March 2008 • MOP 30

Moving with Mocha Charting the evolution of Macau’s nascent slot market

Online Gaming in Focus: Perfect Storm Seeing is Believing Building Asian Appeal

In-Flight : Mile High Club Elixir’s Stellar Commitment RFID: The Need for Speed

6

CONTENTS March 2008 Moving with Mocha

6 Moving with Mocha

14 Mile High Club

18 Perfect Storm

25 Building Asia Appeal

28 The Need for Speed

34 Stellar Commitment

36 Seeing is Believing

40 Regional Briefs

42 International Briefs

45 Sparkling Display

48 Events Calendar 18 14 MobileMobile GamingGaming 2 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 3 Editorial

Surprise Turn in the Revenue Race Fickle weather could not cool the ardour for chasing fickle fortune in Macau. From mid-January, China suffered its severest winter weather in fifty years, with snow storms paralysing large parts of the country. In such conditions, it can be difficult to muster the will to step out of home for non-essential purposes. Yet crowds of mainland Chinese did just that to make their way to Macau. Visitor arrivals from China rose 23% year-on-year in January, and the city’s revenue for the month reached a new all-time high of 10.43 billion patacas (US$1.3 billion)—a whopping 70% year-on-year increase. If the January performance is sustained, Macau will continue its climb up the international casino performance leaderboard. Macau grabbed international headlines when, in 2006, its casino revenue overtook that of the fabled Las Vegas Strip. As Macau left the Vegas Strip in the dust, the next logical rival to pit it against in a casino revenue race—a totally arbitrary construct, designed to feed the hunger for headlines supporting the Macau hype—was all of Clark County, encompassing El Rancho the Strip, downtown Las Vegas and other southern Nevada cities. In what turned out to be a close race that brought the Macau hare onto the rear claws of the Clark County tortoise in full-year 2007, casino revenue at the former soared 46.6% year-on-year to US$10.38 billion, while revenue at the Editor and Publisher latter made a measly 2.1% gain to US$10.87. Kareem Jalal Macau was poised to finish off Clark County this year, after which an even greater race rival would have to be found. In a surprise turn, however, Macau overtook both Clark County and its next Director logical race rival, the entire State of Nevada, in January, when Nevada casino revenue fell almost 5% João Costeira Varela in the month to US$1.06 billion. Although the race has eleven more months to run, and one month does not a trend make, Macau has an early lead in clinching more hype-worthy headlines. Business Development Manager Las Vegas had, until now, avoided the slump in casino revenue seen throughout much of the US Matt Phillips over the past year, and has not experienced a dip in earnings since the country’s sense of security was rocked in 2001. Operations Manager Major Vegas operators have made a point of drawing attention to signs of market weakness José Abecasis observed at the beginning of 2008. Steve Wynn lent his voice to the chorus calling for realistic expectations when he commented: “It would be unsophisticated to think Las Vegas is a magical Contributors island unto itself immune from the effects of the communities that serve it and its visitors.” Michael Grimes, Steve Karoul Mr Wynn has already suffered the fallout of unrealistic expectations. Wynn Resorts was among the US casino companies that suffered a sharp correction in its share price following the realisation Graphic Designer that analysts’ expectations for Macau were wildly optimistic. Given how wildly successful Macau Brenda Chao has actually been over the past year, these expectations can rightly be viewed as magical. The expectations were based on the spectacular casino boom Macau embarked upon in Photography 2004, which led to the belief that operators could enjoy immediate, explosive demand for any Ike new product they brought to the market. The trouble is, while explosive growth in Macau’s casino sector has become a hot international news topic, it is only because the growth came against an already established base, so that the revenue increase was substantial in both relative and absolute Inside Asian Gaming terms. Explosive growth from a negligible base, however, will take time to ramp up and generate is published by significant absolute gains. Must Read Publications Ltd At the time of the 2004 casino boom, Macau had almost no other established markets Suite 1907, AIA Tower, 215A-301 for visitors, such as retail and entertainment. Even the casino market did not extend beyond Av. Comercial de Macau - table gaming. Macau This issue of Inside Asian Gaming profiles Macau’s slot pioneer, Mocha Clubs, which cultivated Tel: (853) 6646 0795 the market from an insignificant base in 2003. Slot revenue has showed much more explosive growth in percentage terms than the overall casino market, but because it essentially For subscription enquiries, started from near zero, will take time to develop to the levels seen in Vegas, where it commands the please email lion’s share of total casino revenue. [email protected] Many look to the evolution of Las Vegas to postulate how Macau could develop. The foundation for the future development of Las Vegas was laid by the development of the “casino resort” on what For advertising enquiries, was to become the legendary Las Vegas Strip. The first of these was the El Rancho, pictured above, please email [email protected] which opened in 1941 at a location several miles out of town in order to benefit from cheaper land or call: (853) 6646 0795 and to avoid city taxes. And so the Strip was born. Over four decades, Las Vegas transformed itself from obscure desert town to the self-proclaimed www.asgam.com entertainment capital of the world. While Vegas casino operators once virtually gave away food and entertainment to support their gaming operations, the revenue mix of Strip properties has shifted steadily in favour of non-gaming sources, which now contribute over 50% of total revenue. While Macau has taken an unassailable lead in the casino revenue race, the real indication that Printed by bullish investment in the city has succeeded in driving a Vegas-style evolution on an accelerated Icicle Print Management (Macau) Ltd time-frame will be Macau’s emergence as a contender in the non-gaming revenue race. Tel: (853) 2871 2818 Fax: (853) 2871 2898 Kareem Jalal www.icicleprint.com We crave your feedback. Please send your comments to [email protected] INSIDE ASIAN GAMING | March 2008

4 March 2008 | INSIDE ASIAN GAMING 5 Cover Story

Moving With Mocha Macau’s slot market is evolving fast, and the shifting trends are best observed at the city’s slot pioneer, Mocha Clubs. As Chief Operating Officer Constance Hsu explains, Mocha’s personal service and responsiveness to players’ needs enables to it outperform the market by a wide margin, despite intensifying competition from glitzy new casino resorts

nside Asian Gaming is tired of hearing anything significant in the non-gaming absolute gains might scarcely match one Macau called “Vegas on steroids.” realm—sporting and musical spectacles of those analysts’ annual bonuses. A well- I Casino operators—armed with over characterised by logistical problems and/or cultivated new market showing explosive US$20 billion in investment—are on a lacklustre attendance do not count. Analysts’ percentage growth will eventually grow mission to transform the erstwhile hardcore overly-aggressive forecasts have already led into something formidable, however, such day-trip gambling getaway into a diversified to disappointment and a sharp correction as the entertainment market in Vegas. It tourism and entertainment hub in the Vegas in the prices of US gaming companies with just takes time. mould. Pundits predict they could replicate Macau exposure. When Venetian Macao’s results for the in five to ten years what took fifty years to It is a pity the analysts did not look fourth quarter of 2007—the first full quarter create in Vegas. to the evolution of Macau’s nascent slot of operation—were announced, analysts Macau may have left the Vegas Strip market to predict how a completely new accused the property of failing to “live far behind in terms of casino revenue, market could take root in the city—showing up to the hype.” It probably will not take but beyond hosting a few conventions at explosive growth in percentage terms, but as long as fifty years for significant retail Venetian Macao, has yet to accomplish against a near-zero base, so that the initial and entertainment revenues to emerge in 6 INSIDE ASIAN GAMING | March 2008 Macau, but if the time-frame is to be set in which enabled the cultivation of a new stock and Sands tapped into it. To its credit, Sands single-digits, it should at least be in years, market-darling, to the latter, which involves played a key role in drawing crowds of mass- not quarters. rehashing the tired analogy of throwing market gamblers to Macau, although it did The lofty expectations that preceded the open the floodgates. abandon its exclusive mass-market focus steep sell-off in gaming stocks were inspired The 2004 boom led to the widespread to also pursue the lucrative VIP baccarat by the spectacular casino boom that Macau application of Sheldon Adelson’s supply- business, which continues to command the embarked upon in 2004. Beijing’s easing of creates-demand thesis to Macau, even lion’s share of the city’s casino revenue. travel restrictions on mainlanders wishing to though the evidence also supported Although Macau was not entirely devoid visit Macau and Hong Kong brought a huge the pent-up demand thesis. After all, the of slot machines during the monopoly era, influx of Chinese visitors to Macau, and casino crowds were three-deep around the tables the slot market was virtually non-existent. revenue soared over 44% year-on-year in of even the most run-down in The first Mocha Clubs outlet opened at a 2004 to surpass the US$5 billion mark. The 2004, and several operators made quick modest 3,000 sq ft venue at Hotel Royal in eased travel restrictions just so happened profits by converting disused office and September 2003 to considerably less fanfare to coincide with the end of Stanley Ho’s residential buildings into casino hotels. That than Sands would open to eight months effective 42-year casino monopoly, and the is not, however, to deny that Sands Macao later, but Mocha was arguably the more opening of the city’s first foreign-operated is great property, having outperformed the transformative product, with its clear and casino, Sands Macao, in May 2004. competition and continuing to crowds exclusive goal of overcoming ingrained In accounting for the 2004 casino boom, even as capacity has exploded, while the prejudices and developing the city’s slot analysts tend to overstate the importance run-down and converted properties have market from a near-zero base. of the introduction of a transformative new been rendered obsolete. In 2003, slot revenue accounted for a property—Sands—to a stale market, while Sands Macao could arguably be better mere 0.8% of Macau’s total casino revenue, understating the impact of the eased travel described as an evolutionary product— compared to over half the casino revenue restrictions, which freed enormous pent-up providing a more comfortable, attractive on the Las Vegas Strip and over 70% in casino gambling demand in China to find its and spacious venue to gamble in—than a downtown Las Vegas. There are several only legal outlet in Macau. It seems analysts transformative one. After all, Macau already explanations for the erstwhile aversion to may have preferred the former explanation, had an established table gaming market, slots in Macau, ranging from Stanley Ho’s

March 2008 | INSIDE ASIAN GAMING 7 Cover Story

neglect of the slots at his properties and the perception that gaming machines under the monopoly regime were bound to be rigged to offer meagre payouts, to cultural explanations such as the supposed preference of Chinese to engage in intense face-to-face battles against the house, and their belief that they can influence outcomes at the tables by spotting patterns and picking lucky cards or numbers, whereas they leave their destinies to unfeeling computers when playing slots. New market Macau’s visitor arrivals soared 40% in 2004, neatly correlating with the 44% increase in casino revenue for the year. Slot revenue, however, jumped a more spectacular 171%, though against a woefully low base. The rise in slot revenue barely registered in absolute terms (a US$50.5 million gain compared to the US$1.6 billion increase in overall casino revenue), but it marked a clear milestone. Mocha Clubs founder—and Stanley Ho’s son—Lawrence Ho commented that casinos in Macau previously only contained slot machines in order to “look more like a casino.” Having languished for years, the slot market became the only unequivocally new market to emerge in Macau in 2004. Transformative products tend to generate big returns in absolute terms much more quickly in existing markets than in new ones. By virtue of starting at a near-zero base, it takes time for new markets to establish critical mass—even with the Internet boom, although the number of users rose dramatically in absolute terms from the outset, it took much longer for most online firms to earn revenues on a par with their brick-and-mortar peers. This issue of Inside Asian Gaming features much discussion of the potential of online gaming, which intuitively appears certain to overtake land-based gaming in the future, but has a long way to grow—the combined revenue of all the world’s online casinos was estimated at less than a third of Macau’s casino revenue last year. There are clear parallels between the online gaming industry and Macau’s slot market, which also has a long march ahead of it. Last year, slot revenue accounted for 4.3% of total casino revenue. Though still a far cry from the 70% share in downtown Vegas, it is a clear improvement from 0.8% in 2003. Macau only had 814 slot machines in

8 INSIDE ASIAN GAMING | March 2008 2003, but even so, demand outstripped supply, as demonstrated by the banks of idle machines at Casino Lisboa. In order to make slots more appealing, Lawrence Ho came up with the Mocha Clubs concept, envisioning a string of trendy and cosy outlets focused exclusively on machine gaming. The Mocha Pioneering Team worked tirelessly to help realise Mr Ho’s vision. Constance Hsu, Mocha’s current chief operating officer, was part of that team. Ms Hsu comes from an accounting background, and has been with the company since it was officially founded in September 2003. Her involvement began even before that, however, as she was responsible for compiling the feasibility study for a slot gaming business in Macau that eventually led to the creation of Mocha Clubs. Looking at the success of slots in markets like Australia and concluding the main reason for their non-performance in Macau was a lack of quality product rather than insurmountable cultural factors, she helped put together the proposal to launch Mocha, and has been developing her operational expertise ever introducing electronic versions of popular The rest of the floor was occupied by since as the company forged new ground in table games such as sic bo, baccarat and linked progressive and stand-alone slot Macau and Asia. . These electronic table machines, machines. As multi-terminal players became known as multi-terminal games, offer a accustomed to playing on machines and saw hybrid between tables and slots, and Mocha some of the slot players winning jackpots, Evolving mix was one of the first operators anywhere to they began tentatively approaching the Faced with the daunting task of offer them. hungry tigers. convincing table-loving Chinese to switch Multi-terminals made up 70% of Mocha’s By 2005-06, following a steady transition to slots, which are referred to in the installed machine base during its first few from multi-terminals to slots, multi-terminals Cantonese dialect as “hungry tigers,” Mocha months of operation, and contributed an made up about half of Mocha’s installed base Clubs came up with the novel approach of equivalent proportion of total revenue. and revenue, with the other half coming from slots, though largely weighted towards the linked progressives, with players eager to win the big jackpot. The shift in preferences continued, with stand-alone slot machines in particular having made strong gains over the last year, reveals Ms Hsu, to the point that the split between multi-terminals, linked games and stand-alones is now even, with each commanding about one third of both installed base and revenue. Stargames’ Action Cash has remained Mocha’s top-performing stand-alone since the company’s inception, but the performance of Aristocrat’s stand- alones has recently been catching up with its new Chinese-featured games, such as 5 Dragons, 50 Dragons and 50 Lions. Ms Hsu credits the maths of Stargames’ stand-alones for their enduring popularity. “Our players are loyal, regular players. They are not one-time players,” she stresses, “so they are very smart. When they play several

