hours Hands/Hour Average Bet HouseAdv. Theoretical Loss Patron’s Actual Player A B.J 20 100 $5,000 0.50% $50,000 $300,000 Probability of Winning Probability of Losing Winning over % chance Actual Losing Over % chance Actual Patron’s Chance of Winning $0 42.23% $0 57.77% Their Actual or More $102,000 27.55% -$102,000 41.92% $204,000 15.96% $300,000 -$204,000 27.29% 8.49% $306,000 8.13% -$306,000 15.77% $408,000 3.62% -$408,000 8.01% 90% Confidence $510,000 1.40% -$510,000 3.56% -$470,671 to $370,671 -$612,000 1.38%

Probability of “Player B” Winning $300,000 Name Game Hours Hands/Hour Average Bet HouseAdv. Theoretical Loss Patron’s Actual Player B B.J 20 100 $10,000 0.50% $50,000 $300,000 Probability of Winning Probability of Losing Winning over % chance Actual Losing Over % chance Actual Patron’s Chance of Winning $0 44.49% $0 55.51% Their Actual or More $136,000 30.30% -$136,000 40.57% $272,000 18.59% $300,000 -$272,000 26.90% 16.58% $408,000 10.20% -$408,000 16.04% $544,000 4.97% -$544,000 8.53% 90% Confidence $680,000 2.15% -$680,000 4.03% -$644,918 to $544,918 -$816,000 1.68%

Probability of “Player C” Winning $300,000 Name Game Hours Hands/Hour Average Bet HouseAdv. Theoretical Loss Patron’s Actual Player C B.J 20 100 $20,000 0.50% $50,000 $300,000 Probability of Winning Probability of Losing Winning over % chance Actual Losing Over % chance Actual Patron’s Chance of Winning $0 46.09% $0 53.91% Their Actual or More $187,000 32.10% $300,000 -$187,000 39.41% $374,000 20.28% -$374,000 26.26% 26.62% $561,000 11.54% -$561,000 15.81% $748,000 5.88% -$748,000 8.55% 90% Confidence $935,000 2.67% -$935,000 4.13% -$891,342 to $791,342 -$1,122,000 1.78%

Table Maximums can be used to augment or mitigate the reflect the normal distribution of expected results associated with volatility of casino earnings. The tables above illustrate three different the standard deviation derived by each style of play. The term 90% types of player, with each offering the casino a $50,000 confidence is used to give a reasonable expectation of a player’s Theoretical Win. To illustrate volatility, “Player A” plays $5,000 a hand winning or losing and is meant to account for 90% of all occurrences. for 20 hours, “Player B” plays $10,000 a hand for 10 hours, and “Player The actual results can be outside the limits listed and the degree of C” plays $20,000 a hand for 5 hours. From the casino’s perspective, confidence can be portrayed at levels other than 90% (e.g. 95% or each player is equally valuable, but presents different degrees of risk even 99%). for the house. The tables show that “Player C” has the potential to win or lose The smaller tables on the right hand side of the larger ones more money than “Player A”, creating a more volatile situation for the 46 INSIDE ASIAN GAMING | May 2008 Casino Marketing

Probability of “Player D” Winning $300,000 Name Game Hours Hands/Hour Average Bet HouseAdv. Theoretical Loss Patron’s Actual Player D B.J 20 100 $25,000 0.50% $50,000 $1,000,000 Probability of Winning Probability of Losing Winning over % chance Actual Losing Over % chance Actual Patron’s Chance of Winning $0 44.49% $0 55.51% Their Actual or More $323,000 30.96% -$323,000 41.31% $646,000 19.62% -$646,000 28.16% 10.6% $969,000 11.24% $1,000,000 -$969,000 17.46% $1,292,000 5.80% -$1,292,000 9.77% 90% Confidence $1,615,000 2.68% -$1,615,000 4.92% -$1,612,296 to $1,362,296 -$1,938,000 2.21% casino. While “Player C” has the same profitability as “Player A”, the The casino has a 10.6% chance of losing over $1,000,000 to this casino needs to take into account the added exposure to short term patron over the session. This represents the casino’s VCL. Do you losses created by more volatile action. know your casino’s VCL? Good luck. The following chart shows the probabilities of losing money to a high action player who bets $25,000 per hand of blackjack for Steve Karoul is a leading casino marketing consultant and 10 hours of play. What is the patron’s probability of winning during a member of the Gerson Lehrman Group Council consulting on the designated session? What are his chances of winning one casinos. Steve can be reached by phone: (1-860) 536-1828 or email: million dollars? These are questions managers should know before [email protected]. You can also visit Steve’s website: www. accepting this type of high action play. euroasiacasino.com

