September 2013 • MOP 30 • ISSN 2070-7681

COVER STORY CONTENTS

8 The Asian Gaming 50 INSIGHTS Show Starter Here it is, our annual ranking of the men and 56 Perhaps the most prolific gaming- women who are having the greatest impact focused inventor in Asia, Jay Chun is on the most dynamic and fastest-growing masterminding a new regional trade gaming market in the world. show to challenge G2E’s dominance. FEATURES Okada’s Philippine Woes Continue 59

Although Universal Entertainment claims it has been cleared of allegations of wrongdoing by the Philippine Economic Zone Authority, the company is pressing on with its internal bribery investigation, as are the Philippine Department of Justice and the US FBI.

Headwinds Down Under 60 Crown and Echo claw for an edge in tough markets.

The Next Frontier 62 NagaCorp follows Lawrence Ho in pursuing the development of an integrated resort in Russia’s Far East. IN FOCUS Off the Hook 64 LVS has agreed to forfeit $47.4 million to the US government to avoid prosecution for failing to report millions of dollars in money transfers from a gambler linked to drug trafficking. BRIEFS 66 Regional Briefs 68 International Briefs Cover illustration by Rui Rasquinho 70 Events Calendar EDITORIAL

Vietnam’s Locals Ban: How It Could End

here are more than 92 million people in Vietnam of whom about 50 million or more are adult Tage, and as we know from the success of NagaWorld in neighboring Cambodia, a substantial number of them like a flutter. How much larger would that number be if they didn’t have to leave the country to enjoy one? “We’d actually be sitting on a gold mine,” says Mike Santangelo, chief operating officer of The Grand – Ho Tram Strip. Phnom Penh’s NagaWorld booked the equivalent of US$251 million in gaming revenue last year, more than $155 million of it from main floor play, of which an estimated 40%—more than $62 million—was generated by gamblers from Vietnam. That’s not counting their contribution to the $95 million the property made on VIP, or the revenue impact of the money that thousands of Vietnamese are losing every day in gambling dens just over the Cambodian border. Ho Tram, a world-class resort with a price tag of US$500 million, opened six weeks ago on Publisher the South China Sea coast in Ba Ria-Vung Tau province just north of the Mekong Delta—its 600- Kareem Jalal plus machine games and 90 live tables about a three hours’ drive from Ho Chi Minh City’s millions Director and off limits to them by law, as are all five of the casinos that currently comprise the country’s João Costeira Varela regulated market. It’s interesting given the timing— Ho Tram opened on the 26th of July—that the domestic Editor gambling ban is now being questioned in the National Assembly, the interesting part being that James Rutherford it’s the government fomenting the discussion around a plan to include something Ho Tram-like with a casino at a sprawling special economic zone called Van Don near Halong Bay about 160 Operations Manager Muji Vong kilometers east of Hanoi. Halong Bay, which is almost within shouting distance of China, is one of the country’s most popular tourist spots and home to a couple of very nice hotels that provide Contributors gambling for their international clientele. Van Don, which consists mostly of coastal lands, was set John Grochowski, Tom Hall up as a showcase of the government’s ability to foster growth and has attracted some $464 million James J. Hodl, Richard Meyer in domestic investment and $120 million in foreign direct investment since its establishment six years ago. Graphic Designer Brenda Chao The casino plan actually is the brainchild of one Dao Hong Tuyen, a businessman who rose to prominence as a developer at Van Don. He’s talking about US$4 billion in integrated resort Photography development, which has observers skeptical since they say he has nowhere near that kind of Ike, Alice Kok, James Leong, money. But this in itself is not all that unusual. Vietnam’s resort landscape is littered with grand Wong Kei Cheong schemes that have come to nothing, although they did wise the government up to the need to impose some stringent capital requirements, as Ho Tram’s backers, Asian Coast Development (Canada), learned the hard way when it ran into 11th hour financing snags and the authorities held Inside Asian Gaming back final approval. is published by Must Read Publications Ltd But it gets more interesting. The Ministry of Finance is reported to have informed lawmakers 5A FIT Center that Mr Tuyen’s project has the endorsement of the Politburo, the Communist Party’s all-powerful Avenida Comercial de Macau decision-making body. This suggests that either they believe Mr Tuyen can get his hands on really Macau big money or they like the project enough to see if it might interest someone who can—like ACDL Tel: (853) 8294 6755 maybe—or maybe someone in Macau or Malaysia or Melbourne. The backdrop here is the fact that tourism is playing an ever more important role in the For subscription enquiries, please email economic life of Vietnam— good for an estimated 4.5% of GDP last year on a 14% surge in [email protected] international visitor arrivals, more than 4 million of them leisure travelers—and with developments like Ho Tram an increasingly important source of foreign direct investment, which looms large For advertising enquiries, these days with the central government beset as it is with a banking sector that reports say is please email seriously undercapitalized and ailing. [email protected] But what the tourists are bringing in the Vietnamese are carrying back out to places like or call: (853) 6680 9419 NagaWorld, and lawmakers have begun to wonder aloud if something shouldn’t be done about www.asgam.com this. Which is where it gets really interesting because the Van Don proposal has fallen smack into the middle of this discussion. The assembly has been working for months on a definitive regulatory framework for promoting investment in a resort-scale casino industry, and a number of legislative Inside Asian Gaming leaders, Deputy Assembly Speaker Nguyen Thi Kim Ngan among them, believe a reconsideration of the domestic gambling ban ought to be part of it. The assembly’s Committee on Finance and is an official media partner of: Budget has issued a report advocating allowing locals at Van Don on a trial basis. The Politburo is believed to have taken a favorable view of this. Of course, Van Don might not happen, and if it does it’s three or four years away at the soonest at the level of development they’re talking about. Or they can move the trial to Ho Tram and implement it today. If the support for it is as strong as it’s reported to be, this is not out of the realm of possibility. James Rutherford http://www.gamingstandards.com We crave your feedback. Please email your comments to [email protected] 4 INSIDE ASIAN GAMING | September 2013

The Asian Gaming 50 – 2013

The Asian Gaming 50 – 2013 The sixth annual ranking of the industry’s most influential people

Sponsored by:

Welcome to the newest edition of The Asian Gaming 50, our yearly review of the individuals we believe have had the greatest impact over the last 12 months on this rapidly growing and most dynamic of the world’s gaming markets. What a year it’s been too. Not since Singapore’s IRs came on line in 2010 has the region’s emerging markets story been this compelling. Entertainment City in Manila came through a long and difficult birthing with the opening of Bloomberry Resorts’ Solaire Resort & Casino. Asian Coast Development (Canada), another new name, opened Vietnam’s first true destination resort at The Grand – Ho Tram Strip. Crown Limited shattered two decades of monopoly policy in Sydney to plant its flag in Australia’s largest city, simultaneously clearing a path for itself into the vast potential of South Asia with an endorsement from the government of Sri Lanka for a $350 million casino there. Lawrence Ho struck out on his own with a bet on Russia’s Far East that could top $700 million when all is said and done. Cotai finally came into full focus with Macau giants SJM and MGM China cleared to pursue their multibillion-dollar developments in the booming resort enclave. And a savvy marketeer with a penchant for jeweled loafers and candy-colored bangs introduced us to a princess orphaned by history and had us all talking about red Rolls Royces and hotel suites the size of McMansions and struggling to pronounce “atelier”. Needless to say, it was a challenging list to compile. To do it justice we decided we had to break with past editions to dedicate 2013’s to the men and women who are mapping this extraordinary wave of expansion and managing the sizable operations already in place that are paying for it all. It was a choice that prevented us from singling out the many innovators on the supply side of the equation whose games and technologies and precision products richly deserve to be recognized. Our consolation is that we are able in the pages that follow to introduce to you 14 personalities who are entirely new to the list. And a pleasure it is for us as well. Because we expect their influence will be profound in the months ahead. We hope you find their stories as interesting as we did.

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8 INSIDE ASIAN GAMING | September 2013 The Asian Gaming 50 – 2013

1 Sheldon Adelson Chairman and CEO Las Vegas Sands Corp.

Sheldon Adelson has built it and they have come in their millions. He has changed Las Vegas. He has changed Macau. He has changed Singapore. He will change Japan. As veteran hotelier Michael Leven, chief operating officer of Las Vegas Sands, has said of him—“At the end of the day, you’re looking at a person who is a historical character.” The casino empire Mr Adelson has built is arguably the most profitable in the world, certainly the most lucrative, with an enterprise value that pencils out as of 30th June at roughly US$50 billion. The $22 billion worth of assets that comprise it have no peer when you combine the scale of their offerings, their geographical diversity and slated for completion over the next three one visualized.” the depth and potential of their markets. years: a $450 million St. Regis-branded hotel As the man himself explains this, “It Three-quarters of that asset value is in at the Sands Cotai Central complex and a wasn’t what I saw, it was what I experienced. I Asia, 46% of it in Macau, where LVS will have megaresort across the street that will connect was Las Vegas’ biggest convention customer invested more than $9 billion by 2015 and with The Venetian and Four Seasons—The with Comdex. And I had a couple other where its Hong Kong-listed Sands China Parisian, it’s called, a 3,000-room destination shows. This was my profession for a long subsidiary is the undisputed leader in a mass with plans for a freestanding replica of the time. So I saw it from a different viewpoint. market that is growing at triple the rate of Eiffel Tower and a price tag of $2.7 billion. People thought, the operators thought, that VIP. Its four resorts generate more than Mr Leven, who has known Mr Adelson the purpose of Las Vegas was gambling. And 60% of corporate net revenues and more since the 1960s, remembers him even then I said to myself, the purpose of Las Vegas is than 56% of EBITDA. Those ratios would be as the “penultimate entrepreneur, incredibly the fungibility of money.” even greater except that Marina Bay Sands creative and wide-thinking, and incredibly It seems so obvious now. Yet he saw in Singapore is so profitable. In all, LVS optimistic, which is what you have to be to Macau with similar clarity. “The only way you generated US$1.37 billion in profits in the be a successful entrepreneur.” can stop the Chinese from gambling,” he once first six months of this year on $6.86 billion in His is the classic Horatio Alger story— said, “is lock the door and don’t let them in.” gross revenues. Its pre-tax earnings in 2013 born in the depths of the Great Depression, That notion alone would have netted will exceed an eye-watering $4 billion. Asia the child of immigrants, the cab driver’s him a tidy fortune. Only he saw something will drive close to 90% of that. son who has amassed a fortune valued by more. He saw that in a place where 500,000 Not that Mr Adelson has any intention Forbes this year at $26.5 billion. It’s good for residents and several millions of tourists of kicking back. He’s cast an investment eye ninth on the list of wealthiest Americans. are crammed into 30 square kilometers on on India. He’s already unveiled a prototype Only 14 people in the world are wealthier. the doorstep of the most populous nation for a super-resort either in Ho Chi Minh He has owned 50 companies, by his count, on Earth, the future belonged to those City or Hanoi should Vietnam ever open its since he first went into business for himself with land. casinos to its citizens. He’ll change Spain at the age of 12 selling newspapers. He likes to joke now that he thought if they let him. Plans for the $8 billion, “Honestly,” as Macquarie gaming LVS was being exiled when the Macau 450-hectare EuroVegas complex he wants analyst Joel Simkins has said, “you can put government directed him to a patch of to build outside Madrid call for 12 resort- him up there with any of the big dreamers reclaimed marsh between the islands of scale hotels and six casinos with 18,000 we’ve had—Sam Walton, Ray Kroc—the Taipa and Coloane which it figured might slot machines and 1,600 table games. LVS individuals who thought the unthinkable.” be suitable for a fireworks factory. The story has consulted with stakeholders in Japan, Mr Simkins remembers rating Venetian goes that Steve Wynn passed when asked to where a legalization proposal is making the Las Vegas’ bonds back in 1998 as a junior join him in developing it. Of course, he went rounds in the Diet, and is believed to be on analyst at Moody’s. “They were telling us, on to do what he’s done so many times when the short list to develop something iconic ‘We’re going to get $125 midweek from the odds were against him—he bet them. in Tokyo or Osaka. the conventioneers.’ People laughed. But “He’s not a corporate CEO, he’s an The 56 hectares the company controls the guy has had a tremendous ability for entrepreneurial CEO,” Mr Leven said of him. on Cotai include two more developments unlocking opportunities in gaming that no “A very broad strategic thinker—‘We’re

September 2013 | INSIDE ASIAN GAMING 9 The Asian Gaming 50 – 2013

going to build a business with my vision.’” the face of any perceived hostility to his aims than any individual has been known to So it’s hardly surprising that processes or to himself and the causes dearest to him. spend to influence any political campaign in and procedures, corporate hierarchies, The Steve Jacobs imbroglio springs to mind, the nation’s history. legal and regulatory hurdles, diplomatic together with the US Justice Department But then he’s never acknowledged niceties, these are of little interest to him, and SEC investigations it has sparked—the limitations, and unless he’s given up on and his businesses go through executives libel suits and the relentlessness with which his capacity for surpassing himself, he like his baccarat tables go through decks he has pursued them—the implacable isn’t likely to start now. The tenacity, the of cards. There’s the legendary pugnacious hostility to organized labor, a major factor combativeness, they come with the territory. streak, a ferocity of will that often waits on in the US in his princely support of the Without them, Cotai might never have risen men obsessed with the greatness of their Republican Party over the years—and the from the swamps, a swimming pool wouldn’t schemes. At times, he’s seemed wired with staggering sums he spent to try to keep be floating in a city park 55 stories above the an instinctive switch to attack mode, born Barack Obama from returning to the White streets of Singapore, Paris might never come perhaps of the hardscrabble childhood, in House, $100 million or thereabouts, more to China or El Dorado to the Iberian plains.

2 Francis Lui Deputy Chairman Galaxy Entertainment Group

Galaxy Entertainment Group and Sands China are locked in a tussle for the second spot in Macau’s market share rankings. The city’s previous monopoly operator, SJM, has managed to hang on to the largest share (inflated by its 14 “satellite” operations from which it derives only a small proportion of earnings). Capacity appears to be one of the major determinants of who’s on top. Following the May 2011 opening of its Galaxy Macau megaresort on Cotai, GEG moved ahead of Sands. But the latter was able to reclaim its position with Sands Cotai Central, which opened in phases in April and September of last year. In Q2 2012, GEG commanded a 21.2% share of Macau casino revenue while International that it’s easy to forget he has comprising the Lui family’s Hong Kong Sands China had 17.3%. By the same quarter less than a decade of casino operating development company and Las Vegas of 2013 their relative shares had flipped to experience. It’s also somewhat ironic that Sands, won the bidding. 18.8% and 20.7%. GEG and Sands, the two companies tipped Although Sands had been keen to bid Come mid-2015, GEG is likely to not only as most likely to grab the lion’s share of for one of the concessions, the city was then once again overtake Sands, but also SJM, the market in the near future, owe their still an unknown quantity, and its casino with the completion of Phase 2 of Galaxy very presence in the city to each other. In industry was rife with murky associations Macau, which is set to kick off the much fact, they were originally supposed to be and had a history of gangland violence. anticipated “second wave” of Cotai resort partners. Sands may now be busily pouring billions development. From there, the company is In 2001, when the Macau government into developing resorts in Macau, but it well-positioned for future development with decided to introduce foreign competition had originally intended to act merely as the biggest land bank on Cotai at 2 million to the local casino industry, it opened a a management company and wanted an square meters, and, if it continues building tender for three gaming concessions, which Asian partner to foot the investment bill. its mass-market business at its current pace, unlike the two single-property licenses Furthermore, Sands wanted to ensure that stands a good chance of becoming by every subsequently offered in Singapore, would should any problems arise that jeopardized measure the No. 1 operator in the largest allow concession holders to develop a its gaming license in Nevada, the partner casino market in the world. potentially unlimited number of gaming could take over the concession. Francis Lui has done so well holding venues in the city subject to government Sands’ search for a suitable partner his own against international stalwarts approval. eventually led it to Galaxy, an entity that Sands, Wynn Resorts and MGM Resorts SJM, Wynn and Galaxy Casino, would eventually come to be controlled by

10 INSIDE ASIAN GAMING | September 2013

The Asian Gaming 50 – 2013

the Lui family. The concession was granted was the garish neon sign out front. Still, there doing business in China, seeing them prior to the conclusion of their management Waldo’s concentration on the VIP market evolving,” he says. agreement, however, and although Sands enabled it initially to out-gross the much- Then there’s the corporate culture. Mr and Galaxy gave assurances that it would hyped Sands. Lui has been able to assemble an executive be finalized within six months, it never was, Armed with that experience, Mr Lui team that’s not only good at what it does but and the government, eager not to delay unveiled his first flagship, StarWorld Hotel seems to be happy in the job. It begins with the development of Cotai, decided the best and Casino, in 2006, and it was then that the humility that Mr Lui himself conveys solution was to disband the consortium, GEG’s brand identity began to emerge. and which stands as a key component of give Galaxy the concession and issue an Owing to the relatively small footprint GEG’s success in a part of the world where independent sub-concession to Sands. and limited amenities at StarWorld, that personal relationships and social and familial The government eventually allowed the brand-building was initially defined by a networks are paramount in facilitating other two concessionaires to grant sub- strong service mindset and an ability to business and other dealings. concessions, perhaps partly to prevent them forge lasting relationships with players and Galaxy also has capacity on its side. crying foul, but also to open the door to junkets. That changed with the unveiling of By October, 12 VIP gaming tables will be more operators to hasten Macau’s tourism the US$2.1 billion Galaxy Macau, which was added at Galaxy Macau—the company has development. shaped by the company’s determination not approval to add 50 tables this year under So, inadvertently, Galaxy got a chance only to “give our customers what they want,” the government’s 3% cap on annual table to cut its teeth as an operator. In July 2004, according to Mr Lui, “but also anticipate growth market-wide. the company started running the Waldo, a what they may want in the future.” Beyond that, in addition to Galaxy third-party-owned venue, one of the four Mr Lui has a particular affinity for his Macau’s US$2.5 billion second-phase casinos of the City Clubs brand that Galaxy clientele. A civil and structural engineer by expansion, GEG plans to spend as much now operates. Waldo was the second training, he started his career in the late as $7.7 billion to begin its third and fourth casino to open following the end of Stanley ’70s in the quarries of Hong Kong with his phases as early as the end of this year, with Ho’s decades-long monopoly. Two months family’s construction materials business, and operations commencing in 2016. earlier, Sands had unveiled the glittering in 1985 started doing business directly in The company earlier this year also Sands Macao, which featured a crowd- mainland China. completed the HK$3.25 billion ($417 million) pulling interior design unlike anything the “If there is a person in Macau who purchase of the Grand Waldo casino hotel city had ever seen. Waldo, on the other understands what the Chinese customer located near Galaxy Macau and has taken hand, had been hastily converted from an will look like in the next five or 10 years it is the property off the market for several office building, and its most notable feature probably somebody like me, who has been months of refurbishments.

Sentosa has superseded Resorts World 3 Lim Kok Thay Genting as the group’s flagship, booking Executive Chairman and CEO the equivalent of US$440 million in adjusted Genting Berhad EBITDA in the first half against the Malaysia operation’s $291 million. The outsized returns from Singapore The Singapore government’s decision have inspired an aggressive plan of global to legalize casinos in 2005 was arguably the expansion funded by a US$7 billion impetus for Genting Group to embark on its war chest and interests in five publicly ongoing global expansion frenzy. traded entities with a combined market Prior to that, since 1970, the company capitalization of $46 billion and a portfolio had been content to earn monopoly profits Melco Crown Entertainment and Caesars of gaming, leisure and hospitality assets from Genting Highlands, recently renamed Entertainment, dropped out, saying the stretching from Singapore to the UK to Resorts World Genting, which continues to required investment was too high. The the Bahamas, including perhaps the most enjoy an exclusive casino license in Malaysia. steep outlays demanded by the Singapore lucrative slot floor in the US right now at The catchment area for RWG covers Malaysia government eventually proved justified, of Resorts World New York City. and Singapore, so Genting’s decision to vie course, as the Lion City’s two IRs have gone The group also is looking at opportunities for one of the two new licenses on offer in on to become perhaps the most profitable in Australia, where listed subsidiary Genting the neighboring city-state was viewed by casinos in the world. Hong Kong has applied to regulators in New many at the time as a defensive maneuver Although revenue growth in Singapore South Wales and Queensland to increase to hedge against expected cannibalization appears to have plateaued and Genting’s its holding in Echo Entertainment, operator of its Malaysia operations. property there, Resorts World Sentosa, saw of Sydney’s only casino. The company may Genting, led by billionaire Lim Kok Thay, revenue contract year on year in the first half want to raise its stake in Echo to 25% and pressed on with that bid even as other of 2013, the returns still probably comfortably is “patiently waiting” for the go-ahead, says major operators, including Wynn Resorts, exceed Genting’s initial expectations and Mr Lim. “My guess is it will go on for a while.”

12 INSIDE ASIAN GAMING | September 2013

The Asian Gaming 50 – 2013

Genting Hong Kong currently holds 6.6% of Manila Bay. A 2016 opening is planned for first emperor in one of the most famous Echo’s ASX-listed shares. Resorts World Bayshore, as it’s called. Plans archeological finds of the last century. Japan is also on the radar should Prime for the $1.2 billion project include 2,000-plus In the UK, where Genting bought casino Minister Shinzo Abe’s government approve slot machines, 360 table games and a 1,440- giant Stanley Leisure back in 2006, the legalization, and a major expansion is in the room hotel. company runs 41 casinos, six of them in works in and around the Malaysia casino. Genting has big plans in North America London. The largest of the group, Resorts Plans call for a 3 billion ringgit (US$937 as well. The company is a partner in Resorts World Birmingham, is under construction million) revamp and expansion at Resorts World Bimini, a 750-acre beachfront and slated for a mid-2015 opening. World Genting that will add 1,300 hotel destination in the Bahamas that opened in Macau also looms large for Mr Lim, “But rooms. The plan, slated for completion in July with luxury villas, shopping and dining, the door’s closed,” as he has put it. “When 2016, includes a 400 million ringgit joint a marina and a 10,000-square-foot casino it next opens, we would be the first one venture with 21st Century Fox to develop containing 15 table games and 153 slot knocking on that door and try our luck.” a 25-acre movie-themed amusement park machines. The 62-year-old tycoon inherited control that will feature more rides and attractions The company also is entering Las Vegas of the Genting conglomerate from his father, based on Fox film brands. in a big way with its recent purchase of Boyd Lim Goh Tong, who founded it. He joined the In the Philippines, Genting Hong Kong’s Gaming’s unfinished Echelon resort on the company, whose far-flung holdings include joint venture with Philippine property Strip. The site will be home to Resorts World palm oil production, utilities, oil and gas giant Alliance Global Group, Travellers Las Vegas, a phased extravaganza that will exploration and non-gaming hospitality, in International Hotel Group, has said it will feature water attractions and amusements 1976. He has been a director since 1986. He spend US$600 million over the next three around a cluster of hotels. Plans include became chairman in 1993 and executive years on an expansion of their Resorts more than 400,000 square feet of restaurants chairman in 2005. Genting Hong Kong, which World Manila casino slated to include 1,100 and retail, 500,000 square feet of MICE he co-founded as Star Cruises, is the third- more hotel rooms, a convention center and space, a panda habitat, a replica of the Great largest cruise ship operator in the world. additional gaming space. Travellers also is Wall of China and a collection of terra cotta The family is ranked third on Forbes’ list developing one of the four IRs licensed for warriors modeled after the legions of little of Malaysia’s richest, with an estimated net the Entertainment City resort complex on men unearthed from the tomb of China’s worth of US$6.6 billion.

