inside asian gaming

• Ho and Adelson: Changing of the guard • Japan’s MICE opportunity • Augmented reality on floors

APR 2019 #154 | 30 MOP

RUSSIAN REVOLUTION

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APR 2019 CONTENTS COVER STORY 16 Russian revolution Tigre de Cristal is pioneering Russia’s Primorsky market near Vladivostok and hoping to retain its lead in the emerging cluster.

Cover Image:

Summit Ascent Holdings

10 Breakfast Briefs

IN FOCUS FEATURES 26 Changing of the guard 46 Rise of the machines Recent health scares suffered by SJM founder Dr and Las IAG speaks with Herman NG, CEO and Executive Director of ’s Vegas Sands kingpin Sheldon Adelson are a stark reminder that the Asia Pioneer Entertainment, about the company’s strong 2018 growth, end of an era could come sooner rather than later. its Asian expansion plans and the state of the EGM industry in Macau.

COLUMNISTS JAPAN 34 Ready player one 50 Cruise control Could popular augmented reality apps like Pokemon Go highlight the Moves to develop an integrated resort on Osaka’s Yumeshima Island next step forward for using such technology on casino floors? could also provide a welcome spark to the country’s cruise ship industry.

JAPAN INDUSTRY PROFILE 38 Japan’s MICE opportunity 54 Jason Tomas: Explorer’s spirit Japan has some ground to make up if it is to become a world leader in Having recently arrived in Macau as Product Marketing Manager for SG the MICE space, but the advent of IRs presents the perfect chance to Gaming, Jason Tomas sits down with IAG to discuss his career journey ride the MICE wave to the top. from the Philippines to his new home.

58 EVENTS CALENDAR

4 INSIDE ASIAN GAMING APR 2019

EDITORIAL JAPAN BUREAU

Managing Editor Senior Advisor Ben Blaschke Aki Isoi

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EDITORIAL

Questions remain in Macau re-tendering puzzle

he announcement by Macau’s government on 15 four provides some much-needed time to get their houses March that it had agreed to extend the concession in order. And it will be particularly comforting for SJM, contracts of SJM and MGM until 26 June 2022 which can now focus all energies on finally launching its has shed little light on what to expect from the long-awaited Cotai integrated resort, the HK$36 billion SAR’sT license re-tendering process. Grand Lisboa Palace, early next year. Having originally promised to release details of its re- In a filing to the Hong Kong Stock Exchange on the tendering plan by the middle of 2018, the decision to delay day of the announcement, SJM said the concession confirmation of the license extensions – which had long extension “represents an important development for the been anticipated – conveniently negates any need for the Group as it places [SJM] in the same position as the other current administration, under Chief Executive Fernando concessionaires when the Macau Government considers Chui Sai On, to act further given its term officially expires inviting tenders for the next round of gaming concessions.” in December. MGM also pointed to the extension as providing better But the wait for clarification could prove much longer opportunities to finance the business and plan for future than that. capital expenditure opportunities. Not to mention that it As speculated by Union Gaming’s Macau-based analyst is now guaranteed an extra two years of operations in the Grant Govertsen, “The new administration will take office at world’s most lucrative casino hub. the end of this year, at which point we would expect a multi- Yet while SJM and MGM can now move ahead with year study to take place (potentially taking a wait-and-see far greater certainty, it seems the wait to learn more approach to Japan) and thus necessitating concession about Macau’s re-tendering plans has been extended extensions for all six perhaps well beyond 2022.” as well. In other words, there is every chance we’ll still be In particular, we still know nothing about what is sitting here in five years’ time asking the very same expected of the SAR’s six concessionaires in terms of questions about Macau’s license re-tendering process as stating their case for renewal, what financial obligations we are now. will accompany it nor what opportunities will be presented But that’s not necessarily bad news for Macau’s six for new operators to enter the market. Govertsen, for his operators. part, puts the likelihood of a seventh (or eighth) licensee In the case of SJM and MGM, confirmation that their being welcomed into the enclave at 50/50. licenses, originally due to expire in 2020, would instead For now though, any such speculation is little more be extended by two years to come into line with the other than a roll of the dice.

Ben Blaschke Managing Editor We crave your feedback. Please email your comments to [email protected].