May 2008 | INSIDE ASIAN GAMING 47 Feature

In Praise of Progress Bally Technologies will show off new products at next month’s G2E Asia

hen you have a winning hand it makes sense to keep on playing. That’s the philosophy adopted by Bally WTechnologies with the latest offer in its highly successful Hot Shot Progressive™ series. All About Money™ Hot Shot Progressive recently made its debut in the US market. Its distinctive dollar green graphics can be seen in action for the first time in the Asia Pacific region at G2E Asia 2008. The international gaming conference will be held at The Cotai Strip Convention and Exhibition Center at The Venetian Macao from 3rd to 5th June. Lucky Threes This is the third game version in the Hot Shot Progressive series and includes multi-level progressive bonusing. “With this game you do have to play at max factor to win the progressives but we set it to a very reasonable wager, so we get very aggressive play and good sales on these progressive products,” says Matthew Lai, Gaming Business Manager Asia Pacific for Bally Technologies. The game in game feature—featuring a mini wheel—reprises the exciting play patterns of the original Blazing 7s® Hot Shot Progressive, which is Bally’s best seller worldwide and has now been issued as Hot Shot Classic. Multipliers All About Money now joins Winning Times, another multiplier game, in the Hot Shot Progressive series. Bally says the strategy is that the versions complement rather than compete with each other. “Hot Shot Classic is the number one game worldwide from Bally including in Macau. It’s also been very successful in The Philippines and Malaysia,” says Mr Lai.

INSIDE ASIAN GAMING | May 2008 Feature

“Given the results we’ve had with Hot Shot, we decided to launch gold colours, free games features and bonuses features, and they put different versions. it all in the same game,” says Matthew Lai. “We’ve just had approval for the region for Chinese Kitchen. High sales We are also getting audio software and sound blasters, so you’ll be “It’s about maximising business opportunities with a successful seeing the new product on casino floors very soon, starting with The formula. It’s not about only marketing the new title and forgetting Venetian Macao.” about existing ones,” explains Mr Lai. “Blazing 7s Hot Shot Progressive is still the number Ways to win one game from Bally. We still want to maximise the series’ Mega Winners™, offering horizontal wins plus vertical potential,” he adds. winning lines, was exhibited at G2E last November in Las Vegas The company says that for new customers it makes sense and got a good reception from customers, says Mr Lai. to familiarise their patrons with the Classic version “This game plays a little differently. It’s a 16-reel game. and introduce them to the complementary It takes five scatter Mega Winners symbols to trigger products later. the bonus feature,” he explains. “With some customers we already “This is a brand new product and I think have Blazing 7s Hot Shot or Winning a new concept for the region,” adds Mr Times Hot Shot on their casino floor. If Lai. they also want to put in a bank of All About Money, we would definitely do Distinctive that. “We really think this Mega Winners product is very different from anything Stages we have seen in the market. I talked “For a brand new customer, we to a couple of customers here in the would probably say to them ‘We know region and they say they’ve never seen you like All About Money, and the anything similar to this game. graphics, but start with the number “It plays differently from what we’ve one game first.’ seen on the casino floor so far. We look “Although we show new products forward to seeing great performance on an individual basis to our existing as well as good sales with it.” operators, we find we always get some Bally says that in launching new customers attending G2E and they Fortune 8’s™ it is the first company are delighted to have the chance of a to develop a seven-reel video product. demonstration,” says Mr Lai. “It’s a 50-line game. It pays you from left to right and right to left,” says Mr Hot Kitchen Lai. Another Bally Technologies game that will be seen at G2E Asia is Chinese Flexible platform Kitchen™, the first one developed by “We have four different the company’s Indian development game themes on this platform centre. Bally now has 100 game including Fortune 8’s. The other developers located in India, which has three are Double Dragon Two-Way a reputation for producing world- Frenzy, Super Fireball Frenzy and class information and media also Bonus Frenzy Free Games. You technology professionals. can see those at The Venetian Macao For Chinese Kitchen the and elsewhere in the region.” Indian R&D team asked for Fortune 8’s, which was approved advice from the Asia Pacific by regional regulators in March, region staff on what kind of has a bonus feature on the eighth features and games to use. number—eight being of course a lucky number in Chinese culture. Customised “They came to us Bally Technologies will display its to ask what kind of latest products for the Asia Pacific Region features and colours at G2E Asia 2008, June 3-4 in The Cotai to use on the game. Strip Convention and Exhibition Center We suggested red and at The Venetian Macao.