4 Lawrence Ho Co-Chairman and CEO Melco Crown Entertainment

“The next wave of the golden age of Macau” is about to begin, proclaimed 37-year-old Lawrence Ho following the recent announcement that Melco Crown Entertainment’s profit in the second quarter had more than doubled year on year, underpinned by strong mass-market revenue growth at the company’s City of Dreams flagship on the Cotai Strip. Having emerged assuredly out of the shadow of his father, Stanley Ho, one of the creators of modern gaming in Macau, Mr Ho is now leading Melco Crown toward regional expansion. Through its Melco Crown Philippines subsidiary the company aside for casino development back in 2009 after the industry was has partnered with the Philippines’ richest man, retail and property banned from Moscow, St. Petersburg and other major cities, where tycoon Henry Sy, on the development of a US$1.1 billion mixed- it was flourishing virtually unregulated and only lightly taxed. Mr use resort with a casino—Belle Grande Manila Bay—to open next Ho’s investment is being made through a Hong Kong-listed entity summer as the second of four IRs licensed for Manila’s Entertainment called Summit Ascent Holdings, one of five bidders the Primorye City resort complex. It will feature 1,000 hotel rooms and suites, 1,900 government has selected to present casino proposals. It is not known EGMs, 350 table games and what promises to be a vibrant assortment how many will be selected or when. of non-gaming attractions. Until Mr Ho’s arrival, Primorye, which like the other zones is Mr Ho is also striking out on his own, pursuing a casino deal in relatively remote, hadn’t struck a chord with investors, and to Russia’s Far East port city of Vladivostok, where he has concluded an encourage development officials there are offering low capital agreement with a local entity for a controlling share in a resort set to minimums and tax breaks resulting in an effective levy on gambling open in phases beginning in 2014 and priced at US$700 million at revenue of zero. Now, Cambodia’s NagaWorld is also reported to full build-out. be interested in investing, Primorye’s attraction being its relative Mr Ho’s is the first big name associated with Primorye, as the proximity to northeast China, the Koreas and Japan. Beijing is about area is known. It is one of four “zones” the Russian government set two and a half hours from Vladivostok by air, Harbin less than two

14 INSIDE ASIAN GAMING | September 2013 hours. Casinos are prohibited in both China and Japan while South Koreans are permitted to gamble in only one casino in their country. While Mr Ho has widened his regional purview, Melco Crown Entertainment remains firmly “on track and on budget” with its Macau expansion plans, he said during the recent second quarter earnings announcements. The company’s second Cotai resort, Studio City, is slated for a mid-2015 opening. Plans call for 300-400 gaming tables and 1,200 gaming machines, although, critically, the casino portion of the resort has yet to be approved. The prevailing sentiment is that it will be. He also said he expects construction on a fifth hotel tower at City of Dreams to commence by the end of this year. “This iconic additional hotel tower represents another powerful addition to our wide array of amenities and attractions that City of Dreams already offers its premium-mass and high-end customers, providing another tool to further extend our leading position in this key segment,” he said. Melco Crown’s expansion plans will be aided by its improved liquidity and access to capital following its secondary listing on the Hong Kong Stock Exchange in December 2011. (The company has been listed on NASDAQ since 2006.) The secondary listing coincided with the completion of a significant localization of the company’s top management, marking a distinct turnaround from the early days of the joint venture between Mr Ho’s Melco and Australia’s Crown Limited. Initially, a lot of the senior appointments had been former Crown executives from the Australian side of the partnership. This probably made sense at the time because of Crown’s extensive experience with running gaming operations in its home market. Gradually, however, as Mr Ho found his stride and felt out the market, the Crown managers have been going back home, and the company has gone from strength to strength as all senior positions have been assumed by locals. “Because Lawrence Ho and the team are actually Chinese, and we grew up in this part of the world, we feel we understand the behavior of customers here better than anybody else,” explains Mr Ho’s second-in-command, COO Ted Chan.

5 Steve Wynn Chairman and CEO Wynn Resorts

Steve Wynn’s plate is piled high these days, with $2 billion in greenfield gaming investments planned in the US in the Boston and Philadelphia areas and a Web gambling license pending in New Jersey, where there’s talk he might buy back the Boardwalk casino he built a generation ago. But by far most of what he’s tucking into is Chinese fare. He delivered parent Wynn Resorts’ second-quarter earnings call from Macau, appropriately enough, given the dominance of the market’s contribution to corporate earnings, and it’s likely he’d been spending a good part of that time in the city poring over plans for his newly named Wynn Palace and touring the 20-hectare Cotai site. More than $100 million in groundwork is under way there, the

September 2013 | INSIDE ASIAN GAMING 15 The Asian Gaming 50 – 2013

company said, and investors were happy to hear that the opening of the 500,000-square-meter, 1,700-room resort has been ratcheted up a year to the first half of 2016. Concerns about cost also were allayed with the assignment of a more or less final price tag of US$4 billion. He colored in some additional detail as well. Wynn Palace will be reminiscent of Bellagio, he said, with a lake at the entrance bordered by restaurants and enlivened with fire and lights, which will sound to some a bit like Wynn Macau, but this will be on a more elaborate scale: the highlight is a sort of amusement ride: an aerial tram with gondolas in the shape of dragons that breathe smoke as they ferry visitors over the lake from the light rail station adjoining the property. The overall theme he described as “flowers, floral things”—also reminiscent of Bellagio—but this will be quite distinct and will feature terraced gardens, floats, sculptures of various shapes and sizes, some as large as 12 meters across. “Our resorts have always had a special public entertainment piece,” he said, and at this one are consistently Michelin- and Forbes Five Star-rated and neither is “The use of flowers, of water and natural light … has been taken to going to be budged from its position at the top of the market. a new level.” “Even when we came to Macau, we resisted the temptation to Steve Wynn, being the legend he is when it comes to design build a quickie, smaller place, to get in on it fast,” the boss has said. and execution, his shareholders like it when he gets ambitious, “We waited and we took our time. I think that that is exactly the way and both Wynn and its Hong Kong-listed Wynn Macau subsidiary to go forward in China—very thoughtfully, very patiently, with great have been trading at close to their 52-week highs—tasty Q2 attention to detail.” dividends attached (US$1 and HK$0.50, respectively). As much Those were the attributes that preceded Wynn Resorts to Macau as anything, though, the multiples Wynn commands are an in 2002, when such was Mr Wynn’s renown, his was the only non- expression of confidence in a strategy that refuses to cut corners Chinese company to be awarded one of the three new casino with the luxury niche it’s established for itself, which enables the concessions. properties to succeed consistently at portraying themselves as And they aptly describe what he has accomplished in the market “boutique” alternatives in spite of their obvious girth. Wynn will to date with operating assets the company values currently at around play poker on the Las Vegas Strip with 300 or 400 bps of occupancy $5 billion and which delivered better than 94% occupancy in the first in exchange for room rates that run at more than double Strip half at daily room rates averaging well above $300. Non-gaming averages. There are a lot of moving parts involved in making revenues surpassed $118 million over the period. In all, Wynn Macau that work, and it takes operational savvy to pull it off, and Mr generated 70% of corporate EBITDA through the first half and 77% of Wynn, on old hand at competing in the toughest markets there operating income. are, is as savvy as they come. He’s added more prudent financial As for Wynn Palace, it “represents everything we’ve learned,” Mr management to his arsenal, too, since relinquishing Mirage Resorts Wynn has said. It will be “the single most important project in the to Kirk Kerkorian all those years ago, and his skill at identifying and company’s history”. nurturing talented management is more in evidence than ever. This It’s a good location for it, too. It will be the first stop on the city’s is serving him particularly well right now at the two Macau hotels, new light rail network from Macau International Airport and the where gaming volumes have been slipping as competition on the new Taipa ferry terminal under construction and the closest resort peninsula intensifies in response to the growth on Cotai. But both to both.

hand, in publicly traded SJM Holdings he has redoubtable Angela Leong, an SJM executive 6 Ambrose So a company with HK$25 billion in cash and director and the mother of five of Stanley Executive Director and CEO cash equivalents, minimal long-term debt Ho’s children, to join up with 180,000 square SJM Holdings and plans to take the brand beyond Macau. meters she controls immediately south of it. Reports are the company has toured Taiwan’s The blueprint for the HK$25 billion resort Penghu and Kinmen islands for possible (US$3.2 billion) includes 700 table games As the last of Macau’s six licensees to development sites and is researching and 1,000 machine games, a complement of receive land on Cotai, SJM was ready to hit joint ventures in Japan, preferably Osaka, “first-class” dining, entertainment and retail, the ground running there with an approach which Mr So says offers more developable and 2,000 hotel rooms, more than 200 of to development that is as innovative as it is space than Tokyo for doing something on a which will be apportioned to a Gianni Versace expansive. Much of this comes down to the destination-resort scale. hotel under the terms of an agreement also corporate leadership of Ambrose So, who On Cotai he’s gained a “leg up on announced earlier this month. It will be only is showing himself to be an ambitious and competition,” as he puts it, by tripling the the third hotel in the world to bear the name creative strategist. size of SJM’s footprint, currently the smallest of the legendary fashion house and it will A protégé of Stanley Ho’s, respected at roughly 70,000 square meters, via a deal be a key differentiator for the resort among throughout the industry as a solid operational concluded earlier this month with the China’s brand-obsessed millions.

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Another indicator of the unique non- operating casinos in its current portfolio gaming attractions to come is contained are run by third parties under a variety of in a deal struck with an influential cultural revenue-sharing arrangements. Generally, organization in Beijing to develop a these are older, smaller, lower-margin venues “Wonderland of Art and Literature” at the resort mostly tucked into the neighborhoods of the featuring Chinese-themed performances, Macau peninsula. Which is not to say they’re exhibitions and tourism-related promotions. unprofitable. These “satellites,” as they’re The challenge Dr So faces between known, contributed to the group a 7.8% now and the resort’s opening in late increase in adjusted EBITDA during the first 2016 or early 2017 is keeping Macau’s half on a 5% increase in revenues to HK$20.52 largest casino operator at the top of billion (US$2.6 billion). Total group EBITDA the competitive heap in an increasingly was up 11.6% year on year to HK$4.27 billion crowded marketplace where much of the in the toughest operating environment growth, certainly in terms of mass gaming, the company has ever faced. Combined is already shifting to Cotai. revenues were up 8.1%. Non-gaming sales The company’s operating arm, Sociedade were none too shabby either, up 8.3% to de Jogos de Macau, saw its citywide share HK$323.7million (US$41.5 million). of mass table revenues decline almost 7 The group’s flagship Grand Lisboa percentage points in the first six months continues to shoulder the heavy lifting of this year from the same period in 2012, in admirable fashion. Visitation there was back to the mid-1970s when he joined while its overall market share slipped from up 9% in the first half. Average daily room SJM’s predecessor, STDM, three years out 27% to 25.3%. The loss of one of its four self- rate was up more than 4% to a robust of university. He was a longtime executive promoted casinos to renovations and the HK$2,230 (US$285), and the hotel ran at 95% director of Dr Ho’s Shun Tak conglomerate, closing of one of its self-promoted slot halls occupancy. Revenues across all segments of and like his mentor he moves in the highest had something to do with that. Interestingly the property were up 12.6%. VIP was strong circles of the Macau political establishment. enough, though, the company actually grew as ever, up 13% to HK$11.8 billion even after He has been a director and a member of SJM’s its mass table revenue by almost 4% year on backing out the effect of a reclassification of senior management since the company’s year in the first half. But such is the impact 31 high-limit tables on the main floor as VIP. founding at the end of the monopoly era. of Cotai. Clearly, Dr So continues to make the He was named an executive director in 2006, Of course, the company also has to most of the experience he’s gleaned from responsible for overall management and contend with the fact that 14 of the 17 a relationship with Stanley Ho that dates strategic execution.

of the group’s 39-year-old chairman, Alvin 7 Alvin Chau Chau, who balances an aggressive appetite Chairman for growth with an emphasis on caution in Suncity Group extending credit, enabling Suncity to avoid the liquidity problems that have plagued some of its less prudent rivals. Macau has more than 200 licensed Suncity strives to distinguish itself from junket operators, but one stands head and other junkets by providing its clients the shoulders above the rest. most complete and highest-quality range of Suncity Group runs 18 VIP clubs with supporting amenities and services, and to 284 tables in the city, and according to that end has invested heavily in businesses company sources, handles around HK$135 outside the gaming realm. In 2008, the billion (US$17 billion) in bets each month. group established Sun City Tours, which Still, more than commanding the largest offers comprehensive travel agency services share of rolling chip turnover, Suncity is in Macau. Suncity also owns SKY 21 Bar the leading innovator among its peers, not and Restaurant atop AIA Tower, offering performances. The group’s media investments only in its core business but also in pursuing panoramic views from one of the trendiest often directly bolster its gaming and tourism other opportunities, from media and hangouts on the Macau peninsula. The businesses. The movie “Poker King,” starring entertainment to IT solutions. group runs an über-exclusive boutique called A-list Hong Kong actors Louis Koo and Lau Suncity’s humble beginnings in 2007 SKYLuxe within SKY 21, offering a collection of Ching Wan, was produced to support Suncity’s saw 30 employees running a small-scale VIP limited-edition and one-of-a-kind timepieces, efforts to develop poker’s following among operation at Wynn Macau. Its gaming division jewelry and fashion accessories. baccarat-focused Chinese players. High rollers now has 1,200 staff and needs more. Hastening Suncity promotes its brand heavily by at Suncity’s Poker King Club at StarWorld this expansion has been the youth and vigor sponsoring big-name concerts and live Hotel and Casino now play for the biggest

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pots in the world. Meanwhile, the Suncity- also delivers discounts and other privileges. two listed arms, Sun International Resources owned e.travellers magazine and UO Macau— By swiping their cards at one of several Limited and Sun Century Group Limited, and the leading Web site for Chinese visitors to conveniently located Suncity BTM Card stresses its intention to continue diversifying Macau—aim to lure visitors to the city. kiosks, members can also access detailed into other sectors. Although many of Mr Chau’s non- records of their gaming activities and other The sharp-dressed Mr Chau embodies gaming investments support Suncity’s core spending and credit amounts they are the Suncity high-roller lifestyle, often activities, others have larger standalone entitled to at specific venues. Members can pictured at elite parties in Chinese-language aspirations. Sun Entertainment Group, set also avail themselves of an exclusive 24-hour tabloids. But he’s known to work harder than up in 2008, has financed and produced a concierge service. he plays, and his professional achievements string of big-budget films, including the Mr Chau has sought to further broaden are widely recognized. Earlier this year, blockbusters “Vulgaria” and “Love in Time.” the Suncity brand by making acquisitions in he was appointed to the Guangdong One of the group’s greatest innovations finance, media, real estate and health and provincial committee of the Chinese in securing the loyalty of its customers is beauty across Hong Kong, Macau and China. People’s Political Consultative Conference, the Suncity Card, which not only offers Other interests include the development, China’s parliamentary advisory body. Such points redeemable for retail, dining and marketing and production of software and appointments are generally reserved for entertainment purchases around Macau but an iron mine in Indonesia. The company has senior business leaders in China.

and 1,000 slot machines. 8 James Packer He’ll be counting another tidy pile of Executive Chairman, Crown Limited cash starting next year when MCE opens Co-Chairman its US$1.3 billion joint venture IR at Manila’s Melco Crown Entertainment Entertainment City with a planned 1,092 hotel rooms, 1,900 machine games and 350 tables. Crown Limited wants to change its In the UK, where Crown owns 40% of name to Crown Resorts, the better to reflect new-style operator Aspers, the company’s “the large investment Crown has made in its VIP casino in London, previously the famed tourism infrastructure” and its “expanding Aspinall’s Club, generated the equivalent of domestic and global investments”—which, A$33.3 million in normalized EBITDA. In the as rebrandings go, matches up nicely US, Crown owns 24.5% of Cannery Casino with Executive Chairman James Packer’s increase, on $2.77 billion of revenue gleaned Resorts, which operates locals venues in Las transition from lucky gene pool member from casinos in Australia, Macau, the UK and Vegas and Pennsylvania. to bonafide tycoon. At 46, he is Australia’s the US. The core of those earnings are being Then there’s Sri Lanka, whose government third-richest person, a billionaire six times generated in the most challenging operating has begun to entertain ideas of becoming the over, with the eye of a world-class investor environment of the four by the company’s Indian Macau and where in one of Mr Packer’s and holdings in gaming, media and the Web flagship Crown Melbourne—a destination- cagiest moves to date Crown has secured that span four continents scale 1,600-room resort that generated approval for a US$350 million joint venture The decision on the name will be made nearly $39 billion in VIP turnover during the gaming resort in the capital of Colombo. by Crown’s shareholders next month. Of year, a 9% increase—and Crown Perth in the He has, as one financial blogger says of course, it’s expected they’ll concur. If Mr capital of Western Australia, where a major him, “a knack for discovering investments Packer’s skillful dismantling of rival Echo remodeling and expansion campaign is primed to pay juicy dividends,” and he’s Entertainment’s casino monopoly in Sydney under way, highlighted by a new 500-room also cast a roving eye toward the Internet, has taught us anything, it’s that his ability luxury hotel slated to open in 2016 with an where Crown has owned a 50% stake in the to get what he wants is as irresistible as his array of restaurants, bars, leisure and MICE Australian arm of Betfair, the world’s largest father’s and grandfather’s. And he expects facilities and sizable high-end gaming space. online betting exchange, for some time. Not to replicate the feat in Queensland, where Needless to say, what he’s planning for content with that, he’s moved beyond the Echo’s status as sole operator in Brisbane Darling Harbour at a projected cost of $1.5 gaming space with investments in deals hangs by a thread and investors as far afield billion will be on a grander scale than either. sites Scoopon and Catch of the Day and ASX- as Malaysia and Hong Kong are looking That’s several years away, as we know, but listed dot-com Carsales. More recently, he to cash in Down Under on the wanderlust that isn’t a bad thing given the money that sold his stake in ASX-listed job site SEEK to of China’s high-rolling millions. As the keeps pouring in from the Chinese in Macau, take a significant interest in US-listed Zillow, competition for them accelerates across where Crown’s 33.7% stake in Hong Kong- and a kind of real estate version of Expedia which Australia it will be surprising if it’s not James New York-listed Melco Crown Entertainment he’s no doubt familiar with from Australia’s Packer who ends up at the wheel. delivered A$152.3 million in profit after $5 billion REA Group, owner of realestate. Crown currently is generating operating adjusting for hold. Mr Packer is co-chairman of com.au. Zillow, reported to have 6 million cash flow in the neighborhood of A$500 MCE and Crown owns 60% of its US$2.9 billion unique users, has taken off with investors in million. In the last year the company realized Studio City IR scheduled to open on Cotai in the States and had a market cap, as of this adjusted EBITDA of $758 million, a 5% 2015 with 2,000 hotel rooms, 400 table games writing, of US$3.8 billion.

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manage the company’s US$13 billion-plus 9 James Murren of long-term debt. MGM China generated Chairman and CEO $387 million in adjusted EBITDA in the MGM Resorts International first half of 2013, up 9.9% year on year. It also declared a special dividend of $113 million, of which MGM Resorts collects $57 MGM Macau is by far the biggest million through its 51% share. MGM China revenue generator in MGM Resorts has returned $312 million to the parent International’s bulging portfolio of company so far this year. gaming, hospitality and entertainment While the herculean task of debt assets, which also boasts 16 US casinos, reduction has consumed the better part including the flagship MGM Grand on the of Mr Murren’s five years at the helm—and Las Vegas Strip and signature Strip resorts to his credit he’s displayed some financial Bellagio, Mandalay Bay and The Mirage. wizardry over this time—his strength as a In the first half of 2013, MGM China strategic thinker has worked to keep the Holdings, the owner and operator of MGM that saw him lead a pivotal recapitalization company as innovative and opportunistic Macau, in which Las Vegas-based MGM of the company’s predecessor, MGM Grand as it is big. Resorts holds a 51% stake, recorded US$1.6 Inc., in 1996 and culminated in a managing Its MGM Hospitality arm has progressed billion in net revenue, well more than double director’s position at Deutsche Bank. from vision to reality, opening a luxury resort the $604 million taken in at the company’s Mr Murren is credited as the architect of in Sanya on China’s Hainan Island in February second-biggest earner, Bellagio. Of course, the key acquisitions—Primadonna Resort 2012. MGM Grand, Bellagio and SkyLofts without the steady stream of Chinese high- & Casino in 1998, Mirage Resorts in 2000 hotels are planned or in various stages rollers being fed Bellagio and MGM’s other and Mandalay Resort Group in 2005—that of development in North Africa, in Dubai US properties by the Macau operation, the transformed MGM into one of the world’s and Abu Dhabi and in India, and a number difference might have been even greater. largest gaming companies. They also loaded it of five-star properties are being mapped Prior to the $1.5 billion MGM China IPO with debt. Since 2008, he has led an extensive for cities across China in partnership with on the Hong Kong Stock Exchange in May corporate reorganization and cost-cutting renowned Diaoyutai State Guesthouse. 2011, MGM had held a 50% stake in the which together with a $3.8 billion refinancing Investment firm Union Gaming Research Macau operation. Pansy Ho, daughter of kept the business afloat during the financial Macau considers the tie-up with Diaoyutai erstwhile Macau casino monopolist Stanley crisis and has helped it weather a challenging to be “an underappreciated driver of VIP Ho, held the other 50%. Ms Ho pocketed Las Vegas market since. business to MGM Macau”. the proceeds of the 20% public offering and The major drag on the company’s MGM China, meanwhile, continues to hold privately sold an additional 1% to MGM at balance sheet when the financial crisis its own as a single-property operation in an the IPO price so it could assume a controlling hit was CityCenter, the $8.5 billion resort increasingly competitive, increasingly multi- interest. Ms Ho’s stake was diluted to 29%. and retail mega-complex that was under store marketplace. Support is anticipated to Given the property’s critical importance construction at the time in partnership arrive by mid-2016 with the opening of a Cotai to the parent company’s earnings, with Dubai World. Getting CityCenter open resort, the official groundbreaking for which engineering that buyout may be one of the in December 2009 has to rank as another was held in February. Described by Mr Murren smartest investments James Murren has of his great achievements, but the resort as “our most stunning resort and casino yet,” made since becoming chairman and CEO has struggled to produce the earnings the property will have 1,600 hotel rooms, of MGM Resorts in December 2008. He had that were anticipated for it, and the cash 2,500 slots and up to 500 gaming tables. The joined the company as CFO in 1998, prior to flow contributed by MGM China has been construction budget is set currently at HK$20 which he had pursued a career on Wall Street crucial to Mr Murren’s ongoing efforts to billion (US$2.6 billion).

overseen a period of growth and prosperity at Sands 10 Edward Tracy China that is remarkable in every respect, not least President and CEO for its success in re-establishing key relationships Sands China Ltd with the junket industry and for advancing the development of the brand through a series of significant non-gaming attractions. Ed Tracy may not have brought to Macau the He’s been a pivotal figure as well for the welcome flashiest of CVs, but here he’s been for three solid level of comfort he’s provided the investment years, two of them as CEO, the pilot in the engine community and the political and regulatory room of the Las Vegas Sands money machine, establishment. where he’s currently directing capital expenditure He’s provided something else in the process, commitments of more than US$3 billion. rather more rare in the often tumultuous world of Since formally taking the helm in July 2011 he’s upper management under Sheldon Adelson, and

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that’s stability at the top, which will prove critical in the months An impressive run so far, all things considered, for a man who ahead in the wake of the recent departure of Chief Operating Officer was entirely new to the China market when he arrived in August David Sisk and Vice President of Casino Operations Hugh Fraser. 2010. His 20 years in gaming up to that point were spent in the Certainly Mr Tracy’s steady hand was critical to getting the first United States, where he served as Donald Trump’s CEO in Atlantic three stages of the US$4.4 billion Sands Cotai Central resort complex City in the early ’90s and later ran a chain of riverboat casinos in up and running. And it has positioned the company not eight months the Midwest. since SCC’s third hotel was fully built out (and with a fourth under At The Venetian he’s got the most expansive physical plant in construction) to jump right into a major new project planned for the market and he’s been employing it well, bringing a parade of its last developable parcel on Cotai. This will be The Parisian Macao, Chinese and Hong Kong headliners to perform at the 15,000-seat fully themed, as the name implies, with 3,000-plus rooms and suites, Cotai Arena and taking it further with spectacles on a Las Vegas a freestanding half-sized replica of the Eiffel Tower and a projected scale, among them two sold-out shows this month by pop star cost of US$2.7billion, including land costs. Opening is expected in Rihanna. late 2015 or early 2016. The strategy, which also envisions Macau as a destination for big- His effectiveness has shown through equally on the operations time boxing, really took flight in April with the professional debut of side, where he has restored Sands China’s standing at the high end of two-time Olympic gold medalist Zou Shiming, whose bout at the the market and kept the group cranking at full speed as the dominant arena reportedly was viewed by more than 100 million Chinese on force in the territory’s mass gaming boom. state broadcaster CCTV. He returned to the arena for a rematch in He’s got SCC ramping up nicely across all sectors. Slot handle July, prompting his celebrated trainer, Freddie Roach, to remark, “I was up 272% in the six months ended 30th June. Mass table drop think I’ve got a new home.” increased more than fivefold. A corporate-wide expansion of VIP Top Rank’s Bob Arum, who is promoting a highly anticipated capacity launched earlier this year helped triple rolling chip turnover Manny Pacquiao bout at Cotai Arena in November, says he envisions at the property in the six months that ended 30th June. Plans are in holding four to six fights in Macau a year. The Pacquiao spectacular, the works there to add another 3,700 square meters of gaming space which will feature young Zou on the undercard, will be the Filipino with 100 table games over the next year. superstar’s first fight outside the US since 2006. EBITDA was up 39% to US$709.5 million at mass-market leader There are reports, unconfirmed as of this writing, that the arena The Venetian in the first half, driven by a 38% surge in main-floor also will be hosting the first Ultimate Fighting Championship in table play. The Venetian and SCC combined generated more than China and that will happen later this year. three-quarters of a record-setting $1.28 billion in six-month group In July, Tracy & Co. brought a slice of Hollywood to town via a EBITDA on total revenues that surpassed $4 billion. This extended licensing deal with DreamWorks for a number of interactive family beyond the gaming floor, too, with substantial increases posted in experiences at Sands Cotai Central that feature the studio’s Shrek, room sales (+45%), F&B (+59%) and retail (29%). Kung Fu Panda and other characters from its popular animated films.