8 INSIDE ASIAN GAMING APR 2019 www.asgam.com

BREAKFAST BRIEFS

MACAU EXTENDS GAMING LICENSES OF SJM AND MGM TO 2022 tender for the granting of new gaming licenses. The concessions of Galaxy, Wynn, Sands and Melco all expire on 26 June 2022. Granting of the two-year extension will require SJM and MGM to pay MOP$200 million (US$25 million) each, with the government adding that the payment does not exempt either from any obligations under their current concession. MGM will also pay SJM a sum of MOP$20 million (US$2.5 million) in connection with the extension of the sub-concession. THE Macau government has authorized the requests of Notably, it will likely also bring to an end any further Sociedade de Jogos de Macau, S.A. (SJM) and MGM Grand decision-making by the current Macau government given Paradise, S.A (MGM) to extend their concession and sub- the regime of Chief Executive Fernando Chui Sai On concession contracts until 26 June 2022. comes to an end in December. At a press conference held on 15 March, the In a note, Union Gaming analyst Grant Govertsen government said it considered that bringing the terms stated, “We do not believe the current administration, of SJM and MGM’s concession contracts into line with which will be in office until December of this year, is likely the SAR’s other four concessionaires would benefit the to move forward in any meaningful way with respect to preparation and development of the upcoming public the license rebid scenarios.” THE GRAND HO TRAM IN VIETNAM TARGETED FOR ACQUISITION BY WARBURG PINCUS

SEVERAL sources have informed IAG that integrated Project Co stating recently it had deployed and forward- resort The Grand Ho Tram in Vietnam has been targeted deployed capital of US$1.1 billion. for acquisition by American private equity firm Warburg The Grand Ho Tram has long sought a change to Pincus, LLC. Vietnamese law to allow local Vietnamese to gamble in Warburg Pincus has been a private equity investor its casino, but to date has been unable to do so. Vietnam’s since 1966 and has investments of approximately US$40 first three-year pilot program for locals gaming was billion in retail, industrial manufacturing, energy, financial instead awarded to Corona Resort and Casino in Phú services, health care, technology, media and real estate. Quõc, which is the only casino currently allowed to accept It has offices in the US and China. local Vietnamese, under certain qualifying conditions. Phase 1 of Ho Tram, located on the southeast coast of A casino resort currently being developed at Van Don in Vietnam around two hours by car from Ho Chi Minh City, cost northern Vietnam will reportedly become the second. around US$600 million to complete and features a 541-room The Grand Ho Tram’s parent company is Asian Coast hotel, a casino with space for 90 tables and a Greg Norman- Development Ltd (ACDL), whose directors as listed designed golf course. A second hotel, set to open soon, will on its website include Philip Falcone, Chien Lee and bring the total key count to 1,100 with developer Ho Tram Anthony Podesta.

10 INSIDE ASIAN GAMING APR 2019 LAS VEGAS SANDS SETTLES 15-YEAR LAWSUIT OVER MACAU GAMING CONCESSION

LAS VEGAS SANDS has reached a settlement with Hong Kong businessman Richard Suen for an undisclosed amount, bringing to an end a lengthy legal battle that had lasted more than a decade. The settlement was announced at the start of proceedings on day two of a civil suit hearing to determine how much LVS should pay Suen for services allegedly rendered in Macau. Suen sued the gaming giant for breach of contract, claiming he played a key role in helping the company win its highly lucrative Macau gaming concession in 2002. Juries had twice previously found in favor of Suen, to the tune of US$44 million in 2008 and US$70 million five years later, but LVS appealed on both occasions. Day one of the civil hearing had seen Suen’s lawyers ask for a massive US$347 million payout. Although details of the settlement remain a secret for now, Suen’s attorney John O’Malley told US-based gaming industry news outlet CDC Gaming Reports, “We’re very pleased to have this case finally resolved after 15 years. We can’t talk about the amount. This settlement completely resolves the litigation.”