May 2008 | INSIDE ASIAN GAMING 49 June 4-5 Cantor Gaming 1346 G2E Asia Exhibitor List The Venetian Macao Cartamundi NV 656 CashCode Co-exhibiting with Nanoptix Inc. 956 Exhibitor’s Name Booth # Casino Careers Online 1546 “BEE” Playing Cards - The U.S. Playing Card Co. 1030 Casino Data Imaging 453 The United States Playing Card Company is the World’s largest Casino Life 1960 producer of premium playing cards. “Bee” is recognized throughout Casino Technology 428 the world and carries with it the most advanced card security features CasinoRecruiter.com 1652 in the industry. Bee factory preshuffle are fully automated preshuffled cards with GLI Certification. Introducing “Bee” Electronic Baccarat Cintas Corporation 571 Dealing Shoe and Bee . Cybercash Technology International Ltd 1620 3M Touch Systems 553 D&S Company 861 777 Gaming Co. 1750 Dal Negro S.P.A. 652 ABREC 866 Dallmeier International Limited 1360 Abric Worldwide Sdn Bhd 556 Designix 1742 Achieve Tech & Engin. Co., LTD 1452 Economics Research Associates 673 Advansys d.o.o 1620 Elixir International Limited 1300 Advantech Co., Ltd. 1542 Elixir International Ltd is a subsidiary of Melco International Development AEWIN Technologies Co., Ltd 1448 Limited. Based in Macao, Elixir has established itself as a full-fledged, home- grown games manufacturer – designing, developing and supplying its own Agilysys, Inc. 1035 brand of gaming products for the highly lucrative Asian market. Elixir is also Ainsworth Game Technology 205 a respected Information and Communications Technology (ICT) provider Ainsworth Game Technology is a leading edge, designer of innovative with consulting, design and building capabilities and services for various gaming machines and game combination software. Under the “Game Plus” gaming concession holders and hospitality developments in the region. brand Ainsworth is proud to launch an exciting new enhanced range of Emphasis Services Limited 255 Ambassador game themes. Ainsworth Game Technology’s objective is to Euro Games Technology Ltd 1620 build a wide geographic market for both their gaming machines and links from a strong Australasian base. www.ainsworth.com.au EVOLUTION 471 Alfastreet 243 Evona Electronics 1620 Alfastreet is one of the world’s most recognized brands of multi-player F2 Systems 1117 gaming machines. Its product range includes multi-player roulette, multi- France Cartes Asia Co., Ltd 669 player dice (Sic Bo) and the new Video series of games which starts with the Friedmutter Group 654 popular Baccarat game. Alfastreet offers advanced multi-player solutions Futro Co., Ltd 1320 tailored for small and big operations. FutureLogic, Inc. 1335 Alioscopy 568 FutureLogic, Inc. is the leading manufacturer of thermal printers for Amaya Gaming Group 1635 cashless gaming and a platinum-level member of the Gaming Standards Amongo Technology Co., Ltd 1053 Association (GSA). With corporate offices in Glendale, California, and service Angel Playing Cards MFG. Co., Ltd 1342 and distribution centers in Europe, Asia and South America, FutureLogic Apacer Technology Inc. 442 is committed to providing innovative, reliable products and exceptional customer service. Aristocrat (Macau) Pty Ltd 700 Gambling Compliance Ltd 1530 Aristocrat is a leading global provider of gaming solutions in the Asia Pacific region. Aristocrat’s true strength lies in the performance of its Game Time International 1760 products and the innovation and technology behind It. In addition to our Gamesman Ltd 772 traditional slot machine business, Aristocrat provides multiple tools to Gaming Laboratories International Inc 851 operate and enhance your gaming floor including Multistation gaming, Gaming Partners International Inc 841 Systems, Service, Signage and Server Based Gaming solutions. Come and GPI supplies all the casino operators in Macau with a 90% market share. see the Next Generation of Gaming at our stand. Booth 700. World leader in casino chips supply, GPI will present the widest range Arrow International Inc. 1334 of chips from the Bud Jones®, Paulson® and B&G® brands, innovative Aruze Gaming America, Inc. Japan Branch 111 and exclusive security features to