March 2008 | INSIDE ASIAN GAMING 9 Cover Story

times, they know the maths exactly. And they proactive to provide customers what they to win the big jackpot, so they prefer know which games are their type.” need,” explains Ms Hsu. linked games,” says Ms Hsu. Mocha’s top- A large part of giving customers what performing linked games are IGT’s Great Changing customer base they need takes the form of product selection, Escapes and Aristocrat’s Cash Express and While slot clubs around the world are and Mocha Clubs introduces new games Jackpot Carnival. usually dominated by local players, Mocha every month. “We have a comprehensive The mid-range Advantage players, Clubs has a solid customer mix, with Hong understanding of the preferences of our meanwhile, do not appear to have strong Kong, Southeast Asia and China among the members—what they like, but more game preferences, and shift between major source markets. Mocha is also getting importantly, why they like it,” claims Ms linked progressives and stand-alones— more international. Ms Hsu comments Hsu. “Different games have different maths, perhaps depending on how large the that “since last year, we have been making different curves, different probabilities.” jackpot has grown. efforts to tap Hong Kong, Japan and Taiwan Ms Hsu also points out that “different Ms Hsu also mentions that slots players with different programmes” in conjunction tiers of members have different preferences.” and multi-terminal players are usually with partner hotels. Four of Mocha’s six Mocha Clubs has four tiers of members. The distinct. “People who play multi-terminals outlets are located in affordably-priced very top tier consists of Royal Members, don’t touch slot machines, and vice versa,” and conveniently-located hotels, including who have access to the ultra-exclusive she explains. Furthermore, “most multi- Hotel Royal, Hotel Sintra, Hotel Taipa Square Royal Members’ Lounge at Mocha Marina terminal players prefer being uncarded,” and Hotel Taipa Best Western. Hotel guests, Plaza. Royal Memberships are granted by even though some of them would qualify especially those on long-stays for business, invitation only. Also ranking as Super-VIPs are as Super-VIPs based on their turnover if they are obvious customers for Mocha Clubs. the second tier, the Premier Members, who did opt for membership. Mocha’s membership has increased have access to the Premier Area at Marina The top-performing baccarat multi- 60% between early 2007 and early 2008. By Plaza. Premier Memberships are granted to terminal at Mocha Clubs used to be tracking and responding to its member’s customers according to a matrix of criteria Stargames’ Vegas Star Baccarat, but it’s preferences, Mocha Clubs has been able including volume of play and number of performance is now being rivalled by to thrive despite intensifying competition visits, as well as by invitation. The remaining the recently introduced Mocha Baccarat, from the casino Goliaths and their pricey members—the vast majority—are either developed in cooperation with Slovenia’s new properties. Mocha’s solution is to Advantage Members or Regular Members. Interblock, who tailor-made the game for “provide more personal service” and “be very The regular members “want a chance Mocha Clubs. Unlike Vegas Star’s theatre-style

10 INSIDE ASIAN GAMING | March 2008 configuration, Mocha Baccarat features the same circular configuration of Interblock’s roulette and sic bo products, which are also among the top-performing multi-terminals at Mocha Clubs. Although Mocha members choose games according to the underlying maths, Ms Hsu admits that members tend to stick to their tried-and-trusted favourites. When Mocha introduced an updated version of Great Escapes, players eschewed it in favour of the earlier version, even though both versions had identical maths and the newer version arguably looked more attractive. Members’ preference for familiar games could account for why Stargames’ Action Cash and Vegas Star Baccarat, and Interblock’s roulette and sic bo, are the most long-lasting gaming machines at Mocha Clubs. “They were there since the very beginning, and they still survive given the competition,” says Ms Hsu. more innovative giveaways.” machines spread over six downtown venues. Coping with the capacity explosion Mocha’s response is to “liaise with a lot With an average of fewer than 200 machines By the end of 2007, Macau had 13,267 of external vendors,” from petrol stations per outlet, Mocha Clubs offers a decidedly slot machines—a more than doubling of and convenience and clothing stores to hot intimate and subdued environment capacity compared to the end of 2006, but restaurants and suppliers of optical compared to the grand Venetian Macao, Mocha’s revenue for the fourth quarter products and Chinese delicacies such as which has more than 3,400 machines—and of 2007 still grew 21.3% year-on-year to bird’s nest. Mocha Clubs thereby “provides much more besides—under one roof. It also US$21.6 million. Mocha Clubs showed no more variety of redemption items to our means that because Mocha offers such a signs of slowing down in 2008. members,” says Ms Hsu. stark alternative to the major Macau casinos, Ms Hsu says the challenges presented Ms Hsu also stresses that Mocha’s it may not compete with them as much as by the relentless expansion of Macau’s slots membership club is more like a private they compete with each other. capacity and increasing competition from club than a casino loyalty programme. “We Of course, without the walk-in traffic of massive new casino resorts are essential provide a lot of privileges and benefits, Venetian, Mocha Clubs is heavily dependent to spurring Mocha Clubs to develop new including ferry tickets, meals at local eateries on the loyalty of its members. “We are totally markets and opportunities. She is conscious, and discounts at a variety of shops.” Mocha customer base, actually,” stresses Ms Hsu. however, not to deviate from “Mocha’s Clubs also hosts regular get-togethers This, to a large extent, insulates the company formula to success, which is based on tailored to different tiers of members, such as from the fallout from the capacity explosion. service.” dinner parties ahead of major festivals. These Mocha Clubs has always been extremely events usually host about 100 members. CSR in focus innovative and service-oriented. In addition With its comparatively cosy and Although Macau is witnessing to pioneering the use of multi-terminals and unintimidating venues, Mocha Clubs revolutionary economic development, opening the first VIP slot lounge in Macau, cultivates a “club atmosphere,” whereas big it is also witnessing the emergence Mocha implemented the convenience of properties can be “more impersonal,” says of unprecedented social and political Ticket In/Ticket Out (TITO) technology Ms Hsu. “Our staff will greet people coming discontent among large sections of the across all machines at all properties by the in by name,” she claims, adding that on population who feel either left out or end of 2007. Mocha is notably also the first her regular site visits, she often sees “guest harmed by the casino boom. gaming operator in Asia to implement a relations executives talking with players like It seems appropriate, then, that Mocha player tracking system, points out Ms Hsu, close friends.” Clubs “aims to be one of the leading and puts the data it gathers to good use in Therefore, even though as each successive forces in Macau to push, implement and game selection. new casino resort opens, “our members will promote corporate social responsibility The likes of Venetian Macao have a inevitably try out these properties,” Ms Hsu (CSR) this year,” reveals Ms Hsu, stressing much greater range of in-property offerings is confident that “eventually, they will come social harmony is essential to sustainable to draw on as loyalty rewards. “They have back to us for the service.” economic development. hotel rooms, they have retail outlets, they When Mocha Clubs promotes its brand have restaurants,” observes Ms Hsu, adding, All about the members abroad, “we want to emphasize this is a “because of our constraints, we need to find Mocha Clubs has 1,100 gaming Macau-rooted, Macau-grown enterprise,”

March 2008 | INSIDE ASIAN GAMING 11 Cover Story

says Ms Hsu. As such, Mocha has a vested interest in doing whatever it can to support the overall stability and prosperity of the city it is associated with wherever it goes. The company will continue its diverse charitable endeavours, but also seek to actively participate in social welfare causes, as well as getting its staff more involved. In addition, Mocha Clubs will implement responsible gaming programmes, and provide comprehensive training to staff, starting next month, to equip them to identify and appropriately counsel problem gamblers. Mocha Clubs supports the government’s initiative to raise the minimum age of casino dealers from 18 to 21, in order to encourage would-be dealers to spend more time studying and improve their skill-set. For its part, Mocha Clubs intends to set up education programmes to help and encourage staff to pursue their studies, and offer sponsorships to staff who pursue courses related to their job fields. billions into Macau, and the analysts attractive mass-market gambling venue— Learning from Mocha forecasting their progress? Well, apart or at least that market share could be won So what lessons does Macau’s nascent from the need for patience and realistic by providing it. On the other hand, the slot market—and Mocha’s cultivation of that expectations, three points come to mind. 700-seat theatre which never staged a market—offer bullish developers ploughing First, you cannot expect a new property performance, and the high-end restaurants to be firing on all cylinders from the day it that were either scaled back or shut down, opens. When a new Mocha Clubs outlet demonstrated more time was needed for opens, for example, Ms Hsu says a ramp-up locals to start demanding Vegas-style non- period of three to six months is needed for it gaming offerings. to catch up with the performance of existing Third, and following on from the venues. In the meantime, the increase in above—what do you do when you discover capacity will possibly lead to a dilution in players need time to develop an appetite overall average net win per machine per for the new product you intend to offer? day. Considering Mocha Clubs outlets are Consider using a transition product. Mocha relatively small, it will probably take longer Clubs made use of multi-terminals to wean for larger venues to ramp-up—analysts Chinese gamblers onto gaming machines. disappointed with Venetian Macao’s 4Q This not only appears to have accelerated results, take note. the acceptance of slots, but also meant Second, start small and test the waters. Mocha did not have to suffer a lean period as Mocha’s inaugural venue at Hotel Royal is it waited for customers to accept a product small by any measure. “We were confident they needed time to get used to. about the business, but we still wanted to Here’s a tricky one though: What is the test it a bit,” explains Ms Hsu. transitional product to offer before you Las Vegas Sands Corp was wise to fly in Beyoncé or the Pussycat Dolls toa enter Macau quickly with Sands in 2004, 15,000-seat stadium that you could not fill at an original cost of US$265 million—an by giving away free tickets by the bushel? It investment which was famously recouped may have been better to start with a more within ten months. Wynn, on the other hand, transitional-sized performance hall in a more wanted to make a grand entrance, so ended transitional-sized resort. There’s no turning up arriving over two years behind. back now, however, except on the idea that Sands was intended as a laboratory of the supply of any new Vegas-style product in sorts, to test what works and what doesn’t Macau, regardless of its unprecedented scale in Macau. It proved there was tremendous in a tiny city, will somehow instantly meet demand for a more comfortable and with overwhelming demand.

12 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 13 Feature

Mile High Club In-flight casinos are a regulatory knee trembler

Ryanair is flying high, but its plans for in-flight gambling appear to have been grounded

The sky’s the limit for Sheldon Adelson in expanding aggressively into new markets 14 INSIDE ASIAN GAMING | March 2008 Feature