APR 2019 INSIDE ASIAN GAMING 11 BREAKFAST BRIEFS

QUEZON CITY TARGETING ENTRY FEE FOR NEW SOLAIRE CASINO

QUEZON City Mayor Joy Belmonte has promised to Government Code that has precedence,” Belmonte said. challenge Philippines gaming regulator PAGCOR in court “Since the argument is it should be for tourism, it over the city’s planned implementation of a gambling should cater only to tourists. We’ll really make it hard for regulatory ordinance that would include an entrance fee Quezon City residents to go [inside] the casino.” for locals. Sureste Properties – the operating entity of Solaire The ordinance and entry fee form part of the local Resort and Casino in Manila’s Entertainment City precinct government’s efforts to limit access to Bloomberry – purchased the land for its Quezon City IR in 2015 for Resorts’ second Solaire-branded Philippines integrated Php1.98 billion (US$38 million). resort, to be built on 1.57 hectares of Quezon City land Bloomberry Chairman and CEO Enrique Razon Jr from mid-2019. revealed last year that the Quezon City resort could boast Belmonte revealed in March that PAGCOR chair Andrea the same total floor space for casino operations as Solaire Domingo had threatened to block the implementation of despite the smaller land size, with the building expected any such restrictions by seeking a temporary restraining to be more vertical. order in court, citing a Presidential decree as giving the Bloomberry also secured a Php40 billion (US$767 regulator exclusive rights. million) loan in February to fund the design, construction “I welcome [the restraining order] so the courts and development of its Quezon City resort, scheduled to can decide whether it’s the PAGCOR charter or Local open in 2022.

AUSTRALIAN-listed Frontier Capital Group (FCG) says it will resume FRONTIER CAPITAL operations at Casablanca Casino, located within the Clark Freeport Zone in the Philippines, after confirming it has the necessary funds to settle a Php225 million PAGCOR escrow payment. GROUP TO RE-OPEN FCG completed a takeover of Hotel Stotsenberg, which houses Casablanca Casino, in February 2016 for a cost of AU$26 million PHILIPPINES CASINO in a deal that included an AU$25 million profit guarantee over five

12 INSIDE ASIAN GAMING APR 2019 EVERI ACQUIRES CASINO KIOSK FIRM ATRIENT FOR US$40 MILLION

GLOBAL gaming and financial equipment supplier Everi Holdings Inc has announced the acquisition of casino loyalty and marketing solutions firm Atrient. The US$40 billion transaction, comprising an immediate US$20 million cash payment with the balance to be paid within two years, sees Everi acquire assets including “existing technology related to self-service kiosks and a marketing platform as well as other intellectual property. “The company also acquired a portfolio of over 50 customer contracts representing over 100 casino locations where the platform is currently installed that provide a stream of high-margin recurring revenue related to software maintenance and support,” it said. Speaking of the Atrient acquisition, Everi President and CEO Michael Rumbolz said, “Our ability to integrate this robust player loyalty platform with our payment solutions and growing compliance suite through our already powerful proprietary network further differentiates our comprehensive offerings and enhances the overall value proposition of the FinTech services we provide to our customers. “We believe this attractive tuck-in acquisition fits perfectly into our strategy of delivering products and services that are focused on improving the guest experience, growing our FinTech transactional base and creating operating efficiencies for our customers.”

years from the operator of the hotel and gaming business, said it has now secured the necessary funds to satisfy E!xcite Gaming and Entertainment. PAGCOR requirements to reopen Casablanca Casino, a However, the company was forced to close casino move it described as “imminent.” operations on 5 February 2017 after the Philippines gaming FCG also revealed that AU$1.5 million of those funds regulator ordered the escrow payment, with the E!xcite have come via the termination of an agreement to operate agreement also terminated at that time. the Mongolian National Lottery, resulting in the return of the In a filing with the Australian Securities Exchange, FCG company’s initial cash balance.

APR 2019 INSIDE ASIAN GAMING 13 BREAKFAST BRIEFS

STAR WARNS OF EGM SATURATION AS ROI PROCESS OPENS FOR SECOND GOLD COAST CASINO The Star Gold Coast AUSTRALIA’S Star Entertainment Group has warned against the potential addition of any further electronic gaming machines into the Gold Coast market after the Queensland government officially called for global an AU$850 million upgrade of its current Gold Coast Registrations of Interest to develop a Global Tourism property and has been granted government approval to Hub (GTH). initiate an additional US$2 billion master plan – said Although full details of the government’s proposal it has yet to be informed of “any detailed information are yet to be released, any new Gold Coast development on what constitutes a GTH or the government’s is certain to contain gaming with Tourism Industry requirements around minimum investment levels, Development Minister Kate Jones stating that it would potential location and what, if any, gaming product will cap the amount of total floor space to be used for gaming be permissible.” purposes at 5%. It has been suggested that a range of It added that the company “has a declared position MICE and non-gaming attractions would also form a key that the Gold Coast is already saturated as an electronic part of any successful proposal. gaming machine market.” Caesars, Hard Rock and NagaCorp are among the The Queensland government is set to establish a international gaming firms to have previously expressed tourism advisory panel to aid the selection process an interest in a Gold Coast casino. for any new IR operator, while Star said it has already In a filing to the Australian Securities Exchange, been invited to take part in the secondary Expressions Star Entertainment Group – which is in the midst of of Interest phase.

