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How IRs have redefined tourism

Social casino gaming june 2018 #144 | 30 MOP

TRIBAL AMBITION US properties eye Japan

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CONTENTS JUNE 2018 COVER STORY

Cover Image: IAG

TRADE EVENTS 16 G2E Asia Awards: A new night of nights Tribal ambition: US properties 10 Breakfast Briefs eye Japan COLUMNISTS

26 Social gathering Global Market Advisors’ Shaun McCamley delves into the booming world of social casino games. IN FOCUS

32 Redefining tourism The prevailing view is that Macau sits a long way off Las Vegas when it comes to non-gaming revenue, yet these two cities sit side by side in utilizing IRs to provide an offering unavailable anywhere else. FEATURES

36 Japan IR timeline With opinions still divided as to when Japan’s first IRs will open, IAG takes a closer look at the steps still needed to get there and how long each might take. TRADE EVENTS

42 G2E Asia Awards: A new night of nights Asia’s gaming industry came together for a memorable night at the inaugural G2E Asia Awards during G2E Asia 2018. FEATURES

44 Lingering clouds: Japan’s great unknown Uncertainty over Japan’s foreign ownership laws and the role of pachinko in Japanese IRs were two of the key topics of discussion during a G2E Asia panel session hosted by IAG titled Asian Markets Forum. With a regional destination TECH TALK looking increasingly likely for one of Japan’s IR licenses, could 48 High and mighty Aristocrat unveiled its new high-volatility, high-stakes slot US tribal casino operators offer machine “Fa Fa Long” at G2E Asia in 2018. an irresistible alternative to the 50 EVENTS CALENDAR big guns of gaming?

EDITORIAL DIGITAL Distribution Supervisor Managing Editor Director of Digital Business Development Emily Vong Ben Blaschke Kevin Sam Distribution Officers Editor at Large Journalist and Social Media Anson Ip Muhammad Cohen Joseff Musa Peng Cheang Mak Man Wah Deputy Editor Hoi Hou Wai Oscar Guijarro SALES & MARKETING Founder and Adviser CORPORATE Kareem Jalal VP Sales and Marketing Winnie Tan CEO Graphic Design Andrew W Scott Rui Gomes Associate Director Sales and Business Development Chief of Staff Copy Editor Jadeson Ho Helene Wong Ray Granlund Hong Kong Sales Chief Financial Officer Social Media and Content Angel Wong Fred Wong Production Manager Client Relationship Manager Yvonne Cheong Director and Administrator Caroline Iau Cynthia Cheang Contributors Paul Doocey Accounting and Compliance Director Dr Brian To IT Anita Loi Steve Karoul Rui Pinto Proença Administration Assistant Peter T Treadway IT Director Suie Ng Dr Glenn McCartney Michael Lau I Nelson Rose Executive Transportation Officers André Ng Still photography Fong Chi Meng Danomad Kuan DISTRIBUTION

Video Producer VP Operations Danomad Kuan Karen Cheong

Advertising Enquiries Subscription Enquiries Jadeson Ho [email protected] +853 6331 5577 Emily Vong [email protected] +853 6647 4123

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EDITORIAL

Japan worth the hype

T would be an understatement for me to describe the When it comes to operators, we’ve heard plenty about the 2018 Japan Gaming Congress as an eye opener – and appeal of global giants like Las Vegas Sands, Wynn Resorts and I don’t mean the copious amounts of alcohol Tokyo’s MGM Resorts – all of whom have promised to invest significant office workers religiously consume on a Friday night out resources into Japan should they win a license – but there are Iin the city! some intriguing alternatives out there. South Africa’s Peermont As strangely entertaining as it was to see so many suits Group is already deep in discussions over a regional IR in literally stumbling out of local bars at the end of a long week, the Nagasaki while US tribal casino operators Mohegan Gaming & more telling cultural experience was talking to local politicians Entertainment and Foxwoods present highly attractive cases for and stakeholders to garner their opinions on all aspects of what they can bring to the table. Check out our cover story for Japan’s IR industry. more insight in that regard. What surprised me most given the global media focus on As we all know, the Japan story is only going to get bigger over local opposition to Japanese casinos was just how positive – the next 12 months. At the time of writing this editorial, Japan’s not to mention how well-read on the issue – those politicians House of Representatives had just passed the government’s supporting the nation’s IR push really are. gambling addiction bill while it seems likely the current Diet From members of the ruling Liberal Democratic Party to session will now be extended into early July to ensure the IR bill those representing its coalition partner Komeito and various is passed as well. In other words, the time for Japanese casinos independents, Japan’s key political identities expressed genuine has finally arrived. enthusiasm when asked about the IR Implementation Bill currently I suspect it has been worth the wait. before parliament. Just as encouraging were discussions with representatives of regional IR candidates who, for the most part, have a clear understanding of the benefits an IR could bring to their Ben Blaschke local communities – not to mention some impressive IR concepts Managing Editor to put forward once the bidding process starts in earnest. We crave your feedback. Please email your comments to [email protected].

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8 INSIDE ASIAN GAMING JUNE 2018 JUNE 2018 INSIDE ASIAN GAMING 9 LAWRENCE HO REVEALS NEW HOTEL BRAND LIBERTINE AHEAD OF MORPHEUS LAUNCH

MELCO RESORTS & ENTERTAINMENT CEO Lawrence Ho has revealed that The Countdown Hotel – formerly known as Crown Hotel – at City of Dreams will be rebranded Libertine when its new luxury offering Morpheus opens for business. Ho also unveiled 15 June 2018 as the official opening date of Morpheus during a busy day in which he delivered the keynote address at G2E Asia 2018, sharing for the first time a series of details around the US$1 billion-plus upgrade of flagship Macau IR City of Dreams which includes the Zada Hadid-designed Morpheus. Among the new features at City of Dreams will be an innovative “pop-up” retail space in which stores can be mixed and matched at will. “We have reinvented retail,” Ho said. “For the first time ever we will be creating our own shopping environment, inviting some of the coolest brands in the world in a 1,500 square meter space that we will be running ourselves as a pop-up. “It will be a totally different take on the retail proposition.” Ho also revealed that the company will unveil a new stunt show at fellow Macau integrated resort Studio City in December – a collaboration with renowned entertainment architecture firm Stufish.

Border gate facilities slowing Macau growth: Wilfred Wong

Sands China Executive Director, President Dr Wong said that the number of people people,” he said. “If we were to open that and COO, Dr Wilfred Wong, says that the crossing from China into Macau via the up I can see visitation doubling.” current border crossing facility between border gate could possibly double if better Dr Wong noted that hotel supply Macau and mainland China is holding the access was provided, stating, “A better remained another ongoing concern for Macau city back from its full potential. border crossing facility would certainly which might prevent any significant uptick Speaking on a panel at G2E Asia improve the future for Macau. in the number of arrivals through the border examining the transformation of Macau into “At the moment the border is a gate, but that “these are important questions the global gaming powerhouse it is today, bottleneck and a deterrent for many we need to ask for Macau going forward.”

10 INSIDE ASIAN GAMING JUNE 2018 Lawmaker warns Japan license renewal terms a deterrent for operators

A Japanese lawmaker has warned that a proposed law requiring IR operators to renew their gaming licenses every three years would deter major investment due to financial insecurity and a lack of stability. Independent MP Mito Kakizawa, a member of the House of Representatives and former member of The Party of Hope, told Inside Asian Gaming in a one-on-one interview at the 2018 Japan Gaming Congress that the renewal period was too short and placed an unfair burden on operators. In particular he labeled a stipulation of the IR Implementation Bill currently awaiting passage through the Diet that would require operators to renew their gaming license every three years as impractical. “This could hurt investment in IRs from operators because of the lack of certainty it presents,” Kakizawa said. “If you look at how long it takes to build an integrated resort of the size we are talking about, then under this law the operator’s license will have to be renewed before they have even had time to finish and open their IR. How can operators invest the money being discussed with so much uncertainty?” Kakizawa’s concerns are echoed by analysts, with Morgan Stanley’s Praveen Choudhary writing in a note that financing projects “could be difficult and expensive” given the complications involved with license renewals. There also remains some disparity between the three- year license renewal period for operators and the 10-year period for locations.