deter and fight counterfeiting, a new Aruze also has subsidiary companies in South Africa and Australia. collection of its famous state-of-the-art plaques and demonstration of its Corporate headquarters are in Japan with Aruze Gaming America based in leading RFID applications in both 125 KHz and 13.56 MHz frequencies. Las Vegas. Aruze provides reel and video slots and poker games and multi- Gaming Standards Association 1528 terminal gaming devices. Aruze Gaming, a global gaming corp. since 1983, GCA (Macau) S.A. 1135 is a manufacturer and distributor of hybrid LCD high-resolution. Gemasia LLC 865 Asia Pioneer Entertainment Limited 969 Global Gaming Business 1762 Astro Corp. 436 Global Payment Technologies Australia Pty Ltd 931 Founded in 2000 and listed in 2004, Astro Corp. is a professional Gaming Glory Cash Handling Systems (China) Ltd 1604 game developer and Slot manufacturer with strong R&D strength to provide total solution for all kinds of operation. In 2007, Astro Corp proudly Gold Club d.o.o. 1140 became the first Asian gaming machine manufacturer to gain GLI approval. Gold Club from Slovenia, one of the leading roulette manufacturers, Main Product line includes Mother Board with content, Video slot machines, participates once again at G2E Asia to show an assortment of their products. CMS and Linking JP System. The major attraction will be an Omega, 8 player roulette, combined with Atronic Group 941 a number of individual Neon stations. Gold Club’s International Sales Manager, Herman Van Lishout, who is responsible for the Asian region will The Atronic Group of companies including Atronic International, Atronic be the present on their stand nr 1140 to welcome all visitors interested in Americas, and Atronic Systems, is a leading global provider of casino games the top quality products of Gold Club. and services. Atronic is dedicated to producing only the highest quality of entertaining games and products including dynamic casino management Graphic Controls and linked gaming solutions which are being operated in 91 countries GuangZhou Shuang Ying Technology Co., Ltd 947 worldwide. Haiwei International Technology 661 AutoGaming Inc. 1704 Homer Technology R&D Inc. 1435 AW Neoon OÜ 565 Honeywell Security Group 1352 AXIOMTEK Co., Ltd. 1547 Huai I Electronics Co., Ltd 254 Bally Technologies 225 HYDAKO, Co. 869 Golden Monkey Big Win™, Hot Shot Progressive™, Quick Hit Platinum™, IBASE Technology Ltd 855 GameMaker® HD™ and Mega Winner™ top the list of 29 unique game titles iGaming Business Magazine 370 being presented by Bally Technologies at its G2E Asia booth, #225. Bally will IGT Asia Lda 400 also showcase a number of new games exclusively designed for the Asian gaming market. International Game Technology (www.IGT.com) is a global company specializing in the design, development, manufacturing, distribution and BetCRIS 260 sales of computerized gaming machines and systems products. Betstone Limited 1161 Independent Gaming Pty Ltd 834 Betting Jobs 271 Innovative Technology Ltd 1548 Bingotimes Technology Co., Ltd 1434 Inside Asian Gaming 1857 BMM Testlabs 535 Interblock Asia Pacific Ltd 824 BMM Compliance is a global professional services and product testing firm Interblock is a leading brand of luxury gaming devices developed and that provides testing, assurance, certification and compliance management produced by Elektroncek d.d. Interblock electro-mechanical gaming and advisory services to help its clients meet and manage the technical machines provide the highest adaptability to local technical and legal product requirements of regulated gaming markets. BMM is now approved environments, fast implementation, and total satisfaction for customers or licensed in 300 jurisdictions around the world. and business partners. The success of the Interblock brand reflects the BNP Media Gaming Group 1858 success of its customers, resulting from Interblock’s painstaking and Boser Technology Co., Ltd. 357 rigorous market research and R&D, coupled with a customer driven sales, Cable & Wireless Guernsey 464 service and support strategy and structure. Cammegh 766 InterGaming Magazine 1861 50 INSIDE ASIAN GAMING | May 2008