SILVER HERITAGE LAUNCHES VIP GAMING AT NEPAL’S TIGER PALACE RESORT

SILVER Heritage Group launched VIP gaming at Tiger It also boasts secure access from the casino’s premium Palace Resort on 2 March as the Nepal IR celebrated the gaming area or via separate private access. one year anniversary of its official casino launch. Silver Heritage recently reported a 110% increase in The property’s new VIP area includes three VIP rooms table drop to US$2.1 million and 142% uptick in footfall covering a combined 4,500 square feet, with a total of 11 to 10,584 at Tiger Palace in January – the first month gaming tables, high limit slots, a lobby lounge and private since opening in late December 2017 that it has reported dining area. comparative year-on-year results.

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COVER STORY

RUSSIAN REVOLUTION

Tigre de Cristal is pioneering Russia’s Primorsky market near Vladivostok and hoping to retain its lead in the emerging cluster.

By Muhammad Cohen

Muhammad Cohen is Editor at Large of Inside Asian Gaming, a contributor to Forbes Asia and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.

16 INSIDE ASIAN GAMING APR 2019 APR 2019 INSIDE ASIAN GAMING 17 COVER STORY

Downtown Vladivostok

18 INSIDE ASIAN GAMING APR 2019 Since its 2015 opening, Tigre de Cristal has welcomed nearly one million visitors [and] formulated ambitious expansion plans to cement its leading role in what it hopes will become a casino cluster on Russia’s Pacific Coast.

igre de Cristal in the Primorsky Krai Integrated that Suncity Executive Director Andrew Lo Kai Bong had Entertainment Zone outside Vladivostok become a Summit Ascent director. In its 2018 earnings defines frontier gaming. report filed with the Hong Kong Stock Exchange on 18 “We’re in the middle of the forest and it’s just March, Summit Ascent wrote, “We are optimistic about us,” Tigre de Cristal COO Stylianos Tsifetakis the potential collaboration with the Suncity Group.” says. Yet, since its November 2015 opening, Tigre de Cristal Andrew Lo tells Inside Asian Gaming the purchase of Thas welcomed nearly one million visitors, formulated Summit Ascent shares “is just an investment, as we think ambitious expansion plans to cement its leading role in its stock undervalued.” However, Lo, who serves as Suncity what it hopes will become a casino cluster on Russia’s Group’s chief investment officer and works on overseas Pacific Coast and created associations with two of the business development, mergers and acquisitions, sees biggest names in Macau gaming. scope for cooperation between the companies on the In 2013, Summit Ascent’s then-chairman Lawrence junket side. Ho signed an agreement with Russian authorities to “Firstly, Vladivostok’s geographical environment is partner in the first casino resort in the new entertainment unique, so it will attract some particular players, and our district that’s about 50 kilometers (31 miles) from platform needs different types of attractions. It is near to downtown Vladivostok but just 15 minutes from the city’s Northeastern China, Korea and Japan. It has sea beaches international airport. Some 300 million consumers live and is a good summer resort. Secondly, as the profit margin within a three hour flight, including 130 million in under- there is higher, we can give more [rewards] to the clients.” served northeastern China. Summit Ascent acquired a Lo adds that Suncity expects to do business with other majority stake in the resort in 2014. Primorsky but doesn’t plan to invest in them. Ho sold his stake in Summit Ascent in late 2017. “Only the chairman and majority shareholder changed,” DEEPER POOL Tsifetakis, who has spent nearly 25 years in casino and The link with Suncity fits Summit Ascent’s strategy of hotel management in Europe, spiced with a stint in Macau, diversifying its junket pool beyond North Asian groups that says. “The strategy is the same.” it claims demanded higher commissions. Tigre de Cristal Taiwan’s First Steamship Group, with shipping, retail has a base rebate rate of “approximately 70%” of VIP and property interests, is now Summit Ascent’s largest revenue, according to Summit Ascent Executive Director shareholder. First Steamship Chairman Kuo Jen Hao, a Eric Landheer, with additional incentives for hitting graduate of Taiwan’s Aletheia University and a certified certain rolling chip thresholds. Last year it paid out 77% of public accountant in New Jersey, now serves as Summit VIP gross win as commission, equivalent to 2.4% of rolling Ascent’s chairman and a non-executive director. chip volume. In Macau, commissions are limited to 1.25% of rolling SOLAR ENERGY chip volume and revenue share tends to follow a 40-40- In December, a Hong Kong market filing announced 20 pattern: 40% tax, 40% rebate and 20% to casino, with that Macau’s leading junket operator Suncity Group’s some 40-50-10 arrangements. At Tigre de Cristal, tax was listed arm has a 3.29% stake in Summit Ascent, and 3.14% of gaming revenue and was not revenue-based.