junkets. MBS works on an expected long- 11 George Tanasijevich term theoretical VIP win rate of 2.85% President and CEO but achieved only 2.53% in the second Marina Bay Sands quarter, a 0.11 percentage point erosion from the year-ago period. The deviation from theoretical VIP win rate at MBS is Marina Bay Sands is an instantly exacerbated by the property’s policy of recognizable structure that has come to taking bets up to S$1 million, though that define the Singapore skyline since its April policy also appears to be helping boost 2010 opening. It is also probably the world’s VIP volume, which rose 24.9% year on year most profitable casino, though growth is in the second quarter to US$14.4 billion. proving hard to come by given the tough Sentosa had led the market in its regulatory environment. Still, operating formative period, thanks to a two- income in the second quarter of 2013 rose month opening head start and a 8.4% year on year to US$255.1 million, with good deal more local knowledge and adjusted EBITDA up 7.5% to $355.3 million connections, derived mainly from parent on a 6.4% increase in net revenue to $739.5 company Genting’s longstanding casino million. monopoly in neighboring Malaysia. MBS Revenues at both MBS and its parent Las Vegas Sands, on the other duopoly-market rival Resorts World hand, had a steeper learning curve. Sentosa are buffeted by volatility in VIP Though the company had already gone win rate caused by their reliance on a through a tough but enlightening Asia- relatively small number of high rollers, acclimatization process with Sands Macao the result of Singapore’s effective ban on and The Venetian Macao, those lessons did

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not always serve it well in Singapore. The Tanasijevich, is one of the best in the region. being “instrumental” in securing the tender. most notable rookie mistake the company Mr Tanasijevich arrived in Singapore “Throughout Marina Bay Sands’ committed on arriving in the Lion City was in 2005 as LVS employee No. 1 and construction and opening phases, George transposing its Macau games mix to MBS. spearheaded the company’s winning bid for continued to impress us with his sharp Unlike in Macau, where baccarat reigns the first integrated resort. An accomplished business and legal mind, familiarity with supreme, roulette is dominant in Malaysia business executive and attorney with the operating framework in Singapore, and and Singapore, and the MBS main floor extensive international experience, he reassuring presence,” Mr Leven has said. “He initially devoted too much precious space was the perfect choice for the job. He’d has been a steady and strong force for the to card tables and too little to ones with been based in Macau up to that point, company since Day 1, and we are proud to wheels. But MBS soon spotted its mistake responsible for the coordination of various have him lead Marina Bay Sands to even and moved quickly to reconfigure. The commercial activities related to LVS’ Cotai greater heights.” market responded in kind, revenue spiked, Strip projects. But having at one time held Mr Tanasijevich also serves as managing and LVS started getting better acquainted a senior position at Singapore’s CapitaLand, director of Global Development for LVS, with local tastes. MBS overtook its rival by Southeast Asia’s largest real estate and working to secure opportunities to keep the Q2 2011 and hasn’t looked back. hospitality conglomerate, he had an insider’s company expanding at the heady rates it has That’s able management, and the knowledge of the market. Sands President experienced over the past decade through team at Marina Bay Sands, led by George and COO Michael Leven credits him with its forays into Macau and Singapore.

The government has not given any 12 Tan Hee Teck indication that it will loosen restrictions President and COO on junket operators, and if anything is Resorts World Sentosa scheduled to impose stricter regulations. It is also expanding its limits on mass-market advertising. That does not bode well for Resorts World Sentosa appears to have RWS, which registered a mere 1% year-on- found itself firmly in the doldrums. year growth in mass revenue in the first half. Its revenue in the first half of 2013 Last month, Singapore extended contracted 7.5% year on year to S$1.38 restrictions on casino advertising to billion (US$1.07 billion), while adjusted include promotional activities surrounding EBITDA slid 18.7% to $560.5 million. membership campaigns and loyalty club Underlying the poor performance programs. The rules, which previously is the confluence of a market that has applied only to advertisements, now require already reached relative penetration and RWS and MBS to obtain prior approval from an unfavorable regulatory environment the Ministry of Community Development, imposed by the Singapore government, includes 5% on the gross and 7% goods and Youth and Sports before launching such from the casino entry levy on residents and services tax) versus 40% on the gross in Macau. promotional campaigns and any media- injunctions on marketing to locals, to the But the government, understandably wary of related activities and sponsorships effective ban on junkets and restriction on junkets and their reputed links to Chinese associated with them. gaming capacity expansion. organized crime groups, has chosen to keep “The casinos are meant to be tourist RWS was also hit by bad luck in the VIP them out. Singapore’s fastidious Casino products and should remain so,” said CDYS segment. Although rolling chip volume had Regulatory Authority has so far licensed only acting Minister Chan Chun Sing. “We are grown 34% in the first half, the VIP win rate three junkets, none of them active in Macau prepared to strengthen social safeguards as fell to 2.3%, having stood above 3% in the or apparently involved in any of the traditional and when necessary to ensure that there is same period last year. This highlights the junket activities beyond marketing to players. no targeting of our domestic market.” danger of the reliance of both Singapore Known locally as “international marketing Despite the bleak growth outlook, integrated resorts on a relatively small agents,” the three approved groups all work Tan Hee Teck stands at the helm of one of number of high rollers, which leads to exclusively with RWS, and by most accounts the most profitable casinos in the world, greater volatility. do not bring in much business. the jewel in the crown of Genting’s global The reason for the limited supply, of Even without junkets, however, operations. course, is that Macau-style junkets are barred mainland Chinese players account for Mr Tan was instrumental in helping from plying their trade in the Lion City. The about half the rolling chip volume in the RWS score its duopoly Singapore license junkets currently active in Macau would city-state. Not surprisingly, this has led as in 2006, and from the property’s February gladly work with Singapore’s casinos in order well to the IRs being saddled with relatively 2010 opening, has worked to shore up its to offer their clientele a greater choice of high impairment charges and provisions for position in the market. He has more than 20 venue and also to partake in the potentially bad debts. RWS saw a 13.7% year-on-year years’ experience in the leisure and gaming greater incentives enabled by the city-state’s increase in its impairment loss on receivables industries, having held various senior much lower tax rate on VIP play—12% (which to S$77.1 million in the first half. positions within the Genting group.

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during the SARS epidemic. “We saw the Versace 13 Angela Leong hotel was a beautiful, elegant, world-class hotel,” Executive Director, SJM Holdings she said at the signing ceremony earlier this Managing Director month, Donatella Versace by her side. “I thought Sociedade de Jogos de Macau it was 100 percent worth it to have such a hotel in Macau.” Angela Leong took some time this month from One of south China’s wealthiest individuals, her campaign for re-election to a third term in with a net worth estimated by Forbes at US$2.3 Macau’s Legislative Assembly to rewrite the future billion, her influence reaches into every facet of Macau’s largest casino operator. It came in the of the SJM/STDM empire. She owns one of the form of an announcement from SJM Holdings largest personal equity stakes in STDM—the that she had agreed to transfer to SJM an interest forerunner of SJM Holdings’ casino operating arm in 18 hectares of land she controls adjoining the and the listed company’s majority shareholder— company’s Cotai location, effectively tripling its area. and serves as a director. She also controls 10% SJM’s was the smallest of the sites the government of the operating company, Sociedade de Jogos had awarded the six casino licensees in the booming resort district. de Macau, and is its managing director. She is also vice chair of the With the stroke of her pen the company had gone from being Wynn Macau Jockey Club. Macau’s little next door neighbors to lords of a demesne where just Her property holdings, described as “vast” by The Wall Street about anything that money can build is possible. Journal, include a significant interest in L’Arc Macau, a 56-story It was, needless to say, a monumental deal, and Ms Leong’s colossus containing a hotel, private residences, retail shops and a position in it was unique because as an executive director of the 10,000-square-meter casino that operates as one of 14 independent company she held decision-making power on both ends, not to “satellites” of SJM’s license. mention that as SJM Holding’s largest individual shareholder she A Guangzhou native, daughter of an army officer, a dancer by stands to benefit in all kinds of ways. training, she’s been as quick a study as they come in the school of Such is the power the youngest and last of Stanley Ho’s consorts casino operations, the years she spent at Stanley Ho’s side having wields in the largest casino market in the world—“Say Tai,” (“Fourth equipped her well to become a solid contributor to SJM’s growth Wife”), as the venerable tycoon calls her after the traditional in an increasingly competitive marketplace, reflected, in part, by Cantonese manner. the fact that for several years now she has headed the trade group She was one of the movers behind a joint venture recently representing the city’s junket operators and promoters. announced with Gianni Versace to develop a HK$2.5 billion (US$322 Her impact on the civic and social life of the region has been million), 270-room Versace-branded hotel at the Cotai site. The similarly profound. She’s been the directly elected representative famed Italian fashion house is hugely popular among China’s brand- of a pro-casino coalition in the Legislative Assembly since 2005 and obsessed nouveau riche, and SJM’s will be only the third hotel she holds a seat on the Jiangxi Provincial and Zhuhai Municipal in the world to carry its name. It is one of the unique features her committees of the Chinese People’s Political Consultative Conference. land deal has made possible, and Ms Leong is said to have been Her charity work includes a longstanding involvement with Po Leung its inspiration, the idea coming to her a decade ago when Palazzo Kuk, a 130-year-old institution founded in Hong Kong to provide Versace in Australia’s Gold Coast was her home away from home services to needy women and girls.

Galaxy Macau’s arrival in May 2011 could 14 Michael Mecca not have been timed better, coming just as President and COO China’s burgeoning middle class created a Galaxy Entertainment Group fundamental shift in the dynamics of the market away from VIP and toward the mass. Play at Macau’s cash tables is now Michael Mecca joined Galaxy growing at around triple the rate of credit- Entertainment Group in March 2009 in the based VIP play. Citywide, the mass market run-up to the opening of the US$2.1 billion generated MOP55.6 billion ($6.95 billion) Galaxy Macau resort on Cotai. His mission, said in revenue in the first half of 2013, having Deputy Chairman Francis Lui, was to take the sustained year-on-year revenue growth of company “to the next level in its development 30% or better for 10 straight quarters. The as a leading Asian gaming corporation”. shift has also been revolutionizing industry The central element of that mission profitability. As cash gambling is conducted was positioning what had until then been a directly between the player and the primarily VIP-centric company with StarWorld casino—no junket intermediaries and VIP Hotel and Casino on the Macau peninsula room promoters to be cut in for 40-45% of to serve the mass market on Cotai. And the win—after-tax margins are around three

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to four times greater than on VIP. in its marketing campaigns, Galaxy Macau young people, being out here supporting A big part of Mr Mecca’s job, as he saw depends crucially on its 8,000 team them every day and being on site with them. it, was to take the strong customer service members—the people who, in his words, So they know that we’re out there too. We’re standards established at StarWorld, the “breathe life into the facility”. not hidden up there [in corporate offices], company’s previous flagship property, and “We spend a great deal of time and we’re out here with all of them, greeting the transplant them to the much larger Galaxy energy training our people, not just when guests, supporting them and making sure Macau. they first join us—we have the dealers’ they have all the tools that they need to get “StarWorld has always been one of the school and training classes when they join— the job done.” most prominent VIP casinos anywhere in but then on a regular, ongoing basis,” he With the appointment in November the world,” he says, “and our responsibility says. “We have dedicated people in every of Gabriel Hunterton as deputy COO of at Galaxy Macau was to ensure we gave department who spend their entire time on Galaxy Macau, Mr Mecca has been able that same level of welcome and memorable the floor, and there are impactful behaviors to focus more on the property’s second- experience as our VIPs have always enjoyed that we monitor that are all geared towards phase expansion, the budget for which was with us to our mass players and premium- providing the required level of service. You’ll recently raised by HK$3.6 billion to HK$19.6 direct players.” see that every one of the security guards, billion (US$2.5 billion). The expansion, which Mr Mecca and his team have succeeded as you enter, they’ll make a motion of is under way and slated for completion in doing just that. As a result, Galaxy welcome. And the dealers, after each hand, in 2015, will double the size of the resort, Macau’s steady gains in the mass market they’ll look up at the customers and make adding as many as 500 gaming tables and have outstripped those of its local rivals. In sure everything is okay. Every department JW Marriott and Ritz-Carlton hotels with a the first half of 2013, its mass table gaming in the property participates in the program, total of 1,300 rooms. revenue soared 45% year on year to HK$4.8 and our goal is to provide a level of service Prior to joining GEG, Mr Mecca had billion, while machine gaming revenue second to none in the industry.” served as president and CEO of Planet jumped 30% to $742 million. The property’s Also integral to keeping Galaxy Macau’s Hollywood Resort & Casino in Las Vegas VIP business fared less well, with revenue up employees motivated is the hands-on and held senior executive roles at Mandalay just 4% to $11.9 billion in the first half. approach of GEG’s senior management. Mr Resort Group, Caesars World, Crown and Mr Mecca stresses that in order to Mecca is a fixture around the property. Las Vegas locals giant Station Casinos. He provide all guests with the coveted “World “It’s about all of us being present,” he has more than 30 years of experience in the Class, Asian Heart” experience promised notes, “all of us participating with these hotel and gaming industries.

allowances and other sales costs by 15 Linda Chen more than $40 million, shaved 6% off its Executive Director and COO advertising spend and even found a way to Wynn Macau raise salaries across the property. But then Ms Chen’s confidence in her ability to leverage the brand rather than give It’s been a challenging year for Wynn in to the temptation to overpay for business Macau, one that’s provided Linda Chen with has always been one of her defining ample opportunity to show why she’s one of characteristics. And she’s as adept as they the ablest managers in the market. come at managing risk. Casino receivables With gaming volumes down across came in at 6% under where they stood in the the board in the first half and renovations first six months of 2012. The provision for under way on 600 rooms she’s had to run a doubtful accounts was up, but only by 2.2%. tight ship at the only Mobil Five-Star resort Those in the know locally hold her in in town. The happy result was a profit of high regard as one of the principal reasons HK$3.69 billion (US$473 million) for the six for this kind of keen competitiveness, months ended 30th June, and the property’s especially at the high end of the market, a Hong Kong-listed parent was able to declare quiet force operating behind the scenes a 50-cent dividend. This was achieved in the to skillfully manage key relationships and face of a decline in VIP turnover of almost maintain corporate credibility. 9%. Mass-market drop calculated in terms substantial increases that were realized in She’s been similarly effective as an of chips purchased at the tables was down non-gaming revenues, 5.2% in aggregate, ambassador for the company in the region, 5%. Slot handle was down almost 13%. It driven by a surge in hotel occupancy (+400 serving as a member of the Nanjing helped that the casino played luckier year basis points) and a HK$50 million jump in Committee of the Chinese People’s Political on year both in the private rooms and on the retail revenue. Consultative Conference (Macau) and main floor—total gaming revenues actually What’s most striking about all this, personally representing Steve Wynn in ended the period up 3.2% on H1 2012— though, is that it was achieved even as Beijing. She’s even been suggested at times but due weight must be given to some the property pulled back on promotional as his possible successor.

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Certainly she has no bigger fan than Mr International), and for two years she headed on the Hong Kong Stock Exchange in 2009. Wynn himself. They go back a long way. She up international marketing for MGM Mirage, She also serves as president of Wynn Resorts’ worked on the opening of The Mirage on the as the merged companies were known at Wynn International Marketing subsidiary. Las Vegas Strip in 1989 fresh out of Cornell’s the time. She rejoined Mr Wynn during the Steve Wynn has referred to her as “a prestigious School of Hotel Administration run-up to Wynn Resorts’ Nasdaq listing and member of my family … virtually one of and was involved in the debut of the MGM the opening of Wynn on the Strip. She came my own daughters,” and three years ago, he Grand, which opened in 1993 as the largest to Macau in 2002 after Wynn won its casino made her one of the highest-paid executives hotel in the world. She was executive concession and was chief operating officer in the industry, and the first woman to crack vice president of international marketing of Wynn Macau. She took on the same title the top 10, with a 10-year contract that came at Bellagio when Mirage Resorts was with the listed parent and joined the board with a US$10 million bonus, not counting bought by MGM Grand (now MGM Resorts of directors when the property went public stock and options.

now been given the bigger job of enhancing 16 Gabriel Hunterton the performance of the already successful Deputy Chief Operating Officer Galaxy Macau following his appointment as Galaxy Macau deputy COO of the property in November last year. Mr Hunterton is charged with leading Gabe Hunterton knows the value of Galaxy Macau’s premium-mass strategy, treating his customers well. which is distinguished by the company’s Until recently, Mr Hunterton served “VIP” approach to delivering service and as COO of Galaxy Entertainment Group’s rewards. Under his watch, in the first two VIP-centric StarWorld Hotel and Casino on quarters of 2013, Galaxy Macau has grown the Macau peninsula. Although StarWorld its share of citywide mass market and slot is disadvantaged by a modest plot size revenues, contributing to higher operating relative to its neighbors—including Wynn margins at GEG as it moves steadily away Macau, Grand Lisboa and MGM Macau— from its previous dependence on the low- that limits the range of amenities it can margin VIP trade. offer, its steadfast commitment to offering “We’ve got a lot of chances to be right high rollers convenience and exemplary with the customers,” says Mr Hunterton of service has allowed it to punch well above the company’s efforts to court the prized trade. Not all the Macau operators have been its weight, earning disproportionately large premium mass. “We do our best to offer the as consistent in their approach to managing VIP baccarat revenue relative to its size and customer the best possible experience. But these critical relationships. development cost—HK$3.4 billion (US$436 at the end of the day, it’s their decision. If they Mr Hunterton is a 16-year veteran million). enjoy the trip then we’ve been successful. If of the gaming industry in Las Vegas and Mr Hunterton was appointed to head they don’t enjoy the trip then we’ve failed.” Macau. Prior to joining GEG he spent three StarWorld in December 2009, with a remit While growing mass revenue, Mr years in senior operational and business to “develop and refine” the property’s Hunterton has certainly not neglected the development leadership roles with MGM performance and prepare it for the impact VIP business. The consensus in the industry Grand Macau. of the opening of the far larger and better- is that is that he has done a first-rate job on His appointment as deputy COO of appointed US$2.1 billion Galaxy Macau on keeping the marriage between GEG and its Galaxy Macau coincided with Charles So Cotai, with the inevitable migration of some VIP players and junkets a happy one—first being named deputy COO of StarWorld. of StarWorld’s players there. at StarWorld and now at Galaxy Macau. If Mr So, who had previously overseen hotel It’s a credit to Mr Hunterton that you speak to executives from the junkets, operations at StarWorld, has more than StarWorld didn’t miss a beat following they consistently single out GEG for praise in 30 years’ experience in hotel ops and F&B Galaxy Macau’s May 2011 opening. He has terms of its support and fairness toward the service.

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charge at Neptune have seen the company 17 Nicholas Niglio grow not only in size but in scale. In addition Executive Director and CEO to a comprehensive range of travel and Neptune Group hospitality services it provides its VIP clients, Neptune has begun to exert a sizable impact on the bigger picture, notably launching Nicholas Niglio’s presence as the only two of the flashiest high-stakes poker non-Chinese member of the board of tournaments in the world—the HK$2 million directors of Neptune Group speaks volumes buy-in “Macau High Stakes Challenge,” which to the esteem in which he is held in Macau attracted the likes of Phil Ivey, Tom Dwan, and Hong Kong by players, operators and Sam Trickett and Eric Seidel to StarWorld investors. Hotel last August to compete for the largest Hong Kong-listed Neptune, one of the that earlier this year saw the company add prize pool ever offered outside the World five junkets that control an estimated 55- to its VIP room investments with a stake in Series of Poker—and June’s “Guangdong Ltd 60% of VIP revenues in the world’s largest 11 tables at the Grand Lisboa. The company Asia Millions,” co-sponsored with PokerStars, casino market, has been in the vanguard of currently shares in the win at 62 tables at a HK$1 million buy-in shark fest that drew to this year’s resurgence in the city’s massive four properties and expects that to increase City of Dreams about 100 big-time players trade in high-end gamblers after a mostly to more than 110 tables over the next couple from every corner of the globe. tepid 2012, when growth flagged sector- of years. Amidst all this, Mr Niglio oversaw a wide, comparatively speaking, on what With three decades of experience on two corporate restructuring that resulted in a appeared to be a combination of economic continents to his credit, Mr Niglio is more spin-off of Neptune’s operating division. and political jitters in China. Not that you than equipped to make it happen. He was The way it’s set up now, the public company would have known that from Neptune’s schooled in the hyper-competitive world of controls the investment end, and the new performance, which belied the slowdown Atlantic City gambling in its heyday, joining entity, Guangdong Group, named for the and outpaced the market over its latest six- Resorts International in administration in company’s popular Guangdong VIP clubs, month reporting period with profits that 1978 and moving into casino marketing. He directly promotes the rooms. Guangdong rose more than 33% year on year on a 29% served as vice president of casino operations directly controls 221 tables, about 11% increase in turnover. at Caesars, the city’s pre-eminent high- of the city’s current VIP inventory. It’s the The rebound in the market, which has roller venue of the time, and was senior second-largest network in town. seen VIP up 10.5% in the first half of 2013 vice president of Eastern Operations before With its distinct but complementary over the same period last year, could total moving to the Trump casinos in the early businesses and the management structure the US dollar equivalent of $29 billion by ’90s, where at various times over an eight- now clearly delineated, Neptune believes the end of the year. Neptune figures to be year career he headed up every facet of it is better positioned than ever to take grabbing a significant chunk of that through domestic and international marketing. maximum advantage of the opportunities a strategy of “continued controlled growth” The six years in which he’s been in that lie ahead.

his worth behind the scenes at turning 18 Michael Leven vision into reality. Along the way he’s been President and COO instrumental in solidifying the company’s Las Vegas Sands Corp. standing in the financial community. He’s helped steer it through the Sands China IPO and the openings of Marina Bay Sands, Sands “We’ve been lucky to have him” is Bethlehem in the US and Sands Cotai Central how Sheldon Adelson summed up the in Macau. He’s secured major partnerships performance of his second in command and cross-marketing deals with an A-list earlier this year. The occasion was Michael of global hospitality, retail, restaurant and Leven’s receipt of the American Lodging entertainment brands. Investment Summit’s “Lifetime Achievement Did he bank on the costly court battles, Award,” the latest of many the veteran the federal investigations, the unwanted hotelier has received over the course of publicity, the volatility at the executive level a distinguished 50-year career. It’s one in that seems at times to be part and parcel which he takes special pride, he says, since he joined the company in 2009 in the depths of a career at LVS? Probably not. But he’s normally it’s given to CEOs in recognition of of the global financial crisis, and it continues handled it all with equanimity. And he’s kept financial performance while in his case it was to provide the terra firma beneath the the trains running on time, ensuring stability bestowed in recognition of his achievements indefatigable expansionism that defines Mr for the thousands in the rank and file as an operator. It was the critical ingredient Adelson and LVS. around the world, and he’s done it with an Mr Leven brought to Las Vegas Sands when Time and again, Mr Leven has proven admirable mix of worldliness, good humor

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and humanity. underneath, all human beings are basically settled into comfortable retirement. But he “What I’ve realized, which has always the same: they want to be treated with took a page from the advice he offers the been my style, is that I manage people the respect, have personal freedom, an ability many young professionals he teaches and way I want to be managed myself,” he once to be successful. I think those values mentors: to challenge themselves, to take told The New York Times. transcend cultures.” the example of his success and seize every A former president of Days Inn and He and Mr Adelson both hail from Boston opportunity to try something new and Holiday Inn Worldwide, Mr Leven founded and have known each other for decades. unfamiliar. a company that developed and franchised When Mr Adelson owned the Comdex In his case, there hasn’t been a dull the Microtel and Hawthorne Suites brands. computer trade show and Mr Leven was moment since and none on the horizon He co-founded the Asian American Hotel running Days Inn, they’d meet occasionally with the $2 billion-plus Parisian slowly Owners Association and helped grow it into for dinner. He declined an offer to run taking shape on Cotai and EuroVegas on the the 9,300-member network it is today. the Sands when Mr Adelson bought the drawing board in Spain—and who knows “Respect for other individuals is the venerable Las Vegas Strip resort in 1988. But after that?—Miami if the political stars most important characteristic,” as he said when LVS went public in 2004 he accepted a align, Vietnam should the ban on domestic in that Times interview. “Although cultures seat on the board of directors and served for gambling be lifted, and of course Japan in all change, and the way people appear to be about a year. likelihood. may be different, internally there are similar When he finally joined the industry What’s certain for now is that he’s on values in every single human being. Though full-time it was at a point in life when most board through 2014. Mr Adelson extended these values may be executed differently, men of his age and accomplishments have his contract last year. He was wise to do so.