International Currency Technologies Corp. 1744 Asian market. Meanwhile, Playtech Live games present casino games in real International Games System Co., Ltd 1642 time through streaming video. International Slot Machine Sales Limited 771 Preserved TreeScapes Internaional 767 JCM Global 525 Progressive Gaming International Corp 625 Jumbo Technology Co., Ltd 919 Progressive Gaming is a leading supplier of integrated casino and jackpot Jumbo Technology is the leading multi-player station gaming machine management system solutions for the gaming industry worldwide. This manufacturer in Taiwan, and the current product line includes: Bingo, technology is widely used to enhance casino operations and drive greater Baccarat, Roulette, and Sic-Bo. Products particularly accentuate the “physical revenues for existing products. Progressive Gaming is unique in offering dealing mechanism” and “real-time image display”, which offer ordinary casino management and progressive systems in a modular yet integrated electronic games more lively and authentic enjoyment and sense of reality. solution. Products include multiple forms of regulated wagering solutions in Visit us at Jumbo’s Website: www.jumbogames.com.tw, or email: Sales@ wired, wireless and mobile formats. jumbogames.com.tw RGB Sdn Bhd 740 Jyuee Ang Ltd 552 RGB is a 100% subsidiary of Dreamgate Corporation, a company listed on the KING Cabinet Solutions 1541 Malaysian Stock Exchange. RGB manufactures and distributes a full range Konami Australia Pty Ltd 716 of gaming machines and casino equipment. We are suppliers of technical support management in Macau, Indo-China, Singapore and Philippines. Kontron 561 Royce & Bach 961 Kuo Kau Paper Products Co., Ltd 557 RW Gaming Innovations Pvt Ltd 670 Las Vegas Cabinets Inc. 1444 Rymax Marketing Service 569 Las Vegas Gaming, Inc 110 SCA Promotions (Asia) Limited 1645 Legrand (HK) Limited 763 SET-Production Co 452 LIVEperson 275 Seven Luck Casino 253 and Gaming Authority - Malta 469 Shandong New Beiyang Info-Tech Co.,Ltd. 1654 Macao Tourism and Casino Career Centre 555 Shang Yang Industrial Co., Ltd 457 Macau Business 1758 Shuffle Master Asia 907 Matsui Asia Ltd 935 Shuffle Master specializes in providing its casino customers Utility Matsui manufactures and supplies GAMING CHIPS, layouts and table Products including automatic card shufflers that improve their profitability, gaming equipment. High quality MATSUI CHIPS, Matsui Wool/Synthetic productivity and security, Electronic Table Systems that delivery popular layouts are used at major casinos all over the world. Matsui has sales office in table gaming content electronically, Proprietary Table Games to increase Macau (MATSUI ASIA LTD), UK, USA, Russia and Korea, while the head office their content offerings, and Electronic Gaming Machines is in Tokyo, Japan. developed for select markets. Mega Fortris (Malaysia) Sdn Bhd 951 Slot-Tickets™ / Coin-Tech Services (H.K.) Ltd. 954 MEI 634 Sona Mobile Inc. 1628 Micro Sova Co., Ltd 950 Spectrum Gaming Group (SGG) 768 Microgaming Asia Pte. Ltd 468 Spin Inc. 671 Modiano Playing Card Co. 1051 Subsino Co., Ltd 235 Money Controls 1129 Subway International B.V. 1054 Morse Watchmans Inc 1361 Sun-Fly International Business Limited 1356 Nanoptix Inc. 956 TableMAX Holdings, LLC 1728 New Dynamic Electron Co., Ltd 153 Tai Ping Carpets Limited 1551 New Sun Yu Enterprise Co., Ltd 860 TCSJOHNHUXLEY 424 Noble Gaming Ltd 668 TCSJOHNHUXLEY provides a total turnkey solution for the international NRT Technology Corporation 1338 casino market, combining manufacturing excellence with innovation and Octavian International Ltd 1105 product development. Don’t miss our latest gaming innovations - Super Sicbo, Novo Touchbet Live Blackjack, Touch Table MultiPLAY Roulette, Octavian’s innovative games and systems have established this international Videobet BLING server based gaming and Triple Towers Virtual Horseracing developer of networked gaming solutions as a force in the