APR 2019 INSIDE ASIAN GAMING 19 COVER STORY

Baccarat is the most popular game as high end customers in particular tend to come from China, with Koreans, Japanese and Russians rounding out the daily average of 1,000 casino visitors.

Tigre de Cristal COO Stylianos Tsifetakis

Tax rates are currently set at 125,000 Russian rubles to 39.2%. In addition to its more profitable business (US$1,943) monthly per table and RUB7,500 monthly per mix, Tigre de Cristal also achieved savings through cost gaming machine position. control and localization, with 97% of its 1,050 employees Summit Ascent recently reported gaming revenue Russian citizens. of HK$419 million (US$53.4 million) in 2018 and total Focused on second half improvement in VIP roll from operating revenue of HK$463 million, down 1.6% from HK$6.5 billion to HK$9 billion plus strong mass growth, 2017. That was largely due to a 17% decrease in VIP rolling Union Gaming Managing Director in Macau, Grant to HK$15.6 billion and 30% fall in VIP win after rebates Govertsen, upgraded Summit Ascent to a buy. Adding to HK$109 million. Those drops came as Tigre de Cristal Suncity to the VIP mix suggests to Union that VIP volume sought new junket arrangements and focused on beefing could reach HK$30 billion by 2020. up its mass market operations. A weaker ruble also contributed to the overall fall. END OF THE WORLD Mass table play became Tigre de Cristal’s largest Named “Russia’s Leading Resort” by the World Travel revenue source, growing 26% to HK$167 million. Slot Awards last June, Tigre de Cristal offers a world class product handle increased 30% to nearly HK$2.9 billion, with slot in what is often seen as an “end of the world” location. The win up 19% to HK$143 million, also topping VIP revenue. hotel has 121 rooms in seven categories and if you woke up Hotel occupancy nudged up to 63.4% from 62.2% in 2017 in one, you’d swear it bore a top Western brand. – Tsifetakis says guest rooms are regularly full Friday The five-star property, built for US$172 million, boasts through Monday. two restaurants, one casual Pan-Asian and Western, one Adjusted property EBITDA rose 4% to HK$181 million fine dining steakhouse, and four bars, with a private club and EBITDA margin increased three percentage points expected to open soon, plus a handful of shops including

20 INSIDE ASIAN GAMING APR 2019 The main gaming floor at Tigre de Cristal

a jeweler and a diamond and watch boutique. There’s also Tigre de Cristal casino adds its own wrinkle with a spa, karaoke and virtual golf (and in case one particular bets and chips denominated in TDC units, equivalent to driving simulator fan is tempted, a presidential suite). RUB60 or roughly US$1. On the main floor, players can The casino has a total capacity of 58 tables and 333 squeeze their baccarat with minimum bets starting at EGMs, with seven junket rooms. Baccarat is the most 50 TDC. Junkets and select VIPs get short-term credit, popular game as high end customers in particular tend to generally repaid in less than two weeks following the come from China, with Koreans, Japanese and Russians visit, with no balances beyond that window and no – allowed to play with no entry fee or visit restrictions – impairments reported. rounding out the daily average of 1,000 casino visitors. To expand guest capacity, Summit Ascent says it Other table games are blackjack, roulette, sic bo and has begun preliminary work to build villas and serviced casino poker variants. The betting floor color scheme apartments adjacent to the current resort. The additions emphasizes earth tones and has the comfortable feel of will increase the key count by approximately 50%, an oversize fur coat. according to the earnings statement, with completion scheduled early next year. LATE NIGHT BANKING That’s in advance of Tigre de Cristal Phase II, part of Players must navigate some Russian regulatory quirks. the original plan for the resort that’s been under revision For starters, casino guests must register with a passport with the changes in ownership. According to the earnings or Russian national ID to enter. Russia requires that all filing, Phase II will add hotel and gaming capacity, new F&B foreign currency purchases and sales take place at banks, choices, an indoor beach club and, in First Steamship’s so the casino floor has a bank branch operating 24/7, wheelhouse, a premium outlet mall. Summit Ascent is now offering competitive exchange rates, Tsifetakis assures. targeting opening the first stage by the third quarter of 2021.