n exasperated Billy Carter, the younger on-board video gambling, followed by over. For example, a flight from Macau brother of US President Jimmy Carter, Lauda Air. Singapore Airlines also tried to Europe using Russian air space has to Aonce told an interviewer: “Sometimes, it twice, and terrestrial operator Harrah’s get overflying consent from the Russian even lawyers need lawyers.” entered into a joint venture with Sky Games. authorities.” MGM Mirage would probably agree. The Canadian company DTI Software provides This is the taken by the Tokyo Las Vegas-based casino operator at one time in-flight gaming to 81 airlines, including In- Convention 1963, defining states’ rights and considered running in-flight casinos, but Flight Hold’em Poker, but so far strictly on a obligations regarding in-flight criminal acts. reportedly dropped the idea on the advice play-for-fun basis. In May 2007, the firm did, Article 16 states: “Offences committed on of its lawyers. however, announce a tie up with London- aircraft registered in a Contracting State shall listed company 888.com be treated, for the purpose of extradition, as Right approach to develop an in-flight if they had been committed not only in the Now, Sheldon Adelson—the billionaire platform offering casino games. place in which they have occurred but also chairman of Las Vegas Sands Corp and a self- in the territory of the State of registration of confessed private collector of aircraft—has Rising trend the aircraft.” decided his lawyers know something those Mr Adelson may then be pushing against “Whether or not the Russians in that case of his rivals do not. He believes the plan will a door that’s already slightly ajar. There can actually regulate anything that occurs work after all—if executed cannily enough. do seem to be several major challenges in connection with the aircraft is pretty Mr Adelson wants to launch VIP charter though. One is that as with cyberspace questionable,” says Mr Nettleton. flights between Hong Kong and Las Vegas and online gaming, few countries have “But both the point of departure featuring on-board baccarat tables. clear guidelines on what should happen and the point of arrival can have a say The Las Vegas Sun newspaper says up in the sky. International air travel is in regarding activities taking place on the LVS recently acquired and is refitting two any case covered by a patchwork quilt of flight,” he adds. second-hand Lockheed Martin L-1011 Tristar conventions, protocols and agreements wide body aircraft to accommodate about that not all countries have ratified and Junket partners 200 customers. that can potentially be interpreted in An interesting question regarding many different ways by many different Hong Kong law is whether LVS plans to Captive audience jurisdictions. Unless someone sticks his use its existing Macau junket partner Dore Chinese gamblers regularly fly to Las neck out and tests the boundaries of Holdings as an agent for its proposed in- Vegas in any case. Why not entertain them governments’ tolerance, then gaming flight gaming, or whether it will seek to deal on the 17-hour journey and avoid having operators may continue to fly blind. directly with Chinese high rollers. If it’s the to share the revenue with the taxman in “We have looked at this on behalf of former, then Dore—which is listed on the Macau and Nevada? That seems to be the a number of clients,” says Hilary Stewart- Hong Kong stock exchange—may need thinking. Jones, a partner specialising in approval from Hong Kong’s Securities and What everyone wants to know now is for legal firm Berwin Leighton Paisner LLP Futures Commission. If it’s the latter, it could will it be legal? There’s an assumption that in London. cause friction between Dore and LVS if Dore if something’s fun, innovative, cheeky, and, “The difficulty is the consistency of feels its close relationship with Chinese VIPs perhaps more importantly, tax avoiding, international law. It depends where the is being undermined. someone somewhere will want to ban it. aircraft is registered. What the conventions The Hong Kong government’s position When Michael O’Leary, the charismatic have decided is that you carry the law of on Mr Adelson’s proposed in-flight casino and provocative chief executive of Irish where your aircraft is registered, and that isn’t yet clear. Although Hong Kong tightly budget carrier Ryanair, announced in stays with you until you land.” controls the availability of gambling November 2005 that his company planned A problem is that not all countries have on its territory and online, there is to allow passengers to gamble in-flight signed up to the relevant conventions. a precedent for allowing casino by 2007, people watched with interest. charters to operate from the Mr O’Leary even suggested that an on- Picture unclear city, in the form of gambling board casino could support a new business Stephen Ketteley, a colleague of Ms cruise ships that are model capable of doing away with airfares Stewart-Jones, explains that some countries legally required to completely. even consider they have jurisdiction over an sail out into the aircraft while it is in their airspace. Take-off aborted Jamie Nettleton, a partner at the Well, 2007 came and went without Sydney office of commercial law firm any news of progress on Mr O’Leary’s Addisons, agrees announcement. The most Ryanair seems “There are at least three possible to have managed so far is a tie up with UK jurisdictions,” he says. online operator jackpotjoy.com, “The point of departure, making its gaming products available via the point of arrival, and the Ryanair website. any other jurisdictions In the late 1990s, Swissair introduced you’re flying

March 2008 | INSIDE ASIAN GAMING Feature

These interior concepts from Boeing Business Jets offer an idea of the luxury that could await VIP gamblers in the skies

international waters of the South China Sea provided they were doing it by way of a Reluctant regulators before opening for business. voucher system or a card. The idea was The Federal Aviation Administration once the player had played the game, they appears to back him up, suggesting, firstly, Legal fiction would come to a land-based casino and that the relevant law effectively excludes The concept of ‘international waters’ is redeem it there.” private aircraft and charter flights from well known, but even this has its limitations, In the end, says Ms Stewart-Jones, the the gambling ban, and secondly, that the says Ms Stewart-Jones. client chose not to proceed with the project. FAA is, in any case, not in the business of “In broad terms, ‘international waters’ is regulating gambling. a fiction because there are hundreds and Loopholes The Nevada Gaming Control Board’s hundreds of treaties covering situations. Mr Adelson appears to be relying position seems to be that any in-flight For example, you can’t murder someone in on several loopholes in the 1994 Gorton casino run by a Nevada-licensed operator international waters.” Amendment to US federal gambling would count as ‘foreign gaming’. As such, She says in some countries, the official legislation. the Nevada licence-holder would need to attitude to in-flight gambling is clear-cut. The Gorton Amendment was sponsored satisfy the Board that it was running a fit and “For one client, the particular by former Washington republican senator proper business and provide regular reports jurisdiction they were asking about gave Slade Gorton, who eventually lost his seat of activities. The Board declines to comment huge problems because it was absolutely for opposing native American casinos in his in more detail, as it says it hasn’t yet received black and white clear that in the country home state. It reads: “An air carrier or foreign a formal proposal. where the plane was registered and where air carrier may not install, transport, or “I expect the operator would really want the airline was based, it was illegal. We operate, or permit the use of, any gambling to discuss it with the authorities first,” says did try to persuade the client down the device on board an aircraft in foreign air Jamie Nettleton of Addisons. route of being slightly more creative. We transportation.” “There will be so much invested in it that suggested if they were doing it by junkets The relevant words appear to be ‘air I’d be surprised if they’d do it on spec.” so the money wasn’t being handled on the carrier’, ‘foreign air carrier’ and ‘device’. Mr aircraft, there might be an argument to Adelson’s legal team seems to be arguing say it wasn’t actually gambling. This would a baccarat table is not a ‘device’. If that legal also mean they weren’t making the airline nicety isn’t enough to get him off the hook, staff complicit in facilitating gambling, he will claim that as a private air operator, he is not a ‘carrier’.

16 INSIDE ASIAN GAMING | March 2008 17 Mobile Gaming

Perfect Storm Asia is the right place at the right time for online gaming, according to CryptoLogic Vice President Asia Pacific Shailesh Naik

ears ago when travelling in south Asia, games of chance aimed at mature players. This perfect storm has been created by a this writer stayed in a village that had The company says it hopes to make an conjunction of technological, demographic Yonly one television. The set took pride announcement soon about an online gaming and societal developments that has allowed of place on a tree stump and the power operation out of Macau, which suggests gaming delivery systems, content and cable was threaded through the branches of the territory may be about to publish its markets to converge in one place at one another tree and then through the window long-awaited legal framework for online time, faster and with more momentum than of a building to the nearest power source. play. Although most Asian countries do not at any previous time in human history. The whole village gathered round to watch a currently have a regulatory framework for The middle class in Asia is growing at the subtitled episode of a fantastically politically online gaming, it’s hard for governments to rate of 100 million people every ten years incorrect British comedy programme from ignore the industry. says Mr Naik—the equivalent of two thirds the 1970s called Mind Your Language. Mobile handsets are becoming more of the current United States’ labour force. The relationship those villagers had with affordable and powerful every year. Those That means every decade, Asia will have “100 their television set in the 1980s is rather like available today have more processing million more people with mobile phones the relationship many Asians have today power than many desktop computers on and PCs, and they love gaming,” he adds. with gambling and gaming entertainment. the market in the late 1990s, according to “They have more money in their Even 21st century citizens have to physically technical journals. Scientists are also coming pockets and they have more leisure time. A move themselves to places such as Macau in up with new ideas about how to improve generation of Asian parents has sacrificed order to huddle around a gaming table. energy efficiency so that the gain in handset their future for their children’s education, Gaming entertainment options are computing power isn’t cancelled out by a and many of those young people have been growing though—and growing quickly— sharp fall in battery life—designers of the exposed to global trends and pop culture or thanks to the ready availability of relatively first generation iPhone might like to make have studied abroad. Now they have come cheap and powerful mobile phones offering a note. The spread of Bluetooth technology back, they’re educated, they want to be near Internet protocol content including video could even help overcome the limitations of the family at home and they have money on demand and online gaming. handset screen size by allowing images to and they want to play.” “This development is considered by be ported from your mobile phone to any Under the land-based casino model many academics to be as big as the television large LCD screen in your vicinity, as could of product marketing and regulation, a revolution of the 1950s and 60s,” says the development of miniaturised digital gambling game is what the law or regulator Shailesh Naik, Vice President Asia Pacific for projectors allowing images to be projected says it is. The difficulty is that regulation has CryptoLogic, an award-winning provider of to the nearest suitable surface. a tendency to categorise what it observes online gaming content and support services rather than what’s going on at the cutting to the telecommunications and multimedia Asia’s primed edge of the market. industries. Gaming includes casual games, “What we have in Asia is a huge and “Anything that requires any amount of role-playing strategy a n d perfect storm that’s been set up skill that people feel they can place a bet on, adventure games (RPG) and for the gaming world,” says we’re going to see in that market,” says of course the high- margin Mr Naik. Ken Crouse, C r y p t o L o g i c ’ s

18 INSIDE ASIAN GAMING | March 2008 Market Outlook

Director, Asia Pacific. for gaming in Asia, but it’s difficult to get a to grow to 290 million by 2011, according to a Understanding convergence includes successful user experience. For example, I recent report from management consulting understanding that gambling is behav- recently played a ten-player poker game on company McKinsey, which also estimates the iourally and culturally based, rather than just a small mobile device and it’s not a very user- current number of middle class Indians with product-based, adds Mr Naik. friendly experience. Companies that only incomes between US$4,380 and US$21,890 “You can talk about pricing, you can talk target the mobile audience will probably find stands at 50 million, and will leap to 583 about affiliates, you can talk about marketing it is quite a while before there are significant million by 2025. spend, you can talk about everything else. improvements in screen size, etc.” But if you’re in this market and you’re not UK-based Global Betting and Gaming Asia’s gaming disposition addressing convergence you’re not really Consultants estimates that even when For cultural reasons related to ideas doing strategy,” he asserts. including rich, wired up North America about luck and good fortune that can In the West, it took 50 years for the and Europe, global online gaming turnover seem strange to Westerners from Judeo- personal entertainment market to move accounted for about US$15.2 billion in Christian cultures, these middle class from family and neighbours gathering 2007—only around 5% of global gaming Asians are overwhelmingly disposed to around a single TV, to multi-set, multi- revenues. gamble, says Mr Naik. platform, multimedia households. It took China has an estimated 210 million And once they get online and away another decade for delivery technology regular Internet users–a penetration rate of from the traditional pastimes of the land- to converge to a single media platform in 16%. This is low by developed world standards, based casinos, what the new consumers are the form of mobile handset-cum-computer. although still up fourfold compared to prepared to gamble on is almost limitless, he Today, entertainment increasingly comes mid-2002. Many of China’s Net surfers are suggests. Role-playing PC-based community not from the communal experience of using communal terminals though, either games akin to the Warcraft series first seen sharing a television, a games console or a in Internet cafes or in workplaces. Only 50.4 in the West in the mid-1990s are being card table with people in the same room, but million consumers are currently accessing formatted for online mobile play. from consuming it remotely or competing the Web via mobile handsets, according to Ken Crouse says it may be some against unseen online opponents. In Asia, the China Internet Network Information time, though, before role playing games that change has happened in the space of Center (CNNIC), a non-profit organisation specifically designed for the small screen five years. set up under the Ministry of Information take off. Mr Crouse says it’s important not to Industry of the People’s Republic of China. “People are not going to make big overstate the current state of technology The online spending power of Internet- investments in developing RPG specifically in the mobile handset market, as it can set enabled mobile users is likely to be for mobile play if they’re not sure how things up expectations among consumers and disproportionate to their numbers. They are going to go on the regulatory front,” says investors that online gaming companies have constant access to those handsets, Mr Crouse. may find hard to fulfil. while the remaining 159.6 million Internet “That’s why companies are taking “When you think of convergence, users have to share just 78 million connected role playing games already out there and technology tends to be the first thing you think computers, according to CNNIC statistics. turning them into gambling games. The of. Online gaming started out with gaming As Mr Naik suggests, though, the Asian challenge is that large companies companies doing downloadable applications middle class is growing quickly. In China, the do not want to get into hot water onto computers and to browsers. lower middle class (those with an average so they do not want their games “Now, in Asia, we have very strong mobile annual income of RMB played for penetration. The mobile is the 25,001 to RMB money.” primary end user device 40,000) is l i k e l y T h i s