JUNE 2018 INSIDE ASIAN GAMING 11 look into this matter and engaged external PRC legal counsel to report to the relevant SIX OURGAME EMPLOYEES public security authorities regarding preliminary evidence found relating to such ARRESTED AS CHINESE employees’ behavior. “To the extent that any authorities in Henan Province or elsewhere in China POKER APP CRACKDOWN request the group’s cooperation, the group will cooperate fully with any such requests. Following their investigation of GAINS STEAM the situation, including discussions with the relevant authorities, the Company’s PRC legal counsel has opined that the purported CHINESE ONLINE POKER and board gambling laws of the PRC.” illegal activities were related to the personal game company Ourgame International In a filing to the Hong Kong Stock actions of the relevant individuals and do Holdings Ltd – owner of the World Poker Exchange, Ourgame said that six employees not involve any illegal actions on the part of Tour and one of China’s leading poker had been arrested and are “subject to the group.” application operators – has revealed that potential prosecution by the public security The arrests of the six employees six employees of its subsidiary Beijing bureau of Henan Province.” However, the come just weeks after Chinese authorities Lianzhong Co, Ltd have been detained company was quick to distance itself from announced that poker will no longer be by authorities in Henan Province for the individuals, adding, “None of these six recognized as a competitive sport and using the company’s platform to “engage individuals is a director of the company. The banned the promotion of Texas Hold’em via in personal activities contrary to the company has established a committee to social media applications.

Aristocrat spins big in 1H18 with 28.5% revenue surge

Slot machine giant Aristocrat Leisure saw its revenue soar by 28.5% to AU$1.58 billion in the six months to 31 March 2018, driven by strong growth in the group’s Americas and digital business plus “further lift in performance” in the ANZ region. Continuing its upward momentum, Aristocrat also saw its operating revenue jump 33.6% to AU$1.64 billion, while EBITDA grew 28.9% to AU$642.9 million. Profit after tax increased 2.8% to AU$256.5 million, with NPATA growing 32.5% to AU$361.5 million. Discussing the results, CEO and Managing Director Trevor Croker said, “Aristocrat has delivered another period of strong growth and operational performance, built on outstanding talent, product, technology and improved front- whilst highlighting our broadening ambition of total daily active users on its digital end execution. as we make substantial progress expanding platforms had increased six-fold in the “The strong 32% profit improvement our addressable market across both digital period to 8.3 million, while American over the six months to 31 March 2018 and land-based segments.” operations saw an AU$42.9 million demonstrates the soundness of our strategy Aristocrat revealed that the number improvement in post-tax profit.

12 INSIDE ASIAN GAMING JUNE 2018 Premium Leisure Corp in talks to become Melco Resorts (Philippines) shareholder

Melco Resorts & Entertainment has its affiliated entities may become equity derived from City of Dreams Manila. revealed that it is contemplating the sale of holders of the corporation.” PLC’s parent company Belle Corp, which shares in its Philippines subsidiary, Melco Melco stressed that there was no owns the land upon which City of Dreams Resorts and Entertainment (Philippines) guarantee the transaction would take place Manila sits, also derives rental fees from Corporation, to local partner Premium given that the discussions are only preliminary. Melco for use of the land. Leisure Corp (PLC). PLC currently has an operating Belle Corp recently submitted a In an announcement, the agreement with a subsidiary of Melco proposal to Melco Resorts (Philippines) company said it has held “preliminary Resorts (Philippines) that entitles it to the to expand City of Dreams Manila onto one discussions” with PLC in relation to a greater of either 50% of EBITDA or 15% hectare of vacant land it holds adjacent to “potential transaction whereby PLC or of mass gaming win plus 5% of VIP win the Entertainment City precinct property.

JUNE 2018 INSIDE ASIAN GAMING 13 SILVER HERITAGE EXPECTING TIGER PALACE TO BREAK EVEN IN 3Q18

AUSTRALIAN-LISTED SILVER Heritage Group says it expects its Nepal integrated resort, Tiger Palace Resort Bhairahawa, to break even by 3Q18. But it will need to do so alongside a new local partner, with the company admitting that its relationship with its current partner has “run its course.” The news formed part of an investor presentation at the company’s annual general meeting, which included the latest performance updates from Tiger Palace Resort. In particular, Silver Heritage outlined a “challenging” operating environment over the past 12 months, with interim Chairman Matthew Hunter revealing that the board had agreed to halve its cash remunerations this year as part of “a range of cost reduction initiatives across the business.” Nevertheless, the company said that Tiger Palace had broken even in April and expected to achieve monthly breakeven he said. “Several high quality parties have Rajendra Bajgain, was recently granted a during 3Q18. expressed interest in partnering with us in stay of termination by a Nepal court after In the meantime, Hunter said that Nepal. The company is actively engaged in Silver Heritage terminated his agreement finding a new local partner was among discussions in this regard and will update in February. Bajgain had publicly accused Silver Heritage Group’s key priorities. the market as and when further progress the company of failing to acquire necessary “It is clear that the relationship with our has been made on this.” work permits for some senior staff at Tiger local partner in Nepal has run its course,” The company’s current Nepal partner, Palace Resort Bhairahawa.

Wynn Resorts IR to become a “new Japanese district”

Wynn Resorts has revealed its intention where it could develop a series of iconic other city districts, with both large- and to create an entire entertainment district structures and open public spaces. medium-sized buildings.” rather than a single IR structure should “What we envision is not one big Gordon said that Wynn’s IR plan it be granted a Japan casino license, building; it should be an entertainment included a large iconic theater to attract describing a “critical mass of attractions” district different to anything we’ve done world-class entertainment acts as well during a presentation to the 2018 Japan before,” he said. as a smaller theater and nightclubs Gaming Congress. “It would incorporate multiple to provide people with options after a Delivering the company’s “operator buildings, multiple hotels and a space to meal. A large open public space with a vision” at JgC, President of Wynn wander around in the open. Japanese theme as well as a series of Development Chris Gordon said that Wynn “Wynn Resorts envisions creating a large capacity hotels would also be key to Resorts was targeting a major city site new Japanese district just as there are the resort.

14 INSIDE ASIAN GAMING JUNE 2018 JUNE 2018 INSIDE ASIAN GAMING 15 COVER STORY

When it comes to Japan’s burgeoning IR industry, much of the discussion around who will win a license has revolved around the big guns – Las Vegas Sands, MGM and Wynn. But with a regional destination looking increasingly likely, could the United States’ tribal casino operators offer an irresistible alternative?

16 INSIDE ASIAN GAMING JUNE 2018 COVER STORY

TRIBAL AMBITION

By Muhammad Cohen and Ben Blaschke

JUNE 2018 INSIDE ASIAN GAMING 17 COVER STORY

OHEGAN Gaming and Entertainment CEO Resorts considered by many to be the leading contenders to win a Mario Kontomerkos believes the Native American Japan license, with their tribal Indian roots potentially providing the casino operator has two aces in the hole for Japan, cultural sensitivity local lawmakers are looking for. Foxwoods, for especially when it comes to the so-called regional example, boasts a US$200 million museum paying tribute to the markets beyond major areas. history of the local Mashantucket Pequot Tribal Nation. In his presentation at last month’s Japan Gaming Congress, Not that Asia will be a completely new frontier, with Mohegan KontomerkosM emphasized that Japan’s regional markets resemble the currently developing Project Inspire, an IR adjacent to South Korea’s remote location of MGE’s flagship Mohegan Sun integrated resort. international gateway Incheon airport with an annual throughput of more In that rural Connecticut setting, albeit just over two hours from New than 60 million passengers. Earlier this year, MGE “amicably” bought York City and 90 minutes from Boston on the US east coast, MGE has out its Korean partner, a chemical company, to take 100% control of the created the highest-grossing casino in North America with annual project, but declined to provide further details on the deal. net revenue exceeding US$1 billion. The IR features 1,600 hotel Inspire will be the “largest integrated resort in Northern Asia” rooms, the 10,000 seat Mohegan Sun Arena hosting top entertainers Kontomerkos says, comprising an investment of US$5 billion and shows plus two MGE owned sports franchises, smaller stages, over 20 years. Expected to open its US$1.6 billion first phase in a golf course, more than 300 gaming tables, nearly 5,000 gaming 2021, Kontomerkos told the Tokyo gathering, “We will have the machines, and dozens of dining and shopping options. next influencer to drive visitors in Northern Asia,” with Korea’s “We rely on the local market to provide employees for the venue, not largest indoor arena, its largest convention center, plus 1,000 hotel as customers,” Kontomerkos declared. Mohegan Sun attracts 11 million rooms and a 25,000-square meter (270,000 square foot) foreigner- people a year, including one-third of all foreign visitors to Connecticut. only casino. Citing the millions of high-end travelers traversing Its one rival in Connecticut is Foxwoods, with revenue of around Incheon’s award-winning airport, he forecast, “We will have a US$850 million a year at its own remote property which includes large database of Northern Asian visitors” that would be potential more than 2,000 hotel rooms, 250 gaming tables and 5,500 gaming customers for Japan. machines across six casinos. On the sidelines of the Japan Gaming Congress, Kontomerkos Despite both operating out of the third smallest state in the and Foxwoods President and CEO Felix Rappaport sat down United States, Mohegan Sun and Foxwoods present an intriguing separately to discuss their respective prospects in Asia with Inside alternative to the large IR operators like Las Vegas Sands and MGM Asian Gaming.