Mr Chan became COO of Melco Crown 19 Ted Chan in February last year. For two years prior to Chief Operating Officer that, he had been co-COO, Gaming, while Melco Crown Entertainment Nick Naples headed operations. Nick Naples left the company in conjunction with Mr Chan’s promotion, the culmination of a “It’s all about the total experience,” says gradual assumption of all senior roles at the Ted Chan of the appeal of City of Dreams to company by Chinese executives. the coveted high-limit cash players known “The young and innovative culture of this in Macau as the premium mass. It entails company is bolstered by our understanding offering the right mix of hotel rooms, F&B, of the customer,” says Mr Chan. “Because retail and perks, according to Mr Chan, [CEO] Lawrence Ho and the team are actually and is something he has been striving to Chinese, and we grew up in this part of the improve ever since he joined Melco Crown world, we feel we understand the behavior customers, the middle customers and smaller Entertainment’s flagship casino. of customers here better than anybody else.” customers, who we put into different tiers, so The effort has helped increase the It’s a differentiating factor, and for we’ll be able to align the right service to the average length of stay of premium-mass reasons both obvious and subtle, an right type of customer,” he says. customers at CoD to about twice the length important one. Having identified the premium mass as of stay of its non-gaming customers, he says, “For any strategy setup or marketing the most lucrative segment, Melco Crown and premium-mass revenue at CoD was the initiative the No. 1 goal is to know your fine-tuned the offering at CoD to cultivate it. primary driver of Melco Crown’s consensus- customer,” says Mr Chan. “So we spend “I think everybody is actually looking at that beating second quarter results, along with quite a lot of time understanding customer segment and would like to replicate what higher group-wide VIP rolling chip volume behavior. we are doing,” he says. and win rate and the company’s ongoing “For example,” he explains, “if someone Mr Chan is a longstanding and trusted commitment to controlling costs. from China comes into your property, [even] associate of Mr Ho’s. He worked with him Melco Crown’s net revenue increased if you didn’t grow up in this part of the world first at Mocha Clubs, then left to take a role 38% year on year in the second quarter to and study the culture in China, you might be as CEO of an outside company, albeit one US$1.3 billion (with CoD contributing $967 able to recognize that person comes from that worked in close cooperation with Melco million), and adjusted EBITDA was up 62% northern China, and from that conclude Crown—Amax Holdings, a Hong Kong-listed to $330.1 million. In addition to CoD, which they like spicy food. But then what’s the junket aggregator that played a key role in produced 91% of group adjusted EBITDA in difference between this guy and somebody sustaining Crown Macau (now Altira), Melco the second quarter, Melco Crown also owns from Thailand?” Crown’s first casino, when it opened. By and operates the VIP-focused Altira Macau, So a key part of Melco Crown’s mission to November 2008, Mr Chan was back in the which generated $41.4 million of adjusted boost mass revenues is learning more about fold as president of Altira prior to assuming EBITDA, and the slot club chain Mocha Clubs, its customers’ preferences. “We do a lot of data- the co-COO position at City of Dreams in the which generated $9.8 million. mining exercises to find out who are the best summer of 2010.

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when as head of Las Vegas Sands from its launch 20 William Weidner as a public company in August 2004 through Chairman and CEO March 2009 he was instrumental in building the Global Gaming Asset Management company into a global powerhouse. President and CEO Few can equal the skills he exhibited as a Weidner Resorts diplomat and ambassador in guiding LVS into The successful opening of Manila’s Solaire Macau and Singapore. Certainly no one has Resort & Casino stands as a glittering US$750 exceeded them. The respect and goodwill he’s million advertisement for the singular abilities of shored up along the way have served GGAM well. Weidner & Co. and the impact that Global Gaming He’ll be drawing on all of it, and a healthy dose Asset Management has begun to exert on the of imagination besides, to bring off Matsu, which world’s casino landscape. presents structural, regulatory and geopolitical The one-time president of Las Vegas Sands challenges that are, to put it mildly, unique. To Corp. has moved aggressively to ensure his meet them he’s conjured plans for a veritable Weidner Resorts is first to market in Taiwan, resort city to open in phases with gaming as the where gaming has been approved on the Matsu archipelago, and anchor for a cluster of hotels and leisure attractions designed to in May it was announced that GGAM had been chosen to manage bring 5 million-7 million visitors a year to the tiny island chain 10 Baha Mar Casino & Hotel, the centerpiece of a $3.5 billion, 1,000- miles off the coast of China’s Fujian province. The current price acre destination resort in the Bahamas. Scheduled to open next tag is $2.5 billion, a good portion of which is earmarked to bring December, Baha Mar is majority funded by Export-Import Bank of the islands’ primitive electrical, water treatment and transport China. The lead contractor is China State Construction Engineering infrastructure into the 21st century. Corp. Significantly, it’s the first foray for both in the Western tourism A consummate negotiator, he’s reached across the Taiwan and leisure market and a tribute to the esteem in which Mr Weidner Strait to sell officials in Fujian with its 37 million inhabitants on and GGAM are held. the wisdom of joining forces, and last December, Weidner Resorts As with Solaire the strategy is to build a globally recognized signed a preliminary agreement with Hong Kong ferry operator brand designed, as Mr Weidner has put it, for “targeting customers Chu Kong Passenger Transport for a service between Fujian’s in key markets, including Asia”. capital of Fuzhou and Matsu. Weidner also has proposed the That covers a lot of ground. But then he knows a good bit of it. development of a supporting tourist hotel near Fuzhou, whose He came up in the heyday of Atlantic City’s intensely competitive 4.4 million residents, together with the 5 million or so living in day-trip market as vice president of hotel operations at Caesars. He and around the port city of Xiamen farther south, are considered later moved down The Boardwalk to the Sands, where he served key to the success of whatever ultimately gets built on Matsu. It’s as president, and eventually headed Pratt Hotels, the hospitality reported that Fuzhou officials like the hotel idea, as does Taiwan’s giant that owned the Sands and was developing casinos and hotels pro-business Minister of Transportation and Communications at that time in the Chicago metropolitan area, in New York City, in Yeh Kuang Shih, whose department has drafted a framework for Orlando and Palm Springs, Fla., and in Puerto Rico. regulating resort-scale gaming that is under consideration by the He’s best known for his 13 years as Sheldon Adelson’s right hand, national parliament in Taipei.

monopoly until 2035 on casino operations in February after the passing of the king’s 21 Chen Lip Keong within a 200-kilometer radius of the capital, father and a holiday period of sorts in June CEO and Executive Director Phnom Penh. He listed the company in in the lead-up to July’s elections. NagaCorp Hong Kong in 2006 after Singapore rejected The property is substantial by regional the listing, and the stock price has been standards—660 hotel rooms, 1,700 climbing ever since (he still controls more electronic gaming machines and 170 live than half of it). Between this year and last, table games, 15 food and beverage outlets, the price doubled, partly on news that a nightclub, a spa, 25,000 square meters of NagaCorp is expanding. In November 2012, meeting space—and there are no statutory the company broke ground on Naga2, which limits on gaming capacity. Naga2 will add a is expected to be operational by 2016. When further 1,033 rooms, 200-300 table games it is, it will include new hotels, restaurants, and 500 EGMs. entertainment and MICE facilities and an Vietnamese players are NagaWorld’s underground shopping mall. mainstay, accounting for an estimated 35- NagaWorld is the principal asset of 40% of main floor revenues. But VIP play, NagaCorp, which reported a 15% year-on- most of it Malaysian, is an increasingly year increase in revenue in the first half of important part of the mix. Chinese, not Chen Lip Keong founded NagaCorp 2013 to US$152 million despite two business surprisingly, also feature prominently, and in 1995, the same year he obtained a 70- disruptions during the period, including are the country’s fastest-growing visitor year gaming license in Cambodia and a a week-long period of national mourning group. Five or so junkets are driving most

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of the high-roller volume, although the Mr Chen, who trained as a medical doctor the new government would survive. And property has relationships with some 30 before turning to property development and he proposed making the investment well different operatives. Last year saw the gaming, landed on Forbes’ list of billionaires before regional mass tourism had taken off opening of the company’s first sales offices for the first time this year on the back of and a decade before Asia’s casino boom in Ho Chi Minh City and Bangkok. NagaCorp’s surging share price. When he first got rolling with the opening of Macau to The property also is embarking on a made it onto Forbes’ “Malaysia’s Richest” in competition. “transformational” VIP program, in the words 2009, his net worth was estimated at US$195 The unlikely venture, launched on a of investment analyst Grant Govertsen of million. Since then, NagaCorp’s share price has barge on the Mekong River, got started Union Gaming Research Macau. New VIP risen more than 500%. slowly. But since then, NagaCorp’s success facilities have opened at the property with His gamble on NagaWorld was a bold has closely tracked Cambodia’s progress more in the works (including 50 private one. He put in the bid for the casino in 1994 as a nation and has grown with it. The gaming salons at Naga2), and new junket as efforts were still under way to bring peace first Cambodian company to list on the operators have been recruited to bring in to Cambodia after years of civil war. With no Hong Kong Stock Exchange, it has played players. In 2014, a private Naga terminal experience in gaming, he set out to get into an integral role in shaping the country’s is scheduled to open at Phnom Penh’s the business when the Khmer Rouge was increasing appeal among tourists, investors international airport. still active and was not even clear whether and the international business community.

franchise in his home country. 22 Kazuo Okada You could say he’s all in. Chairman The good thing is that the powers that Universal Entertainment Corp be in the Philippines appear to have little choice but to let him see it through despite the embarrassment his legal troubles has His ugly and protracted falling-out with caused them, which is good for everyone Steve Wynn drags on, and Kazuo Okada isn’t concerned because there are still moments wavering in his determination to turn the when it all seems dangerously close to tables on his former partner and accuser unraveling. and reverse the battering his reputation His pressing need, as of this writing, has suffered. With equal doggedness he was to secure a credible partner or partners continues to pursue his Philippines “dream,” to take a majority stake in the land under as Universal Entertainment characterizes the resort and thereby resolve, or so it’s the US$2 billion mix of high-end gaming hoped, the criminal charges he and 25 and leisure attractions he’s counting on Filipinos and Japanese connected with the With similar resourcefulness he’s working at Manila’s new Entertainment City resort project could face under a finding by the to slot in a new Filipino-Chinese money man complex to establish him as a regional Philippines Justice Department that dummy as a partner—real estate and retail magnate operator to be reckoned with. companies were set up to evade rules on Andrew Tan—to replace the old one—John Mr Okada’s vision for Manila Bay Resorts, foreign ownership of land and other rights. Gokongwei, who exited the project earlier as it’s called, is indeed immense—2,000 Intertwined in this controversy is an alleged this year, reportedly because the two sides hotel rooms, 3,000 slot machines, 500 table bribery scheme involving a politically could not agree on terms. games, an expansive luxury residential connected businessman who is among A tie-up with Mr Tan, should Mr Okada component, the world’s largest oceanarium. those named in the ownership probe. This pull it off, could solve a host of problems. Mr He’s already pumped in an estimated $500 second and far more serious investigation Tan’s Alliance Global has been involved with million. Ground has broken. Nothing short had stalled at one point over the reluctance Manila Bay Resorts as a prospective investor of a criminal indictment, and perhaps not of witnesses to testify, but it appears now to in its residential component. Alliance also even that, would induce him to relinquish it. have gathered fresh steam amid reports that is one half of the joint venture that owns Looking at what it has cost him to date the country’s former top gaming regulator the Philippines’ largest and most successful it’s obvious that the stakes couldn’t be any may have been involved. casino, Resorts World Manila, and is licensed higher—by the boards went his friendship Universal denies any wrongdoing on to develop one of Entertainment City’s four with Steve Wynn and a very lucrative both accounts, and Mr Okada, perhaps licensed megaresorts. investment in Wynn Resorts; it’s jeopardized taking a page from Wynn’s success in ousting In the meantime, Universal says his machine gaming business in the US, him, has countered with an investigation it is “cooperatively” working with the where he is also under investigation; it may of his own into the bribery allegations, government, and has been for more than a well have led the South Korean government conducted in the friendlier confines of year, to resolve the land ownership issues, to reject his bid to develop a destination Japan, that has traced the “illegal flow of and the company has been assured, it says, resort in Incheon; quite possibly it could funds” into the Philippines, as the company that it will have “until the completion of the doom any plans he might have for a casino terms it, to rogue executives. development” to do so.

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big investments. And the long-awaited 23 Kingson Sian Entertainment City—first envisioned by President PAGCOR almost a decade ago—is finally Travellers International Hotel Group taking shape with the opening of the $1.2 billion Solaire Resort & Casino in March and with three other resorts under development As the largest of the Philippines’ privately at the complex or on the drawing board. owned gaming resorts, Resorts World Manila, One of those is Travellers’ $1.1 billion located across the street from Terminal 3 of Resorts World Bayshore, though the Ninoy Aquino International Airport, was the company has held off on getting it under precursor to the massive gaming and leisure way. According to Mr Sian, the focus for complexes sprouting up at Entertainment City now is on maximizing returns at RWM, with about five miles across town on Manila Bay. Resorts World Bayshore expected to open RWM is owned and operated by no earlier than 2017. Travellers International Hotel Group, a joint The company intends to spend $600 venture between Genting Hong Kong, a million over the next three years to expand subsidiary of the Malaysia-based Genting RWM. Its decision earlier this year to delay resort conglomerate, and Alliance Global, risky one. But Travellers, led by Kingson Sian, a planned $1 billion IPO will not interfere a Philippine corporation with extensive who also heads Alliance Global, arrived with with that, it says. Instead, the expansion, holdings in residential and commercial real the right product at, crucially, the right time which is slated to include 1,100 hotel estate and food and beverage. and proved the naysayers wrong. rooms, a convention center and additional Prior to the opening of Resorts World, The property opened strong in 2009 in gaming space, might be funded through major casinos run independently of the the midst of the global financial crisis and the debt markets. government operator-cum-regulator, has sustained that performance ever since. “We are not pressured,” Mr Sian said the Philippine Amusement and Gaming Travellers reported a 24% year-on-year jump of the IPO. “We will just wait for the right Corporation, had enjoyed only modest in consolidated revenues in the first half of timing.” success in the country, with many citing 2013 to PHP19.1 billion (US$432.8 million), In addition to serving as president of corruption and meddling by PAGCOR and the with profit up 25% to PHP2.3 billion. Travellers and president of Alliance Global, a government as reasons for their struggles. Moreover, its success has inspired position he has held since 2007, the 52-year- There were market-watchers who believed confidence among the developers of the old Mr Sian holds executive positions with RWM would fare no better, and in light of the Entertainment City IRs that conditions in the other subsidiaries and affiliate companies of history, the US$800 million investment was a country are finally conducive to supporting the group.

South Korea’s foreigners-only casino following the government’s decision in 2005 24 Philip Chun sector, characterized by relatively small to set up its own casino operating company, Chairman and CEO casino hotels serving mostly Japanese and Grand Korea Leisure, under the auspices of Paradise Group Chinese players, faces the twin threats of the the Korea National Tourism Organisation, opening of new integrated resorts across the with a remit to boost inbound tourism region and looming legalization of casinos and generate income to fund tourism in Japan. Paradise Group, the country’s infrastructure and other government leading foreigners-only operator, last year projects. GKL opened three casinos—two received long-awaited approval to develop in Seoul and one in the port city of Busan— the country’s first large-scale integrated under its Seven Luck brand in 2006, and resort to meet the challenge. by 2010 had grabbed an estimated 54% of The South Korean government legalized a foreigners-only market worth just over foreigners-only casinos in 1967, and for most KRW1 trillion (US$885 million) a year. As of the ensuing four decades Paradise Group the market expanded to 17 casinos in all, has dominated the market. Paradise’s share contracted to around 30%. In 1968, the company opened what is Philip Chun, chairman of Paradise still the country’s best-known casino at the Group since 2004, has sought to reclaim his Sheraton Walker Hill Hotel in the capital of company’s lead in the market. In the second Seoul. Paradise now operates five foreigners- quarter of 2012, Paradise’s share was back only venues, led by flagship Walker Hill, up to 50% while GKL’s had dropped to containing more than 79 table games 42%, with other operators combining for and 160 slot machines, and as recently as the balance. However, Paradise needs to 2005 controlled an estimated 90% share continue to work to consolidate that lead, of revenue in the sector. It lost that lead with GKL reclaiming the top spot briefly

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in the fourth quarter of last year, though foreigners-only casinos is the imposition games are envisioned at full build-out— it appears Paradise is ahead again in 2013. of a 4% casino consumption tax beginning twice as many as Paradise operates now in There is also one casino opened to Korean in 2014. The government is also proposing all five of its casinos. nationals, state-owned Kangwon Land in an additional 10% leisure tax on Kangwon The joint venture company, Paradise the remote northeast of the country, which Land to raise funds for infrastructure SegaSammy, announced in July that rather debuted in 2000. development in its host Gangwon province than obtaining a separate license for the casino Going forward, a big factor in Paradise’s ahead of the 2018 Winter Olympics. If that within the planned IR, it was going to develop favor is that it is relatively more reliant measure proceeds, a leisure tax may also the complex as an expansion of Paradise on Chinese visitors, whose numbers are be imposed on the foreigners-only sector, Casino Incheon’s current operations. This may showing the strongest growth of all inbound though probably at a lower rate. have been a defensive move in the wake of markets. (South Korea is the third most Paradise, meanwhile, is investing the government’s rejection in June of casino popular destination, behind Hong Kong and heavily to compete within a regional license bids by Caesars Entertainment and Macau, for outbound Chinese travelers.) GKL gaming industry increasingly replete with Kazuo Okada’s Universal Entertainment, both is dependent more on Japanese patrons. comprehensive and luxuriously appointed of which were bidding to develop similarly Paradise also enjoys an additional revenue resorts. In September last year, Paradise scaled IRs in Incheon. stream from its ownership of the largest casino signed an agreement with Japan’s Sega Mr Chun is also jockeying to position his in Kenya, Paradise Safari Park & Casino, with Sammy Holdings, a leading manufacturer of company ahead of the expiration of Kangwon 40 tables and around 100 slots. And Paradise pachinko machines, to develop a KRW800 Land’s exclusive license to serve the domestic has been going strong so far this year. In the billion (US$730 million) IR in Incheon market. When that happens, it’s probable second quarter, revenue across its six casinos featuring two five-star hotels, a convention one or more licenses will be issued in what (including the Kenya property) rose 19.7% year center, concert hall, indoor theme park, is already a massive and lucrative sector, on year to KRW127.7 billion (US$115 million). shopping mall and casino, with a phased and Paradise Group looks to be the odds-on One thing weighing against all the opening beginning in 2016. Some 450 table favorite to secure one of them.

25 Hajime Satomi Chairman, President and CEO Sega Sammy Holdings

Hopes are high that Japan is on the verge of legalizing casinos. In April, a cross-party alliance consisting of 140 pro-casino lawmakers in Japan’s parliament, the Diet, selected Prime Minister Shinzo Abe as their chairman and agreed on a plan to submit a draft casino bill during the Diet’s extraordinary session this autumn. Mr Abe has indicated he is open to the idea of casino resorts as part of his strategy for driving economic growth. If the wisdom of stock markets is anything to go by, were casino licenses to be offered, Sega Sammy Holdings—which is developing a gaming resort in South Korea in partnership with that country’s Paradise Group—would be among the front- runners to secure one. The company has seen a strong rally in its Sega Sammy was created in 2004 when Sammy Corporation share price this year despite reporting a drop in profit in the fiscal bought a controlling interest in ailing video game giant Sega. year ended 31st March. The 71-year-old Mr Satomi, who heads the combined group, Sega Sammy stated a desire as far back as 2007 to invest in casinos founded Sammy Corp. in 1975 and built it into one of the biggest in Japan should the opportunity arise, and last February, purchased suppliers of pachinko and pachislot machines in Japan—its a resort in Miyazaki Prefecture. Two months after that acquisition major rival in the market is Sankyo Corporation. In the current was announced, Chairman Hajime Satomi reasserted the company’s fiscal year, Sammy says it will sell 260,000 pachinko machines intentions, saying, “Of course, [a casino] is what we have in mind.” and 365,000 pachislots. Then, last September, the company signed the agreement with Sega Sammy expects to generate 485 billion yen (US$4.9 billion) Paradise to develop an integrated resort in Incheon just minutes in total revenue in the current fiscal year, a significant improvement away from the international airport serving Seoul. The joint venture over last year’s 321.4 billion yen. Although it already ranks as one company, Paradise SegaSammy, has estimated the development cost of Japan’s biggest companies based on recurring income, a casino at KRW800 billion (US$730 million), which includes two five-star hotels, license would propel it much higher. Investment brokers CLSA Asia- a convention center, concert hall, indoor theme park, a shopping mall Pacific Markets estimates two casinos, one each in Tokyo and Osaka, and a casino, with a phased opening beginning in 2016. would generate US$10 billion in annual revenue.

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which is what Macau is.” 26 Enrique Razon Jr Interestingly, his late father, the amiable Chairman and popular Enrique “Pocholo” Razon, who Bloomberry Resorts Corp. launched the family business with a successful bid for a Manila port franchise in the post- Marcos era, walked away from a partnership Energetic, handsome, impossibly rich, with Stanley Ho on a floating casino in the Enrique Razon personifies the image Philippine capital city. gaming is eager to project of itself as an His son, however, not only believes industry whose time has arrived. Bloomberry will recover its $1.2 billion The same could be said of his new Solaire investment inside of five years, as he recently Resort & Casino—sleek, contemporary, brand- told Bloomberg, he put in $200 million aware, affirmational—a total lifestyle play. of his own money. He sees Solaire as the PSX-listed Bloomberry, majority controlled “springboard” for a gaming expansion strategy by Mr Razon, spent US$750 million to similar to the one by which he turned that complete Solaire’s first phase, which opened port franchise into a global conglomerate, in March as the first of four destination-scale casino hotels International Container Terminal Services, with operations in 18 envisioned for Entertainment City, a 120-hectare development countries. It’s made him the Philippines’ third-wealthiest man, zone along Manila Bay the government is sponsoring in hopes of with a net worth estimated by Forbes at $3.6 billion, and at 53 the driving regional tourism and providing badly needed jobs. Solaire youngest of those at the top of the list. is in the midst of a $450 million expansion slated for completion “We just have to build the brand,” as he says. next spring to contribute more rooms and restaurants, a spa and He’s gone a long way toward achieving that in what friends pool, high-end retail, a showroom and a bayfront promenade to and colleagues describe as an uncompromising insistence on the the effort. very best, which he amply displayed in hiring Global Gaming Asset “The Philippines has more to offer actually than places like Management, founded by the men who put Las Vegas Sands on the Macau and others,” Mr Razon has said. “There are many things to see map in Macau and Singapore, to run Solaire and offering them an here, and we’re coming from a very low base of visitors. It’s a tourist ownership stake in Bloomberry. destination that has world-class gaming, so there’s something for “Ricky Razon knows how to take risks,” a Bloomberry director everyone. That’s really what it has to end up as, not just gambling, once said of him, “and he’s good at managing his risks.”

hand man was able recently to report Work is progressing as well on a major hotel 27 Rowen Craigie a creditable performance for the latest addition, Crown Towers Perth, which is CEO and Managing Director financial year, with pre-tax earnings at scheduled for completion in 2016. Crown Limited Crown Melbourne and Crown Perth up Rationalizing costs has been a priority for a combined 5%, adjusted for hold, on him as well, at Crown Melbourne particularly, normalized revenue of A$2.77 billion, a where he’s been able to improve the overall 5.6% increase over 2012. operating margin and still grow an expensive Significantly, VIP turnover grew 7.8% VIP business. against tough competition in Sydney In the midst of all this he’s found time to from Echo Entertainment’s refurbished jet back and forth to Sri Lanka to nail down and revitalized Star, leaving no doubt that a joint venture for a $350 million gaming the company’s flagship Crown Melbourne resort in Colombo and bring some touchy is losing none of its appeal as a preferred negotiations with the government over destination among Asian high rollers. VIP the design of the property to a successful revenue there was up more than 9% year conclusion. on year. Closer to home, the tentative approval Under Rowen Craigie’s able stewardship, Combined revenue from main-floor granted the company’s plans for a $1.3 billion Crown continues to deliver solid underlying gaming was up 3.6%. Revenue from hotels, super-resort in Sydney has overshadowed results in operating conditions in Australia F&B and other non-gaming attractions grew plans that are quite expansive in their that have become increasingly challenging, a robust 8.1%. Earnings on a per-property own right to take on Echo in Queensland. while pursuing an aggressive strategy of basis were strong at +7.1% in Melbourne, There, too, Mr Craigie has been the point expansion at home and abroad. normalized for hold, and +6.4% in Perth, man, wooing state and local leaders on Growing the business has been a which has begun to reap the benefits Crown’s pitch for a destination-scale casino struggle in the face of a sluggish domestic of an expanded gaming floor and new in Brisbane that would leverage the economy characterized by weak consumer restaurants, including a gourmet outlet company’s strength’s in the international sentiment. But James Packer’s right- targeting Crown’s sizable Chinese market. VIP trade.