APR 2019 INSIDE ASIAN GAMING 21 COVER STORY

Tigre de Cristal’s Presidential Suite

CLUSTER EFFECT Russia requires that all By that time, Summit Ascent expects that Hong Kong listed NagaCorp and Russia’s Diamond Fortune will have foreign currency purchases opened their Primorsky casinos. Shambala, which ran a and sales take place at banks, casino in the Azov gaming region that was eliminated at the end of last year, also announced plans last June for a so the casino floor has a bank Primorsky casino. branch operating 24/7. “We don’t see the other operators as competitors,” Tsifetakis says. “We see them as opportunities for a cluster effect.” Innovation Group Director Michael Vanaskie examines destination, but to become a top gaming destination within the potential cluster effect in Primorsky in a recent the region the IEZ will have to induce a large number of monograph, using Macau and Manila’s Entertainment City foreign visitors. as spectacularly successful examples. He notes that the “From what we’ve seen in the past, to accomplish proposed scale of investment in Primorsky, US$2.7 billion, this, the IRs within Primorye would have to be truly is well below the US$23 billion in Macau during the first visionary properties (along with necessary infrastructure decade of casino liberalization and roughly half of the US$5 improvements). If the investment into IRs and non-gaming billion in Entertainment City. He sees another key obstacle destinations within the IEZ does hit the US$2.7 billion target to a successful cluster in the Integrated Entertainment by 2025, it could certainly become a gaming destination. Zone (IEZ). However, we don’t see it becoming a top destination – it “I think the biggest challenge is the fact that there is will be difficult to a create a truly visionary property at that not a strong existing foreign tourism base in Primorye,” investment scale across multiple developments.” Vanaskie writes, using a common informal term for Being a regional gaming destination neighboring Primorsky, in response to questions from IAG. “This China, Korea and Japan would likely suit Primorsky and doesn’t mean that Primorye can’t succeed as a gaming its backers just fine.

22 INSIDE ASIAN GAMING APR 2019 An artist’s impression of NagaCorp’s Primorye IR, designed by Steelman Partners

Destination: Primorsky

“We are the closest European style city in Asia. Around Formed around vast Golden Horn Bay with steep hills, that, we have many other options,” Primorsky Province Vladivostok evokes comparisons with San Francisco. Tourism Department Director Konstantin Shestakov says of Vladivostok has a branch of Saint Petersburg’s renowned Vladivostok, Primorsky’s capital with a population of 600,000. Mariinsky Theatre, playing its sixth season in a state of the Russian officials right up to President Vladimir Putin have art opera house built for it. Rural Primorsky is home to been working for nearly a decade to put Primorsky on the Siberian tigers, leopards, bears and marine mammals from tourism map. walruses to whales. Exceptional seafood heads the menu Until 1992, Vladivostok was a closed city due to its of what’s an emerging foodie destination. Those attractions strategic role as the home of the Soviet Pacific fleet. Its were enough to lure 780,000 visitors in 2018. international coming out party, the 2012 APEC Summit, The only Asia-focused area among Russia’s four zones included US$20 billion in infrastructure improvements, for legal gambling opened after the 2009 shutdown of from a new airport terminal and runway improvements to a the nation’s casinos, Primorsky Krai (a Russian term for new campus for Far Eastern Federal University – the APEC border region) Integrated Entertainment Zone measures venue and now home to the annual Eastern Economic 619 hectares (1,530 acres). About 40% of the zone has been Forum that brings together top officials from Russia, Japan, offered for development so far. South Korea and Mongolia – all connected with iconic cable- “The area has beautiful lakes, hiking trails, skiing, ice stayed bridges, one of them the world’s longest. skating, hunting and numerous outdoor attractions that

APR 2019 INSIDE ASIAN GAMING 23 COVER STORY

will be further developed with increased investment and Russia offers visa-free entry to South Koreans – tourism growth,” NagaCorp Chairman Tim McNally says, Primorsky’s fastest growing visitor group, though Chinese adding that Primorsky’s fresh air and open spaces will be account for roughly two-thirds of foreign visitors – and novelties for many visitors. The operator of NagaWorld Primorsky has liberalized visa policy to 18 countries in Phnom Penh owns one of Primorsky’s three casino including China and Japan, with online visas often provided projects under development to join Tigre de Cristal, open within hours of application. Shestakov says officials are since November 2015. looking at easing visa requirements further. Most relevant to the gaming business, Primorsky IEZ Tourism officials are also working to improve air is 15 minutes from the airport with flight times under 90 connectivity. Shestakov notes that Singapore’s Changi minutes to Harbin and Changchun. Primorsky also shares Airports International became a partner in Vladivostok land borders with northeast China’s Heilongjiang and Jilin International Airport in 2017. provinces, is under two hours to Seoul and less than three “We’re both interested in increasing the number hours to Beijing, Shanghai and Tokyo. In each instance, of international flights,” Shestakov says. In 2018, Primorsky is closer than Macau. international passenger traffic surpassed one million for