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Foxwoods Resort Casino

Despite both operating out of the third smallest state in the United States, Mohegan Sun and Foxwoods present an intriguing alternative to the large IR operators like Las Vegas Sands and MGM Resorts considered by many to be the leading contenders to win a Japan license.

aggressively trying to expand our non-gaming offerings in a way that MARIO KONTOMERKOS I think will be very, very special. MOHEGAN GAMING AND ENTERTAINMENT MC: When you said highest consumers of movies, does that mean going to the theater to watch movies? MK: Yes, per capita, folks in Korea are watching movies at a much Muhammad Cohen: Where do things stand with the higher rate than any other country. Not watching on their mobile or Inspire integrated resort project at Korea’s Incheon at home, but going out to watch the movies at theaters. International Airport? We are very excited about the entertainment aspects of Mario Kontomerkos: We are very advanced in the process. We’ve Korea. And as we meet with folks in Korea, they are very focused spent over US$15 million advancing with design and we are in the on the entertainment aspects of our resort. I think that the real construction costing process for it. So you can see we are very differentiator is in our arena, which will be a platform for worldwide committed to the process. We are at the point now where we feel content: Western content, Korean content, plus Asian content. It is very confident that by the end of the year, if not sooner, we will be truly going to be a very special place. breaking ground and starting construction in earnest in Incheon. And then there’s other themed attractions on a large scale. I think we will be very, very well received there. We always wanted to MC: How has the plan evolved since its original make it the largest integrated resort in Northern Asia. conception? The property that we are building in Incheon will certainly be MK: We’ve learned a lot of things since we’ve come to Korea. I think able to hold all these, because we’ve got 600 acres (243 hectares) one of the things we’ve learned is that the non-gaming aspects of there we are developing. It is essentially a US$5 billion investment our development can be as important, if not more important, than over the next 20 years. the gaming aspects. We’ve learned that Korean consumers are the highest consumers per capita of themed entertainment. We’ve MC: Do you come there with any relevant experience with learned that Korean consumers are probably the highest consumers the Asian market? per capita of movies as entertainment. MK: Yes, believe it or not. The Connecticut facility is the highest- So the light has gone on regarding several different non-gaming grossing facility in the Western hemisphere. We don’t do the highest developments. You are going to see us in the next few months volume of Asian business, but we have the largest database of Asian

JUNE 2018 INSIDE ASIAN GAMING 19 COVER STORY

“The Connecticut facility is the highest-grossing facility in the Western hemisphere. We don’t do the highest volume of Asian business, but we have the largest database of Asian business in the US, or we believe we have; it’s sort of a hard number to pin down.” – Mario Mohegan Gaming and Entertainment CEO Kontomerkos, Mohegan Sun Mario Kontomerkos

business in the US, or we believe we have; it’s sort of a hard number you look at what they’ve done, they’ve done a nice job of creating to pin down. The number of Asian games that we offer is probably, this concept of an art theme. Ours will be more focused on if not the highest in the US, close to the highest. entertainment, so I think we’ll be complementary and we will be We are very prolific in that area, so we have a dedicated area very good for the whole Incheon region. in Connecticut called Sunrise Square which is exclusively for Asian Our product is going to be a platform for South Korean and gaming and that is something we are replicating in other properties. Western from a musical perspective, from a concert perspective, So, yes, I think we have a lot of experience in this area. from F&B and retail perspectives. It’s really going to be a melding of both, which I think will be very successful. MC: How much is the experience of Paradise City [a joint venture between South Korea’s top foreigner-only casino MC: We’re talking in Tokyo at the Japan Gaming Congress, operator Paradise Group and Japanese gaming machine where Mohegan Sun is a sponsor and you’re making a manufacturer Sega Sammy that opened in April last year at presentation. Beyond that, what’s Mohegan Sun’s current a different end of the Incheon airport complex] informing level of participation and interest in Japan? your project? MK: If we think of the fact that we are investing US$5 billion over MK: Look, we believe very strongly in the concept of critical mass. the next 20 years at Incheon, at probably the busiest transit hub We believe very strongly that one plus one is three. We’ve seen this in all of Northern Asia, we believe that we are uniquely positioned example over and over in Asia, very successfully, and I’ve seen it to be able to benefit and connect both markets. So really we will in the United States being very successful as well. So we want to be operating the largest integrated resort in Northern Asia when see Paradise succeed and we think that our development will be Inspire opens and we’ll be able to leverage that connection to the a different sort of experience but will be complementary. I think it airport. The fact that we will have a database of millions of millions will benefit both. The new Paradise product is very nice, very well of foreigners who are mobile, affluent and willing to travel, can appointed. certainly be beneficial for the Japan IR process.

MC: What have you learned from them? MC: What will you bring to the table in Northern Asia? MK: What we are doing, like I said, is going to be different and MK: You know, there’s a lot of benefits that we’ll bring. I think one complementary. We are going to be focused on different things. If thing is the fact that we are investing so much in this extremely high

20 INSIDE ASIAN GAMING JUNE 2018 COVER STORY

traffic corridor in Northern Asia. It’s going to be very unique – I think that’s number one. FELIX RAPPAPORT Number two, I don’t think Korea has seen this scale of integrated resort and entertainment resort that we are looking to FOXWOODS RESORT CASINO build before, so that’s going to be brand new for everybody in Korea and I think that’s going to knock people over. People are very excited about that. Ben Blaschke: We’re talking at the Japan Gaming Number three, I think it is very important to differentiate the Congress. What brings Foxwoods to Tokyo? fact that representing a tribe is very different from your average Felix Rappaport: Foxwoods is one of the largest IRs in North corporate brand. We as a tribe, our main goal is to ensure the America. We were the third jurisdiction legally after Nevada and sustainability and continuity of our constituents for not just one New Jersey, so it’s only natural for us after being in business for 26- year, not just five years, but for 13 generations. plus years with 6.5 million people in our database that we explore I think that our mindset is longer and a much longer-term opportunities to share our expertise and look at new markets to mindset matches very well with the long-term planning that is potentially brand a Foxwoods property. evident here in Asia. Folks know that we are not here to eat and We very actively look all across the United States and we are run. Folks know that we are here for a very, very long term and also willing to look globally. We think we bring certain advantages that we are going to be part of the fabric of the society in the that perhaps other companies don’t have, not the least of which is exact same way that we are in the United States. That is a very, experience. We think the combination of our brand, our database, very big differentiating factor for us. So those are just a couple of our experience and the experience of our team makes us potentially reasons why. a very good partner in Japan. But I would also say that our approach – we are all about win-win situations, unlike some companies that MC: Hard Rock [owned by Florida’s Seminole tribe] said the might come through a new jurisdiction and think that they don’t same thing about thinking long term. need help or don’t need partners. We are very culturally sensitive. MK: Lots of tribes can make those type of statements, but only one We are the first full-service tribal gaming company and so we’re very tribe has got the Northern Asia exposure in the location that we do respectful of culture and history. in Incheon. We’re probably the only company here with its own museum.

An artist’s impression of Mohegan’s Korean IR Inspire in Incheon, which is expected to break ground this year.