casino, lottery game. and AWP markets. With its worldwide presence, Octavian sets the standard TransAct Technologies 525 in high quality games content and systems for efficient management of local and wide area operations. TransAct Technologies designs, develops, markets and services world-class transaction printers under the Ithaca(R) and Epic brands and marketing ODREX 461 receipt paper under the Poweroll brand. Our top-quality tickets, coupons, Orion Art Pty Ltd 1031 receipts and vouchers can be found throughout the Gaming, Banking Orion Gaming 655 and POS industries— in casinos, retail establishments, banks and financial Orion is a Netherlands based gaming company dedicated to serving the institutions the world over. global gaming community with a singular focus on the player. A subsidiary Tyco Electronics 1328 of WMS Gaming, Orion creates, designs, and manufactures slot machines Unicum Gaming 529 and video gaming machines for the casino and AWP industries. The Universal Tickets/The Bright Group 1627 company enables casino operators to provide players with unique content in regional markets around the world. Videobet 261 Videobet – a subsidiary of Playtech – designs, develops and deploys Oxo Concepts Limited 1454 high-end server-supported and server-based gaming platforms for the PACTGAMES 1610 land-based gaming industry. The Videobet gaming platform can run as a Paltronics Australasia 901 stand-alone unit, server-supported network or as a server-based network. Since 2004 Paltronics have been building the framework and acquiring the Featuring a wide variety of downloadable games on a wide range of cabinet resources required to construct a long term and solid Macanese company. options, Videobet tailors the perfect solution to the exact nature of its client’s We now have a fully operational base in Macau Central with global business for maximum performance and enhanced revenue. resources. The growth in Macau has been both explosive and exciting and VIVA Macau Ltd 1553 we are thrilled to be part of this. VSR Industries 1332 Paradise Entertainment 631 Wayi Amusement Co., Ltd 1646 PATIR-Design GmbH 1047 Weike (S) Pte Ltd 1149 Pelco Asia Pacific Pte Ltd 1451 An established worldwide distributor of slot machines, Pentasia 361 link and card systems, electronic table games and thrilling games; Weike has As Asian gaming’s only end-to-end staffing solutions provider, Pentasia is developed more than 80 game titles to meet the need of the ever-growing recognised globally as the sector’s premier confidential recruitment and gaming industry. Weike has also established strong market presence in the training consultancy. Founded in 2001, with a contact network unrivalled in South East Asia, Macau, China, Africa, South America and North Europe. the sector and offices on three continents, we are perfectly placed to provide Winner Sporting Goods Co., Ltd 1751 you with the service you need to grow your business or further your career. Winning Asia Technology Ltd. 1620 Phoenix Gaming Pty Ltd 1428 Winsted Corporation 1333 PIATNIK Playing Cards 456 Wiremold 761 Player2Players 369 WMS Gaming 655 PlayMotion Limited 1431 WMS is engaged in serving the gaming industry worldwide by designing, Playtech Software Ltd 265 manufacturing and marketing video and reel-spinning gaming machines, Leading online gaming software provider Playtech has developed a video lottery terminals, and in gaming operations, which consists of unified cross-platform network of online, mobile and server-based gaming the placement of leased participation gaming machines in legal gaming platforms that can be accessed by players through a single user account and venues. WMS is headquartered in Waukegan, IL. managed by operators through a single powerful management interface. Yogonet.com 1958 Playtech’s Asian P2P games offer an array of popular Asian game variations YUEHUA Token Co 1643 including Big2, Chinese poker and Fight the Landlord, tailored to the diverse ZEPHYR d.o.o. 1519