24 INSIDE ASIAN GAMING APR 2019 the first time, rising 47% to 1.15 million. Traffic on South Korea routes grew 73%. In January, a South Korean developer agreed to build a US$30 million golf course project including a 100 room hotel. Primorksy Krai Development Corporation Director General Igor Trofimov, whose organization oversees the IEZ build out, says, “Koreans think this territory has a future.”

APR 2019 INSIDE ASIAN GAMING 25 IN FOCUS

CHANGING OF THE GUARD

26 INSIDE ASIAN GAMING APR 2019 Recent health scares suffered by SJM founder Dr Stanley Ho and Las Vegas Sands kingpin Sheldon Adelson are a stark reminder that the end of an era could come sooner rather than later, while raising questions as to who will one day replace the two most important figures in developing Macau’s casino industry.

By Ben Blaschke

APR 2019 INSIDE ASIAN GAMING 27 IN FOCUS

Chairman and CEO of Las Vegas Sands and Sands China, Sheldon Adelson

hile license re-tendering looms as the family members over the course of the next few days, were most significant issue facing Macau in later denied by his third wife Ina Chan Un Chan and their the coming years, perhaps the starkest daughter Laurinda, with no further updates provided since. reminder yet that a new era awaits the Three weeks later, on 1 March, Sands China – the enclave’s gaming industry came during Macau subsidiary of Las Vegas Sands – filed an update in the first few months of 2019 as its two most influential which it revealed that Adelson was dealing with “certain Wfigures, STDM founder Dr Stanley Ho and Las Vegas side effects” from medication he is taking to treat non- Sands Chairman and CEO Sheldon Adelson, suffered Hodgkin’s lymphoma, which had impacted his ability major health scares. to perform normal work duties. The update followed On 9 February, reports emerged that Dr Ho had been speculation in the preceding days over Adelson’s health rushed to the emergency room of a Hong Kong hospital after an LVS lawyer informed a district judge that the after his condition suddenly deteriorated. Those reports, company’s Chairman and CEO was unlikely to be fit to and others claiming he had been visited by numerous testify in a civil lawsuit.

28 INSIDE ASIAN GAMING APR 2019 The ailing health of Adelson and Dr Ho – particularly with their current 20- year gaming concessions coming to an end in 2022 – inevitably raises questions as to what their companies will look like once departed.

It was also revealed that Adelson had not been seen Often referred to as the Godfather of Macau’s gambling at the LVS corporate office since Christmas, although industry, Stanley Ho’s influence dates back to 1962 when Sands China’s filing stated, “The company anticipates he and three colleagues – Henry Fok, and Teddy that Mr Adelson will return to his regular schedule at the Yip – founded Sociedade de Turismo e Diversões de Macau, completion of his treatment.” SA (STDM), having been granted a monopoly on operating Nevertheless, at 97 and 85-years-old respectively, it games of fortune in the enclave a few months earlier. is an inevitable fact of life that the reigns of Dr Ho and That monopoly lasted for 40 years and saw STDM Adelson over the Macau gaming industry are now deep operating a total of 11 casinos by the time of liberalization into their twilight – prompting the question: what will in 2001, including its first, , opened in 1962, become of the gaming goliaths they created once their and the now iconic , opened in 1970. time finally does come to an end? Dr Ho is also credited with introducing junkets to No-one has had such an enormous impact on shaping Macau in the 1970s, which today comprise around half of modern-day Macau as these two men. the SAR’s annual revenue of US$37.6 billion as of 2018.