JUNE 2018 INSIDE ASIAN GAMING 21 COVER STORY

Foxwoods CEO Felix Rappaport

We have a 300,000-square foot, US$200 million museum dedicated to American tribal history and culture and when we have entertained Japanese visitors at Foxwoods there has been an amazing cultural “We certainly can’t help connection in terms of veneration for the wisdom of elders and but notice that in some of veneration for the land and the history of culture of our people. So we think we bring a lot of positives to the table. the regional areas there is BB: What has Foxwoods learned about Japan since somewhat of an overlap in exploring IR opportunities? FR: Japan is one of the most brilliant cultures in the world. The terms of what we’ve built people are incredibly warm; I think the service culture is second to none. I have now been to Japan three times in the past year-and- in Connecticut and what a-half and it’s always a phenomenal experience. You can’t walk anywhere in your hotel without being greeted incredibly warmly. some of the prefectures and I think Japan in terms of culture and in terms of hospitality and potential is a magnificent country. We think it’s an extremely communities are looking attractive country to look at possible developments. to build here.” BB: Are you looking at a regional property rather than a major Japanese city? Felix Rappaport, Foxwoods

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FR: Well first of all, we know it is a very competitive environment Osaka, Yokohama, Tokyo, Nagasaki, Hokkaido – all have their own and we also know our limitations. Are we the biggest gaming individual charm and appeal. But we certainly can’t help but notice company in the world? Absolutely not. We have great respect that in some of the regional areas there is somewhat of an overlap for other companies in our industry. Obviously there is a level of in terms of what we’ve built in Connecticut and what some of the competition but also a professional respect. prefectures and communities are looking to build here. What I would say is that in the US there are two types of We are a perfect example of a destination resort where people casinos. There are casinos that are destination casinos of which are willing to drive a little further or travel a little further because we are one and I think Foxwoods is probably the ideal example of once they get there, there is a whole feast of things to do. You could an integrated resort because we are 9 million square meters under easily spend a week at Foxwoods and never eat breakfast in the roof, we are 1,600 acres, we have 2,200 rooms and suites, 40+ same place twice, never eat lunch in the same place twice, never restaurants, a 300,000-square foot mall, 100 stores, two theaters, have dinner in the same place, never go to the same nightclub or 300 shows a year and 175,000 square feet of convention and bar. I think we’re a really good model for that. meeting space. One of the things we’re really excited about is that we are Then of course there are casinos of convenience. They happen creating a lot of attractions. We were just showing some colleagues to be located near a population center on a highway. That’s typically our new zip line which goes from 350 feet off one of our towers, not what we are – we try to give people more reasons to come runs 3,800 feet and links to our museum, which is pretty unique. to us, so I think any of the locations that are being discussed – It’s three-quarters of a mile of zip line and you go 60 miles per hour.

TheFox Tower at Foxwoods

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“We have about 13 million visitors a year just to Foxwoods and it takes some effort to get there, so we think we understand better than almost anyone in the business how to get people to drive 80 miles from Boston or 125 miles from New York.” Felix Rappaport Hokkaido has been touted as a possible location for a regional IR in Japan.

That is kind of the beginning of all these family-friendly activities we number that we hear is more in the US$2 billion to US$3 billion are adding in. range which is still a significant investment. We’ve had 330 million people visit Foxwoods in the 25 years We estimate that to recreate Foxwoods in today’s dollars in the we’ve been open and that’s pretty phenomenal. Every year Las US is probably a US$2.5 billion to US$3 billion investment, so that’s Vegas, with dozens of properties, gets around 44 million visitors. probably not totally out of line. I think it really depends. We are all about We have about 13 million a year just to Foxwoods and it takes some partnerships. We are the ultimate in respectful partners so when we effort to get there, so we think we understand better than almost come to Japan or to a particular target area for an IR we want to partner anyone in the business how to get people to drive 80 miles from with people. We want local companies and local investment partners Boston or 125 miles from New York because once they get there it’s to work with us as partners. They know the market better than we do. not just gaming, it’s not a limited menu of things to do. It’s almost We know the business, we know the industry, we certainly know what an unlimited menu of things to do. works as an IR in the United States and our suspicion because of the global economy is that many of the things that work in Connecticut will BB: What advantages can Foxwoods bring that bigger also work here but it has to be tailored to the likes of both the Japanese operators can’t? people and the tourists we hope to attract. FR: We have built-in cultural references at our property which makes I mentioned that we have attracted 330 million people since us unique – yes we have a lot in common with Las Vegas properties we opened – we are the number one tourist attraction in the state but we also have a personality that makes us unique. Mashantucket of Connecticut and I think it’s safe to assume that without our Pequot Tribal Nation is a community and a government of 1,000- contribution and that of the other Indian tribe that runs a casino plus members and they’ve been in the area for hundreds and in Connecticut that tourism would be far less successful without hundreds of years – long before the European settlers came – and our participation. they are very proud of their community. It’s also worth mentioning that Foxwoods has single-handedly They are very proud of what they’ve built but they also have contributed US$4 billion to the state fund through its participation great respect for other cultures so if I’m Japan, I’m making sure in our revenue stream, so we project ourselves as being great that, be it through museums or attractions, you build in all of community partners, we want to be an employer of choice and one that rich history and culture. The wonderful thing about Japan of the top employers anywhere we go but I would think that working is that each region has its own rich history and each of the IRs with local Japanese companies and local investment partners is that is built can have a reflection of what makes that particular really the key for us. region unique. We don’t come in gangbusters and dictate to anybody what’s best. We want to learn, we want to absorb, we want to refine, we BB: What level of investment would you be looking at want to collaborate and approach everything in a collaborative in Japan? fashion. It’s all about learning, respect, educating yourself and FR: We only know what people have told us. We have participated reflecting the tastes of the Japanese people and the potential tastes in the IR process in a couple of the jurisdictions and I think the of the tourists to the country.

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SOCIAL gathering

By Shaun McCamley

Global Market Advisors’ Shaun McCamley delves into the booming world of social casino games.

OCIAL casino gaming is is growing with an eye popping 250% year- booming. In 2017, the global on-year growth. JP Morgan estimates the Shaun McCamley is a partner at social gaming industry generated industry will see 8% to 10% revenue growth Global Market Advisors and has over a whopping US$106 billion in in the Asia Pacific region in the coming year. 37 years’ experience in the land- revenues, with the social casino Eager to build and promote their brands, based and digital gaming industries. His areas of expertise include segment generating US$4.5 billion in savvy land-based casino companies have S interactive gaming consultancy, revenues. Not surprisingly China, Japan and devoted significant amounts of capital to international marketing, player Korea generated 90% of the games revenue get into the social sphere as they recognize development, casino operations, in the region. the branding opportunities, excellent casino resort pre-opening and more. Asia is the second largest social casino crossover promotions and the opportunity He can be reached at market after North America with revenues of to grow their databases. Given the sizable [email protected] around US$900 million – and that number costs and licensing restrictions associated

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with operating an online casino site, In terms of game development, over most popular offering today with more than working with a good social casino platform the past five years there have in fact been 20 million likes on Facebook. In terms of makes a lot of sense. few new game innovations or significant publishers, Playtika remains the largest The most popular games are slots, game upgrades. After all, the core basics social casino publisher and the most bingo and poker which are easily played of a slot, bingo or poker game are already popular of the social casino portals with on mobile devices. Over the past couple there. Slotomania, although the oldest around 29% market share, closely followed of years there has been a definite and social slot game on the market, is still the by Double Down and Scientific Games at pronounced shift to mobile platforms. This reflects a move away from PC-based platforms where social media giant Facebook, which in 2012 and 2013 was Eager to build and promote their brands, estimated to have 59% market share, today has an estimated 23% market share. savvy land-based casino companies have Mobile technology today features fantastic graphics with great sound devoted significant amounts of capital to quality, which make the games all the more get into the social sphere as they recognize engaging and at the end of the day is what publishers are looking for. Sticky games the branding opportunities, excellent with high entertainment value are what it crossover promotions and the opportunity is all about and publishers do not have to reinvent new games to meet these goals. to grow their databases.

Aristocrat’s Heart of Vegas app under its Product Madness social casino brand utilizes the IAP revenue model.