May 2008 | INSIDE ASIAN GAMING 51 Events Calendar Events Calendar A more comprehensive events listing is available on our website, www.asgam.com.

29 April – 1 May, 2008 3 – 5, June 2008 Canadian Gaming Summit & Exhibition 2008 G2E Asia Palais des Congress, Montreal, Quebec Venetian Macao, Macau, P.R. China Contact: Phillip Soltys Contact: Yolinda Wong Tel: +1 416 512-8186 ext.246 Tel: + 852 2965 1632 Email: [email protected] Fax: + 852 2824 0246 Website: www.canadiangamingsummit.com Email: [email protected] Organizer: Canadian Gaming Association & Media Edge Website: www.g2easia.com Communications Organizer: Reed Exhibitions 8 – 10, May 2008 24 – 26, August 2008 GTI Asia Taipei Expo 2008 Australasian Gaming Expo Taipei World Trade Center (TWTC), Taipei, Taiwan Sydney Convention & Exhibition Centre, Sydney Contact: Angie Huang/Robert Lin Contact: Ross Ferrar Tel: +886-2-27607407 ext 207 Tel: +61 2 9960 0125 Fax: +886-2-27623873 Email: [email protected] Email: [email protected] Website: www.austgamingexpo.com/austgamingexpo Website: www.gtiexpo.com.tw Organizer: Game Time International 8 – 10, September 2008 Asian Casinos Executive Summit 13 May – 14 May, 2008 Grand Hyatt, Singapore European Gambling Briefing Contact: Pauline Oh Hotel Okura, Amsterdam Tel: +65 6322 2762 Contact: Stephen Jury Fax: +65 6226 3264 Tel: +44 (0)20 7370 8566 Email: [email protected] Email: [email protected] Website: www.terrapinn.com/2008/aces_SG Website: www.europeangamblingbriefing.com Organizer: Terrapinn Organizer: Clarion Gaming 9 – 11, September 2008 20 – 22 May, 2008 BetMarkets Asia Gaming Technology Summit Singapore , Las Vegas, Nevada Contact: Rosalind Wade Contact: Lesley Grashow Tel: +852 2531 6100 Tel: +1 203 938-2782 Email: [email protected] Email: [email protected] Organizer: Beacon Events Ltd Website: www.gametechsummit.com Organizer: BNP Media & Whitesand Consulting 19 - 21, September 2008 World Series of 27 May - 1 June, 2008 Wynn Macau, Macau, P.R. China 2008 Asian Poker Tour - Philippines Email: [email protected] Dusit Thani Manila hotel, Makati, Philippines Website: www.world-series-mahjong.com Contact: Martin Elliott Organizer: World Mahjong Limited Tel: +63 2887 2525 Email: [email protected] Website: www.asianpt.com Organizer: Asian Poker Tour (APT)

denotes events where Inside Asian Gaming will be available. To list your event here and on our website, email [email protected].

52 INSIDE ASIAN GAMING | May 2008 May 2008 | INSIDE ASIAN GAMING INSIDE ASIAN GAMING | May 2008