19 Mobile Gaming

notion of role playing games being betting for 50% longer or more each day? What there, they will you it’s very evident that games may be difficult for some people— government, when faced with content that a large rush to online gaming means that especially Western investors—to grasp, potentially redefines gambling and also has sooner or later they will have to embrace and suggests Mr Naik. the potential to produce huge revenues, can regulate it. We are asking ourselves what we “Are role playing games gambling? avoid taking a policy position on the issue? can do to prepare for that.” We think that the inevitable convergence “Ninety percent of professional money will see some RPGs take on gambling Relentless march of online gaming managers can’t beat the money or equity characteristics,” he asserts. “Our view of online gaming is either that market, but governments allow that industry “Already, there are massively multiplayer governments will take charge of it, or it will in nearly every country,” says Mr Crouse, games (MMORPG) where there is a random overrun them,” says Mr Naik. himself a former investment adviser in number generator in the program used by “We have already seen this in Japan, where Silicon Valley. the player. The player doesn’t know what the government has not yet regulated for “In my mind that’s way more gambling the outcome will be and the player uses the online gaming. Yet, if you speak to legislators than what we do in .” game to generate outcomes typically in the form of virtual currency or real winnings.” Mr Naik quotes a recent newspaper report from southern China about a CryptoLogic - History and Strategy woman who spent the equivalent of US$6,000 on an online subscription- CryptoLogic is a public company listed in Toronto, London and New York. It specialises based role-playing game. in the development of high quality games for online use, including those delivered “She spent many, many thousands of to mobile handsets. It also provides support services including e-cash management, hours playing this game until she got to marketing and customer care. the level of the queen. She had spent about The company’s products feature more than 200 games in all major languages. The 50,000 yuan–about US$6,000 on it. The range includes original versions of classic card and gambling games offered for fun fundamental trigger here is what she called a chest. She said: ‘Paying to open a treasure play or cash wins, role play products and slot style games featuring famous characters chest on this game was like a casino slot licensed from partners including Marvel Comics. machine. All kinds of material and equipment CryptoLogic is a mature company in online gaming terms. The business was spin inside the chest like the drum on a slot founded in 1995 by two mathematicians who created an online encryption program machine.’ for secure payments via the Internet. They discovered the system offered huge benefits “During a crazy period, she said for her it to the gaming industry, and as a result decided to set up a gaming software provider. was like gambling in a casino,” adds Mr Naik. In its e-cash management role, the company has processed more than US$54 billion in This exhibiting of what some might call secure electronic transactions for more than 2.5 million players across the world. gambling behaviour in a technically non- In 1999, on the strength of its products and reputation, CryptoLogic signed up gambling setting raises ethical challenges William Hill, a major UK gaming brand since 1934 and the first land-based operator to for content providers, carriers and establish an online casino. Other clients include Playboy and the Scandinavian poker governments. licensee Betsafe. The company was recently named Top Casino Software provider for If it’s not illegal, what gaming company the third consecutive year by a leading industry award scheme. can afford to ignore this revenue stream? “In Asia, we’ve chosen five markets, identified on the basis of broadband penetration, If it’s not banned, what telecoms carrier— mobile phone uptake, a massive and growing middle class and an interest in electronic faced with downward pressure on carriage gaming and gaming generally,” says Mr Naik. charges from industry regulators and “They include Japan and Korea. Korea has the highest and most intense broadband consumer groups—can afford to penetration on the planet right now—far ahead of anything in Europe or the US.” turn away content that keeps people Cryptologic’s other target markets are Greater China (including mainland China, on the phone Hong Kong, Macau and Taiwan); Indo-China and the Philippines; Southeast Asia (including Malaysia, Singapore and Indonesia) and India. CryptoLogic says it takes a responsible approach to online gaming, and that all markets are addressed with appropriate products. Some markets, such as Muslim Indonesia with 234 million people at a median age of only 26.9 years, are hard to ignore, and CryptoLogic will offer only those casual and skill games that are acceptable culturally and legally in such countries. “You have to decide whether you want to be in a market for the long term or the short term,” says Mr Naik. We are here for the long term, and so we seek strong engagement with governments and regulators in the region. We strongly advocate government involvement and regulation in all aspects of gaming, to ensure safe and responsible entertainment for all consumer segments.

20 INSIDE ASIAN GAMING | March 2008 Mobile Gaming

“When you’re operating in markets movement is growing, Mikoishi recently a poker game, and other people play for the where the consumer base is growing at ten appointed a former CEO of MTV Networks community experience. million to 15 million consumers per month, Asia Pacific and a former regional vice “One of our bets on you also have to think about who you’re president of Electronic Arts is not that it’s going to be the aiming at. as its chairman and game of choice for gamblers, “Who is your target customer? Are CEO respectively. but that it might be so popular you going for a young audience or a “We’re getting with community play that it more mature one? Sooner or later most Mikoishi to help us then creates a space for all people across Asia will have a mobile with convergence the other products.” phone and/or a PC. and to take card “Some companies are willing to sign games into the casual up any licensee. We have chosen to focus gaming market,” says on a very select and very few licensees but Mr Naik. deliver to them high quality entertainment “We’ve also agreed and games,” says Mr Naik. to make an investment “CryptoLogic is very strong today in in Mahjong Time with a games of chance, casual and role playing view to combining our games and new and emerging products. two organisations. This “We can bundle products and we can effectively puts us right deliver to PC, to mobile, to console, to cable into the mahjong space and probably to a few more platforms in with both community the next few years.” based play and web 2.0.” Just as the old divisions between the “We’re very excited offline and online worlds are being pushed about the Mahjong Time back by wireless handset technology deal for several reasons,” allowing players to remain permanently adds Ken Crouse. ‘on’, so the divisions between home “One is that mahjong might be the entertainment and entertainment on the ultimate game for convergence. We’ve move are also blurring. all been waiting for the mahjong market CryptoLogic has just taken a stake to take off for a number of years and we in Mikoishi Studios, a game developer in all hear about the hundreds of millions Singapore that has worked with leading of players that love to play the game in companies including Sega and Capcom. To China. It’s a national pastime for a variety of emphasise how strongly the convergence reasons. Some people bet on it for cash like

March 2008 | INSIDE ASIAN GAMING 21 Mobile Gaming

Korea – an exciting new model

Korea, where CryptoLogic recently launched an online poker room, was chosen as an important target market because of its combination of high broadband penetration, clear regulation and opportunities to operate a new revenue model. “Korea’s rules are very specific,” says Ken Crouse. “You are allowed to have an online , but you are not allowed to have a winner. You are, though, allowed a final table payout to the top three players. You can give them a prize such as a trip to Las Vegas, but you can’t announce in advance what the prize will be. The reality is that once you’ve given out prizes of a trip to Vegas the first time, players know what to expect.” The Korean online poker market is also supported by a unique feature that boosts operating margins for content and service providers. In order to take part, players are required to select an on-screen persona or ‘avatar’, rather like in the cult PC role-playing game Second Life. Avatars in cyberspace usually owe more to the user’s daydreams of how he or she would like to look in front of the mirror than to reality, but their sales are a potentially lucrative revenue stream. “Avatar sales are a distinctive feature of the Korean market,” says Mr Naik, adding “we make a better margin on avatar sales than we do on the game play.” “Poker margins are becoming increasingly complicated and competitive,” adds Ken Crouse. “In Korea, players are also dressing up their avatars—buying a hat, or even buying an avatar girlfriend or boyfriend. All these little things are generating revenue for the site. “People are playing poker in Korea for money, but also because they like the whole user experience,” adds Mr Crouse. “We’re also seeing advertising sponsorship in-game. These are revenue models that the video game industry has been working on for a number of years and starting to put in place in Korea. Ultimately, we could see some kind of virtual currency exchange.” The advent of new revenue models is an exciting development in an increasingly crowded market, says Mr Crouse. “The margins are being driven out of the online poker market except for the top three or four sites that have a brand and are able to attract players. We don’t really want that to happen in the category games market. “Margins on games of chance are typically high. Margins on games of skill and role-playing are not so high, so we would like some of those skill game and RPG customers to come over to games of chance. That latter market in itself is so large that we think this will be as big, if not bigger, from a revenue standpoint, than our traditional online gaming markets.” One website powered by CryptoLogic that was targeted at Chinese customers attracted two million regular users after just nine months of operation and claims 20,000 concurrent users. “We have casual gaming, subscription based mahjong and subscription card games, including poker,” says Mr Naik. “We have now the ability to deliver in China games that would be recognised as games of chance elsewhere, but are actually legal in China. We’ve also made a minor investment in an RPG company which takes games out of Korea and distributes them elsewhere, and we hope to make an announcement soon about operations out of Macau and also a South Asia- facing licensee.”

22 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 23 24 INSIDE ASIAN GAMING | March 2008 New Games

Building Asian Appeal Playtech deploys cutting-edge technology to offer its licensees a unique package of games catering to Asian tastes

laytech is the world’s leading supplier of online gaming soft- ware, and looks set to extend its lead over its competitors with Pits ever-expanding presence in Asia. Playtech was one of the main exhibitors at last month’s Asian i- Gaming (AiG) Congress & Expo at Venetian Macao. Inside Asian Gam- ing visited the Playtech booth, and discovered the depth of the com- pany’s commitment to Asia. A large part of that commitment involves the development of games specifically catered to Asian tastes. Playtech has a dedicated Asian Gaming Director, Idan Losica, in addition to development centres and partnerships in the region. Mr Losica was on hand at AiG to demonstrate the company’s innova- tive and colourful new Asian peer-to-peer (P2P) games, which have tremendous potential. Mr Losica points out it is harder to develop games for Asia than other regions, because there is considerable variation in game for- mat, rules and playing styles among countries and even provinces. In the ancient Chinese tile game of Mahjong, for example, there are about as many rules as there are Chinese dialects, almost one for each locality, including rules for Japan, Taiwan and Hong Kong. That is why Playtech’s package of Asian games feature “exceptionally com- prehensive customization options,” stresses Mr Losica. Playtech’s P2P games include Big2, Chinese Poker and Dou Di Zhu (“Fight the Landlord”), offering a wide range of major regional game variations, cash tables and enhanced tournament structures. The other major impediment to bringing traditional Asian P2P games online is the risk of collusion. The traditional Asian P2P games generally involve four players, and if two of those players are working together, they have a significant advantage over other players at the table. Playtech has developed an anti-collusion detection mechanism based on cutting-edge technology that ensures the integrity of its new Asian P2P games. “Our powerful collusion prevention and detec- tion tools enable operators to analyze every move of every player at every table and to issue immediate alerts,” says Mr Losica. Although the Mahjong package currently only has a Solo ver- sion of Mahjong, Playtech has been developing a full P2P version of the game, which could gain a massive following. The February 2007 issue of Inside Asian Gaming featured a discussion of whether Mah- jong could become the next P2P gaming giant. “With over 350 mil- lion mahjong players worldwide—several times more than poker players—there certainly is potential for Mahjong to surpass poker

March 2008 | INSIDE ASIAN GAMING 25 New Games

as the most successful land-based and online P2P game in the gam- ing industry.” Playtech’s Asian casino games include the Japanese classic , as well as a variety of Asian-facing slot games. Playtech’s Live games, including Roulette, Baccarat, Blackjack, and Sic Bo, also have particular appeal to Asian players, who tend to place less trust in Random Number Generator (RNG) systems that run other online casino games. The Live games offer casino games in real-time via vid- eo-streaming, with real dealers who players can chat with by means of instant messaging. “The cross selling opportunities between the casino, the live dealers and the P2P games further enhance player value introducing players to a constant stream of new offerings,” adds Mr Losica. Cross-platform network Playtech’s “unified cross-platform network en- ables all of our gaming platforms—online, mobile and land-based—to be accessed and funded by players through a single user account via the same username-password combination,” explains Mr Losica. Operators can therefore manage all gaming platforms by means of a single management interface. “We cater to a se- lect clientele, one that demands a more customized, tailored offering and service than standard ‘one prod- uct fits all’ solutions can offer,” continues Mr Losica. “We unify so that our clients can diversify.” Mr Losica also emphasizes that the Playtech platform includes count- less solutions for managing players, games, and networks with flexible configuration options, which “allow operators to accommodate future product diversification with ease. As their global reach extends, our clients can reap the benefits of a product range that is available in multiple languages and supports multiple currencies, and a games portfolio that is specifically tailored to the gaming patterns of a diverse selection of coun- tries. Our Asian facing offer- ings in particular, provide the ultimate unified solution in a culturally diverse region.” Playtech trumpets its ongoing and open dialogue with its licensees, enabling it to be very responsive to their needs. Mr Losica says his compa- ny is on the brink of unveiling several new developments, and vows “Play- tech will keep improving and develop- ing more products for the Asian market, drawing on our wealth of experience in deploying platforms and Asian facing products and providing an unrivalled level of service to operators entering Asia.”

26 INSIDE ASIAN GAMING | March 2008 Cover Story Well poised

The Asian i-Gaming Congress was abuzz with speculation that China could soon license regulated online gaming. With the Chinese government having made no statements to that effect, it remains purely speculation, but if online gaming is ever legalised in China, Playtech appears well positioned to serve the market, having already entered into several strategic agreements that boost its China presence. In March 2007, Playtech entered into a landmark sponsorship agreement with the China Mahjong Association under a three-year deal which makes Playtech the exclusive software provider to the CMA. Mahjong is China’s most popular game, and as part of the agreement, Playtech sponsors the CMA’s annual championship and the quarterly regional championships, with the events renamed the “Playtech China Mahjong King Championship” and “Playtech China Regional Mahjong Finals” respectively. Playtech also sponsors the CMA World Mahjong Championships. With the CMA deal, Playtech will develop its brand presence in the potentially lucrative China market. It was Playtech’s Asia expertise that enabled it to clinch the deal. CMA Chairman Sheng Qi explained: “We chose Playtech over other potential sponsors as they demonstrated an outstanding knowledge of Mahjong, of China and its regulatory framework and had existing extensive Asian and Chinese support operations already in place.” Another major China-focused contract signed by Playtech last year was with Hong Kong-listed CY Foundation Group Ltd to supply P2P gaming software within China. A subsidiary of CY Foundation Group Ltd has signed licensing agreements with an operating arm of the Communist Youth League (CYL). CYL is responsible for the implementation of China’s “Green Internet Policy”, which seeks to provide duly licensed play for cash prizes P2P tournament games via internet cafés situated throughout China.