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Resorts World Casino New York City, 28 Lee Choong Yan a video lottery facility at the famed President and COO Aqueduct Racetrack in the borough of Genting Malaysia Bhd Queens. It contains a mammoth 5,000 gaming machines and has been growing steadily since its opening two years ago, Genting Malaysia, listed on Bursa driving a 4% year-on-year increase in the Malaysia with approximately RM23 billion company’s revenue from US operations to (US$7 billion) in market capitalization, is RM454.6 million (US$138.6 million). one of the leading leisure and hospitality Genting Malaysia also is one of the corporations in the world. Its portfolio largest casino operators in the UK, with includes Resorts World Genting in Malaysia, 41 venues in the country, including six in Resorts World Casino New York City and London. The business has been less than casinos in the United Kingdom. stellar of late, with revenue down 5% year on The Malaysia operations consist of the city-state. year in the first half to RM773.1 million and Resorts World Genting flagship in Genting Genting Malaysia’s revenue from adjusted EBITDA down 41% to RM97 million. Highlands, about an hour from the capital home-country operations was up 4% year To address the declines the company is city, Kuala Lumpur, together with a pair of on year in the first half to 2.8 billion ringgit focusing on growing its premium-player resort hotels in Langkawi on the Andaman (US$857 million), though adjusted EBITDA business in London and is expanding Sea in the northwest and in Kijal on the South declined 7% to RM950.7 million as a result physically, with a major leisure and China Sea coast. Together, these account for of higher promotional expenses and entertainment complex under development more than 60% of the company’s global contributions in support of the group’s at the National Exhibition Centre in revenues and 90% of EBITDA, and most of social responsibility efforts. Resorts Birmingham, to be known as Resorts World that comes from RWG, a complex of 8,000 World Genting is striving to market itself Birmingham, slated for a mid-2015 opening. rooms and suites in five hotels, theme parks as more than the low-rollers paradise it Lee Choong Yan is responsible not and other family-oriented attractions, more is perceived to be and to spend more only for Genting Malaysia’s corporate than 100 food outlets, shops, an 18-hole golf aggressively to attract high-limit players development but also for overall operations course and MICE space. The resort, opened from the wider region. In line with that at its flagship Resorts World Genting. His in 1970, holds the national casino monopoly, the property is being revamped at a steady hand is credited with having kept the with a collection of 3,000 slot machines and cost of RM3 billion (US$917 million) and home market solid in the face of mounting electronic table games and 500 live tables expanded by 1,300 hotel rooms. The plan, regional competition as the company across 200,000 square feet of gaming space. slated for completion in 2016, includes pursues expansion opportunities abroad. The legalization of casinos in Singapore a RM400 million joint venture with 21st Mr Lee trained as a chartered was viewed as a serious competitive threat Century Fox to develop a 25-acre movie- accountant in London and worked as an to the aging RWG, but the venerable themed amusement park that will feature investment banker in Hong Kong prior to mountaintop property continued registering more than 25 rides and attractions based joining Genting Group in January 1997. He revenue growth even after the 2010 arrival of on Fox film brands. also holds various directorships in other glitzy integrated resorts in the neighboring In the US, Genting Malaysia operates companies within the group.

29 John Redmond It’s said that on John Redmond’s arrival longstanding monopoly in Australia’s at Echo Entertainment last fall he was largest city was doomed, he responded Chief Executive Officer given “Who Wants to be a Billionaire,” an with a toughness honed by a career in “the Echo Entertainment Group unauthorized biography of James Packer. most competitive market in the world,” as He’s professed to have read it, carefully, for he has characterized his 27 years in Las some insight into what he might expect Vegas, where he served as a regulator, held from his powerful rival down in Melbourne. executive positions at Caesars Palace in its He didn’t have to wait long. heyday and later ran the MGM Grand as New South Wales Premier Barry president. O’Farrell was sold on a Crown casino on Correctly sizing up the hopelessness of Darling Harbour to compete with Echo’s the political situation he took Echo’s case The Star months before he got there, to the public, defying a gag order imposed and Crown’s no-bid proposal already by Mr O’Farrell to pitch what he called was under review by a panel the premier “a win-win scenario for the people of had set up with a well-connected banker Sydney”—two luxury hotels in partnership friend of Mr Packer’s in charge. Whether with a “prestige global operator” that may or not Mr Redmond knew that Echo’s well have been resort giant Genting, which

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owns more than 7% of Echo, and $130 if Crown was held to the VIP-only table in Echo’s Gold Coast and Brisbane markets, million in infrastructure improvements games casino it originally proposed. Crown among them. anchored by a pedestrian bridge linking “We don’t have a plan to lose, we only But Mr Redmond is not without a few The Star to Crown’s chosen location across have a plan to win,” he said at the time. resources of his own. In The Star he has the harbor. It was a bold plan, pegged at He lost, of course. inherited a beautiful property that’s been A$1.1 billion and promising 1,400 new The battle lines keep shifting too. In remade at a cost of $870 million, and he’s jobs, and it came with a $250 million Queensland, where demand has fallen managing it well, cutting expenses and sweetener for the state in exchange for off and Echo’s three casinos are sorely in growing revenues, and reports are that 15 more years of exclusivity. Alternatively, need of reinvestment, potential rivals are a joint venture may be in the works with Echo offered to build the hotels and wooing the heavily indebted government Genting, which has applied for approval to everything else, minus the $250 million, with lavish resort proposals in Cairns and raise its Echo stake above 10%.

flagship City of Dreams, which he helped 30 Michael French shepherd to its opening in 2009. Chief Operating Officer Not surprisingly, he was top of mind Solaire Resort & Casino when Messrs Weidner and Stone secured the management contract at Solaire and went looking for the talent they would need Michael French joins the ranks of “The to make it a success. Asian Gaming 50” in a big way—he’s the guy It’s been a bit of a struggle in the early in charge of Manila’s new Solaire Resort & going. Solaire’s first full month resulted in Casino, one of the most anticipated gaming an operating loss that necessitated some destinations to open in the region in recent price-tweaking and other adjustments. Then times. the marketing began to hit its stride. More He joined Solaire in January 2012 and would be counting on him. junkets were brought on board. Loyalty led its US$750 million first phase through It’s a role Mr French knows well. He club sign-ups quadrupled. EBITDA ramped to completion and its acclaimed debut this was The Venetian’s senior vice president of up nicely, totaling PHP824.7 million over March. Over those 14 months the enormous operations when it opened on the Las Vegas May and June ($18.5 million) for a blended machinery of a casino hotel had to be Strip under Bill Weidner and Brad Stone operating margin of 25.6%. For the three created almost from scratch. Marketing and in 1999, and after six years as an executive months ended 30th June, Solaire generated advertising strategies had to be devised and consultant in the US tribal gaming PHP3.9 billion in gaming revenue ($87.5 and executed. Some 4,500 people had to industry, he arrived in Macau in 2007 as SVP million). Total net revenues for the quarter be hired and trained, and every one of them operations at Melco Crown Entertainment’s exceeded PHP4.1 billion.

operators by rolling chip turnover, and as a 31 Jack Lam measure of his prominence he is one of the Chairman few junketeers to run a property in his own Jimei Group right, having taken over the Casino Oriental at the former Mandarin Oriental back in 2009 with the blessing of its owner, Stanley Jack Lam may not be quite the force in Ho’s Sociedade de Jogos de Macau. Located the “new” Macau as he surely was in the old, under the roof of the renamed Grand Lapa, but the chairman of Jimei Group still sits atop the refurbished and rebranded Jimei Casino an empire consisting of some of the city’s operates as a “satellite” of SJM in exchange leading VIP rooms, a casino at the Grand for a share of revenues. Lapa Macau and a diversified portfolio of But the Philippines remains the most investments in property, financial services, audacious of the investments the 52-year- tour and travel, casino cruises, a resort in the old has pursued, and Fontana Leisure Parks, Philippines, a junket room in one of Seven a sprawling holiday getaway he’s assembled Luck’s popular foreigners-only casinos around 300 hectares of a former US military in Seoul and the recent addition of a VIP base north of Manila, is certainly his most operation at the new Solaire Resort & Casino imaginative. in Manila. Mr Lam had been running gambling In the Macau junket sector, which packages to the Philippines from Hong accounts for much of the heft of the portfolio, Kong, Taiwan and South Korea for years Jimei is believed to rank among the top five and cultivating relationships along the way

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with politicians and government officials meeting and convention space and a regularly in Macau. While accompanying that bore fruit with VIP rooms in casinos in boutique casino—a leisure city within a his uncle on several trips to the city’s Pasay City and Cebu and an interest in the city, catering both to locals and to a Chinese casinos, he built up a network of contacts Fort Ilocondia Resort and Hotel on the South and Korean clientele that Jimei has come and started working as a junket sub-agent, China Sea in northern Luzon. to know intimately over the years. Fontana a position that gave him insight into the But it’s the Fontana complex, located in marked its ninth anniversary in April. nuts and bolts of building and maintaining the Clark Special Economic Zone about 80 Mr Lam was born in Guangzhou and customer relationships. By the early kilometers from the capital, that has grown moved to Hong Kong at the age of 18. He ’80s, he was working as a small-time to become Jimei’s flagship—a collection of started out as a bookkeeper at an uncle’s junket representative in Macau. Through family-style holiday villas and time shares, factory, earning a mere HK$1,000 (US$128) diligence and a solid understanding of his a hotel, a water park, golf courses, fitness a month. He got his introduction to clientele, he gradually emerged as a leader facilities, a sauna and spa, restaurants, gaming through his uncle, who gambled in the industry.

32 Cristino Naguiat Chairman and CEO Philippine Amusement and Gaming Corporation

Regulating a growing national gambling industry is not an easy job under the best of conditions, and in the Philippines, where such conditions rarely prevail, it can be filled with pitfalls. Cristino Naguiat has been negotiating them for three years and making a pretty good show of it too. He’s maintained the stable operation of the government’s third-largest source of revenue, and with the opening earlier this year of Entertainment City’s first integrated resort he can take credit for having shepherded one of its pivotal economic development schemes from vision to reality, a vision he kept alive when all might have been lost amid the corruption scandals that attended the fall of his predecessor. gaming jostle daily for players. That effort was slapped with a fresh As a regulator he’s charged with overseeing compliance in a challenge in April with a court ruling that says all the country’s national market that’s doubled in size since he took office—driven licensees, including PAGCOR, must pay the 30% corporate income mostly by Resorts World Manila, which opened in 2009 as the tax on top of their gaming taxes and fees. PAGCOR was hit in addition country’s fourth privately owned casino and its largest by far—and with a requirement to pay a 5% franchise tax. it’s going to get a lot bigger now that Solaire Resort & Casino is up The corporation missed its profit target for the first half of the and running and Entertainment City’s second licensee, the US$1.3 year by 5%, in part due to higher contributions to the government. billion Belle Grande Manila Bay, has set a mid-2014 opening date. Net income was PHP1.4 billion (US$31.9 million) on total revenues of Mr Naguiat forecasts the market will generate $2.5 billion in PHP21.06 billion ($480.2 million), which were down slightly from the total revenues this year, reaching $10 billion by 2017, when all four same period last year. Entertainment City IRs are expected to be up and running. On the plus side, results from the 7,100 machine games and Good news for the country’s stubbornly high unemployment 650 table games operated by Casino Filipino and some two dozen rate and for the thousands of Philippine nationals working abroad. PAGCOR slot arcades exceeded forecasts, coming in at PHP14.73 But it means pressure will be mounting on PAGCOR to get out billion. of operations and concentrate on regulation. President Benigno Moreover, the corporation managed to reduce expenses in Aquino’s supporters in Congress have been pushing such a bill for the first half while exceeding its projected contributions to the more than a year. And it’s not making it any easier for Mr Naguiat government by 16%. Those payments amounted to PHP10.64 billion, to keep the corporation’s Casino Filipino brand competitive in one the bulk of which—50% after deducting the franchise tax—went of the few countries in the world where private- and public-sector directly to the Bureau of the Treasury.

this year of MGM Resorts International as management partner— 33 Michael Santangelo and there will be more to come for Vietnam’s first experiment in Vice President and Chief Operating Officer large-scale destination gaming. Ho Tram Project Co. Ltd With casinos off limits to the country’s citizens, The Grand’s success depends on its ability to market itself to big-spending The Grand – Ho Tram Strip has overcome its share of challenges foreigners and comfortably transport them the 125 or so kilometers to get the doors open—not least among them the abrupt exit earlier from Ho Chi Minh City to what is a fabulously appointed property on

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one of the country’s most beautiful stretches of beach. That’s where COO Michael Santangelo comes in. He’s responsible for managing the operation and providing the strategic direction, a job that takes in everything from gaming and marketing to finance and IT—or as he describes it, rather more succinctly, providing The Grand’s guests with the “ultimate integrated resort experience”. So far, it’s been so good. Hotel bookings have been pleasantly higher than expected. Weekends are sold out heading into this month. Mr Santangelo has to keep the momentum going. As a relative newcomer to the industry it will take all the experience and savvy he’s been able to muster. Fortunately, he’s no stranger to Asia. His background in accounting and finance brought him to semiconductor giant Amkor Technology back in the 1990s. He served for 14 years as CFO out of the company’s Philippines office. He came to Las Vegas in 2007 to handle the books for no less than The Venetian as vice president of finance and controller. He moved down the Strip two years later to take on the same responsibilities at The Cosmopolitan, which had That’s where he came to the notice of MGM, which snapped him just opened. up last March and brought him to the South China Sea coast.

Assembly and a longtime partner of Stanley giant Sociedade de Jogos de Macau, the 34 David Chow Ho’s, believes he still has a thing or two to successor to the gambling monopoly Co-Chairman teach the “new entries,” as he derides his Mr Ho controlled for four decades and Macau Legend Development Ltd Vegas-style competition on Cotai. licensor of Macau Legend’s two casinos. For years, Mr Chow has been floating Mr Chow brought on a co-chairman, the plans for Fisherman’s Wharf, the sprawling older brother of the head of Hong Kong’s David Chow took a chunk of Macau 109,000-square-meter promenade he and Securities and Futures Commission. He Legend Development public in July, raising Mr Ho opened in 2005 in a location that won a bid for 30,000 square meters on US$238 million to remake the company’s seemingly couldn’t miss, next door to the Hengqin Island, where he plans to develop moribund Fisherman’s Wharf theme park Macau Ferry Terminal, and done up with a a commercial complex with a shopping on the city’s Outer Harbour and renovate bit of everything—restaurants, cafes, shops, mall, and plans were announced for and expand its Landmark Macau hotel. It meeting and exhibition space, a family Fisherman’s Wharf that include three new was a lot less than the $600 million he’d arcade, a hotel, a marina, a scale-model hotels—1,300 rooms and 350 table games hoped for. But Mr Chow has never lacked volcano, a Roman amphitheater, a Tang in total—a yacht club, a machine gaming for connections or chutzpah. The 62-year- Dynasty castle, a fancifully grotesque casino venue run by Japanese pachinko giant old entrepreneur, investor, husbandman, called Babylon—all, that is, except visitors. Dynam Holdings, which bought $35 million high-stakes gambler, junketeer, honorary But things now look to be taking of the IPO, and a dinosaur museum replete consul and all-around mover and shaker, shape. Last year, the company restructured with fossils culled from collections in China. a former member of the Macau Legislative with the aid of $62 million from casino It’s going to take a lot more than $238 million to get all that on, but the Landmark runs at 92% occupancy, and its Pharaoh’s Palace Casino is a cash cow, contributing almost all of Macau Legend’s gaming revenue, which was up 19% in the first half to HK$623 million ($80 million), and most of its total revenues, which grew a robust 25% year on year to HK$843.8 million. Renovation of the Landmark is well under way—all remodeled rooms, more shops and a 3,160-square-meter spa and sauna— and slated for completion the end of this year. The Dynam venue, which opens next summer, around the same time as the first of the new Fisherman’s Wharf hotels, includes a joint marketing agreement aimed at bringing in more players from Japan and Korea.

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132 tables and 960 machines in line with 35 Choi Hung-jib government orders to limit the casino President and CEO industry’s income. That cap, which led to Kangwon Land Inc. sluggish revenue growth, remained in place until November last year. Following its lifting, Kangwon Land quickly expanded, Choi Hung-jib, 62, is a former governor having the new maximum allowable 200 of South Korea’s Gangwon Province—the tables and 1,360 machines in place by June. economically depressed former coal mining The casino reported soft second quarter region where the majority state-owned results, with revenue up a mere 1.1% year Kangwon Land casino is located. He was on year to KRW298 billion (US$268 million), appointed CEO of this most remote and the but the third quarter is expected to come in most lucrative of the country’s gambling much stronger given the boost provided by operations in July 2011, becoming the the expansion. seventh person to head it since it was Political involvement in commercial founded in 2003 as a sovereign wealth ventures can have its upside as well as fund for all intents and purposes, designed downside—especially in East Asia. South to plow its profits back into the regional Korea chose Gangwon for its winning bid economy and community. He replaced Choi for the 2018 Winter Olympics. The event will Yung, who resigned amid an investigation be held at Pyeongchang, up the road from into allegations of corruption. Kangwon Land. The property, which also has Kangwon Land is the only one of South a ski resort, is likely to benefit from the huge Korea’s 17 casinos where Koreans are influx of visitors expected in the region. allowed to play, and owing to that exclusive The downside is that no matter position, generates a great deal of money. how successful Kangwon Land has could take place at that time or soon after. On weekends, eager city dwellers pay local been—including overcoming the not Furthermore, official plans call for the grannies the equivalent of hundreds of US inconsiderable handicap of being 125 licensing of up to five resort-scale casinos dollars just for reserving seats for them at miles and four hours’ drive along difficult over the next decade or so. the tables. The property generates gross mountain roads from the capital of Seoul— It’s not all bad news for Kangwon revenues in excess of US$1 billion per year. as a publicly owned venture it constantly Land, though. In anticipation of the Not surprisingly, it has always been risks having the rug pulled from under it. Winter Olympics, the central government capacity-constrained. The casino opened Kangwon Land’s exclusive right to is planning to build an upgraded road to with 30 table games. Following 18 months serve domestic gamblers expires in 2025, connect Pyeongchang and the county of steady expansion, the National Gaming and authorities say that licensing for at of Jeongseon, where Kangwon Land is Control Commission imposed a cap of least one new venue catering to locals situated.

lottery segment, but in 2012 it generated 36 Sonny Yeung approximately HK$10.7 million in revenue Chairman (US$1.4 million). Though the company’s Success Universe Group lottery interests have a way to go before turning a profit, they appear on track to benefit from continued strong demand. Hong Kong-listed Success Universe China lottery sales surged 18% year on Group, best known for running Ponte 16 year to RMB261.5 billion in 2012 (US$42.7 Resort, Macau, has diversified into the billion), with Sports Lottery sales up 17.8% burgeoning China lottery sector. In late 2012, to RMB110.5 billion. the company began operations of its China Meanwhile, the Ponte 16 casino resort, in Sports Lottery technology service platform which Success Universe holds a 46.8% stake, and providing sales agency services to also benefited from robust demand among the Sports Lottery administration centers mainland Chinese punters. Ponte 16, one of in Jiangxi and Qinghai provinces. Success Sociedade de Jogos de Macau’s 14 “satellite” Universe plans to extend its services to other casinos, is 51% owned by SJM, with Success parts of the country and has also launched Universe acting as the third-party promoter, a dedicated website, www.128cai.com, effectively controlling most of the business. offering lottery and market information and The property got off to a sluggish start online support services. following its February 2008 opening but It’s early days for the company’s has recorded continuous improvement in its

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operating results since then. It recorded its television). The property’s other major experience was as a VIP room operator at first profit in 2011, and last year saw EBITDA non-gaming draw is its unique location at Stanley Ho’s Casino Lisboa. The relationship increase a further 5% to HK$331.5 million. Macau’s Inner Harbor, within a somewhat forged during that time paid dividends when One of the distinguishing features of dilapidated neighborhood but offering easy he was able to broker the investment deal Ponte 16 vis à vis SJM’s other satellite casinos access to the city’s UNESCO World Heritage with Dr Ho for Ponte 16. Success Universe is the throngs of local players it draws to its sites. Part of its remit, in fact, is to revitalize has now moved its VIP customers into its main casino floor. Whereas in Macau VIP the surrounding area. own room at Ponte 16. The entire casino baccarat accounts for over two-thirds of Ponte 16 cost only HK$2.4 billion to build houses 109 tables, with 82 designated as total gaming revenue, at Ponte 16 its share (US$310 million at current exchange rates), mass gaming, 9 high-limit and 18 VIP. is closer to 50%, reflecting the property’s a modest sum by contemporary Macau In addition to Ponte 16, Success Universe strong mass-market appeal. standards. Development of the property’s Group also operates a Hong Kong-based Ponte 16’s trademark attraction is Asia’s third phase is in progress, featuring the casino cruise ship and two travel businesses first and only Michael Jackson museum, addition of a waterfront commercial complex that help feed customers to the Macau which records the milestones in the King with a total floor area of approximately resort. The nine-deck M.V. Success, in which of Pop’s career and displays a collection 40,000 square meters. The complex will also the group has a 55% interest, saw revenue of more than 40 artifacts related to the include space for the expansion of gaming increase 16% to HK$80.4 million in 2012, artist (including the famous rhinestone- areas and car parks, with construction with profit reaching $2.9 million, versus a encrusted glove he wore the first time he expected to be completed by 2014. $7.8 million loss in 2011. The group’s travel performed the “moonwalk” on American Sonny Yeung’s formative gaming business also registered healthy growth.

offer strong entertainment value. 37 Constance Hsu As Constance Hsu explains: “There are President several cultural explanations for the erstwhile Mocha Clubs aversion to slots in Macau, such as the supposed preference of Chinese to engage in intense face-to-face battles against the Mocha Clubs, the largest slot club house and their belief that they can influence operation in Macau, saw net revenue rise outcomes at tables by spotting patterns and 6% year on year in the second quarter of picking lucky cards or numbers, whereas 2013 to US$37.2 million. That mirrors the 6% when they play slots they leave their destinies Macau-wide increase in slot revenue over to unfeeling computers. However, from our the corresponding period to $436 million. point of view, the main reason for the previous Considering the heavyweight competition the non-performance of slots in Macau was a humble Mocha is up against in Macau, home lack of quality product offerings, service and to some of the most opulent new integrated comfortable ambience.” resorts in the world, it has done an admirable Mocha Clubs, owned by Macau casino job keeping pace with market growth. giant Melco Crown Entertainment, has Notably, Mocha achieved that revenue helped to redress that, creating a chain increase despite a reduction in the number of locals-focused venues offering cozy, of gaming machines in operation at its 10 coffee-shop style surroundings, a slick ranks in Macau’s gaming industry. venues to 2,000 in the second quarter from player rewards scheme and one of the best Mocha appears intent on branching out 2,100 in the year-ago period. That translated to returns to player in the city. The company’s from its locals focus and is seeking further average daily win per unit of $207 versus $181. keen attention to service and local game opportunities to work as a third-party slot Adjusted EBITDA was up 7% in the second preferences has allowed it to compete in operations manager within existing casinos, quarter to $9.1 million. The recovery in win the face of fierce competition from the slot a business model launched in January last per unit is a reversal from a decline in 2012 floors of Macau’s resort casinos. year at Casino Golden Dragon, one of SJM’s following an aggressive capacity expansion. Ms Hsu has been with Mocha since third-party-owned “satellite” casinos. Mocha The slot sector in Macau has come a the beginning, starting out as a financial also seems to be going after more tourists, long way since Mocha Clubs opened its controller and rising through management trying to gear the games mix at locations first venue in 2003. Previously, slots were ranks quickly to become chief administrative such as Mocha Macau Tower to appeal to regarded as merely decorations at the table- officer. There, she oversaw finance, treasury, out-of-towners. dominated casinos. Worse, they were seen audit, legal compliance, procurement and Given the constraints of the regulatory as a bad gamble, “hungry tigers,” as they human resources. In 2008, she was promoted environment, as well as Macau’s limited were called. Mocha has worked hard to to her current position as president of land area and population, initiatives such as shake off that perception, showing Chinese Mocha, becoming one of only a handful these will be important to Mocha’s growth players that slots are not only fair but also of Chinese women to rise to the executive going forward.

