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December 2010 • MOP 30 • ISSN 2070-7681 Cotai at the Crossroads Sands China ponders its next move In Focus: Macau Revenue Breakdown Singapore: The Illusion of Lawmaker Control | How Cupholders Increase Your Hold WMS: Net Benefits | TCSJOHNHUXLEY: Champagne Supernova | Only the Best: Aruze Gaming CONTENTS December 2010 Cotai at the Crossroads 6 Lost the Plot 10 Macau Revenue Breakdown 13 Net Benefits 16 Edge Wise 19 The Illusion of Lawmaker Control 23 Fresh Boost For LVS? 25 Only the Best 28 Test Bed 32 Champagne Supernova 34 Drawing to a Close? 38 Kentucky Sues to Recover Poker Losses 40 How Cupholders Increase Your Hold 10 42 ADVANCE Notice 44 Regional Briefs 46 International Briefs 48 Events Calendar 40 2 3 Editorial Silence—Not So Golden Publisher Kareem Jalal Director João Costeira Varela Editor Michael Grimes Contributors Desmond Lam, Steve Karoul I. Nelson Rose, Richard Marcus Shenée Tuck, James J. Hodl Andrew MacDonald William R. Eadington Graphic Designer Brenda Chao Photography Macau, like the motherland China, is a quota-driven society. In Macau, reams of statistics Ike on everything from gross gaming revenue to average length of visitor stay are prepared by civil servants and then earnestly pored over by government and media alike. No doctrinal conference of the Catholic Church ever paid more reverence to the articles of Christian faith Inside Asian Gaming than does Macau to its tourism statistics. is published by But when it comes to the big picture stuff—how strategic decisions are made in Macau Must Read Publications Ltd and public policy is formulated on things such as land and gaming development rights— 8J Ed. Comercial Si Toi silence reigns. Facts are few and far between. Instead, decisions are delivered miraculously, 619 Avenida da Praia Grande fully formed (or sometimes half-baked) like smoke out of a Vatican chimney following the election of a new pope by a conclave of cardinals. That’s what seems to have happened in the Macau row over Cotai plots 7 and 8 and the government’s strangely worded letter saying Las Vegas Tel: (853) 2832 9980 Sands Corp’s right to the land is “not approved”. Then, when the market has had a few days to digest the latest promulgation from the For subscription enquiries, Chief Executive’s office, and the awkward questions start to flood in, it’s left to public officials please email lower down the pecking order to explain or otherwise interpret what the ‘policy’ means. They stand blinking under the powerful lights of television cameras, like rabbits caught in car [email protected] headlamps, loyally trying to interpret the orders from above and hoping for the sake of their own careers they don’t get it hopelessly wrong and drop their superiors deeper in the mire. For advertising enquiries, An American journalist’s description of Macau as “a casino designed as a nation” has never please email seemed more appropriate. Except it seems in Macau’s case, the casino management is taking [email protected] its leadership lessons from Donald Trump rather than Kirk Kerkorian. or call: (853) 6680 9419 Eventually, Las Vegas Sands Corp will probably swallow whatever pill it is asked to take in relation to its Cotai land rights. It’s making too much money from its existing operations to press the nuclear button in its relations with the Macau government. www.asgam.com But Macau emerges from this fiasco with very little credit in the wider world. No one would suggest LVS Chairman Sheldon Adelson is a natural stand-in for the jolly grandpa in the Werther’s Original candy commercials. But he is a businessman of international standing Inside Asian Gaming who’s investing the best part of US$7 billion in Macau’s infrastructure. He’s surely entitled to is an official media partner of: better treatment in Macau than he’s receiving under the current dispensation. Michael Grimes We crave your feedback. Please email your comments to [email protected] http://www.gamingstandards.com 4 INSIDE ASIAN GAMING | December 2010 Cover Story Lost the Plot The shenanigans over Sands China’s Cotai land rights do Macau little credit in the wider world f we’ve learned anything at all from studying Macau government policy as it relates to the gaming industry, it’s this—when it comes Ito decision making, it isn’t over until it’s over. And even when you think it’s over it may not be over. At the time Inside Asian Gaming went to press, the possibility of Las Vegas Sands Corp. (LVS) getting back its ‘lost’ undeveloped land on Cotai known as Plots 7 and 8 appeared still to be alive. An interesting question is whether Sands China wants to hold on to Cotai 7 and 8 because it desperately and urgently wants to