27 RFID

The Need for Speed The delivery of fast, accurate and understandable data may be the key to successful casino management

casino table and a racing car management is part of the vital ‘front cockpit do have a few things line’ of that effort. Ain common. They are places The information provided by generating a lot of information, CIS assists casino staff in a number which needs to be digested and of key areas including: live game analysed in a matter of seconds. management, minute-by-minute Decisions based on that data can inventory audit and fraud detection make the difference between a and prevention. Progressive’s place on the winner’s podium or system is already used by major being an also-ran. gaming operators in Macau From a casino house perspective, including, Crown Macau, Wynn the judgement calls made by staff Macau and Galaxy Entertainment at table level can affect the number Group. The latest addition to the of bets processed per session and the system is an RFID-enabled dual level accuracy of the accounting procedures. chip tray to cope with the high volume When extended across many tables and betting common in the region. The dual level many hours of play, this can be the dividing tray is currently undergoing trials and will be line between a healthy margin and a slim released on to the market later this year. one, or even a profit and a loss. The ability to monitor play data Speed and coverage accurately and quickly is especially critical in chips quickly and directly from the chip tray RFID in itself isn’t new. Tagging technology Asia where the intensity and volume of play is the key to its success, says Bryce Rubio, was first used 15 years ago by the United is often significantly higher than in other Progressive Gaming’s Vice President and States’ Department of Defense, amongst markets. General Manager, Asia. others, to monitor some of its equipment. What is new in casino applications is the Margin maintenance From tray to play speed and comprehensive coverage of the Progressive Gaming International “The system gets significantly more CIS system, says Mr. Rubio Corporation [PGIC] has created a hi-tech powerful and flexible if you have an RFID The high frequency 13.56 MHz Phase chip tracking system based on radio chip tray. This is one of the most critical areas Jitter Modulation (PJM) technology frequency identification (RFID) technology from an operator’s point of view,” he says. employed not only reads tags very quickly, that helps maintain and even build the “With technology like this you can read it can also differentiate between individual margins of casino operators working in the the whole chip tray in real time, all the gaming chips. In telecommunications ‘jitter’ high intensity Asian market. time. Speed is very important. The speed is normally a negative phenomenon of The product, known as the Chip Inventory of read is one of the questions operators physics because it represents an unwanted System (CIS), helps monitor and protect what always ask first.” variation in a signal’s characteristics–for is the most valuable and potentially also the Monitoring betting patterns and example in frequency–that can lead to data weakest part of any casino management preventing bet fraud are the most obvious loss. In some applications though such as system–its table chip stock. Like banknotes, applications of this technology but other RFID technology, jitter is a blessing, because it gaming chips are essentially receipts for important elements are player tracking enables the signal variations to be used to sift value that can (with the exception of VIP and player marketing, says Russ McMeekin, through tightly packed items and read them. rolling chips) be redeemed for hard cash. Progressive Gaming’s CEO and President. PJM can also write data at speeds of up to That’s why casinos still have security guards The company’s information technology 424 kilobits per second and read data at 106 to escort chips to and from casino tables. products cover all aspects of running a kbit/s from 8 chips simultaneously allowing The ability of Progressive Gaming’s casino from back office reporting and cash a lot of information to be transported and product to read tags embedded in gaming desk management to slot monitoring. Table sifted in a very short space of time.

28 INSIDE ASIAN GAMING | March 2008 RFID

Gaming’s system reduces the chances of Gaming’s Marketing Director. players’ attention being distracted or broken A coherent IT strategy using and them getting up to go elsewhere. Fraud buster good quality programs and “The last thing a casino operator wants “Our system can read chip denomination is for his system or his technology to slow as well as quantity. It’s the only one that can robust technology systems down play,” explains Mr Oosthoek. do this. Other systems will give you the is particularly important “Right now we’re reading everything total chip volume, but won’t give you the instantaneously,” adds Mr McMeekin. breakdown.” for operators wishing to “With other systems you experience a “Even when casino chips are stacked manage several properties four- to eight-second lag or more if there is a together, 13.56MHz PJM can still read them large number of chips. We can do hundreds and send the data back to the system where from a central location, says in mere seconds. We can read the entire chip its sorted into relevant groups such as Mr McMeekin. tray without a break.” denomination,” adds Mr Oosthoek. “That’s one of the strengths of our 13.56 Smooth play MHz PJM technology. It can read a lot of tags “If an operator is seeking to A smooth flow of information on who’s that are very, very close together. This is a manage information across betting on which games and how much, can completely different requirement than for reduce the likelihood of a high stakes game example the RFID tag used to identify your several properties, then the being interrupted at a crucial moment in suitcase as it goes through an airport,” he data numbers can be pretty order for a chip tray to be filled or the chip explains. inventory to be counted. frightening without a PJM “When an operator does a chip tray Theft prevention fill, the Chip Inventory System can check CIS also guards against more traditional system,” he points out. if the fill is going to the right table and if forms of dishonesty such as physical theft. it’s been accepted in the chip tray,” says Mr “When the chip tray is in locked mode Oosthoek. “All this happened in real time or is in the process of being locked, if Speed essential and can be monitored via a workstation, anyone attempts to take chips out, the “With a typical tray fill of up to 600 chips, either remotely away from the gaming system registers this and an alert is sent. It our system takes two seconds or less to read floor or from the table’s management isn’t a blaring horn on the gaming floor but and register it,” says. Mr Jeroen Oosthoek, system PC at the table.” an electronic alert to a predefined group New Business Director, Asia. Fraudulent events such as pinching such as surveillance and key members of Two seconds also happens to be the time and capping, where players attempt to management,” says Mr Oosthoek. it takes the average male pedestrian to walk retrospectively manipulate their bets “Those chips are then electronically ten feet according to a study published by the depending on whether they or the bank hold ‘marked’ as stolen or missing. Information United States’ Transportation Research Board. a winning hand, can be eliminated by 13.56 about them can be put either manually or In other words, the speed of Progressive MHz PJM RFID, says Sandra Low, Progressive automatically into a program called Chip

March 2008 | INSIDE ASIAN GAMING 29 Hound. The system will effectively flag those closes to work out the exact table win for that chips and the next time they are presented session. Until that point, the management for cash or play, an alert will pop up or be team is essentially relying on experience and sent out to management.. rough calculations “With a non-RFID system at end of the Unique technology day the management sees how many chips The key to the successful application there are in the chip tray and compares it of Progressive Gaming’s RFID system is the with when they opened the table for that versatility of the antenna systems. session. That’s essentially going to be their It would be hard, for even an experienced table win,” says Mr Oosthoek. gambler, to tell the difference between “For Macau which has such a high Progressive Gaming RFID enabled table and volume of chips being played and so much a conventional one. What the player would money going around, that system is a rather notice though is the ability of the dealer and rudimentary process. You have this big the casino management to maintain the unknown all the time during the day. It’s sort pace of play even in high volume games, of ‘after the fact’ calculation. You can judge without the need for interruptions related to it against all sorts of statistics for things like housekeeping issues. the average percentage for a baccarat table The heart of the system is hidden away on its drop, but they are only statistics and inside the tags embedded in the gaming not an absolute measure. This is particularly chips and in the antennae inside the table. the case with baccarat which is quite volatile Under the surface of the table’s betting area for wins,” he adds. are wafer-thin loops that act as antennae and send a dome shaped signal over the Margins boosted table to a height equal to a stack of around Real time monitoring via 13.56MHz PJM 35 gaming chips. RFID helps not only to maintain speed of play On the outside, the RFID chip looks but also to maintain or even boost margins, and feels like a standard gaming chip. On suggests Mr Oosthoek. the inside, each chip is embedded with “The pace of play—the number of a tiny radio frequency (RF) microchip. ‘decisions’ per hour as it’s known in the When a gaming chip is placed in the business––is a key part of the business. A betting circle, the antenna emits an good dealer with the right system behind electromagnetic field that enables it to him or her can maximise the number read the value of the chip and relays the of decisions an hour, and each time the data to the table’s desktop computer and operator is getting a percentage out of that,” the back office system. he explains. The Chip Inventory System allows updates Flexible reading of the chip stock or float level minute-by- The ability of the system to read chips minute, rather than hour-by-hour. stored either horizontally in the chip tray “In a non-RFID system, managers like to or stacked vertically on the table is the count chip trays every hour, because if you company’s proprietary knowledge, says wait until the end of the table session, it Sandra Low. could be too late,” says Mr Rubio. “For operational purposes we don’t go normally higher than 20 gaming chips, but Manual versus automatic system wise we can go–depending on the “They manually count all the chips and antenna–to 35 high,” adds Mr Oosthoek. compare the tally to the drop and make “The system uses a dual axis antenna sure those ratios are in line. They also try which means it can read and create a field to get an idea of how their turnover on the at different angles. In this case it can read floor is building up, and where the turnover chips that are placed on it vertically. This is is. For example they may want to know quite special from a technological point of whether to open one pit and close another. view. We had to specially design it for this It’s s disruption though because even for market.” experienced staff it takes time every hour to do this. Instant results “Our system can do the count With a conventional non-RFID enabled automatically in real time. If for example tray system, casinos have to wait until a table the management is concerned about an

30 INSIDE ASIAN GAMING | March 2008 RFID

individual player or a pattern of play, they a modular system of casino management an S2S interface that would allow non- can look at that table in real time, rather offered by Progressive Gaming. Operators Progressive Gaming table management than having to wait for an hour for the next have the option of purchasing other systems to ‘talk’ to our system.” manual count to come round.” modules that cover functions such as Cash Another factor potentially slowing Desk management or Casinolink Analytics – Dumb chips, smart system down table management is that in some an advanced business intelligence tool—as The tags within the gaming chips jurisdictions, including Macau, the regulator they grow their business. The Chip Inventory themselves are kept relatively simple, adds has to sign off any fills or credits to a table. System has also been engineered to work Mr Oosthoek. “They are what’s known with other management systems provided as passive technology. They don’t have Dual trays by other vendors. a battery or power source inside but are Progressive Gaming has also developed powered via the energy emitted from RFID enabled dual level chip trays especially Interchangeable antenna instead. The tags are kept as for Asia. “We’ve made it possible to communicate simple as possible because you need a lot “We are the only company to offer this. with our CIS system through an S2S [system- of them and you want them to last a long They will be coming to market in the next to-system] interface,” says Mr Oosthoek. time,” he explains. few months. With conventional trays you “The system has been engineered “We try to keep the tag within the would need fills and credits much too often to comply with the Gaming Standards gaming chip as ‘simple’ as possible and have due to the volumes of business and chip Association (GSA) standards for inter- them provide the key basic information and activity. In the US or Europe you don’t find operability” Mr Rubio adds. put the intelligent life into the software and many dual level trays being used.” “When we developed the 13.56MHz the system. It’s all about adding value to the The Chip Inventory System is part of PJM chip tray we realised we also needed gaming operation.” Progressive Gaming Platforms RFID Solutions offering from Progressive Gaming includes activity at every table. and cage management systems, built upon the Operator benefits claimed by Progressive Gaming: latest software technologies. Progressive Gaming also has a joint - Pit clerks spend more time on customer service, less time venture with IGT on table management. keying in data; Mr McMeekin explains that Progressive Gaming also has - Customers applaud the ability to cater to them individually cutting edge products such as Rapid Bet Live that allows its and assign them objective and fair ratings; customers to run a proposition betting system on poker and non- - Costs decline and operators see returns many times over on casino sports. their technology investments. “We’re the only people who have within the same system, TableLink modules can be implemented alone or as an the possibility to bet on the outcome of a game plus proposition integrated suite on all of a casino’s existing tables. betting, either on traditional wired terminals or wireless devices. Betting on ‘Is he going to pass? ‘Is he going to kick the ball?’ ‘Is he TableLink Player Tracking™ (PT) going to score within two minutes, three minutes, four minutes?’ This, the core TableLink module, enables the casino to track, It’s all within one system, and this is something being considered in real time, each player’s time-on and average bets at the tables. for licensing by the regulator in Macau.” With TableLink PT, profit-critical decisions, such as selecting “We’re the second largest provider of sports wagering systems, bonus players, are no longer subject to human observation and but the fastest growing,” he adds. guess work, says the Bryce Rubio, who continued by saying that TableLink PT also has the ability to integrate with an existing Chip Inventory System (CIS) casino management system. The architecture of CIS consists of an RFID enabled gaming chip and chip stations placed around the casino in cash desks or TableLink Chip Tracking™ (CT) on tables and connected to a central database server. This interface sees the enablement of RFID functionality with CIS allows for the connectivity of many devices (chip stations) TableLink PT for an even more detailed view of table play. Using chip and applications throughout a casino from the cage, to the vault, sensors, TableLink (CT) tracks each chip as it’s wagered, revealing to chip banks, tables and chip trays. This comprehensive approach an up-to-the-moment handle for each player. With TableLink (CT), enables any casino to monitor their chip inventory in real time player ratings are assigned accurately, complimentary allowances through instant chip validation at any point, providing the are awarded objectively and the customer database becomes a movement history of each chip during the course of its life. source of information for future marketing efforts. TableLink® Alerts/Paging Progressive Gaming’s TableLink product is a comprehensive The company says the TableLink suite can be easily configured to and fully featured suite of software products that enables incorporate an alerting service. This allows casino personnel to send casinos to automate table accounting and player tracking and receive notifications via e-mail, mobile phone, pager or PDA.