September 2013 | INSIDE ASIAN GAMING 47 The Asian Gaming 50 – 2013

from Chinese high rollers), permission 38 Nigel Morrison to introduce cashless gaming and TITO Managing Director systems, and increases in the permitted SKYCITY Entertainment Group numbers of gaming tables and slots. In May, SKYCITY secured an extension of the license at its flagship Auckland property SKYCITY Entertainment Group operates together with permission to add more slot three monopoly casinos in New Zealand—in machines as part of an agreement with Auckland, Hamilton and Queenstown—and the New Zealand government to build a two in Australia, in Adelaide and Darwin. convention center in the country’s most Until December 2012, SKYCITY also held a populous city. The agreement is awaiting 50% interest in New Zealand’s Christchurch final approval from Parliament. In return Casino, which it sold to co-owner Skyline for the NZ$402 million convention center, Enterprises. which is expected to open in 2017 as the SKYCITY’s normalized revenue was centerpiece of government’s economic essentially flat year on year at NZ$948 Auckland—a rare enough occurrence to revitalization plans, SKYCITY Auckland will million (US$743 million) for the 12 months merit attention.) be allowed an extra 230 machine games ended 30th June, while normalized EBITDA Despite these one-off factors, it’s fair and more gaming tables. Its casino license, slumped 2.5% to $303.8 million. There to say the company’s recent growth has which was due to expire in 2021, will be were three major factors mitigating the underwhelmed, especially in the context extended to 2048. significance of the decline. First, there was of a booming industry in greater Asia. But Mr Morrison has stated his intention to a high base of comparison in the year-ago SKYCITY hopes to return to growth mode boost the high roller appeal of SKYCITY’s period, when SKYCITY Auckland in particular with major expansions at Adelaide and properties with the addition of new VIP had benefited from an estimated $6 million Auckland and by attracting more well- gaming rooms and accommodations. He windfall from the Rugby World Cup being heeled Chinese players. is well acquainted with the preferences of hosted in New Zealand in December 2011. SKYCITY won legislative approval from those high rollers from his previous role as Furthermore, the sale of Christchurch Casino the parliament of South Australia in July group CFO at Macau casino giant Galaxy means income from there is lost from the to expand Adelaide and intends to invest Entertainment Group. latest figures. Then there’s the appreciation A$300 million (US$270 million) to transform Mr Morrison joined SKYCITY as managing of the New Zealand dollar against the the property into “a truly world-class director in 2008. He has also served as CEO Australian, diluting earnings at its Australian integrated entertainment complex,” says of the Federal Group, Australia’s largest properties when earnings there were Auckland-based CEO Nigel Morrison. The private gaming group, and COO of Crown converted to the kiwi. (The company’s latest key terms of a revised licensing agreement Limited. Before embarking on his casino earnings announcement also made mention include a 20-year extension of its monopoly career in 1993, he was a corporate finance of a group of Asian gamblers absconding in South Australia to 2035, a lowering of partner with Ernst & Young in Melbourne, after racking up $2.4 million of debts at gaming taxes on VIP revenue (i.e. on revenue specializing in the gaming industry.

open in 2016 with 246 luxury suites and project’s Hong Kong-based, Bermuda- 39 Stephen Hung villas, the only Michelin 3-star L’Ambroisie incorporated owner. Co-Chairman and Executive Director outside Paris and an invitation-only “Atelier” The literature says the resort is “the Louis XIII Holdings Ltd with not a couture, bespoke or limited- first of a series of ultra-luxurious lifestyle edition goody on the shelves for under $1 experiences the Group is planning to offer million. Peter Marino, who designs flagship the world’s wealthiest,” although right now With his candy-colored bangs, diamonds stores for luxury brands, has signed on as Louis XIII’s sole revenue source is Paul Y. flashing at his fingers and wrists, a fleet of concept architect charged with bringing Engineering, a well-known construction Italian sports cars in the garage and a fashion the “17th century French Renaissance management and services company it took model for a wife, financier Stephen Hung and Baroque” theme to life. (Don’t mind over early this year along with PYE’s Hong could be a walking advertisement for the the historical incongruity. The fat cats Kong listing. It was around that time that the über-exclusive hotel he plans to open in a won’t.) Mr Hung’s “good friends” Laurence project raised half its HK$6.4 billion budget few years on Macau’s Cotai Strip. and Francois Graff of the famed diamond (US$820 million) from a sale of new shares “The willingness of mainland Chinese merchants are on board, so is Versace, and and convertible bonds, $2 billion of which to spend money on the very best is a fashion designer who claims to be a direct went to buy a company Mr Hung chairs that unprecedented,” he assured The Financial descendant of France’s Bourbon kings has holds the rights to the Cotai site. The rest Times earlier this year. been hired as “special advisor” to Mr Hung is expected to come from borrowings. And The implication, of course, is that’s what and private-equity investor Peter Coker, the company does boast an impressive list they’ll find at Louis XIII, which is slated to his co-chairman at Louis XIII Holdings, the of banking partners. It’s a world Mr. Hung

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knows well. He’s a former vice chairman of eSun Holdings. At one time, he co-headed investment banking for Asia at Merrill Lynch. At the age of 33 he founded his own firm, Amida Capital Group. For all his ambition, though, he has yet to secure Louis XIII its all-important gaming license. Reports are that 66 VIP and premium-mass tables are planned, but the company doesn’t talk much about it or the casino operating agreement it has dating back to 2008 with an unnamed “concession or subconcession” believed to be Melco Crown Entertainment. Melco has a longstanding relationship with PYE, which did work for Altira Macau and is involved in the construction of Melco’s Studio City resort on Cotai. Mr Hung has connections of his own with Sociedade de Jogos de Macau. He’s vice chairman of Rio Entertainment Group, operator of the Rio Hotel & Casino, an SJM satellite on the Macau peninsula.

has been talk of more stock being sold to private 40 Lim Byoung-soo investors, but the company is still majority-owned President and Chief Executive by the government. Grand Korea Leisure Paradise had dominated the foreigners- only market for almost four decades before GKL opened and, to its credit, began snapping up The top job at South Korea’s Grand Korea share. Now, GKL and Paradise Group together Leisure had been vacant for much of this year command around 93% of foreigners-only following the departure of Ryoo Hwa-sun, revenues and are locked in a close-run contest who was appointed president of a prominent for the lead in market share. women’s college in January. Lim Byoung- But Mr Lim has his work cut out for him soo, who headed the Gyeonggi Tourism formulating a development strategy to keep GKL Organisation, was named his successor only on an equal footing. He certainly understands that last month, taking over at a time when GKL is in China is where the growth is and the company critical need of leadership. announced earlier this year that it would be Because come 2016, rival Paradise Group is doubling its Chinese VIP marketing staff from scheduled to open a KRW800 billion (US$730 29 to 60. If current trends continue, Chinese will million) integrated resort at Incheon that will dwarf all of the constitute the largest group of players at GKL by 2014. Already, their country’s current small-scale, foreigners-only gaming venues. GKL, growing numbers are bolstering the company’s revenue, which on the other hand, has no new venues on the horizon. rose 4.5% in the second quarter to KRW133.0 billion. EBITDA was up Another problem for GKL is its heavy reliance on Japanese 11.6% to KRW40 billion. players, who make up the majority of its customers, whereas He also faces the difficult task of obtaining government Paradise derives the bulk of its revenue from Chinese, and they’re approval to build a new casino. His political contacts should aid the country’s fastest-growing inbound visitor group. The number of him in that regard, as will his track record in promoting tourism- Japanese visitors to GKL’s three Seven Luck brand casinos in Seoul boosting initiatives, which is no doubt what GKL will be presenting and Busan fell sharply in the second quarter of 2013, down 19.5% its planned IR as. year on year, while the number of Chinese visitors to the country Looking further ahead, there is the expiration of Kangwon Land’s surged 24.2%. domestic market monopoly in 2025. Authorities say that licensing GKL is a semi-private owner and operator that was set up by for at least one new venue catering to Koreans will take place soon the government in 2005, through the Korea National Tourism after, and GKL and Paradise are the clear front-runners to obtain one Organisation, to boost tourism and generate income to fund tourism of them. Whether GKL succeeds will depend a lot on how Mr Lim infrastructure and other government projects. In November 2009, manages to position the company over his coming three-year term GKL floated 30% of its equity on the Seoul Stock Exchange, and there as president and chief executive.

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deliver our guests to that place.” 41 Paul Steelman The seeds of this were planted in the Founder and Principal late ’80s before he struck out on his own, Steelman Partners through his work with Golden Nugget and Mirage Resorts, and the influence of Steve Wynn, one of the great iconoclasts Paul Steelman likes light. Lots of light. of casino design, is evident in his approach He lavishes it on his spacious hotel lobbies even now. and the archly contemporary restaurants At various times he’s enunciated this as he designs, it fills his wide, bright corridors, a set of “rules” that can be summarized by even his gaming rooms, where the what he terms the “cocooning effect”—the windows can stretch from floor to ceiling. layering of structures within structures, The architect behind Sands Macao, subdividing interior space in ways that Four Seasons Hotel Macao, Harrah’s makes it seem smaller and more personal. Atlantic City, MGM Grand at Foxwoods, Curved pathways are integral to the effect, the Hard Rock at City of Dreams, Galaxy as is lighting and the employment of “art Macau, Solaire Resort & Casino in Manila as light,” as he puts it, and the modular and Vietnam’s newly opened The Grand design of conference and meeting areas, – Ho Tram Strip probably has done more function rooms, entertainment arenas than anyone to lift casinos out of the dark and VIP salons. All have been widely ages—literally. emulated since, and with Las Vegas-based The impact of this has been profound. Steelman Partners having designed resorts Mr Steelman talked a little about it earlier in more than 30 countries—the firm this year at the announcement of his currently is working on some 85 projects most magnificent opportunity to date— around the world—the effect has been Genting’s multibillion-dollar Resorts World to revolutionize the look of the modern It has changed the way casinos feel and Las Vegas, slated to open in 2016. gaming resort and how it functions as has gifted them in the process with an Casinos “ought to be a sketch of a public space, how people move in and emotional range beyond what most of journey,” he said. “We’re all homesick for through it, how building and guest interact us would have thought possible even a places we’ve never been, and we want to with their surroundings, inside and out. decade ago.

foreign businesses to make inroads in 42 Albert Yeung the isolated nation. Not much current Founder and Chairman information is available on the Rason casino, Emperor Group though it supposedly caters to Chinese and Russian contractors working in the area who pay a hefty entry fee to get in. Albert Yeung is the businessman who Mr Yeung’s official biography recounts built the “casino paved with gold”. The that he started in business as a jewelry lobby of the Grand Emperor Hotel & Casino retailer with a single shop. From that in downtown Macau features a “Golden foundation he expanded into property Pathway” with 78 gold bars, each weighing development and investment, financial one kilogram, recessed in the floor under services, entertainment and movies, hotels, glass panels. publishing, catering and retailing. The feature aptly sums up Mr Yeung’s No stranger to controversy, he has personality as a showman and show business endured allegations of corruption and entrepreneur. He counts Hong Kong and Emperor Entertainment Hotel. organized crime links to retain his position Hollywood actor Jackie Chan among his The Emperor Group, based in Hong as one of the region’s wealthiest and most friends, with Mr Chan named as a minority Kong, has become a regional player in influential businessmen. He’s connected to a shareholder in the Grand Emperor when it entertainment and leisure, with ventures lot of powerful people, top officials in Beijing opened in January 2006. in Macau, China, Taiwan, Thailand and reputed to be among them. The casino operates under a gaming Indonesia, employing some 7,000 staff. It Born in southern China’s Chiu Chow region, license provided by Sociedade de Jogos de also notably operates a hotel and casino in an area renowned for breeding “tough guys,” Macau. Gaming revenue in the 12 months the North Korean special economic zone he collects luxury cars and proudly displays his ended 31st March was up 14% year on year to of Rason, bordering China and Russia. The wealth on expensive “lucky” number plates. He HK$1.86 billion (US$238 million), accounting property, which according to the company is also a high-profile philanthropist, supporting for 91.5% of the revenue of Hong Kong-listed was opened in 1999, was one of the first many mainland Chinese causes.

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and revenue from operations in the latest 43 Jaydev Mody financial year of $77.6 million, $30 million of Chairman it from gaming. Delta Corp. Not surprisingly, Mr Mody likes the profit-making potential of casinos and believes there is plenty of appetite in South With the M.V. Horseshoe approved last Asia for more of them. month to start taking bets in Goa, there are In Daman, where the company holds a now five casino cruises plying the lucrative substantial equity interest in Advani Hotels waters off the western Indian state, and & Resorts (India), owner and operator of the hotel and leisure giant Delta Corp. owns Ramada Caravela Beach Resort, plans are in three of them. the works to add a casino with up to 1,500 Mumbai-based and -traded Delta has no either. Casino Royale, the state’s second- gambling positions to the company’s own intention of stopping there. The holdings the largest gambling vessel, features 480 Thunderbird resort complex. Mr Mody also company has amassed under its charismatic gaming positions on four decks, with is busily wooing officials for approval to 58-year-old chairman Jaydev Mody include separate VIP areas, its own helipad and a open a second casino in Daman. He sees the residential and commercial real estate both crèche and playroom for children. Casino state as the gaming hub for Mumbai with an at home and abroad, including several Caravela contains 190 gaming positions immense opportunity to broaden its overall Mumbai landmarks, the city’s famed on two decks, one of them private. The appeal as a domestic vacation destination. Crossroads mega-shopping mall among Horseshoe, a catamaran 87 meters long In Sri Lanka, Delta intends to be an even them. In the resort space, it owns the state and containing 80 slot machines and about bigger player, and its ambitions appear of Daman’s largest tourist and convention 100 gambling tables, was purchased from to dovetail with the government’s desire hotel, three non-gaming tourist hotels in Caesars Entertainment for US$3 million to to leverage resort-scale gaming as an Goa, one of them an extravagant all-suite replace a much smaller boat. economic development tool. The company waterborne affair, and foreigners-only Delta not only is India’s largest gaming owns a sizable plot of land in Colombo and casinos in two tourist hotels in the Sri Lankan operator, it is the only one in the country is looking for a partner or partners to join it capital of Colombo. that is publicly traded, with a current market in building something there of destination The Goa casinos aren’t modest affairs cap in US dollars of about $255 million proportions.

rooms and other perks. To soften the blow understand better than American investors 44 Lam Man Pou he’s taken the novel approach of offering the swings in fortune that can characterize Founder and Chairman cash-only agents a piece of the win he shares the high-roller trade. To signal his confidence Asia Entertainment & Resources Ltd with his casinos. It’s gutsy, and it hasn’t he’s joined his management and a core of come without a price. Rolling chip turnover AERL shareholders in purchasing $60 million through the first half of this year was down of the stock for the listing. Lam Man Pou is leading Asia 15%, and the acquisitions took a significant Entertainment & Resources down a path of bite of net income, which was down 89% to managed expansion, adding two promoters US$4 million ($24.4 million on a non-GAAP to its junket network earlier this year and basis). establishing a presence with casino giant But revenue-sharing has begun to pay Sociedade de Jogos de Macau for the first off, and the company made money in the time through the acquisition of six VIP tables second quarter on hotel and other services at SJM satellite Le Royal Arc Casino. He plans charged to its agents. The momentum is to cap these achievements with a dual listing expected to continue into the second half, on the Hong Kong Stock Exchange. with rolling chip turnover forecast to grow Amid the general slowdown in VIP to $19 billion for the year, and that’s not volumes last year, AERL was tardy in counting the L’ Arc tables. joining its competitors in the switch from The Hong Kong listing should be commission-based partnerships with the finalized before then. Mainland Chinese and casinos to the revenue-sharing model the Hong Kong investors have been calling for it, casinos prefer. Mr Lam’s focus ever since has according to reports, and Mr Lam has high been to minimize the company’s exposure hopes for it. AERL, for all the challenges it’s to the risks that can impede growth over faced, has enjoyed robust free-cash-flow the long haul. He’s reined in credit and cut yields that aren’t being fairly valued, as far as complimentaries to his agents for hotel he’s concerned. Moreover, he believes locals

September 2013 | INSIDE ASIAN GAMING 51 The Asian Gaming 50 – 2013

surpassing US$1.5 billion. 45 Yoji Sato “Our target was to build Dynam Japan Chairman like Wal-Mart,” he said in a recent interview. Dynam Holdings Today, Kohei oversees operations (plans are to open 1,000 halls over the next decade) while Yoji maps an aggressive program of It’s the breadth of his vision as much as overseas expansion that kicked off in fitting his business acumen that finds Japanese style last August when Dynam went public pachinko king Yoji Sato making his debut as the first Japanese company to have its this year on “The Asian Gaming 50”. primary listing on the HKSE. With an eye on Macau’s burgeoning He believes pachinko has global machine gaming market, Mr Sato’s Hong potential as an entertainment proposition, Kong-listed Dynam Holdings bought into a conviction he first tested several years ago Macau Legend Development’s IPO earlier in South Korea, where the game became this year to the tune of HK$273 million, such a sensation—the number of arcades and if and when Japan legalizes casinos ballooned to 7,000 in just one year—the it’s expected he’ll be in the thick of things him heir to two pachinko halls in Tokyo. government shut it down. He plans to on the strengths of his mass-market Adapting what he’d learned in consumer replicate that success in Macau with his team savvy, his renown as a philanthropist retail he renamed the family firm, cut from South Korea and a new generation and a Rolodex bulging with the names of prices on his games and with his younger of games featuring varying skill levels and friends in high places. brother Kohei built the company into other innovations. Dynam’s investment in Interestingly, the 67-year-old was the second-largest player in the largest Macau Legend is the springboard. Mr Sato running supermarkets, not gaming parlors, machine gaming market in the world, expects to have pachinko in front of China’s when the death of his father in 1987 made with 362 arcades and annual revenues gamblers within a year.

ramp up” and continues generating losses. 46 Clarence Chung EGT Chairman and CEO Clarence Chung Chairman and CEO hopes to turn things around by refocusing Entertainment Gaming Asia Dreamworld Pailin’s efforts on attracting VIP players rather than mass-market tour groups, reducing its table count in the Nasdaq-listed Entertainment Gaming process. Asia (EGT) appears to be facing an uncertain While the recently opened Dreamworld future. Poipet is still finding its stride, its prospects EGT, formerly Elixir Gaming Technologies, are buoyed by a low operating cost structure, is a wholly owned subsidiary of Hong Kong- with a mere $25 average daily win per unit listed Melco International Development, required to achieve break-even EBITDA. headed by Lawrence Ho, co-chairman of EGT also runs slot operations in third- Macau casino juggernaut Melco Crown party owned venues in Cambodia and the Entertainment. Philippines. Revenues in the Philippines From its roots as a supplier and third- have come under pressure from “increasing party operator of machine games, EGT has competition from the development of major been transforming itself into a developer of integrated resorts in Manila,” according to poor performance elsewhere in the quarter. casinos in emerging markets, starting with the company. With several more Manila But NagaWorld also presents the a focus on Indochina. The company has two IRs set to open over the coming years, the single biggest risk for EGT, which will see properties in Cambodia, both along the outlook there looks bleak, despite EGT’s its agreement to run slots there expire in border with Thailand. There’s Dreamworld vague assertion that “This increase in 2015. There is speculation that NagaWorld Pailin, with 26 tables and 58 electronic competition will bring consolidation at the might not renew the agreement—it has gaming machines, opened in May 2012, top-class level, and we believe this could already been adding significant numbers and Dreamworld Poipet, a slot club with provide an opportunity for us.” of machines not operated by EGT. Naga 300 machines, which had a grand opening The company’s slot operations at executives have also made no secret of their this May. NagaWorld in Phnom Penh generated $3.7 displeasure with EGT’s decision to open Revenue at Dreamworld Pailin in the million in the second quarter, constituting casinos of its own. second quarter of 2013 was US$907,000, 63.2% of its total revenue. Average daily EGT also supplies high-security gaming down from $1.1million in Q1, owing to net win hit $256, up from $217 in Q1. The chips and plaques under the Dolphin brand. declining player traffic. The company strong contribution from operations at The company relocated its production concedes the property “has been slow to NagaWorld helped mitigate the company’s facility from Australia to Hong Kong in the

52 INSIDE ASIAN GAMING | September 2013 The Asian Gaming 50 – 2013

second quarter, impacting profitability of October 2008. He has a strong background and operating self-owned venues. So far, the that division in Q1, but with a near-term in management and finance, most recently path to diversification has been a tough one, order pipeline of approximately $2 million, as an investment banker at Lazard and a vice but the lessons they’re learning on the way supplying chips could prove the company’s president of Pacific Century Group. could prove vital to their continued survival most reliable ongoing earner. He and his company have been on a if EGT’s agreement with NagaWorld comes Mr Chung took over as CEO of EGT in steep learning curve, running table games to an end in the next couple of years.

along the lines of a sports book. Poker King 47 Winfred Yu Club manages, staffs and promotes the President room in exchange for a fee, which is great Kings Consulting for StarWorld and great for local players, who get a shot at a game they can afford in a world-class venue, and with the likes of Phil Poker pro, entrepreneur, marketeer, Ivey, Johnny Chan, Sam Trickett, Gus Hansen Winfred Yu has been a force in putting poker and John Juanda checking in from time to on the map in the world’s largest gambling time, a chance to see the best on the planet market. in action. The Hong Kong native is founder and But its biggest selling point is Mr Yu president of Kings Consulting, the company himself. A fixture on the global tournament that partnered with junket giant Suncity circuit, he’s the second-winningest player in Group to bring to Macau perhaps its best- Hong Kong history. On the all-time money list known poker venue, Poker King Club, players will find limits they can afford and he’s in the top 1%. It’s the kind of credibility located at StarWorld Hotel & Casino, home the only regular sit-and-go tournaments in that has secured for Poker King Club official of the “Big Game,” where whales normally town. They also enjoy a casino-style rewards host status on the Asian Poker Tour and found at the city’s high-stakes baccarat program that’s unique in the business, delivered last year’s HK$2 million buy-in tables vie with the elite of the sport for pots where as members they can accumulate Macau High Stakes Challenge. Sponsored in the tens of millions. points good for gifts and services such as by another big-time junket, Neptune Group, Poker King Club is fitted with all the ferry tickets, hotel rooms, food and beverage the tournament offered a breathtaking prize comforts and services a high roller would vouchers and branded merchandise. pool of more than HK$300 million and paid expect. But the genius of the concept as Mr It’s a model Mr Yu and Suncity believe out a first prize in excess of $50 million, the Yu has set it up is that it’s open to all. Average has legs throughout the region. It’s designed largest for a single day of poker ever.