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8%. Zynga and Madfish come in next with bored so the game becomes easier if 1. Free with in-app purchases (IAPs) around 7% market share each. a player is stuck on a certain level, or – the most common and lucrative model. Regulation is non-existent because alternatively gets harder if the player is Distributing a free, entirely open-access social casino gaming with no prize or winning too quickly. This Dynamic Game game attracts players to download the payout schedule is not considered to be Balancing (DGB) is automatic, because app. Once players are engaged, IAPs offer gambling. Also, very few people understand game designers want players to stay additional credits, discounts and incentive the difference between gambling and engaged and these games become very chances to skip ahead or enhance the social games. Interestingly, we recently entertaining as a result. playing experience. saw China move to ban all forms of social So if it is not considered gambling, how Texas Hold’em Poker. In the US, gambling do social casino game providers generate 2. Freemium apps – Freemium apps requires the presence of three elements: the large revenues we see today? involve some form of “upgrade”, perhaps consideration, chance and some sort of There are three main revenue models: to unlock exclusive levels. Non-game apps, prize. Players bet on the outcome of an uncertain event to win a larger amount. Social games are not gambling if they eliminate one of the three elements. Slotomania, although the oldest social Because the games are not regulated, operators are free to set the odds at any slot game on the market, is still the most level they want. In fact, these games popular offering today with more than 20 are almost never truly random. Game developers do not want players to get million likes on Facebook.

Clash Royale is one of the world’s most popular examples of an IAP – free to play but with the option for in-app purchases.

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In the US, gambling requires the presence of three elements: consideration, chance and some sort of prize. Players bet on the outcome of an uncertain event to win a larger amount. Social games are not gambling if they eliminate one of the three elements.

particularly media providers, often use this stuck on a level or having to wait 30 minutes but also with successful online operators, model in the form of a “paywall” protecting for some seeds drive IAPs. Understanding land-based casinos and other social or premium content. how these trigger activities work and mobile game developers that are looking analyzing individual or macro-level data is to enter the social casino market. The key is 3. Paid/Premium – Pay your money critical for showing the right paid products to to focus on new markets and opportunities and get your game, the old-fashioned way. the right players at the right time. such as Asia. In addition, developing new Parents, many of whom have decried IAPs For operators today, the main challenges distribution channels beyond Facebook, as honey-traps, tend to like this model. are the rise of user acquisition and ongoing iOS and Google Play as well as continually Minecraft, for example, is a global smash development costs. Compared to running an working on product innovation is a must. hit and can be purchased once and played online casino site these costs are still much Long story short, social casino gaming almost infinitely. lower, but nevertheless, as any operator will is a rapidly expanding market segment tell you, having good marketing strategies with new and emerging markets like Asia Savvy and successful operators optimize to fish where the fish are is the difference providing the best opportunity to enter and trigger activities and focus on microdata between success and failure. find success. As they say, a rising tide lifts all detail. For example, what prompts a player to Not only do social casino developers have boats, and that is something we are definitely purchase an IAP? Trigger activities like getting to compete with their direct competitors, seeing through the Asia Pacific region.

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Macau’s Cotai Strip REDEFINING TOURISM

The prevailing view is that Macau sits a long way off Las Vegas when it comes to non-gaming revenue, yet according to academic Bo Bernhard, these two cities sit side by side in utilizing integrated resorts to provide tourists with an offering they can’t find anywhere else.

By Muhammad Cohen N an era when tourism constitutes a growing portion of the global economy, integrated resorts present a potent although frequently misunderstood means for growing visitor arrivals Muhammad Cohen and revenue. It’s not simply the casino but their range of also blogs for attractions that make IRs such powerful tools for economic Forbes on gaming developmentI and job creation while minimizing social costs. throughout Asia and Amid Macau’s massive gaming revenue numbers, it’s easy to wrote Hong Kong On miss that the “Las Vegasization” of its IRs is underway: non-gaming Air, a novel set during revenue is approaching the nominal amounts seen in Las Vegas, the 1997 handover moving the global casino capital closer to becoming the “world about TV news, love, center for tourism and leisure” that Macau and Beijing authorities betrayal, high finance have mandated. and cheap lingerie. So says Bo Bernhard, executive director of the International Gaming Institute at the University of Nevada, Las Vegas. Bernhard delivered his keynote address titled “The Surprising Impacts of

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the Integrated Resort” to the International Association of Gaming Some see that killer app as potentially fatal to existing tourist Advisors (IAGA) Gaming Summit, held in Macau last month in economies, a view not necessarily supported by evidence. conjunction with G2E Asia. “The vast majority of studies pre- and post-casino IR openings Las Vegas and Macau served as primary examples in the suggest that cannibalization – simply moving revenues from existing presentation and the talk carries significance for Japan, where restaurants, retail and so on to the IR – does not happen,” Bernhard legislators continue to wrestle with IR legalization amid strong says in response to questions from Inside Asian Gaming. “In fact, public opposition. given the increased inbound tourism that large-scale IRs see, there IRs have been one major factor in the transformation of gambling enclaves from “outposts for outcasts” to powerful, multifaceted tourism magnets, Bernhard says. An unsung player in the narrative has been government. While in many instances government intervention tends to stifle business growth, the efforts of authorities to remove Amid Macau’s massive criminal elements from Las Vegas and to introduce competition to Macau – each a bold decision that upended a successful formula – gaming revenue numbers, set the stage for IRs. Macau doubled down on competition when it added three sub-concessions to the original three concessions, in it’s easy to miss that the “Las effect allowing six casino operators. Vegasization” of its IRs is NON-FATAL KILLER APP These changes have taken place as tourism has come to represent underway: non-gaming revenue more than 10% of the global economy, Bernhard estimates. The is approaching the nominal world’s most expensive private buildings, integrated resorts, have proven to be a killer app when it comes to tourism, research shows. amounts seen in Las Vegas.

IRs have been proven to drive increased tourism in places like Macau.

JUNE 2018 INSIDE ASIAN GAMING 33 FEATUREIN FOCUS Las Vegas raked in an estimated US$10.3 billion in non-gaming revenue in 2017

succeed running a casino and that’s even more true of integrated [Bernhard] credits IRs with resorts, according to Bernhard. creating what he calls “the In order to survive in a competitive environment that ultimately depends on consumer taste – IRs must solve the title thesis of world’s most expensive real Clayton Christensen’s The Innovator’s Dilemma: the bigger you get, the stronger your status quo bias. The book uses Apple under Steve estate” – a table at a nightclub Jobs as an example of overcoming the dilemma through an ability to “create new categories.” that costs US$10,000 for four Bernhard sees that process playing out in the breadth of categories IRs span and the innovations within them. For example, hours – and then parlaying he credits IRs with creating what he calls “the world’s most expensive that concept into day clubs that real estate” – a table at a nightclub that costs US$10,000 for four hours – and then parlaying that concept into day clubs that extend extend opportunities to reap opportunities to reap comparable revenue. Looking at other surprising IR impacts, Bernhard debunks the comparable revenue. idea that IRs don’t create good jobs. IR employment almost always involves customer interaction, whether directly or indirectly. Delivering services to consumers successfully builds social intelligence, a trait that’s a better predictor of business success than IQ, studies show. often are positive effects, as tourists seek to get off property and enjoy other amenities.” GOOD EXPERIENCES In Singapore, the home of Las Vegas Sands’ much envied Marina Bernhard also disagrees with the notion that IRs don’t produce social Bay Sands and Genting Group’s much imitated Resorts World good, a view frequently rooted in the moral judgment that gambling Sentosa, there’s been a restaurant boom that observers attribute is bad. Judgments aside, his keynote proposes taking a larger view to the IRs bringing celebrity chefs and true top-end dining to town. of the IR as a place that produces a wide variety of experiences for That’s one example of how IRs reach beyond their walls to enhance visitors. Studies show that experiences tend to have greater positive the overall tourism proposition for a destination. impact on people than acquiring things. For IRs, their range of experiences works its greatest magic when CATEGORY BREEDER it comes to tourism. Bernhard cites an “agglomeration effect” that IRs themselves are crucibles of innovation, with a mix of amenities IRs promote by adding new options for travelers. and room to experiment. Contrary to popular belief, not everyone can “Many tourists don’t make travel location decisions seeking

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one single destination or amenity, but instead for an agglomeration Las Vegas Strip ratio of roughly one-third gaming revenue and two- of destinations or amenities – sometimes under one roof, as at the thirds non-gaming revenue. IR,” he says. “We are actually seeing evidence that the ‘Las Vegasization’ The range of amenities and attractions in Macau’s portfolio of of Macau’s casinos is already happening,” Bernhard says. “This IRs generates impressive amounts of non-gaming spending. means that Macau IRs are as healthy in some non-gaming sectors “A large Macau property generates the same amount of non- as their counterparts in Las Vegas, for example in retail, as some of gaming revenue as Las Vegas IRs,” Bernhard, who teaches hospitality the highest-grossing retail shops exist in Macau. Often this is less and sociology at UNLV, says. “But it doesn’t get noticed because visible, however, as the store itself may be empty, but the sales are gaming revenue is so much bigger.” taking place upstairs in a high roller’s room.” Overall, on the Las Vegas Strip last year, gaming revenue totaled The trend that Macau and Beijing authorities favor, of greater US$6.5 billion with non-gaming revenue estimated at US$10.3 billion. non-gaming spending by tourism and leisure visitors – overnight Macau authorities reported gaming revenue equivalent to US$33.2 visitors grew 18% last year – is gaining momentum. billion and tourist non-gaming spending of US$7.7 billion, up 16% “The diversification that Beijing and the Macau government from 2016. Bernhard contends the Macau non-gaming growth story have sought is happening,” Bernhard observes. “Be careful if you remains underappreciated due to the “obsession” with achieving the think of messing with it.”