March 2008 | INSIDE ASIAN GAMING 31 RFID

Highs and Lows The debate around RFID systems

Much has been written about the pros and cons of low Passive frequency (LF), ultra high frequency (UHF) versus high frequency Passive tags have no internal power supply, as their name (HF) RFID systems. The gaming industry has generally opted for suggests. They are mostly limited to transmitting a response high frequency systems, as these are considered more robust to an interrogating signal though some can have data ‘written’ both to handle the amounts of data required and to cope with onto them. They can only be read accurately when placed short public or semi-public environments with large numbers of people distances from the interrogating device—typically 10 centimeters using radio signal equipment such as mobile phones, which can (4 inches) up to several meters. create electronic ‘noise’. One of the main advantages of passive tags is that because Other businesses may not need RFID systems engineered they don’t need an independent power source they can be made to the same standards as casino operators. Unlike other as small as silicon technology currently allows. Microchips have more high profile technology tussles in the consumer also become relatively cheap to manufacture as the production sector—such as the Betamax versus VHS debate seen in the technology has been exported to emerging economies such as home video market in the late 1970s and early 1980s—RFID China and India. systems tend to be selected on the basis of how fit they are In 2006 the Japanese electronics manufacturer Hitachi for purpose. High, ultra high and low frequency RFID all have produced a tag less than 7.5 micrometers deep—the average their applications and their supporters in many different thickness of a piece of writing paper, meaning that potentially industries. Deciding which configuration to choose depends casino playing cards as well as chips could be given an electronic on customers getting impartial advice tailored to the practical signature. While tags have been miniaturised to the degree they needs of their business. can now be implanted under human skin, in the longer term the theory known as Moore’s Law predicts that the silicon technology Tags used in microchips will hit a technological brick wall. It suggests Most RFID tags consist of two parts—an integrated circuit silicon will lose its power to conduct electricity once it gets for storing and processing information (including radio signals) beyond a certain critical point of miniaturisation. and an antenna for receiving and transmitting those signals. A system called chipless RFID means identifying tags can be Active printed directly onto assets. This is cheaper than installing tags Active tags have their own internal power source to process containing integrated circuits. and transmit data and typically have fewer read and send errors Although the gaming industry appears to have settled on the than passive tags. Active tags transmit at higher power levels than high frequency route, another issue has been whether to adopt passive tags, allowing them to be more effective in places where ‘passive’ or ‘active’ tagging. Active tagging is generally more radio signals face interference or blocking from environmental or expensive than passive tagging, and there are currently some human factors. Many active tags typically have effective ranges of issues on miniaturisation with regard to active tags. 500 meters (1,500 feet) and a battery life of up to 10 years.

32 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 33 Stellar Commitment Elixir Gaming Technologies has a knack for exceeding expectations. Having blown away its target for securing contracts to place electronic gaming machines around the region, the company is striving to create slot venues that are star performers in their respective markets

GT’s crowd-pulling Star Wars™ floor design layout, purchases the machines wins on the machines. EGT’s actual share progressive slot machine made its Asian and management systems from top is higher than that, however, and looks Idebut at the new 240-machine PAGCOR manufacturers (IGT, Aristocrat, Bally, Melco, poised to rise further. Slot Club in Manila, developed as part of a etc.) for the venue, installs the gaming turnkey solution provided by Elixir Gaming machines and systems, and provides on-site All in good hands Technologies, Inc. (EGT). maintenance. EGT insists on controlling 100% of the It was only in September 2007 that EGT The agreements with the property gaming machine floor at all the venues it started offering its turnkey solutions to 3, 4 owners are valid for five years, and are helps develop. As EGT Executive Director and 5 star hotels, cruise ships and other well- automatically renewable. EGT retains and Senior VP Joe Pisano explained in the located venues throughout Asia seeking to ownership of the gaming machines, and, January issue of Inside Asian Gaming: “I open slot clubs at their properties. importantly, also the management system want to be able to determine what games In return for a share of the slot and data. By owning the system, which go on the floor, and if there are games revenue, EGT assists the property owner runs the players’ club, EGT essentially owns that aren’t working, I want to be able to with the licensing process, casino design, the players. According to market guidance, change those games. If you have other construction management, slot and game EGT receives not less than 20% of net products on the floor, it’s a bit difficult to

34 INSIDE ASIAN GAMING | March 2008 Slots and Tech

manage the complete floor mix.” announcing in January that it had already and the Elixir Group is widely recognized in Furthermore, EGT is one of the best secured contracts to place 5,530 machines the gaming industry in Asia for its industry placed companies in Asia to negotiate the across 33 venues, with 2,400 contracted at 12 leadership and distribution capabilities. acquisition of the most popular products, venues in the Philippines, 2,230 contracted Further, Elixir International, a strategic such as the Star Wars™ progressive, at at 17 venues in Cambodia, 400 at 2 venues in partner of Elixir Gaming, has a research and the best prices from leading slot machine Vietnam and 500 aboard 2 cruise ships. development team that has developed and manufacturers. A humble hotel operator in EGT expects to install about 1,000 units manufactured what in our opinion is the the Philippines or Cambodia would not get per quarter over 2008, and is on its way to best slot machine cabinet currently available. quite the same reception from IGT as would having “an installed base in excess of 2,500 It has been designed to support both the Mr Pisano, who incidentally once headed gaming machines by late March/early April traditional slot machine model as well as the Asia-Pacific business development at IGT. 2008,” according to Mr Pisano. He added: developing server based gaming models. Mr Pisano has thirty years of experience “Importantly, at the same time Elixir Gaming’s While we fully understand the gaming in gaming technology, and along with the contracted pipeline continues to steadily software and games content industries and rest of the EGT management team, offers grow along with the average daily net win at represent some of the leading products formidable experience and insight to start- the venues currently in operation.” in Asia, we were struggling somewhat on up gaming venues, which, without EGT, the physical machine development and would probably have struggled to even get Logical cooperation ongoing support. By entering into this co- off the ground, let alone draw crowds with In February, EGT and AsianLogic—a operation agreement with Elixir Gaming, we big-name attractions. leading Asia-focused gaming company— can delegate this critical side of the business Although bringing Star Wars™ to Asia was entered into an Asia-wide co-operation to the Elixir Group and focus on rolling out a coup, EGT uses its experience to do much agreement in the gaming machine and games and gaming concepts utilizing both more than get deals from manufacturers. server based gaming sector. According to of our distribution channels.” Experience enables EGT to determine “what an EGT announcement: “The Companies EGT Executive Chairman and CEO Gordon works for what market,” says Mr Pisano, and intend to collaborate on marketing efforts, Yuen also gushed about the prospects of the to set up and run venues in an optimal distribution agreements, game content, partnership, which would give EGT “access to way. An example of EGT expertise in action gaming software, server based gaming additional games, gaming software, server was the recent reconfiguration of the slot experience, manufacturing and additional based gaming experience and some unique floor at Casablanca Casino—EGT’s first gaming technology.” offerings which we believe will enhance property—located within the Clark Field AsianLogic operates online casinos and net win at our existing and future outlets Special Economic Zone in the Philippines. peer-to-peer (P2P) game platforms across as well as further strengthen our leading Following the reconfiguration, Casablanca the Asia-Pacific Region, as well as land-based strategic position in Asia. We recognize that Casino’s average net win per machine per outlets in the Philippines. It AsianLogic, in conjunction with its software day exceeded its annual target of US$125, also distributes leading gaming content, providers such as Playtech and Videobet, and the gain was sustained for a month, software and systems. understands the importance of cross suggesting it is not a temporary blip. AsianLogic Vice Chairman Tom Hall marketing, database mining and gaming The demand for EGT’s turnkey solution elaborated on the benefits of the agreement: across multiple platforms such as land- is, unsurprisingly, huge. The company had “The explosive growth of the slot market in based, online and mobile. We are confident originally targeted securing commitments Asia makes compelling logic for us to formally that through combining the two strengths to place 3,000 electronic gaming machines partner with Elixir Gaming as they are the of the organizations we will continue to offer on a long-term participation basis around clear market leader in this space. The senior the leading and optimal revenue generating the region by the end of this year. That management of Elixir Gaming has many years products to gaming venue operators across target has long since been beaten, with EGT of experience in the Asian gaming industry the Asia-Pacific region.”

March 2008 | INSIDE ASIAN GAMING 35 Online Gaming

Seeing is Believing Asian gamblers like online games with a real casino feel

or Asian gamblers, seeing is believing, says Hwa-Min Hsu MBE, an international Flawyer and marketing expert with experience of the high stakes worlds of diplomacy and gaming. “Asian people don’t like random number generated games,” he explains. “They like to see and feel cards being turned.” “With all automated online games, they feel hackers can intervene and that software can be used to cheat. Chinese people believe nine out of ten gamblers are cheating in any case, so live games are preferred.” Trusted products The understanding that Asia is a low- trust business environment—at least as far as gaming is concerned—is what drives the business model of iFaFa. Philippines-based iFaFa was set up in 2005 as a subsidiary of a UK holding company, and offers a comprehensive service for online operators in Asia ranging from start-up support to software, hosting, online broadcast studios an Internet chat facility between player and trust, and in the cyber environment there are and agent networks. dealer isn’t enough, says Mr Hsu. many potential weak spots for that chain of iFaFa specialises in helping online “You must know what you’re doing. That trust to be broken, suggests Mr Hsu. companies create casino-style products that means in terms of the software provider, are live and interactive, replicating as much studio provider, general agent and sub Cheaters and trusted agents as possible the feeling and atmosphere of agents. The software also has to be localised An example cited by Mr Hsu is a case actually being in a bricks and mortar casino. and customised.” in Taiwan where the dealers in a live online “Last year, 27 million people visited game knew in advance the turn of the cards. Macau,” says Mr Hsu. “After they’ve been to Fair play “Are you surprised? Don’t be surprised. Macau, people—especially the ones that live Crucially, the game play needs to be Be careful with your partner. The online Asian in China—want to come back. But because of perceived by Asian players as fair, says market is a tough, difficult and dangerous the visa problem, because of transportation Mr Hsu. place,” he warns. or because of their job, the Internet is the “Fairness is very important,” he explains. This low-trust culture can also apply most convenient way for them to do it.” “This is why baccarat is so popular in between operators and their agents, says Asia—not just in Macau, but also in The Mr Hsu. Casino atmosphere Philippines, Korea, Malaysia and soon “At iFaFa, we organise the agents. We So how do you make that target Singapore. use reputable people. They are former audience—eager to rekindle that Macau “Baccarat is a , not skill, ambassadors, lawyers, bankers and feeling and eager to be entertained— unlike poker, where the more you play the accountants. feel they’re back in a real casino? More better you get. I’ve seen a baccarat player “If you don’t know the agent system, you importantly, how do you get them to trust with 40 years’ experience beaten by a dealer can’t do business in Asia. They are the people the gambling process, when in reality they’re who was in his first day on the job. who take the commercial risk on profit and sitting by a modem, keypad, computer “For Asians, baccarat should be a fast, fun loss, they do the marketing and they collect screen and speaker? Simply having live and above all, fair, game.” the payments. video streaming to a dealer in a studio and All online gaming essentially relies on “On the technical side, we also use highly

36 INSIDE ASIAN GAMING | March 2008 Online Gaming

qualified engineers. These are all legitimate you take a business over, you’re not going to quickly,” explains Mr Hsu. people to help guide you through what can lose all the agents overnight, and that you “You have to train the dealers, you have be a Wild West market.” have the right people to run the business for to hire all the knowledgeable people and As a hosting company, iFaFa says it’s you,” says Mr Hsu. know where to get funding. You also have to careful to protect the confidentiality of iFaFa says market newcomers not know the local markets. Japan, Korea, China, each client’s player database. The iFaFa going down the M&A route can save a lot etc., are different, and the demands are all servers are housed in locked cages at an of time and money by taking up one of its different. It can take six to eight months just independent data centre with 24-hour ready-made start-up packages tailored to to negotiate for a licensee. Software also has security, including guards, biometric locks clients’ budget and needs. This includes to be localised, and each country is different,” and CCTV surveillance. Clients are also given the application for a Philippines operating explains Mr Hsu. the option to house their data on their own licence. proprietary and exclusive servers. Regulation Time is money “Last, but not least, you need to find a Partners and mergers “If you go in cold in Asia, it will take legal jurisdiction. As a Philippines-based As well as protecting clients’ existing 10-12 months even if you’re doing it company licensed by the Cagayan Economic market share, iFaFa also helps with expansion, including the identification of suitable partners and potential merger and acquisition targets in the Asian online gaming markets. “With a partnership you need to select the right party,” says Mr Hsu. “As well as being trustworthy with a good reputation, good experience and good connections, they must also be a company not too busy to look after you.” As the online Asian gaming business becomes more mainstream and respectable, many of the more swashbuckling pioneers are ready to sell out. This is where iFaFa’s market knowledge and contacts can prove invaluable, says Mr Hsu. “Often, it’s hard for these operators to get out quickly, because they have a network of agents and sub-agents working with them. “There are big opportunities for mergers and acquisitions, but you have to be careful. You have to make sure, for example, that if

March 2008 | INSIDE ASIAN GAMING 37 iFaFa products

Software iFaFa software can be fully customised, allowing clients to select between different components including single or multi-player skins, streamed music or sound and interactive chat. iFaFa ensures that software complies with the requirements of target markets and with industry accepted standards. The company’s software has been tested and certified by Technical Systems Testing, which is recognised throughout the online gaming industry as a world leader in Internet platform testing.