48 Han Chang-woo prospered in the post-World War II era, pachinko also thrived, and Mr Han did well enough in the ’60s to diversify into bowling alleys, Chairman and CEO driving ranges for golfers, amusement facilities, cinemas and other Maruhan Group leisure-related businesses. In the 1970s, he returned his focus to pachinko and rode the wave of the country’s ’80s economic boom, Japan’s primary speculative pastime which left him well-positioned to take advantage of the long slide is pachinko, a form of quasi-gambling that followed, when he continued to build the company by exploiting played on pinball-style machines that the decline in asset prices to increase Maruhan’s market share. generates about US$36 billion annually While Japan still struggles to regain its economic legs, Maruhan in revenue. Corp. prospers. Mr Han, now 82, has expanded his reach into more More than 4,000 companies manage centralized locations. He’s built multi-story emporiums that lure some 12,300 pachinko parlors across the customers with innovations that include non-smoking sections, free country, and by far the biggest earner parking and improved odds. The cash flow from these large, successful among them is Maruhan Corp., which outlets has helped transform Maruhan into the conglomerate it is in the 12 months ended 31st March today. The company’s Maruhan Japan Bank subsidiary has been generated the equivalent of $21.5 billion expanding in Cambodia, Myanmar and Laos. Until this year, Maruhan in sales, a year-on-year increase of 2.8%, across 286 venues. held a minority interest in Macau’s Ponte 16 casino. The estimated $3.4 billion fortune of Maruhan’s self-made The revenue the company generates in Japan suggests an founder, Korean-born Han Chang-woo, landed him in eighth place enormous untapped demand for purer forms of gambling. The this year on Forbes’ “Japan’s 50 Richest” list, emblematic of an industry advent of legal casinos would not necessarily sound the death knell which owing to its disrepute among Japan’s commercial elite is for pachinko, however. If anything, the game is so ingrained in the dominated by ethnic Koreans, especially on the operations side. national psyche, it’s likely not only to endure alongside any future Maruhan was set up in 1953 and incorporated in 1957. As Japan Japanese casinos, it may even influence their design.

September 2013 | INSIDE ASIAN GAMING 53 The Asian Gaming 50 – 2013

announcement. “You see in our track record 49 Dennis Valdes on revenue that there has been no effect on President e-games. The reason for that is that Resorts PhilWeb Corp. World Manila and Solaire are in a very small section of the entire country, which is the city of Manila and Paranaque, while e-games PhilWeb hopes to expand its online is in every island.” business to at least six countries across the PhilWeb operates some 277 Internet Asia-Pacific region over the coming months. gaming cafes nationwide—the “7-11 of The Philippines-based operator, whose gaming,” as Mr Valdes characterizes them. far-flung activities include scratch cards, “It’s your corner convenience store.” sweepstakes and Web gambling, is eyeing On the other hand, it is a difficult country Thailand, Myanmar, Sri Lanka, Palau, to call when it comes to predicting how Nepal and Mongolia in a bid to grow the politics will affect the prospects of companies international segment of its revenues, which like PhilWeb. Calls to outlaw Internet cafes, currently comprises about 9% of the total. which have been heard for years, continue “Asia in general is booming,” President to resound among Philippine politicians Dennis Valdes said earlier this year in and lawmakers. This is also true overseas, in announcing a 20% increase in net profit for Guam, for example, where Web gambling, any single jurisdiction. 2012 on PHP1.5 billion in revenues (US$450 and PhilWeb, have found themselves in the Last month, PhilWeb landed on Forbes million), a 27% increase. crosshairs of a prominent senator. Asia’s roster of 200 best up-and-coming He is bullish as well about the company’s Such regulatory risks will continue as companies for 2013, the only Philippine domestic prospects, despite the growth of the company pursues its aggressive plan of company to receive that honor. It has also land-based competition. regional expansion, although it appears to been on the magazine’s list of top Asian “We found that the gamers are have enough irons in the fire to mitigate the companies with less than $1 billion in very different,” he said at the earnings fallout of negative political developments in market capitalization for four straight years.

years of Queensland investment experience 50 Tony Fung under his belt and holdings that include Chairman and Founder shopping malls, residential and commercial Yu Ming Investments property and real estate in China and the United States, has timed his proposal at a juncture when foreign tourism has become The Macau integrated resort model offers a policy priority across Australia. Asians, the a compelling proposition for jurisdictions country’s largest contingent of visitors, are seeking to attract hordes of Chinese tourists. the primary focus, especially the Chinese, Tony Fung believes Australia’s far north the country’s fastest-growing source of is the ideal place to transplant that model. inbound tourism. “I am looking at Macau and so are others— Mr Fung now faces the more everyone is looking at how to take a piece of are still a family man.” challenging task of getting his proposal the Macau pie,” he says. Mr Fung has purchased an option approved. Though local environmental The 61-year-old billionaire scion of through a local company he controls on and community groups are already voicing one of Hong Kong’s best-known financial about 300 hectares of farmland some 13 their opposition, state officials appear to services families is pitching an A$4.2 billion kilometers north of Cairns in a seaside be enamored of the idea, and of Mr Fung, gaming and entertainment mini-city near hamlet called Yorkeys Knob. Here he wants a son of one of the founders of Sun Hung the Queensland city of Cairns, Aquis Great to build five hotels totaling 3,750 rooms and Kai & Co. and a former chairman of SHKI Barrier Reef Resort it’s called, and it will dwarf 1,335 apartments and luxury villas, plus a Group and the man credited with building anything they’ve ever seen Down Under. golf course, a 25,000-seat sports stadium, the Hong Kong Convention and Exhibition Speaking recently to The Australian two theaters, 13,500 square meters of high- Centre. They especially like the part about Financial Review, he explained one of the end retail, a lake and a reef lagoon and one the 9,000 construction jobs and 10,000 full- area’s major appeals to Chinese travelers of the world’s largest aquariums. Initial time positions once the resort is open, and seeking a punt overseas: “I think it will be an plans call for 750 table games and 1,500 slot they have streamlined the review process easy sell for us. You see, if you go to Macau machines. He is shooting for a 2018 opening. by declaring it a “coordinated project,” your colleagues think you are a gambler. Cairns is home to one gaming venue which means they will look in full at the If you go to Singapore they think you are already, the Reef Hotel Casino, owned by plan, enabling Mr Fung to avoid having to a gambler. But if you say you are going to Reef Casino Trust, but its exclusive license seek separate approvals for different parts Cairns and the Great Barrier Reef, then you expired a few years ago, and Mr Fung, with 15 of the proposal.

54 INSIDE ASIAN GAMING | September 2013 The Asian Gaming 50 – 2013

About the Associate Sponsors

Aristocrat has built on its Australian market leadership and reputation to become a premium supplier of ground-breaking technologies and services to the international gaming industry. Aristocrat enjoys a well-earned reputation for outstanding performance and strong brand equity in more than 200 jurisdictions around the world. The diverse product line-up extends from electronic gaming machines to complete gaming solutions, including systems, services, electronic tables, and ancillary equipment. Aristocrat aims to be the leading provider of gaming solutions through application of imagination, focus and creativity. www.aristocratgaming.com

Bally Technologies is a diversified, worldwide gaming company that designs, manufactures, operates, and distributes advanced gaming devices and computerized monitoring, accounting, and player-tracking systems. The company’s product line includes reel-spinning slot machines, video slots, wide-area progressives, mobile applications, and Class II, lottery and central determination games and platforms. As the world’s No. 1 gaming-systems company, Bally also offers an array of casino management, slot accounting, bonusing, cashless and table management solutions. www.ballytech.com

Konami Gaming, Inc. is a complete gaming manufacturer that develops, designs, manufacturers, distributes, sells and services slot machines and an innovative casino management system, SYNKROS™. Konami’s headquarters are located in Las Vegas and its products are distributed throughout North America, Europe, Latin America, the Caribbean and Southeast Asia. www.konamigaming.com

SPIELO International is a world leader in the design, manufacture and distribution of top-performing games, cabinets, central systems and associated software for legal gaming markets around the world. It offers a complete range of end-to-end gaming products for diverse gaming segments, including distributed government-sponsored markets, commercial casino markets, Amusement with Prize (AWP) markets, and interactive and sports betting markets as a result of integration with GTECH G2. www.spielo.com

TCSJOHNHUXLEY delivers profitable solutions to international casino operators through the most comprehensive and complete portfolio of products. From tables to roulette wheels, chipping machines and table displays to electronic hybrid gaming; its world famous products form the foundation of casino operations worldwide. TCSJOHNHUXLEY has strategically-based offices all over the world to provide personal service, after-sales service and technical support. www.tcsjohnhuxley.com

Weike Gaming Technology was established in 1998 and has since built a strong reputation for technology and innovation in the gaming industry. It supplies slot gaming machines, electronic table games, gaming management systems and jackpot links to markets that include Singapore, Malaysia, Philippines, Cambodia, Vietnam, Macau and Laos. Weike is dedicated to becoming Asia’s premier casino gaming supplier and is committed to serve the needs of its clients across the region. www.weikegaming.com

Core Ranking Methodology An initial shortlist of 80 individuals was put through a scoring process to arrive at the final rankings. The panellists gave each of the nominated individuals a score of between 1 and 10 on the following criteria: 1. How well known is the individual within the gaming sector in Asia? 2. How successful has the individual been historically in the gaming sector? 3. How fast has their business grown over the last 5 years? 4. What is their potential for future growth in their current gaming sub-sector and other gaming sub-sectors in Asia? 5. How successful are they financially (individually and/or company, or individual together with company, where relevant)? 6. How influential are they with the government and regulators within their jurisdictions of operations? 7. How influential are they internationally within the gaming industry (individually and/or company, or individual together with company, where relevant)? 8. How much of an innovator are they within the gaming industry? 9. How well are their products and/or services marketed and promoted? 10. How much do they own of their principal business and/or how much control do they have over their company? 11. How well positioned are they to cope with competition within their existing jurisdictions of operation and from overseas competition? 12. How do you perceive their dominance/position in their current major markets of operation? Feedback from the panellists led to each question being given a specific weighting—between 90% and 115%. Further weightings were applied relating to the company the nominated individual either works for or controls. These include the company’s status (public or private), financial performance and size (in terms of both operations and market capitalisation/value), as well as the size/importance of the markets it operates in. Finally, panellists applied a further weighting for each nominated individual with respect to his or her perceived personal integrity, effectiveness in management, overall track record and foresight.

September 2013 | INSIDE ASIAN GAMING 55 INSIGHTS

Show Starter Perhaps the most prolific gaming-focused inventor in Asia, Jay Chun is masterminding a new regional trade show to challenge G2E’s dominance

ay Chun is a consummate gaming equipment innovator. Nevertheless, he Jbelieves it’s a mistake to be too focused on machines in Asia. This month’s Global Gaming Expo in Las Vegas is mostly about electronic games, which makes sense in the US where such games generate the bulk of casino revenue, but in Asia it’s the tables that dominate by a big margin. Mr Chun feels, therefore, that G2E Asia is not sufficiently adapted to local realities, creating an opportunity for a regional trade show with a broader purview. Always quick to fill a perceived gap in the market, his latest creation is the Macao Gaming Show, scheduled for 14-16th November at The Venetian Macao. “In Macau, where over two-thirds of revenue comes from VIP rooms, a show claiming to cover the whole gaming industry needs to include not only gaming equipment but also junkets, Macau Slot [the city’s sports betting monopoly], horse and dog racing and lotteries,” explains Mr Chun. Having an all-encompassing show benefits all exhibitors, he says, and he has convinced Macau’s five biggest junkets to take stands at the MGS, which in turn will draw the major casinos from around the region, since most of them are eager to tap into the supply of mainland Chinese high- rollers provided by the junkets. Among the confirmed attendees beyond Macau are senior management from several casinos in Korea, the Philippines, Singapore, Cambodia, Vietnam and even South Africa. US operators have been invited as well. which has 2,800 of its electronic player running VIP operations at the SJM-licensed The junkets, in turn, are also happy to terminals installed in Macau, along with a Grandview Hotel), reveals that at least one meet casinos from other jurisdictions in rapidly growing international business. junket is currently negotiating with several order to expand their reach and provide LT will exhibit at the MGS alongside casino operators on terms to run slots within their players greater geographical choice most of the major international equipment its own VIP rooms (presumably on some next time they want to gamble somewhere suppliers who “are very supportive and sort of revenue-share arrangement). If that outside Macau. will be there at the show,” says Mr Chun. happens, the junkets could also become The MGS is organized by the Macau The bonus opportunity for them is that in direct purchasers of slots. Gaming Equipment Manufacturers addition to displaying their wares to casinos “That’s a good opportunity,” he Association, chaired by Mr Chun. He is also they will also get a chance to showcase explains, “even if, let’s say, each junket chairman and managing director of Hong products to junkets. Mr Chun, known for only needed 200 machines. But how many Kong-listed Paradise Entertainment, parent his solid connections with local junkets junkets do you have?” (There are 200 company of equipment supplier LT Game, (he got his start in Macau gaming in 2004 licensed junkets in Macau).

56 INSIDE ASIAN GAMING | September 2013 INSIGHTS

The MGS will provide slot manufacturers “Rather than playing with anticipating the needs of Asian casinos that valuable opportunities to garner feedback chips, players he feels G2E may have neglected. to put toward product development. First, Then there are the conference sessions, there will be insights from talking to the will ticket in/ticket out at the and the theme this inaugural year is junkets at the show, “because the junkets tables. It will save “Capitalizing on Asian Gaming Growth.” know the players—especially the high a lot of labor.” Among the speakers at the sessions rollers—better than anybody,” he notes. will be several regulators, including Mr Chun has also offered casinos from representatives from Macau’s Gaming around Asia incentives to bring their VIP slot Inspection and Coordination Bureau (DICJ, players to the show, where the players will as it’s known by its Portuguese initials), be able to try out the latest products from Singapore’s Casino Regulatory Authority all manufacturers in a dedicated VIP area. and even the California Gaming Control The players will then vote on awards for the Commission. Some of the big-picture topics best products in various categories. “We to be discussed are industry prospects in don’t want information about the players,” Japan and Taiwan. he stresses. “We just want their feedback on the products.” Bred of Necessity Beyond equipment suppliers and Mr Chun has a background in computer junkets, also exhibiting will be providers science. He was brought up in Shanghai, of casino facilities, marketing services, has lived in Japan and Canada and got his entertainment and F&B. Again, it’s part of MBA at Arizona State University. He arrived Mr Chun’s mission to differentiate his show in Hong Kong in 1999 and was involved in by seeking to offer a more comprehensive the pharmaceutical industry before moving selection of products and services by to Macau in 2004, where he initially worked

Jay Chun’s LT Game has 2,800 of its electronic player terminals installed in Macau, along with a rapidly growing international business.

September 2013 | INSIDE ASIAN GAMING 57 INSIGHTS

in the junket business. Mr Chun’s latest pièce de résistance is a “When I arrived in Macau, where I was kiosk that unlike competing products can working with SJM, even though it was just not only be used to redeem tickets for cash before the opening of the Sands, Sands but can also accept large sums of cash and had already started recruiting staff and SJM dispense equivalent tickets for players to was losing them. Because of the policy that take to gaming machines and e-tables. “I dealers must be local Macau residents, we was asking people to do this for two years. realized that with so many casinos being They didn’t, so I made it,” he explains. Unlike built, there would be a shortage of dealers. competing products, his kiosk can also So in an effort to save labor costs, we started handle multiple currencies. our live dealer multi-terminal games.” “We also developed an e-drop box for The terminals have come a long way traditional tables,” he adds. “This will be since the first 20 units were installed at very good for operators and the DICJ, who SJM sub-licensee Greek Mythology in 2005. need to closely monitor movement of cash The new models are a lot sleeker and more between the table drop box and count room technologically robust, passing muster at to ensure there is no leakage (because of the even the most upscale joints in town. tax calculation). By automating the count Mr Chun also plans to install chip-less table-side, it makes transportation less e-baccarat tables at the Casino Lisboa problematic.” next door to a 200-terminal LT “stadium” While Mr Chun is the originator of all configuration recently opened at the iconic the main concepts, the task of turning the monopoly-era property. ideas into working products is left to a team “Rather than playing with chips, players of 100 developers based in Zhuhai and will ticket in/ticket out at the tables. It will Shenzhen. Such backup certainly makes it save a lot of labor. You won’t need a pit boss more feasible to be a relentless innovator and there’ll be less work for the operator. and is why his spearheading of the MGS You can also have more positions. There’ll has not detracted from his creation of nifty even be terminals behind for back-betting.” electronic gaming products. The e-drop box for traditional tables

“I was asking people to do this for two years. They didn’t, so I made it,” explains Mr Chun.

58 INSIDE ASIAN GAMING | September 2013 Okada’s Philippine Woes Continue Although Universal Entertainment claims it has been cleared of allegations of wrongdoing by the Philippine Economic Zone Authority, the company is pressing on with its internal bribery investigation, as are the Philippine Department of Justice and the US FBI

azuo Okada’s embattled gaming official in Japan and two lawyers from the and 25 others in an alleged scheme to set machine manufacturer Universal country, found “illegal payments” were made up dummy companies to acquire land for KEntertainment claimed in a disclosure by “some managers who had ignored the the resort. The department has said its to the Tokyo Stock Exchange that it has been company’s existing rules and regulations,” investigation into the bribery allegations cleared of bribery and corruption allegations but it concluded there wasn’t enough has been hampered by a lack of witnesses by the Philippine Economic Zone Authority. evidence to prove bribery. willing to testify. PEZA, set up in 1995, is an office of the That hasn’t stopped Universal from Mr Okada was removed last year from country’s Department of Trade and Industry. subsequently recommending criminal the board of directors of Las Vegas-based It aims to promote “export-oriented charges against unnamed executives for Wynn Resorts and its Hong Kong-listed manufacturing and service facilities” inside “fraud, breach of trust and misappropriation Wynn Macau subsidiary after an internal special economic zones declared by the of funds” in connection with the “illegal flow” investigation found him “unsuitable” as authority. Mr Okada’s Aruze Philippines of $40 million into the Philippines, where a result of his business dealings in the Manufacturing, Inc. operates facilities within Universal wants to be one of four developers Philippines. His shares in Wynn Resorts were a PEZA-authorized zone. of integrated resorts at the government’s forcibly redeemed at a discount. He had been According to the statement from new Entertainment City complex in Manila. the company’s largest individual shareholder. Universal, PEZA issued a letter dated 23rd A lawsuit filed by Universal in Tokyo last Mr Okada denies the charges and is August stating that the group’s local unit, year also claims a former president of Aruze suing the company to contest his removal Eagle 1 Landholdings Inc., had “complied USA’s Japan office made an “unauthorized” and the seizure of the shares. with all the necessary documents required withdrawal of $5 million from a corporate by the Presidential Proclamation of the bank account in 2010. Okada Resorts as Tourism Economic The $40 million, described by Universal Zone … without any special favours or in part as “a payment linked to the Philippine accommodations extended …” business,” was first reported in a series Universal contends the letter proves of Reuters articles last year and is under “the allegations about illegal expenditure investigation by the Philippine Department are totally unfounded.” Still, the company of Justice and the Federal Bureau of has said it will continue looking into the Investigation in the United States, where allegations. Aruze USA is licensed as a slot machine Last month, an internal investigation at manufacturer. Universal alleged former President Hajime Reuters tied the money to a politically Tokuda altered the minutes of a company connected businessman named Rudolfo meeting to include a 2009 payment of US$25 Soriano. million connected to the company’s pursuit Universal has had difficulty securing of its casino license in the Philippines. Philippine partners for the Entertainment Rendering of Universal Entertainment’s proposed The panel that conducted the probe, City project after the country’s Department US$2 billion integrated resort at the Entertainment composed of a former high-ranking police of Justice named Chairman Kazuo Okada City complex in Manila

September 2013 | INSIDE ASIAN GAMING 59 Headwinds Down Under Crown and Echo claw for an edge in tough markets

rown Limited and Echo Entertainment reported annual increases in profits Cas the Australian rivals continue to battle weakness in domestic spending, an unpredictable VIP sector, and each other. Buoyed by its 33% stake in Macau casino giant Melco Crown Entertainment, Crown beat consensus estimates by posting A$473.2 million in adjusted net income for the 12 months ended 30th June, a 14% increase over the same period last year. Analysts polled by Thomson Reuters had forecast $452.3 million. The market value of its Macau investment more than doubled over the period as gaming revenue in the city rose 16% in the first half, while Crown continues to expand in its home markets, completing an expansion of its casino in Perth in Western Australia and winning tentative Echo Entertainment’s Treasury Casino & Hotel in Brisbane approval to construct a $1.3 billion resort on Darling Harbour to go head to conditions and volatility in the VIP sector. Coast and Townsville, are too small to attract head with Echo for Sydney’s high-roller Echo reported a net profit of A$83.5 overseas tourists, says Mr Redmond. market. Crown also has been approved million for the 12 months through June, “We don’t have a compelling enough for a foreigners-only casino with a hotel almost double last year’s results but missing offering to attract people,” he said. “You need in the Sri Lankan capital of Colombo, and the $123 million forecast by a Bloomberg poll to build or develop something at a scale that the Melco Crown investment is opening a of analysts. The company warned against allows you to compete with the rest of the large-scale resort in Manila next year. year-on-year comparisons, however, noting world.” ASX-listed Crown (CWN), controlled by that underlying profit of $126.9 million was Crown, meanwhile, is lobbying hard billionaire James Packer, also is looking to down 15.5% and the period was impacted for government approval to break Echo’s plant its flag in the Queensland capital of by costs associated with restructuring at exclusive license in Brisbane, and Hong Brisbane, where Echo holds a monopoly, its flagship Star casino in Sydney together Kong businessman Tony Fung is proposing arguing Australia needs to increase its with some $40 million in operating cuts and a $4.2 billion complex of resort hotels gaming options to compete against growing additional termination payments and legal and leisure attractions, including casinos, markets such as Macau and the Philippines and consulting fees. along the Great Barrier Reef in Cairns. The and to reverse what it sees as “evidence of On the plus side, VIP volume at Star rose state also has OK’d a short list of bidders weak consumer sentiment” in Australia. 29% to $22 billion. for a combined resort and cruise ship Echo (ASX: EGP) is wrestling with the “The focus for 2014 is to drive improved terminal, which might include a casino, in same problem—“headwinds in domestic top-line momentum across all of Echo’s Wavebreak. gaming,” as Merrill Lynch analyst Mark Bryan properties,” said Chief Executive John Echo’s revenues in Queensland fell 3.3% terms it in a recent note to investors—and is Redmond. during the year, driven down by a 19% drop seeking approval to relocate and expand in The Brisbane relocation is key to that in VIP volume, and Mr Redmond says the Brisbane as the Australian market continues plan because the company’s Queensland market isn’t big enough to support more to be challenged by subdued economic properties, which include casinos in Gold gaming.

60 INSIDE ASIAN GAMING | September 2013

FEATURES

The Next Frontier NagaCorp follows Lawrence Ho in pursuing the development of an integrated resort in Russia’s Far East

ambodia casino operator NagaCorp announced on 9th September it had Cagreed to invest US$350 million to develop a casino resort near the Russian port city of Vladivostok. The resort will be part of the Primorye casino zone, one of four such zones designated by the Russian government in 2009 in conjunction with the exiling of the industry from major cities such as Moscow and St. Petersburg, where it was flourishing virtually unregulated and only lightly taxed. Russia’s Primorsky Krai administrative region, informally known as Primorye The other zones, all relatively remote, are Kaliningrad in Eastern Europe, the Altai investment in local infrastructure projects to manner, while government infrastructure region in Central Asia and in the lower Don improve access to the site) that could allow the commitments should improve access in River region near the Black Sea. company to walk away should certain targets future. Just days before the NagaCorp not be met.” 2. It seems probable that Vladivostok announcement, Lawrence Ho, co-chairman The attraction of Primorye is its relative will be a limited license environment, of Macau’s Melco Crown Entertainment, had proximity to northeast China, the Koreas and (including the licenses of Naga and signed a deal with Primorye authorities to Japan. Beijing is about two and a half hours Lawrence Ho’s Summit Ascent). invest US$700 million through a Hong Kong- from Vladivostok by air, Harbin less than two Furthermore, it is unlikely most other listed vehicle, Summit Ascent Holdings, on hours. Casinos are prohibited in both China major Asian gaming operators would an integrated resort of his own in the zone, and Japan. South Koreans are permitted to be interested in Vladivostok, since it scheduled for completion by 2017. gamble in only one casino in their country. “wouldn’t necessarily move the needle NagaCorp’s IR is expected to come online UGRM stresses “there is no gaming for them,” according to UGRM. around 2018 and include 1,000 hotel rooms, company we can think of that has more 3. The gaming licensees are expected to 100 gaming tables, 500 EGMs, a 2,000-seat ‘frontier market’ experience than Naga, face a friendly regulatory environment— theater and various MICE and entertainment which first entered Cambodia in 1995.” It namely an exceedingly low gaming facilities. According to Union Gaming Research believes the Primorye investment makes tax and few restrictions on gaming, Macau, “The long-dated development timeline sense for the company for four other reasons: including the operation of junkets. contemplates taking up to two years to obtain 1. Sufficient existing infrastructure exists to 4. The expected opening date of around necessary permitting, while also accounting get customers from China, the Koreas and 2018 would give NagaCorp at least two for certain contingencies (e.g. government Japan to Vladivostok in a relatively easy years of operations at Naga2, which will have a heavier VIP focus than the existing NagaWorld facility. This bodes well for Naga in Vladivostok, where UGRM believes the market will have a significant VIP focus. UGRM calculates that NagaCorp’s Vladivostok property would need to capture less than 1% of total regional VIP play to achieve a 25%+ return threshold. It adds, “Going forward our wish list would include an improvement in individual visas (or visa on arrival) for Chinese tourists, who today can obtain tour group visas relatively easily, more flights from the broader regional geography, and continued central Conceptualization of future resort development at the Primorye casino zone government (Moscow) support.”