“Macau IRs are as healthy in some non-gaming sectors as their counterparts in Las Vegas, for example in retail, as some of the highest-grossing retail shops exist in Macau. Often this is less visible, however, as the store itself may be empty, but the sales are taking place upstairs in a high roller’s room.” – Bo Bernhard

Macau is home to some of the world’s highest-grossing retail stores

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JAPAN IR TIMELINE

With opinions still divided as to when Japan’s first IRs will open, IAG takes a closer look at the steps still needed to get there and how long each might take.

By Ben Blaschke

HAT year for Japan’s first IR? It’s a question requested the Diet to debate about the bill. All party groups have a that continues to divide industry stakeholders, representative to discuss the IR situation, so we hope the debate can the answer further clouded by the substantial proceed smoothly. disparity in opinion offered at last month’s “After the bill is passed we would like to build the government’s Japan Gaming Congress (JgC) in Tokyo. policy and based on this policy or regulation any prefecture, candidate WAt the nearer end of the scale, members of the ruling Liberal city and IR operator can start to apply and then if everything proceeds Democratic Party remain hopeful of the nation’s first integrated smoothly I am hoping to have an IR here in Japan in the early 2020s.” resort opening its doors as early as 2022 or 2023 – a dream that has But not all expect the process to run so smoothly. Inside Asian been boosted in the weeks since JgC by news that the current Diet Gaming spoke to a number of Japanese politicians involved in the session will likely be extended into early July to ensure passage of the IR process during JgC, with one of them, independent MP Mito long-awaited IR Implementation Bill. Kakizawa, suggesting that casino gaming won’t become a reality in Speaking in Tokyo in May, Deputy Chief Cabinet Secretary of Japan until at least 2029 or 2030. the LDP, Yasutoshi Nishimura, said, “As the Central Government, Kakizawa, a member of the House of Representatives and former we recognize the IR bill has now been submitted, so we have just member of The Party of Hope, said the process of establishing Japan’s

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Deputy Chief Cabinet Secretary of the LDP, Yasutoshi Nishimura, remains hopeful that Japan’s first IR can open in the early 2020s.

By breaking down the implementation process into individual segments, the year 2025 emerges as the most likely scenario assuming no further unexpected delays along the way.

Casino Control Commission, initiating RFPs, selecting operators and approving design plans would likely take much longer than has been publicly iterated. In particular, he predicted that the three winning operator bids to be granted a Japan casino license would not be determined until 2024 “at the earliest.” Putting such extremes aside however, the safe money seems to be on Japan’s first IR opening around 2025 or 2026. This is not only the opinion of the majority of politicians we spoke to – including the IR leader of the LDP’s coalition partner Komeito, Kiyohiko Toyama – but also multiple industry analysts and consultants. Melco Resorts Chairman and CEO Lawrence Ho offers a similar view, telling CNBC that, “Assuming the whole legislation process goes very smoothly without any hiccups I think the earliest the

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Independent MP Mito Kakizawa says IRs in Japan could be delayed until 2030.

One of the most significant steps in pushing Japan’s IR industry forward will be the formation of the Casino Control Commission (CCC) – the government watchdog charged with regulating and supervising casino operations.

bidding can even take place is probably 2020 or 2021, and if you fierce considering the number and caliber of operators that will build an integrated resort with Japan’s dedication to quality and seek a license.” their building methods in terms of perfection, it’s probably going However, he notes that there may still be an opportunity for to [take a while]. operators to collaborate on a larger-scale development such as the “In Macau we built these great buildings in three-and-a-half to Osaka Strip concept his company first touted in 2017. four years but I think in Japan it’s probably going to be five or five- “If allowed under the regulatory environment, the level of and-a-half years, so the soonest that an integrated resort will open in investment and tourism draw would increase significantly if multiple Japan I think would be in 2025.” operators would come together on a single large site such as In fact, by breaking down the implementation process into Yumeshima Island in Osaka to form an Osaka Strip, or in the Tokyo individual segments, the year 2025 emerges as the most likely or Yokohama area,” he said. scenario assuming no further unexpected delays along the way. According to Union Gaming’s Grant Govertsen, it is the lead- The process once the IR Implementation Bill is passed will be up to this RFP process that poses the greatest risk as rules and as follows: expectations regarding foreign ownership levels become clearer. “Even though there is more clarity on the regulatory environment FORMATION OF CASINO CONTROL COMMISSION in Japan,” Govertsen said during a panel session at G2E Asia in May, One of the most significant steps in pushing Japan’s IR industry “the ownership question will continue for quite some time before we forward will be the formation of the Casino Control Commission actually get any clarity or even marriages between the international and (CCC) – the government watchdog charged with regulating and Japanese partners, so it’s going to be in waiting mode for a while.” supervising casino operations as well as monitoring organized crime and money laundering threats. The CCC would comprise around 100 LOCATION AND OPERATORS SELECTED officials under the Cabinet Office and its first task would be to set out Consensus suggests that Japan’s first three locations and IR operators precise IR regulations. will be named sometime between 1Q20 and 2Q20. According to gaming consultancy firm Global Market Advisors, The most significant takeaway from the recent JgC in this regard formation of the CCC and associated regulations should be complete was the push for at least one Japan casino license to be granted to sometime in 1Q19 although others predict a little longer. Toru a regional location with Hokkaido, Nagasaki and Wakayama among Mihara, an advisor to the government during development of its IR the main contenders. Implementation Bill, stated earlier this year that just putting the CCC Member of the House of Councillors for the LDP, Seiko together will take a full 12 months. Hashimoto – a former speed skater and track cyclist who represented Japan in seven Olympics – said at JgC that “having a INITIATION OF RFP PROCESS regional casino is very important.” Financial services firm Morgan Stanley has this pegged for mid-2019 “I grew up in Hokkaido and I know what it has to offer in terms and running for about a year as operators and candidate cities start of the ice and the snow, the natural attractions it has throughout the the bidding process in earnest. year,” she said. “I also understand the benefits an IR can bring to the GMA Partner Brendan D Bussmann says that “the RFP for local economy. An IR is the perfect way to invigorate the economy of the three potential locations and selection of operators will be the regional centers.”