Live streaming Zone Authority (CEZA) through First iFaFa’s game products include live baccarat, live blackjack, live roulette, Cagayan Resort and Leisure Corporation and live sic bo. The company uses advanced video streaming technology for (FCLRC), we have the advantage of Asia’s its live dealer games. Its platforms allow players to see real dealers perform first regulatory regime for online gaming. actions such as dealing cards or spinning roulette wheels in real time via a It’s totally legal, 24 hours a day, seven live video stream broadcast over the Internet. All live dealer games come days a week. Most importantly, we receive constant support from CEZA Administrator, with the option of streamed sound. Mr. Jose Mari Ponce, and FCLRC’s President and Legal Council, Mr. Alfredo B. Benitez Studio and Ms. Katrina L. Nepomuceno, whom are iFaFa provides comprehensive services including a professional live all fighting to legalize online gaming in gaming studio and operations team. As with the software, everything can the region as well. I think the Philippines be customised to meet clients’ specifications. is going to be the capital of online gaming iFaFa works with casino consultants from Las Vegas who periodically in Asia.” Mr Hsu knows a few things about how review all policies and procedures in its operations department. The to negotiate a deal. He is a former legal company says croupiers and supervisors go through a rigorous training adviser to the UK government on Taiwan programme to ensure they are proficient in all current games, as well as affairs and has delivered lectures to the those being developed for future release. United Nations on Chinese law. He also has a deep knowledge of gaming law and the Hosting implications and obligations of operating iFaFa provides experienced and skilled engineers to set up and manage online in Asia. hardware and software systems that have built-in redundancy and security. Clients are then free to focus on administrative and marketing responsibilities. Experienced team Other members of the iFaFa team include Web servers, report servers, encoders, firewalls and routers are located in executives with experience of developing a secure off-premises hosting centre managed by iFaFa’s operations unit. online gaming products in Asia, and of The company also supplies operational hardware, including cameras, running online gaming businesses in the UK dealer terminals and casino equipment, as well as providing a dedicated and Asia. iFaFa also claims experts with more account manager to assist online casinos from setup to implementation than 40 years of Asia-focused marketing and operation of all iFaFa systems. experience, a former vice president of Atlantic City and Las Vegas casinos and staff with investment banking background in Consultancy and support London and of guiding businesses toward iFaFa says it can guide new operators through the entire start-up public listings and through mergers and process and can provide advice and support on company incorporation, acquisitions. gaming license applications, registration of websites, taxation and payment “In Asia, you have to know the Asian way systems. and you need the right advice,” says Mr Hsu. All products and services are backed by a round-the-clock multilingual “Be cautious about who you trust, but don’t think about killing your competitor. client support team. Work together and live together. There is room for more participants in this market.”

38 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 39 Briefs

investment, the casino might become the country’s top casino performer, but did not reveal how much the investment would Regional Briefs amount to. Star City accounts for half of Tabcorp’s casino division business and represents a fifth of Tabcorp’s business overall. First half net profit New Thai PM Covets Casinos rose 22% to $273.4 million. ’s newly-appointed prime minister, Samak Tabcorps’ priorities for the coming 12 months will remain its core Sundaravej, expressed a desire to follow in the footsteps of operations. “This will include the redevelopment of Star City Casino, Macau and Malaysia by legalising casinos in his country, if he the expansion of in New South Wales and continued investment completes his four-year term. in our wagering retail network,” said Mr Funke Kupper. Addressing reporters in , he suggested that tourist areas The brands managed by the company include Star City and such as Pattaya, Phuket, Khon Kaen, Chiang Mai and Hat Yai present Conrad Jupiters casinos, TAB, Tabaret, Keno and TAB Sportsbet. The the best locations for the first phase of the country’s possible casino company claims that its three major business units, known simple as development. Casinos, Wagering and Gaming, employ more than 11,000 people in Proposals to legalise casinos in Thailand have arisen sporadically all States of Australia. in the past, but no progress has ever been made towards realising Tabcorp’s reported revenue for the second half of 2007 rose those proposals, in large part because the country’s popular king 1.8% to $2.03 billion. Earnings before interest and tax (EBIT) rose vehemently opposes the idea. Sundaravej is hoping to give it one 1.6% to $138.7 million in the gaming division and 0.4% to $190 more go, however, given the huge potential economic benefits million in the casinos division, but fell 8.9% to $130.8 million in the casinos could bring to the country. its wagering division. Currently, the only legal forms of gambling in Thailand are a and two horse racing tracks. However, illegal gambling is rife, and the prime minister argues the only viable solution is LVS Awaits Cotai Approvals to offer a regulated alternative. “This way, the illegal dens and Las Vegas Sands Corp (LVS) revealed in its latest annual report private casinos will close down. If people want to gamble they that it had already commenced construction or pre-construction can come here.” of its projects on parcels 5, 6, 7 and 8 on the Cotai Strip, even though However, the results of a recent survey conducted by the it had yet to receive land concessions from the government for Assumption University of Bangkok suggest the prime minister’s those parcels. plans may go against the wishes of the Thai population. Less than a Proceeding with construction ahead of finalising all land third of respondents supported the prime minister’s plan, while 56% agreements is a common practice in Macau. For example, Melco PBL said they did not want casinos to be allowed in Thailand. Entertainment (Macau) Ltd only received the necessary approvals for its City of Dreams resort along Cotai last month, even though it broke ground on the project in April 2006. Tabcorp Gets Star City Boost The four parcels sit across road from the sprawling Venetian Macao resort, unveiled by LVS in August last year. LVS plans to build 12,550 hotel rooms at the sites, in addition to extensive gaming, retail and entertainment facilities. LVS is already building two Shangri-La Hotels and Resorts, as well as a St Regis hotel, on parcel 5. It also plans to develop a Sheraton hotel on parcel 6, and Hilton, Conrad, Fairmont and Raffles hotels and serviced apartments on parcels 7 and 8.

MGM Hosts China’s Next Top Model Gala Show MGM Grand Macau hosted the gala show of the final episode of the first season of ‘China’s Next Top Model.’ The show has proven popular in the mainland since it first aired at the start of this year. MGM GRAND Macau Managing Director Pansy Ho, who is a guest judge of the final episode, Tabcorp’s Conrad Jupiters considered the “artistic ambience and tasteful lifestyle everywhere Tabcorp Holdings Ltd announced it will spend more than within the hotel” an ideal match the originally budgeted A$300 million for the expansion and “with the superb style and charisma The stage is set for the gala refurbishment of its Star City casino in Sydney. of the ‘China’s Next Top Model’ show at the MGM Grand Macau Tabcorp CEO Elmer Funke Kupper hopes that following the competition”. Grande Praça

40 INSIDE ASIAN GAMING | March 2008 Briefs

MGM GRAND Macau President Bob Moon stressed that Macau Thus, while the opening of Crown Macau helped MPEL’s net was the “perfect choice” for the event, citing “figures recently released loss narrow to $36.5 million for 4Q 2007, compared to $53.0 in the by the Macau Government Tourist Office showing that Mainland year-ago period, the property could have made a much bigger China remains the largest source of visitors for Macau, accounting for contribution to the company’s bottom line. more than 55% of total visitor arrivals in 2007.” Following Crown Macau’s implementation of its new ‘China’s Next Top Model’ is an adaptation of popular US reality TV arrangement with AMA, its rolling chip volume has embarked show ‘America’s Next Top Model’. on a steady ascent. MPEL CEO and co-Chairman Lawrence Ho commented: “Good progress has been made in the period since our last quarterly report. Core rolling chip business at Crown Macau has continued to make significant market share gains. Crown Macau delivered sequential hold-adjusted EBITDA growth in every month of the third and fourth quarters of 2007, and this trend has continued into the first quarter of 2008 with January’s hold-adjusted EBITDA meaningfully increasing from December levels. February is off to a good start, driven in part by the seasonally strong period which immediately follows Chinese New Year. “It is gratifying to see Crown Macau on the path to reaching its full potential, following our decision over six months ago to execute a reconfiguration of the property to focus heavily on the junket supported rolling chip market segment. This emphasizes the original vision for Crown Macau, and we view our initial performance thus far in 2008 as clear validation of this strategy. “In the fourth quarter, total monthly rolling chip volume at Crown Ms Pansy Ho and Dr Flora Zeta at the gala show Macau increased from approximately HK$20 billion in October to HK$30 billion in December. In January, total monthly rolling chip volume jumped to over HK$50 billion. January was the first full month Crown Macau Snags Market Share of operations that reflected our agreement with AMA International Melco PBL Entertainment Limited. We estimate that Crown Macau achieved a table games (Macau) Ltd (MPEL) reported Q4 market share of 16% in January, up from 9% in December. Our 2007 revenue of US$179.8 million, February table games market share at Crown is estimated to be up from US$17.9 million in the year- approximately 18% through February 17th.” ago quarter. The primary cause of the surge in revenue was the start of operations of the company’s first Goa’s Maharajah casino, Crown Macau, earlier in 2007. According to the South Asian Post, a new large-scale offshore Prior to the arrival of Crown Macau, casino offering ‘no-limits’ tables is set to open in Goa in April. Goa is which targets VIP gamblers, MPEL’s the only place in India where casinos are legal. main source of revenue was its string The ‘Maharajah Casino’ will be operated by Creative Gaming of Mocha Clubs slot venues. Solution, a subsidiary of Mumbai-based Pan India Network Infravest Crown’s adjusted EBITDA for Pvt Ltd (Pinipl), the promoter of the Playwin lottery. 4Q 2007 was $4.2 million, which, Pinipl managing director Amar Sinha said “it will be the biggest according to the company, was held offshore casino and will be back by an unusually lucky run for its VIP players. “Our expected an added appeal for tourists rolling chip table games hold percentage remains at 2.7%. Rolling to visit Goa.” chip volume totalled US$8.5 billion for the fourth quarter of 2007. Goa, like Macau, was Actual rolling chip table games hold percentage in the fourth formerly a Portuguese quarter (calculated before discounts and commissions) was below colony (for 450 years until our expected level at 2.4%.” By contrast, Wynn Macau’s 4Q results India took over in 1961), and were boosted by an unusually unlucky streak for its players, with has become a popular tourist rolling chip table games hold reaching 3.1%. destination for both Indians During the quarter, Crown Macau’s expenses were pushed up by and foreigners, thanks to its Goa’s appeal the recruitment and training of 350 table game staff in preparation for beaches, lush forests, and world heritage architecture. the launch of the property’s new arrangement with junket operator “Many Indians who regularly frequented casinos in Kathmandu AMA International Limited . The preparation for the AMA agreement have been hunting for alternatives in and around India owing to the also involved a 12-week reconfiguration of Crown Macau, during recent bouts of unrest in the Himalayan kingdom,” said Mr Sinha, and which gaming capacity was reduced by approximately 40%, and Goa certainly offers an attractive alternative. . access to food and beverage outlets at the property was restricted, The company is expected to earn revenue of around Rs.1 billion significantly holding back revenue. (US$25 million) in its first year of operations.

March 2008 | INSIDE ASIAN GAMING 41 Briefs

construction CityCenter development to Dubai World during the quarter, contributing to a rise in net income to US$872.2 million, from International Briefs $201.6 million in the same quarter of 2006. MGM MIRAGE said it also benefited from a strong quarter at the gambling tables. Overall gaming revenues increased 2%, helped by a 17% increase in baccarat volume and a 3% increase in slot Accounting Reviews Hurt Harrah’s 4Q machine revenues. Harrah’s Entertainment, which was recently taken private, The company reported a 5.6% increase in overall quarterly said it swung to a fourth-quarter loss, hurt by charges from revenue to $1.9 billion, from $1.8 billion in the year-ago quarter. accounting reviews. Revenues for all of 2007 were almost $7.7 billion, compared with $7.2 Las Vegas-based Harrah’s, the world’s largest gambling company billion in 2006. by revenue, posted a loss of US$47.8 million in the fourth quarter Dubai World owns almost 20 million shares of MGM MIRAGE, of 2007, compared with a which equates to 6.7% of the company. Dubai World will own 9.4% of profit of $47.6 million in the the gaming company when it completes a pending stock purchase. same quarter a year earlier. Tracinda Corp., the investment arm of billionaire Kirk Kerkorian, Adjusted net income totalled remains the company’s major stockholder with roughly 54% of MGM $80.1 million, compared with MIRAGE. $84.9 million in the fourth Following a conference call with analysts and investors, MGM quarter of 2006. Quarterly MIRAGE CFO Dan D’Arrigo said the nation’s current economic revenue climbed 8% year- slowdown and other factors could slow revenue growth at the on-year to $2.63 billion. company for at least the first half of 2008. Harrah’s said results were Nevertheless, Mr D’Arrigo said the company is proceeding hurt by a $169.6 million pre- Caesar’s Palace is undergoing a US$1 with development plans for a $4 billion to $5 billion resort billion expansion tax write-off of impairment project on the northern end of the Strip, a joint venture between charges resulting from required accounting reviews at its Caesars MGM MIRAGE, Kerzner Holdings International and Dubai World. Indiana property and London Clubs International PLC. Development plans are under way on the $5 billion MGM Grand London Clubs operates seven casinos in the UK, two in Egypt, Atlantic City. one in South Africa and is a consultant for a casino in Lebanon. The company was acquired by Harrah’s in 2006. Affiliates of private equity firms Apollo Global Management LLC and TPG Capital LP completed their $17.3 billion acquisition of Harrah’s in January. The company operates 50 casinos worldwide, including Caesars Palace, Flamingo and Bally’s in Las Vegas. Harrah’s earned $619.4 million for full-year 2007, compared with $535.8 million in 2006. Revenue rose to $10.82 billion from $9.67 billion in 2006. Harrah’s CEO Gary Loveman said results were “mixed” across its properties in different parts of the US. While he noted strong early numbers in 2008 at the Harrah’s property in New Orleans, results were “more modest” in other areas. “In Las Vegas, the gaming business has held up well, but room MGM MIRAGE’s CityCenter rates are off a little bit,” said Mr Loveman. The Vegas convention market had also started to soften as corporations reacted to the “We still have 160 acres of developable land in Las Vegas, so we economic downturn by scaling back expenses, with cancellations have plenty of opportunity to expand,” D’Arrigo said. and lower attendance at large trade shows. CityCenter, the nation’s largest privately funded development In line with the overall weakness of the Atlantic City casino project ever, will cost between $8.1 billion and $8.4 billion, according market, the Harrah’s casinos in AC saw income drop to $61.1 million to MGM MIRAGE estimates. in the fourth quarter of 2007, from $64.3 million in the same quarter “I don’t think CityCenter is any different than any large a year earlier. Mr Loveman attributed the drop to new smoking development around the world,” D’Arrigo said. “There is incredible restrictions, increased promotional spending and competition from competition with China and the Middle East for building materials. new slot halls in Pennsylvania. We’re also factoring in the labor costs going forward.” CityCenter has 5,600 construction workers and is expected to have 7,000 construction employees by summer. The project is CityCenter Stake Sale Drives Bumper Quarter expected to open in 2009 and includes a 4,000-room hotel-casino, A US$1 billion cash infusion from its joint venture partner gave residential offerings, boutique hotels and a retail, dining and MGM MIRAGE’s earnings a boost in the fourth quarter of 2007, entertainment complex. according to a Las Vegas Gaming Wire report. Through the fourth quarter, CityCenter had sold 1,336 units of the MGM MIRAGE completed the sale of half of its massive under- 2,647 available residences, totaling more than $1.67 billion in sales.