62 INSIDE ASIAN GAMING | September 2013

Off the Hook LVS pays US$47.4 million to settle money-laundering case

as Vegas Sands has agreed to forfeit $47.4 million to the US government to avoid prosecution for failing to report millions Lof dollars in money transfers from a gambler linked to drug trafficking. The deal was finalized on 26th August, according to news reports, in exchange for which the US Attorney’s Office in Los Angeles will not seek an indictment against the Las Vegas-based casino giant. The settlement is based on what LVS reputedly won from the player, a Chinese-Mexican businessman named Ye Gon Zhenli, who gambled at several major casinos, including LVS’ Las Vegas flagship, The Venetian, between 2004 and 2007. Prosecutors say Mr Ye transferred more than $45 million to The Venetian between 2006 and 2007, when he was the largest cash player the property had had to that point. He lost an estimated $84 million, including $36.5 million in credit that was later written off as uncollectable. His losses were large enough to affect the bonuses of many Sands and Venetian executives, including some involved in compliance, the settlement agreement states. His bets were monitored in real time and had an immediate effect on the company’s earnings, it said. Mr Ye would wire money to LVS and subsidiary companies in small sums from different banks and currency-exchange houses in Mexico, where he operated a pharmaceutical factory. The money would arrive from companies he was not obviously connected to and that didn’t identify him as the beneficiary. The Wall Street Journal, citing information contained in the settlement agreement, reports that a portion of the transfers went into a Sands account that was Ye Gon Zhenli would wire money usually used for aviation services and had not previously been used to LVS and subsidiary companies in small for gambling transfers. Such accounts are common in the industry to protect high rollers’ privacy. sums from different banks “Millions of dollars earned from illegal drug trafficking were and currency-exchange houses in Mexico, transferred through casino accounts in a complex scheme designed where he operated a pharmaceutical to thwart law enforcement detection,” said Anthony Williams, a special agent with the US Drug Enforcement Administration in Los factory. The money would arrive from Angeles. companies he was not obviously Prosecutors say at least one LVS officer warned The Venetian connected to and that didn’t identify him about Mr Ye; and in April 2007, the property filed what is known as as the beneficiary. a “suspicious activity report” on him, as required by federal law; but

64 INSIDE ASIAN GAMING | September 2013 IN FOCUS

they say it left out key transactions. The report was filed a month after Mr Ye’s Mexico City home was raided by police and $207 million in US currency was seized. He was later indicted in the US on narcotics charges, but the case was dismissed in 2009. He is awaiting extradition to Mexico, where he faces drug trafficking charges. According to a statement from the US Attorney’s Office, LVS admitted “in hindsight that it failed to fully appreciate the suspicious nature of the information or lack thereof pertaining to Ye Gon,” and the government agreed not to prosecute based on the company’s cooperation, according to a letter dated 26th August from Assistant US Attorney Kevin Rosenberg and cited by Reuters. The terms of the agreement require Sands to conduct two years of reviews of its anti-money laundering policies and file periodic reports with the government. The company also has agreed not to use accounts with generic names. “All companies, especially casinos, are now on notice that America’s anti-money laundering laws apply to all people and every corporation, even if that company risks losing its most profitable customer,” said US Attorney André Birotte. The Journal notes that LVS also was under federal investigation in connection with its handling of funds from a second high roller, who was later convicted of a crime, but he wasn’t named in the agreement. In a separate case, the company acknowledged in March that it had “likely” violated record-keeping provisions of the US Foreign Corrupt Practices Act, which outlaws the bribery of foreign officials. Sands has said it is cooperating with that investigation, which was launched early in 2011 and is ongoing.

Prosecutors say at least one LVS officer warned The Venetian about Mr Ye; and in April 2007, the property filed what is known as a “suspicious activity report” on him, as required by federal law; but they say it left out key transactions. REGIONAL BRIEFS

Gambling Debts Collectable, Singapore Court Says “Most of our clients are from north India,” one executive told the English-language Times of India. “With the depreciating rupee, travelling abroad is expensive, and it’s cheaper to fly to Goa for gambling.” To take advantage of the situation, the casinos reportedly are working through agents in Delhi to pre-arrange large cash transfers to their properties. In all, it’s a considerable plus for the tiny state on the country’s Arabian Sea coast. Tourists historically have provided the bulk of the trade on a mix of gambling boats in the Mandovi River and some 12 casinos in resort hotels in and around the capital of Panaji. But competition from Singapore and Macau has taken a toll, operators say, while Sri Lanka and Nepal more recently have emerged as cheaper alternatives. A slowing economy and other factors such as a ban on mining also have hurt, they say. In part it’s the reason why the number of riverboats has fallen in recent years from six to three. Yet, as one executive told the Times, “The serious players who are high-spenders never stopped coming.” The actual state of the market is difficult to assess. Officially, Marina Bay Sands the industry is turning over a combined 900-1,000 crore per year, Marina Bay Sands has won what could be a precedent-setting or roughly US$145 million-$165 million. But sources cited by victory over a gambler in Singapore’s first casino debt collection case. the Times say the real numbers are much higher. If taxes and fees A report in The Straits Times says the High Court ruling means the are any indication, the casinos in total paid the equivalent of $43.6 megaresort can recover S$240,000 (US$188,200) extended as credit million to the state in the 2012-2013 financial year, according to the to a player who challenged the 3-year-old debt as unrecoverable, legislature’s tally. claiming he was not a “premium player” under the law and that MBS had violated regulations in giving him credit. Judge Lai Siu Chiu disagreed and ordered 33-year-old Lester Ong Growing with China’s Booming Lotteries Boon Lin to pay back the money, plus interest at 12% a year going AGTech Holdings has boosted its share of China’s massive lottery back to August 2010. He is also liable for MBS’ legal costs, which the market with a winning bid to supply betting terminals to the Guizhou court will determine later. Sports Lottery Administration Centre. Singapore’s stringent rules on the extension of credit require that The contract will be fulfilled by a Beijing subsidiary and covers players deposit at least $100,000 with the casino to be considered approximately 75% of the terminals included in the tender, lifting eligible to draw markers as “premium players”. Written agreements AGTech’s share of the Guizhou market above 65%. are required spelling out conditions such as credit limit and interest AGTech (HKSE: 8279) claims to supply half of China’s installed rates, and all dealings must be recorded for official inspection, base of 130,000 sports betting terminals, a market reach that extends including chip amounts issued on credit and when the loan or loans to 80% of the country’s provinces and municipalities. The company are repaid. also partners with UK betting giant Ladbrokes through Asia Gaming Technologies Limited to provide China’s only approved virtual fixed- odds sports betting game. Goa’s Fortunes Rise on Falling Rupee Gambling is illegal in China but the government vigorously promotes its Sports and Welfare lotteries, which are the second- largest in the world after the United States and fund an array of social services, and in the case of the Sports Lottery, public fitness programs and training for the country’s Olympic athletes. They’re immensely popular, too, with sales up 20% last year to a combined 245 billion yuan (US$40 billion) following a record 2011 during which sales increased 33% to a record 221 billion yuan ($35.5 billion). AGTech derives most of its revenue—HK$97.2 million (US$12.5 million) in the first half of 2013—from the technologies and services it provides to the China Sports Lottery. This includes game software, systems, hardware and marketing services in addition to its betting kiosks. Net income from operations amounted to HK$1.4 million in the first half. However, the company reported a $52.7 million loss as Casino Royale Goa a result of its adoption of Hong Kong Financial Reporting Standards A depreciating rupee is motivating wealthy Indians to pursue governing the payment of share options to investors, directors, their entertainments closer to home, and Goa’s casino operators say officers and other eligible employees. they’re reaping the benefits.

66 INSIDE ASIAN GAMING | September 2013 REGIONAL BRIEFS

Tabcorp Blames Victoria for Profit Swoon In July alone, more than 1.6 million Chinese came to Macau from Australian betting giant Tabcorp reported a the mainland, a 14% increase over July 2012. Guangdong province 63% decline in net profits to A$127 million for accounted for the lion’s share at 738,106, followed by Fujian at the 2012/13 financial year, attributing the drop 74,292. Travelers on the Individual Visit Scheme accounted for 44% to the expiration last August of the machine of the total. gaming duopoly it shared with rival Tatts Group In all, July’s visitation was up 4.9% to 2.6 million, with the average in the state of Victoria. length of stay unchanged from a year earlier at one day. Overnight Earnings fell 4.3% year on year to $312.8 Tabcorp CEO David and same-day visitors stayed an average of 1.9 days and 0.2 days, million on a 30% decline in total revenues to Attenborough respectively. $2.13 billion. Figures compiled by the government’s Statistics and Census On the plus side, the company said handle from digital wagering Bureau show the total for January-July surpassing the same was up 13.6% for the 12 months ended 30th June, driven mostly period last year by 4.3%, with mainland China the source of 63.2% by growth in fixed-odds and mobile betting. Mobile accounted for of all visits. Hong Kong, which accounts for 23.7% of total visits, 43% of digital division turnover in the second half of the year, up was down 3.8% to 3.9 million. Taiwan accounted for the biggest from 28% in the first half. The company said its TAB iPhone, iPad and relative drop among top feeder markets, down 10.5% to 549,298. Android apps have been downloaded more than 900,000 times since Philippines visitation was down 3.4%. Japanese visitation was their launch. down 34%. Chief Executive David Attenborough said strengthening the The continued surge in mainland digital offering would be a “key focus” in fiscal 2014. visitation was reflected in a record Tabcorp succeeded last year in securing its New South Wales one-day total of 320,000 entries and monopoly through 2033, but it is suing the Victoria government exits through the Gongbei border for compensation for concession fees it paid back in the 1990s gate on 25th August, according to to secure the slot duopoly. Tatts is suing the state as well. Both figures published by the English- also have been hit by new regulations in Victoria that call for a language Macau Daily Times. 50-50 revenue split rather than the 75-25 they enjoyed under Fifty-three percent of the crossings the old rules. originated in mainland China, 44% in Macau and Hong Kong. It was the eighth consecutive Asian Sales Boost GPI weekend of 300,000 or more crossings, Asian sales of RFID casino currency and solutions drove revenues the Times said, and is believed to be upward for Gaming Partners International during the second quarter driven by a combination of improved and six months ended 30th June. transportation via the Guangzhou- Sales across the region were up US$600,000 for Las Vegas- Zhuhai Intercity Railway and a more The Guangzhou-Zhuhai Intercity based GPI (Nasdaq: GPIC) in the second quarter, but lower gross relaxed visa policy. Railway margins and higher expenses company-wide resulted in a net loss of $54,000, compared with a profit of $1.8 million for the same period last year. Samoa May Seek Bids for Casino License First-half net income was $400,000 versus $3.1 million in H1 2012. The government of Samoa could reopen the bidding for Q2 revenues were up 8% quarter over quarter to $14.1 million a casino license after calling off negotiations with a Chinese and rose from $28.5 million to $28.9 million in the first half, also developer who has landed in legal trouble in China. driven mainly by the Asia business, the company said. Exhibitions Tourism Group had planned to build a 500-room “As in the first quarter, our results reflect the variability of our hotel and casino in the tiny, cash-strapped South Pacific nation, global customers’ product demands from quarter to quarter,” said which is heavily reliant on foreign aid and remittances from President and CEO Greg Gronau, who warned that lower year-on- citizens working abroad. The deal called for a tax of 15% of gaming year earnings are expected for the balance of 2013. “At the same time, revenue on top of a fee of US$150,000. But talks hit a snag when we are working to balance production in our manufacturing facilities ETG boss Deng Hong was named in a corruption investigation in and to collaborate with our customers to provide new products and mainland China. The Samoan government withdrew the license increase sales of our current offerings.” last month. GPI ended the quarter debt-free and with $20 million in cash, “We need to make a decision about whether we go back to cash equivalents and marketable securities. The company bought market for the license or whether we just continue on with one back 20,201 shares of stock during the period under a repurchase license given to a local firm,” Gambling Control Authority Chief scheme that authorizes additional purchases of 231,459 shares. Executive Robbie Kearney told Reuters. The government authorized two licenses back in 2010, including one for local hotel operator Aggie Grey’s, as a way to Macau Visitation Surpasses 16M help recover from a decline in tourism in the wake of the global A 10.4% increase in travelers from mainland China drove financial crisis. A 2009 tsunami wrought further havoc with the Macau’s total visitation to 16.7 million through the first seven island’s economy, and a 2012 cyclone added to the damage. The months of the year. economy was valued last year at $677 million.

September 2013 | INSIDE ASIAN GAMING 67 INTERNATIONAL BRIEFS

G2E Will Be Largest Since 2008 in Lake Charles, La. The latter will be sold to Golden Nugget Casinos, a subsidiary of Houston-based Landry’s, for $250.9 million, which includes Ameristar’s development costs to date plus a $37 million credit to Golden Nugget. Louisiana regulators have to sign off on the sale. Carl Icahn’s Tropicana Entertainment is reported to be the buyer for Lumiere in a $260 million deal that includes several adjacent hotel parcels. The transaction requires FTC approval and approval from Missouri regulators. Tropicana operates eight casinos, including the Tropicana Atlantic City, the Tropicana Laughlin in southern Nevada and the MontBleau in Lake Tahoe in northern Nevada. Icahn also owns the stalled Fountainebleau project on the Las Vegas Strip. Pinnacle has a 23% stake in The Grand – Ho Tram Strip, which opened last month on the southern Vietnam coast, and will operate the resort’s second hotel and casino, slated to open in 2017.

Bally Posts Record $997M Year Global Gaming Expo 2013 will host its largest trade show floor Bally Technologies approached since 2008, organizers say. US$1 billion in revenues for the To date, more than 455 companies have registered for more financial year ended 30th June than 285,000 square feet of exhibit hall space at the Sands Expo and on record systems sales, revenue Convention Center in Las Vegas, an increase of nearly 10% over last from progressives and continued year, boosted by more than 110 new exhibitors and 77 international expansion into new markets. exhibitors. The Las Vegas-based slot giant This year’s G2E, the largest gaming industry exhibition in reported net income of $235.5 the world, will be held 23rd-26th September. It is produced by million, a 41% year-on-year increase, Washington, D.C.-based trade group the American Gaming on $997 million in total revenues, Association in partnership with Reed Exhibitions. which were up 13% over fiscal 2012. Some of the largest overall sales increases this year are in the Earnings per share (NYSE: BYI) hit Bally’s Ramesh Srinivasan so-called iGaming Zone, which will feature more than 19 exhibitors $3.45 in what President and CEO in 2,900 square feet of space, a 61% increase over 2012. Across the Ramesh Srinivasan called a “truly momentous year”. entire floor, exhibitors in the remote and online sectors will occupy “We made enormous progress in many different ways, including more than 5,000 square feet. continued growth in wide-area progressive units, record gaming The Food, Beverage and Hospitality Pavilion also will see a large operations revenue, significant success in new markets like Canada, increase over 2012 sales numbers, with more than 86 exhibitors Illinois and South Africa, and establishing new revenue records in buying up 5,153 square feet, an increase of 84%. systems while setting up systems for further growth in the years ahead.” Systems revenue was up 19% for a record $252 million while Pinnacle Completes $2.8B Purchase of Ameristar the base of wide-area progressives grew by 38% and also produced US regional casino giant a revenue record. Combined they offset an 8% decline in machine Pinnacle Entertainment has won sales, which the company attributed to fewer casino openings. Federal Trade Commission approval The three months ended 30th June was the eighth consecutive of its $2.8 billion acquisition of rival quarter of earnings-per-share growth. Revenue and total earnings Ameristar Casinos and will sell off also set quarterly records. The 95 cents per share represented a riverboat properties in St. Louis and 55.7% increase over Q4 2012 and beat consensus estimates by a Louisiana to satisfy antitrust rules. penny. Earnings of $64.6 million were up 32.4% on a 7.6% increase in The merger between the revenue to $264.4 million. two Las Vegas-based companies, The quarter benefited significantly from a 32% jump in revenues accomplished at $26.50 a share from the systems division. plus the assumption of $1.9 billion “The growth and stability of our revenues that are recurring in in Ameristar debt, gives Pinnacle nature continue to provide significant financial flexibility,” CFO Neil 15 casinos and racetrack casinos in Davidson said in a statement. “With the planned acquisition of SHFL, Lumiere Place in downtown St. Louis nine states, effectively doubling the we now expect to utilize the majority of our excess free cash flow to size of NYSE-listed Pinnacle. repay debt.” Pinnacle agreed with the FTC to sell its Lumiere Place in Bally said its $23.25-per-share acquisition of Nasdaq-listed SHFL downtown St. Louis—the company owns three casinos in the Entertainment is on track to close next year. The $1.3 billion deal was market—and Ameristar’s $580 million casino development announced in July.

68 INSIDE ASIAN GAMING | September 2013 INTERNATIONAL BRIEFS

UK Will Tax Offshore Operators gambling. Like its predecessors, neighboring Delaware included, The British government is serving participation will be limited to residents or visitors physically present notice that gambling operators taking in the state, which leads observers to believe that as the most bets in the country over the Internet populous market to date to regulate the industry, it will be the most will no longer enjoy the shelter of lucrative. their offshore tax havens. Analysts project Nevada’s current poker-only market will yield Ladbrokes, William Hill, bwin. US$50 million to $250 million in annual revenue, while New Jersey party and Betfair are among the could generate $250 million to $500 million. industry giants affected by a new point-of-consumption tax equal to 15% of gross revenue that takes effect in December 2014. The rate MEI Releases Next Gen Support Tool for SC Advance is about the same as that paid by onshore operators, and estimates MEI’s new PPM Advance is a support tool for the SC Advance are it could cost the offshore segment £300 million (US$465 million) which has features to lower maintenance costs a year based on a market valued at roughly £2 billion. and increase operational efficiency. The product “It is unacceptable that gambling companies can avoid UK taxes encompasses simpler management of software and by moving offshore, and the government is taking decisive action performance monitoring. to ensure this can no longer happen,” Economic Secretary to the “The PPM Advance provides new functionality Treasury Sajid Javid said. to technicians. And, as a result, it makes MEI a The tax is incorporated in new legislation that will require better partner in the continuous battle to reduce all UK-facing operators to hold a license issued by the Gambling the overall cost of operations,” says MEI Senior Vice Commission, bringing to an end the so-called “white list” that allowed President—Americas, Eric Fisher. offshore operators to market their services in the UK. Violators will The PPM is a portable programming module face unlimited fines, prison terms and license revocation. that has four components for operators— The last decade has seen almost all of the country’s major updates in currency data, configuration bookmakers and gambling operators move their online businesses software and data, performance diagnostics to Alderney, Gibraltar, the Isle of Man and as far as the Caribbean to and audit data reporting. The module has the The PPM Advance take advantage of tax rates ranging as low as 1% in some jurisdictions capacity for several languages and increased to an effective 0% in others. memory. Operators will be able to tailor the firmware to meet their “We knew it was coming,” said Clive Hawkswood, chief executive needs. The PPM Advance will also have a Bluetooth function for of the Remote Gambling Association, a trade group representing the mobile and tablet devices on Android. industry. “The focus for us now is on trying to get the actual rate of Operators will be able to download software from a remote the tax reduced.” location and add the Soft Count asset numbers. “Operators’ toolbox Gibraltar, however, is reported to be incensed at the plan and for cash management solutions just got bigger,” claims Mr Fisher. is considering an appeal to the European Commission. William Hill, which has the largest share of the UK online market, also has said it may challenge the tax as a breach of EU competition law. 888’s Earnings Nearly Double Operators have until 30th September to comment on the British online gaming company legislation. 888 Holdings’ full-year earnings nearly doubled, helped by strong growth of its casino and poker Wynn Seeks a Piece of NJ Web Market offering, and the company named Brian Mattingley as chief executive. Wynn Resorts has filed The company, which operates 888 casino, poker, sport and bingo an application with New brands, said it planned to invest in several newly regulated markets Jersey regulators for an across Europe and the United States. Internet gambling license. More Britons prefer to stay at home, watching TV and gambling Las Vegas-based Wynn online, updates from consumer-facing companies showed, amid has no casino operations fears that the UK will slip back into recession. in the state, but the move For 2011, the company’s earnings before interest, taxes, makes it one of dozens depreciation, and amortisation rose 94% year on year to US$55.6 of companies seeking million. Revenue increased 26% to $331.1 million. the licenses from the NJ Last month, Britain’s second-biggest bookmaker Ladbrokes, Division of Gaming Enforcement ahead of a targeted launch date in which pulled out of talks to buy 888 and Sportingbet last year, late November. posted a strong full-year profit helped by sales growth in gambling Web gambling will be offered only by Atlantic City’s 12 land- machines. based casinos, which are partnering with online gaming companies. Former CEO Gigi Levy stepped down in April last year. Media Unlike Nevada, though, which permits only poker, the sites will offer reports had said that Levy was frustrated with the slow progress casino-style games and slots. of the potential takeover by Ladbrokes, but 888 had said that was New Jersey in February became the third state to legalize online not the case.

September 2013 | INSIDE ASIAN GAMING 69 Events Calendar

24 – 26 September, 2013 14 – 16 November, 2013 Global Gaming Expo (G2E) 2013 Macao Gaming Show Sands Expo Convention Center, Las Vegas, USA Cotai Expo, The Venetian Macao, Macau G2E is the world’s largest gaming event where gaming The inaugural edition of the MGS is organized by the Macau executives, buyers, and industry professionals meet each Gaming Equipment Manufacturers Association and co- fall in Las Vegas to conduct serious business. It’s the gaming organized by the General Association of Administrators and industry’s most in-depth source of new products, networking, Promoters for the Macau Gaming Industry, Associação de ideas and information. G2E showcases over 600 exhibitors, 100 Mediadores de Jogos e Entretenimento de Macau, Macau conference sessions and exciting special events. Jockey Club, MACAUSLOT and Macau Yat Yuen Canidrome. It Website: http://www.globalgamingexpo.com/ is the first large-scale international gaming and entertainment exhibition put together by local Macau organizations, with a floor area of over 10,000 square meters. Exhibitors and buyers 8 – 10 October, 2013 eyeing the Asian market are expected to come from all over the world to attend the MGS. European iGaming Congress & Expo Website: http://macaugamingshow.com/en/ Fira Barcelona, Barcelona, Spain Forward thinking, innovative and interactive, with new features and formats spanning both the congress and the expo 4 – 6 February, 2014 floor, EiG goes into its 12th year with a 360 degree focus on the iGaming industry. ICE Totally Gaming Website: http://www.eigexpo.com Excel London, London, UK Showcasing compelling innovation and expertise, ICE Totally Gaming is the largest and most comprehensive B2B gaming 16 – 18 October, 2013 exhibition in the world. Bringing together international operators and suppliers from the betting, bingo, casino, Enada Rome 2013 lottery, mobile, online, social and street gaming sectors Rome Expo Center, Rome, Italy over three days, ICE Totally Gaming claims to offer unrivaled Enada Rome is regarded as the leading gaming and amusement opportunities to visitors and exhibitors alike. exhibition in Italy. Products on display include slot machines, Website: http://www.icetotallygaming.com/ VLTs and video games, along with amusement machines. Website: http://en.enada.it/ 12 – 14 November, 2013 SAGSE Costa Salguero Convention Center, Buenos Aires, Argentina Now in its 21st installment, the South American Gaming Supplies Expo & Congress held in Buenos Aires attracts gaming industry professionals from around the world with a view to doing business in South America. The latest gaming technology will be on display and the event also offers networking opportunities. Attendees include Argentinean and Latin American regulatory authorities, directors, manufacturers, national and international operators, and many international visitors. Website: http://www.monografie.com/sagse_bsas/ingles/

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

70 INSIDE ASIAN GAMING | September 2013