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Akihiko Sasaki, the Vice Mayor of Tomakomai in Hokkaido, said Entertainment Group, Jean-Louis Masurel of Monaco’s Société des that IRs provided a unique opportunity to address the issues of an Bains de Mer (SBM) said, “SBM promises the best of Europe ageing population and declining birth rate in Japan’s regional centers through its international recognition, iconic brands, 155-year history using private sector funding. and heritage. Galaxy promises the best of Asia through its unique “The low birth rate and ageing process has led to a hollowing Asian-inspired resort and hospitality experiences. out of the downtown area, making it difficult to collect taxes,” Sasaki “Together in collaboration with local partners we will add the best said, adding that, “Despite the declining population, we want to of Japan, capturing the vibrancy, vitality and uniqueness of Japan reverse the trend of a declining economy.” through innovative design and architecture, arts and culture, events A study released by the Hokkaido Prefecture Government on the and entertainment and technological innovation to ensure the IR is eve of JgC found that Tomakomai City would attract the most visitors unique, authentic and unlike any other in the world.” of any Hokkaido location with estimates of 8.7 million annual visitors President of Wynn Development, Chris Gordon, told JgC that and annual IR revenue of up to ¥156 billion (US$1.4 billion) – around Wynn Resorts would create a “new Japanese district” incorporating double that of its nearest competitor. “multiple buildings, multiple hotels and a space to wander In Wakayama Prefecture, located in Japan’s south, estimates around in the open,” but added, “If someone travels to Japan have the number of annual visitors pegged at four million per year they are here to see Japan. We would still clearly have themes and revenue of ¥140 billion, with a location in Marina City already of our company but it would be quintessentially Japanese. We chosen as the preferred site. would also make the non-gaming aspects part of the fabric of the resort.” DESIGN AND APPROVAL PROCESS To the victors go the spoils. Come late 2Q20 to 3Q20, the successful GROUND BREAKING candidates will start finalizing their IR designs and submitting them If all of the above goes to plan, GMA says ground can be broken on for approval. Japan’s first IRs as early as 1Q22, leaving the final opening date down As per Morgan Stanley’s timeline, it will take around two years to the pace of construction. for operators to prepare to break ground on their chosen site and will “GMA believes that the earliest that large IRs will open will be require certification of their respective IR development plans by the late 2024 or early 2025,” Bussmann tells IAG. “While there is one CCC and the signing of an implementation agreement. regional site with an existing infrastructure that could open earlier, it Japan’s IR candidates have promised distinctly Japanese-themed is likely that between the regulatory formation, RFP Process, as well IRs that will reflect the community in which they are located. as the design, environmental approvals and overall construction that Describing his company’s partnership with Macau’s Galaxy Japanese IRs will not open until the mid-2020s.”

Could an Osaka Strip of “The ownership IRs still be a possibility? question will continue for quite some time before we actually get any clarity or even marriages between the international and Japanese partners.” Grant Govertsen

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A NEW NIGHT OF NIGHTS

Asia’s gaming industry came together for a memorable night at the inaugural G2E Asia Awards during G2E Asia 2018.

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2018 G2E Asia Awards winners SIA’S gaming industry celebrated a new night of nights at G2E Asia in 2018 with the inaugural G2E Asia Awards attracting more than 350 guests to a glamorous dinner event in The Ballroom at

MGMA COTAI. The G2E Asia Awards were a collaboration between G2E Asia and Inside Asian Gaming and are set to become a regular fixture on the annual calendar, recognizing excellence and innovation within Asian gaming. A total of 12 awards categories were presented at the inaugural G2E Asia Awards, culminating with Best Integrated Resort which was won by Galaxy Macau. The relaxed and enjoyable evening saw guests treated to world class entertainment from popular Hong Kong act Drum Galaxy Macau’s SVP of Table Games Jason Barry, SVP of Electronic Jam, singer Crisel and a troupe of glamorous dancing girls. Games Michael Palmieri and Galaxy Entertainment Group director The distinguished guest list also included some of the most Philip Cheng are presented the award for Best Integrated Resort by MGTO director Maria Helena Senna de Fernandes. important individuals representing Macau and Asia’s gaming and tourism industries, including DICJ Director Paulo Martins Chan; Director of the Macao Government Tourist Office Maria BEST B2B DIGITAL PRODUCT SOLUTION Helena Senna de Fernandes; Acting Director of the Macao Odds.gg – UltraPlay Economic Bureau Chan Tze Wai; Founder and Chairman of the Asian Responsible Gaming Alliance and China Lottery BEST CORPORATE SOCIAL RESPONSIBILITY CONTRIBUTION Industry Salon, academic leader and professor of lottery major MGM China of Beijing College of Social Administration Prof. Su Gao Jin; BEST LOTTERY SOLUTION and Chairman of LKF Group Dr Allan Zeman. Lotto Instant Win (Pin Projekt) Representing Macau’s six concessionaires were Galaxy Entertainment Group director Philip Cheng Yee Sing, Executive BEST INDUSTRY RISING STARS Vice President and Chief Human Resources and Corporate Matthew Righton – SG Gaming Social Responsibility Officer at Melco Resorts & Entertainment Vinni Leong – Winson Group Akiko Takahashi; Chief Operation Officer of MGM China Mike Lei – MGM Cotai Holdings John Shigley; Senior Vice President of Asian Gaming Maulin Gandhi – Tangam Systems Operations at Sands China Limited Cetin Tanisman; Director Carlos Eduardo Coelha – MdME and Company Secretary of SJM Holdings Dr Rui Cunha; and BEST VIP GAMING PROMOTER Vice Chairman and Executive Director of Wynn Macau Limited Suncity Group Linda Chen. BEST B2B DIGITAL PLATFORM AND SOFTWARE SOLUTION Betsoft

BEST ELECTRONIC GAMING SOLUTION (Slots and ETGs) Duo Fu Duo Cai (SG Gaming)

BEST INDUSTRY INNOVATION Angel Playing Cards (Angel)

BEST TABLE GAME SOLUTION Perfect Pay (Walker Digital)

BEST GAMING FLOOR Galaxy Macau

BEST INDUSTRY SUPPLIER Aristocrat

BEST INTEGRATED RESORT Galaxy Macau

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LINGERING CLOUDS JAPAN’S GREAT UNKNOWN

Uncertainty over Japan’s foreign ownership laws and the role of pachinko in Japanese IRs were two of the key topics of discussion during an insightful panel session hosted by Inside Asian Gaming at G2E Asia titled Asian Markets Forum.

HE distribution of ownership between local and foreign issued and entry fees have now been determined, Tash believes partners developing Japan’s integrated resorts remains ownership rules remain the number one stumbling block yet to the “biggest mystery” for operators as IR legislation creeps be resolved. closer to becoming a reality, according to Senior Vice “Yes there are 11 factors that have now been determined – there President of Gaming and Strategy for 2NT8 Alidad Tash. will be three cities, the next round will be seven years later, the tax rate TThe former Sands China and Melco Crown executive raised the is fixed – but I think the most unresolved question is the percentage issue as a major area of concern for the world’s leading IR operators of foreign ownership,” he said. “That is the biggest mystery I would during a special Asian Markets Forum conference session at G2E struggle with. Asia 2018, presented and hosted by Inside Asian Gaming. “The percentage of foreign ownership is a big deal and that may While issues such as tax rate, the number of licenses to be play a part – if that ownership is less than 50% or less than 30% it will

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upset who we have traditionally viewed as the likely winners of those a Western company coming in without Japanese partners. I think first three licenses because some of the people who operate IRs in Asia that’s going to be a very critical part of the equation.” don’t play very well with other partners, let alone multiple partners. Either way, the details of any official government policy will “It would be easy if someone went to MGM and said, ‘You get be essential for any companies with an interest in Japan, as these 40% and this company gets 60%.’ I think that’s very doable. The difficulty will be if they say ‘You get 40% and these 15 companies over here collectively get 60%.’ “That consortia and having to deal with a bunch of different people who are not necessarily into gaming, entering into While issues such as tax rate, the negotiations and everything that is associated with it, that’s going to be very challenging.” number of licenses to be issued Despite Tash’s concerns, it is clear that the operators and entry fees have now been themselves recognize the need to partner with local Japanese companies. Fellow panellist William Shen, Senior Vice President determined … ownership rules and Managing Director for Korea & Japan at Caesars Entertainment Corp, said, “When Japan is looking for a Japanese integrated remain the number one stumbling resort, a uniquely Japanese integrated resort, you can’t do that as block yet to be resolved.

(L to R) Union Gaming’s Grant Govertsen, Summit Ascent’s Eric Landheer, Caesars Entertainment’s William Shen and 2NT8’s Alidad Tash during the Asian Markets Forum “Asia North” panel session, hosted by IAG CEO Andrew W Scott, at G2E Asia.