build on them, or whether it wants to hold on to them because it doesn’t like the idea of having Stanley Ho’s casino company SJM as a neighbour. SJM has repeatedly said it covets the site and is making all the right noises to the government about focusing a Cotai project on a more general entertainment theme. That’s in line with the government’s aspirations to focus more on tourism and a little less on gambling. Anyone who looks closely at the history of SJM’s operations and that of its Ho family predecessor STDM, however, will be taking the new ‘family friendly’ incarnation of SJM with a fairly large pinch of sodium chloride. Macau is all about casinos, no matter how much lipstick local politicians like to put on the gaming pig. Big picture And even if SJM were allowed to build a casino with a family friendly face, it doesn’t answer the question of what exactly Cotai is supposed to be. Relatively new Macau-watchers would be forgiven for assuming Cotai was always meant to be the Las Vegas Strip plonked down in the South China Sea. That’s not the case. Those who lived in Macau prior to the boom brought by casino liberalisation in 2002 will be aware that under a government plan drawn up in the early 1990s, Cotai was envisaged as primarily a residential area, supporting 180,000 residents and with only sufficient hotel and convention facilities to support 40,000 tourists at any one time. In 1999, that Cotai plan was amended and replaced with the casino-heavy zoning we know today. In 2002, reportedly against his initial better judgement, Sheldon Adelson, the Chairman and CEO of LVS, was persuaded to work with the government to turn what was a Parcelled out—land allocation for gaming on Cotai and Macau boggy reclamation area into a new casino zone. peninsula prior to the government’s decision. 6 INSIDE ASIAN GAMING | December 2010 Cover Story In an interview with the Las Vegas Review-Journal in May 2006, islands. The Land, Public Works and when work on the US$2.4 billion Venetian Macao was already well Transport Bureau, which in theory under way, Mr Adelson described his original doubts. is in charge of land management “At first, I thought it was political exile,” Mr Adelson recalled. and urban planning, admitted in “I thought Stanley Ho had some influence that he got me off the the weekly Catholic newspaper O peninsula because that’s where he believes the centre of everything Clarim that it didn’t know anything is. All I was hoping was that I could get a location in which I could about the project. The fact that Ao really do something.” Man Long, a former director of the It’s possible to argue that without The Venetian Macao’s presence, bureau eventually ended up behind Cotai could never have taken off as an alternative gaming destination bars at the old prison for soliciting to the traditional downtown casino area on Macau peninsula, and and taking massive bribes on public SJM wouldn’t currently be sniffing around for a home there. It’s works projects might possibly have difficult to imagine City of Dreams having the pulling power by itself vindicated the government’s decision to bring in hundreds of thousands of tourists from China and around to keep the new building’s layout the world direct to Cotai. hush hush. Macau’s Chief Executive— Now such is the draw of Cotai and It’s not the case that Macau has Judge Dredd in disguise? such is the demand for land there no planning ‘rules’ at all. It’s quite good at setting out and enforcing that the government even allowed the contracts with the casino operators in terms of the proportions the selling off of a site there that of gaming space, hotel capacity and convention space there should had previously been reserved for an be at each property. The difficulty comes with the big picture stuff. extension to Macao University of Science These are the decisions that have strategic consequences and and Technology. That was much to the perhaps major cost implications for the operators over many months dismay of several lawmakers including or even many years. Ng Kuok Cheong, who said in the Macau The only person who can reasonably be assumed to have the media in February 2007: “The purpose big picture in planning for the gaming industry in Macau is the of use has been changed without any territory’s Chief Executive Chui Sai On. And he doesn’t appear overly announcement or public consultation”. anxious to share that information. Mr Chui’s role in Macau seems akin If anything, this example goes to show to Sylvester Stallone’s character in the 1995 Hollywood film Judge the depth of incoherence that exists in Sheldon Adelson—made Dredd, about a comic book hero who enforces a semblance of order Macau’s strategic land use policies.