42 INSIDE ASIAN GAMING | March 2008 Briefs

Death Knell for UK Supercasino Last month, the UK government gave the go-ahead for the development of sixteen small- and medium-sized casinos across the country, but according to the Financial Times, only a few of these are expected to actually be built, with operators concerned that many of the sites would generate poor returns. Culture Secretary Andy Burnham finally officially scrapped the supercasino planned for Manchester, while giving the go-ahead to 16 second and third-tier casinos in locations such as Leeds, Milton Keynes and Newham in east London. Mr Burnham told MPs there were concerns about the “negative impact” of a Las Vegas-style resort in Manchester, but said the eight large and eight smaller casinos did not “pose the same level of risk”. They would have to provide “non-gambling areas” and observe new restrictions, including a requirement to close for six hours a day. The government hopes the restrictions will counter the notion it is bringing in 24-hour gambling. The new regime, including measures already announced such as banning free drinks and the use of credit cards, created the “toughest regulatory controls for gambling in the world”, said Mr Burnham. A fall-off in demand and the smoking ban have compounded the Get away from it all in Siberia’s Altai region blow dealt by the introduction of a 50% tax on revenue at large high- roller clubs last March. The operators are reeling, and not only do they market because of restrictions, according to Storm CEO Michael view most of the 16 new casinos as uneconomic, but also fear the Boettcher. impact the capacity increase will have on their existing venues. Russian President Vladimir Putin is forcing casinos out of Moscow In January, Ladbrokes said it was no longer interested in acquiring and St. Petersburg to reduce gambling, exiling them to four regions any of the 16 casino licences Gala Coral is reviewing the future of outside the two biggest cities. This is bound to halt an unbroken ten- three of its casinos and contemplating closures. Both Genting, which year run of growth in Russia’s casino revenue, which has swelled to as owns Stanley Leisure and is building a stake in the Rank Group, and much as US$7 billion. Harrah’s, which bought London Clubs International two years ago in “If the law doesn’t change, we’ll leave Russia,” said Mr Boettcher, order to gain a foothold in what then looked like a market with great a 60-year-old Briton who said he founded Moscow-based Storm 16 potential, have made large losses on their investments. years ago with two blackjack tables and a roulette wheel. “Most staff, Las Vegas Sands Corp had previously jockeyed for position to bid certainly the management, will come with us,” he added. for a UK license by wooing national and local politicians, but now Gambling mushroomed after the Soviet Union collapsed in wants no part of a market of “lousy little casinos,” according to the 1991, with casinos appearing in Russian cities and slot machines company’s chief operating officer, William Weidner. MGM MIRAGE installed in Moscow’s underground rail network. In 2006, President had long since turned its attention from the UK to Asian and other Putin, who declared that dependency on gaming was akin to markets, after concluding promised casino potential in the UK would alcohol or nicotine addiction, put forward a new law—which never materialise. takes effect from July 2009—to restrict casinos in the country to Newham and Leeds are seen as the pick of the 16 new casino four regions: the Pacific coast, the Baltic enclave of Kaliningrad, licences, while the operator of the Milton Keynes licence will enjoy Siberia’s Altai region and around the Azov Sea in the south. The a monopoly. But many of the 16 are in or near existing casinos, and areas are too far from Moscow to draw gamblers, according to Mr would-be operators would think twice about taking on a rival in a Boettcher. flat market. Storm plans to open a renovated casino in the Armenian capital Finally, rather than offering relief, the government appears of Yerevan by May and will invest US$300 million developing a hotel, more likely to add to the burden of ailing UK casinos. During his concert and exhibition halls, a shopping centre and restaurants. In announcement of the approval of the 16 new casinos, the culture Costa Rica, the company is refurbishing a hotel and building a casino, secretary added that he was disappointed at the level of contributions both scheduled to open by July. made by operators to the Responsibility in Gambling Trust, which Storm’s revenue has risen by as much as 25% annually in the helps problem gamblers, and said he would introduce a statutory past seven years and climbed 40% in 2007, Boettcher said, without levy unless those contributions increased substantially by the end giving figures. The company has five Moscow casinos including Jazz of the year. Town, which has its own music club, 30 gaming tables and a leather- furnished VIP room. In view of the coming restrictions, Storm will turn its Moscow Storm Set to Move Out of Russia properties into stores, offices or hotels and is diversifying into According to a Bloomberg report, Storm International, business jets and yacht-chartering for millionaires in the Russian Russia’s largest casino company, will open gambling venues in capital. Storm is also building a resort in Sochi, the host city of the Costa Rica and Armenia this year and may abandon its home 2014 Winter Olympics.

March 2008 | INSIDE ASIAN GAMING 43 44 INSIDE ASIAN GAMING | March 2008 Feature

Sparkling Display The third annual Asia’s Gaming and Entertainment + Leisure Expo Manila (Asia’s GEM), which runs April 3-4, will not only showcase the latest gaming equipment from around the world, but also present to the world the Philippines’ greatest gaming asset—its labour

he Asia’s GEM EXPO will span 9,130s sq. m at the SMX Convention the EXPO and Congress, including the invitational golf tournament, Center, showcasing the latest wares from the world’s leading card dealing competitions and the World Celebrity Charity Poker Tgaming machine and equipment manufacturers. Notably, Tournament sponsored jointly by the Philippine Amusement and one of the stated goals of Asia’s GEM is to also to provide small- Gaming Corporation (PAGCOR) and Jack Binion—who created the and medium-sized suppliers opportunities to exhibit and network at Binion’s Horseshoe in Las Vegas in 1970. in Asia. What could be of particular interest to Asian casino operators, A day before the EXPO, on April 2, there will be a full-day many of who are currently in a mad dash to expand, are the talent conference. The Gaming, Tourism & Investment Congress at the management centres and booking offices showcasing Filipino casino Hyatt Hotel & Casino Manila is expected to be attended by 5,000 talent at Asia’s GEM. delegates and feature presentations by heads of some of the leading Dealer salaries in the Philippines typically start at about US$150, international gaming companies. compared to as much as US$2,000 in Macau. Although the Macau There will also be variety of informal networking events alongside government currently bans casinos from using imported workers March 2008 | INSIDE ASIAN GAMING 45 Feature

as dealers, the city’s intensifying labour crunch has led to constant Grand plans speculation of when that ban might be lifted. One of the main topics of discussion at the Gaming, Tourism & PAGCOR President and COO Rafael “Butch” Francisco told Inside Investment Congress will be the Bagong Nayong Pilipino-Manila Asian Gaming that even though PAGCOR was only established in Bay Integrated Entertainment City, PAGCOR Chairman and CEO 1976, illegal casinos operating in Manila Bay in the 1950s produced Efraim C. Genuino’s vision of an entertainment complex, similar to highly-skilled dealers who helped set up South Korea’s first casino in the Las Vegas Strip, built on a stretch of reclaimed land in the Bay 1967. He also points out that “most of our executives today started as City area along Roxas Boulevard. The Entertainment City is expected dealers,” including “most branch managers” and even the previous to boast a complex of luxury hotels, convention centers, state-of- holder of Mr Francisco’s own position at PAGCOR. the-art theaters, sports stadium, restaurants, shopping centers, Since 2002, dealer positions in the Philippines are restricted to cultural museums, amusement parks and one of the world’s tallest those who hold a minimum of an undergraduate degree, whereas observation towers. in Macau, even high-school drop-outs can find jobs as dealers. Mr The first phase of the Entertainment City is expected to cover 85 Francisco explains that if a dealer has been to university, “it will be hectares, and the entire project developed over ten years in various easier for them to be promoted.” This is good for morale, and stands phases at a cost of at least US$20 million. It was the anticipated in contrast to Macau, where dealers with scant qualifications have massive foreign investment from international casino resort been known to grumble if they have not been promoted after a year operators into the Entertainment City that served as the impetus to of employment. launch Asia’s GEM.

ListList ofof GamingGaming ExhibitorsExhibitors

Abbiati En Cash Jumbo Tech. Piatnik Ainsworth F2 Systems KGI Prestige Aristocrat First Cagayan Kolonwel R. Franco Aruze FutureLogic Konami Real Corp. Astro Corp. Games Corp. Money Controls RGB Games Atronic Gaming Revolution Omniprime Sibel Bally Glimex Orion Truevest LLC Bayview Tech. IEST Pacific Gaming The Bright Group DFNN IGT Paltronics Wincor DVTel JCM Global Phil Kingdom WMS Elixir Jimei Philweb Xtale

46 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 47 Events Calendar Events Calendar A more comprehensive events listing is available on our website, www.asgam.com.

12-14 Mar 2008 28-29, April 2008 Gaming & Hospitality The Future of Betting and Gaming Venetian Macao, Macau, P.R. China The Waldorf Hilton, London Contact: Tan Peng Pheng Contact: Rory McNeil Tel: +603-2723-6614 Tel: +44 (0)207 760 8667 Fax: +603-2723-6699 Fax: +44 (0) 20 7490 2296 Email: [email protected] Email: [email protected] Website: www.marcusevans.com Website: www.marketforce.eu.com/gaming Organizer: Marcus Evans Events Organizer: The Institute of Economic Affairs & Marketforce 31 Mar ~ 1 Apr 2008 29 April – 1 May, 2008 Bet Markets Canadian Gaming Summit & Exhibition 2008 Vienna Marriott Hotel, Austria Clarion Gaming Palais des Congress, Montreal, Quebec Contact: Stephen Jury Contact: Phillip Soltys Tel: +44 (0)20 7370 8566 Tel: +1 416 512-8186 ext.246 Email: [email protected] Email: [email protected] Website: www.bet-markets.com Website: www.canadiangamingsummit.com Organizer: Canadian Gaming Association & Media Edge 3-4, April 2008 Communications Asia’s GEM – Gaming & Entertainment + Leisure Expo Manila 2008 8-10, May 2008 SMX Convention Center, Manila, Philippines GTI Asia Taipei Expo 2008 Tel: +63 2-750-13-69 Taipei World Trade Center (TWTC), Taipei, Taiwan Fax: +63 2-893-40-97 Contact: Angie Huang/Robert Lin Email: [email protected] Tel: +886-2-27607407 ext 207 Website: www.asiangemphil.com Fax: +886-2-27623873 Organizer: Philippine Amusement and Gaming Corp. (PAGCOR) Email: [email protected] & Asian Gem and Tourism Foundation Website: www.gtiexpo.com.tw Organizer: Game Time International 3-4, April 2008 Casino Affiliate Conference 13-14, May, 2008 NH Grand Krasnapolsky, Amsterdam European Gambling Briefing Contact: Marc Lesnick Hotel Okura, Amsterdam Tel: + 1 212-722-1744 ext 72 Contact: Stephen Jury Email: [email protected] Tel: +44 (0)20 7370 8566 Website: www.cac2008.com/index.php Email: sjury@@ateonline.co.uk Organizer: Ticonderoga Ventures, Inc. Website: www.europeangamblingbriefing.com Organizer: Clarion Gaming 22-24, April 2008 The International Gaming Conference & Expo 3-5, June 2008 Corinthia Lisboa Hotel, Lisbon, Portugal G2E Asia Contact: Amanda Manero Tel: + 1 215-441-5887 Venetian Macao, Macau, P.R. China Fax: + 1 215-441-5767 Contact: Yolinda Wong Email: [email protected] Tel: + 852 2965 1632 Website: www.igconference.com Fax: + 852 2824 0246 Email: [email protected] Website: www.g2easia.com Organizer: Reed Exhibitions

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

48 INSIDE ASIAN GAMING | March 2008 Psychological Warfare

March 2008 | INSIDE ASIAN GAMING 49