JUNE 2018 INSIDE ASIAN GAMING 45 FEATURES

will determine “whether that model is going to be able to justify a return on investment for what will be massive investments,” “If pachinko can generate this according to Eric Landheer, Executive Director of Summit Ascent much volume from players Holdings – the Hong Kong-listed company that runs Tigre de Cristal in Vladivostok, Russia. in such an unattractive Landheer added that some of the most important aspects that environment, imagine what it the legislation has not yet tackled include credit and insurance details, the full taxation structure and whether junkets will be allowed can do when they are able to in the country. play in an integrated resort?” JAMES BOND ELEGANCE – Alidad Tash Despite the legal uncertainty, Japan provides a huge revenue opportunity if operators are able to draw an accurate profile of potential customers and take advantage of underutilized infrastructure. In this regard Tash points to the pachinko segment, noting that he sees “an opportunity” in the sector despite pachinko’s generally style casino where there is a sense of elegance,” he said. negative connotations. In fact, Tash believes it is only a matter of “If pachinko can generate this much volume from players in such time before pachinko – which generated an estimated US$30 billion an unattractive environment, imagine what it can do when they are in revenue last year despite declining player numbers – finds its way able to play in an integrated resort?” onto Japan’s IR floors. Tash sees pachinko maintaining the status quo away from “When you walk into a pachinko parlour it is an overwhelming Japan’s IRs during the early years before gradually claiming a space assault on the senses with lights and noise – it’s completely different on casino floors in the future, as “they are naturally targeting the from the typical table games experience, the traditional James Bond same people.”

RUSSIA’S “MINI-MACAU”

WHILE ALL EYES ARE FOCUSED ON JAPAN, there is movement at the station in Russia where the Special Economic Zone in Vladivostok is set to become a “mini-Macau.” So says Summit Ascent Holdings Executive Director Eric Landheer, whose company owns and operates the region’s first IR, Tigre de Cristal. According to Landheer, Vladivostok will be home to “six to eight IRs within the next five to 10 years” due to the SEZ’s incredibly generous tax rates and proximity to the largely untapped northern China market. He suggested that the ongoing success of the region “needs to be inspired by further mass growth” but predicted enormous benefit would be gained from the future “cluster effect, which we know has been proven to work both here, in Macau and other places.” Diamond Fortune Holdings broke ground on what is scheduled to The cluster effect refers to the added attraction for visitors of become Vladivostok’s second IR, the US$900 million Selena World clustering multiple IRs together, as is the case in Las Vegas and Resort & Casino, last June with an opening date of mid-2019, while Macau. NagaCorp expects to open Phase 1 of its Russian IR – which will boast “I don’t expect to see a Macau and I don’t expect to see a Japan a casino, conference space and 279 hotel rooms – sometime in 2019. or even perhaps a Singapore, but you could say I expect something Tigre de Cristal is expected to unveil plans for its second phase in like a mini-Macau,” Landheer said. July or August of this year.

46 INSIDE ASIAN GAMING JUNE 2018 JUNE 2018 INSIDE ASIAN GAMING 47 TECH TALK

HIGH AND MIGHTY

4848 INSIDEINSIDE ASIAN ASIAN GAMING GAMING JUNE JUNE 2018 2018 TECH TALK

Aristocrat unveiled its new high-volatility, high-stakes slot machine “Fa Fa Long” at G2E Asia in 2018.

NE of the more eye-catching “Fa Fa Long” is based on Aristocrat’s rarity in Asia Pacific. It offers a suite of high- displays of the entire repeat-win math model. Its simple end denominations and configurations ideal exhibition floor at G2E Asia mechanics are paired with intuitive line for VIP room placement. 2018, held at the Venetian displays, which offer players a low-line math “With bespoke Asian artwork coupled Macao from 15 to 17 May, model. While popular in numerous markets with proven math, ‘Fa Fa Long’ is derived wasO Aristocrat’s innovative High Limit Area. around the world, this style of game is brand from one of ANZ’s most popular high Designed to provide customers with new to Asia with the company claiming it has denomination games, ‘Big Red’. an insight into how they can potentially the potential to redefine high-limit slots. “We’re confident that the repeat-win customize their slot machine offering to “‘Fa Fa Long’ is seeking to provide mechanic will entertain players across the appeal specifically to VIP players, the High players with something a little different,” region, with its balance of simple mechanics Limit Area featured one of the company’s explains Aristocrat Marketing Manager – and strong pay table, complete with a top newest releases, “Fa Fa Long” – a standalone APAC, Nick Callaway. prize of up to 1,000 credits.” game for players who enjoy a higher-volatility “The game is a high-denomination, Aristocrat’s “Fa Fa Long” slot offers gaming experience. eight-line game, with such low lineage a denominations up to HK$1,000 (US$127).

Aristocrat’s High Limit Area featured one of the company’s newest releases, “Fa Fa Long” – a standalone game for players who enjoy a higher-volatility gaming experience.

JUNE 2018 INSIDE ASIAN GAMING 49 Events Calendar

from the leading land-based gaming operators, marketing experts, sports betting operators, sports and racing bodies and key 3|5 July 2018 legislators from state and federal governments. World Gaming Executive Summit www.gamingdownunder.com Barcelona, Spain

The World Gaming Executive Summit will return to the stunning W Hotel in Barcelona in 2018, bringing together over 200 senior-level 14|16 August 2018 operator speakers and 700+ attendees. The seniority, reputation Australasian Gaming Expo and global reach of the World Gaming Executive Summit make Sydney, Australia it the most exclusive and influential gathering for the gaming industry. The summit features everything from high-level content At the 2018 Australasian Gaming Expo, visitors will enjoy one of and discussion to pool parties, yacht parties, BBQ dinners, beach the world’s largest hospitality trade equipment exhibitions, which drinks receptions, city tours and more. The 2018 event will feature returns for its second year at the all new International Convention brand new streams and workshops on customer experience and Centre (ICC) Sydney. Located right in the heart of the Darling loyalty, payments, integrated resorts, real estate, new technologies, Harbour precinct – with a host of restaurants, nightlife and sports betting and cyber security. accommodation all within a short stroll – this year’s exhibition will www.terrapinn.com/conference/world-gaming-executive- again have an amazing 19,000 square meters of exhibition space summit/index.stm available, all under one roof with more than 10 meters of clear ceiling height. www.austgamingexpo.com 17|20 July 2018 iGB Live! Amsterdam, Netherlands 9|11 October 2018 Global Gaming Expo (G2E) In 2018 the iGaming Super Show, EiG and Amsterdam Affiliate Las Vegas, USA Conference will come together at a consolidated three brand event called iGB Live! The creation of iGB Live! is part of a Set yourself up for success at Global Gaming Expo (G2E) – the commitment to streamline the events calendar and provide largest gathering of global, commercial, and tribal gaming stakeholders with a unique opportunity to engage across the professionals in the world. Take advantage of new educational entire iGaming space at a single event. This strategic move content that is fast-paced and actionable and experience first-hand will enhance the value and appeal of attending what will be the new products and innovative technologies showcased on the biggest dedicated iGaming exhibition and conference for the expo floor. G2E has everything you need for your casino floor the industry and one which is guaranteed to meet stakeholder and across your entire operation – from traditional casino fare to needs from a networking, education and business perspective. sports betting, non-gaming amenities and digital products – G2E The first iGB Live! will take place from 17 to 20 July 2018 at the is where your business growth is accelerated. Amsterdam RAI. www.globalgamingexpo.com www.igblive.com 13|15 November 2018 13|15 August 2018 MGS Entertainment Show Gaming, Racing & Wagering Australia Venetian, Macau Sydney, Australia MGS Entertainment Show (MGS) is organized by the Macau Gaming, Racing & Wagering Australia (GRWA) is the region’s Gaming Equipment Manufacturers Association (MGEMA), premier gaming conference taking place in August. Bringing co-organized by the General Association of Administrators and together over 150 of Australia’s leading sports betting, gaming, Promoters for Macau Gaming Industry, Associação de Mediadores wagering, lottery and racing executives to learn about the latest de Jogos e Entretenimento de Macau, Macau Jockey Club, developments in industry, incoming regulations and disruptions MACAUSLOT and Macau Yat Yuen Canidrome. It is the first large- and strategies to stay ahead of the curve. This year we are hosting scale gaming and entertainment exhibition organized and run by the 9th edition of GRWA in a brand new venue, L’Aqua at Darling Macau organizations. MGS will have a floor area of over 10,000 Harbour. A number of events have occurred in the past year which square meters. Exhibitors and buyers eyeing the Asian market will have impacted the industry. To get the latest updates, opinions be coming from all corners of the world. and predictions, join us in August to network and gain insights www.mgsentertainmentshow.com