APR 2019 INSIDE ASIAN GAMING 29 IN FOCUS

Back in 2001, when the decision to award three gaming align with the other four) – inevitably raises questions as to concessions was first announced, Macau’s annual gaming what their companies will look like once departed. revenue was US$2 billion – well below today’s numbers In the case of SJM, keen observers couldn’t help but but remarkable nonetheless for a territory of just 435,000 ponder the timing of a bold power play by Pansy Ho – Co- people at the time, and almost all of it controlled by Dr Ho. Chairperson and Executive Director of MGM Holdings and Adelson’s influence, via Las Vegas Sands and its local one of Dr Ho’s five children to second wife Lucina Laam – subsidiary Sands China, has been the most strongly felt in when she announced in January an alliance to take control of the 18 years since 2001. One of the six companies granted STDM just weeks before her father’s reported ill-turn. either a concession or sub-concession to operate casino The alliance between Pansy Ho, three other companies gaming following the transfer of Macau’s sovereignty from controlled by her (Shun Tak Holdings, Lanceford Co Ltd to China in 1999, it was the opening of Sands Macao and Interdragon Ltd) and The Fok Foundation took their in 2004 that truly set the SAR on the path to becoming the combined interest to 53% of issued shares in STDM, which in world’s premier gaming hub. turn holds a 54% stake in SJM Holdings. SJM is the holding Sands Macao completely altered global perceptions as to company for Sociedade de Jogos de Macau, S.A. – one of the what Macau could be. Quickly brushing aside concerns that six companies to hold a Macau casino concession or sub- a Las Vegas-style casino would never work on the other side concession. of the world, it is now part of Macau folklore that a crowd of It has long been speculated that Pansy Ho would one 40,000 people literally broke down the doors (16 of them in day move for control of SJM, having been a key figure in the total) on opening day at Sands Macao – a relentless rush that uneasy truce that stalled a previous dispute over control of saw the company recoup its US$265 million investment in her father’s estate. After Dr Ho underwent brain surgery in just nine months. 2009 following a serious fall in his home – he now receives It was also Adelson who recognized the potential of a full-time care in Hong Kong – it was Pansy Ho and her four 6.7-square kilometer mudflat known as Cotai, developing full siblings, who include current SJM Chairman Daisy Ho the concept of the Cotai Strip and leading the charge with and Melco Resorts Chairman and CEO Lawrence Ho, that construction of the world’s biggest casino, the Venetian engineered a deal to transfer shares in companies controlled Macao, in 2007. Today, the Cotai Strip is the heart and soul by Dr Ho their way. of Macau’s casino industry with nine integrated resorts The move was initiated shortly after Dr Ho had gifted his in operation and a 10th due to open by the end of the year. fourth wife, Angela Leong, a 7.03% stake in SJM in December Sands China runs four of them. 2010, making her the company’s second largest single Despite these contributions, the ailing health of Adelson shareholder at 7.63%. Amid a litany of legal challenges, and Dr Ho – particularly with their current 20-year gaming claims and counter-claims that threatened to spiral out concessions coming to an end in 2022 (the licenses of SJM of control, the family truce – said by some to have been and MGM were recently extended by two years from 2020 to engineered by Beijing – was finally agreed in 2011 and saw

30 INSIDE ASIAN GAMING APR 2019 MGM China Co-Chairperson and Executive Director Pansy Ho

It has long been speculated that Pansy Ho would one day move for control of SJM, having been a key figure in the uneasy truce that stalled a previous dispute over control of her father’s estate.

APR 2019 INSIDE ASIAN GAMING 31 IN FOCUS

Sheldon Adelson was the brains behind Macau’s Cotai Strip

32 INSIDE ASIAN GAMING APR 2019 Pansy Ho named a director of STDM, while Leong was that news of Adelson’s cancer battle “should not cause guaranteed the role of Managing Director of SJM for a investor alarm with respect to LVS or Sands China. The period of six years. That period expired in 2017. companies both have strong management teams and there In a January 2019 note titled “Let the game of casino is an internal succession contingency in place in the event thrones begin”, Deutsche Bank research analyst Karen of Mr Adelson’s inability to perform his duties as Chairman Tang suggested that formation of the new Pansy Ho-Fok and CEO.” alliance could well be the first step towards removing SJM’s Although full details of such a succession plan have not current management, including Leong. been released publicly, Bernstein added, “The company has “We see a risk that, when the current terms of board a capable management team running the operations and directorships expire for Leong and her associates, namely remains in good hands under the leadership of President SJM’s CEO (Dr Ambrose So) and COO (Louis Ng), they may and COO Rob Goldstein and CFO Patrick Dumont. not be re-elected again,” Tang wrote. “We believe the COO’s “Along with Sands China President and COO Wilford Wong term expires in June 2019 and the other two in June 2020.” and Chief of Staff Grant Chum, and a capable cohort of direct Notably, aside from promising to submit a “common reports in the US, Macau and Singapore, the management proposal” for the election of STDM board members in team at both LVS and Sands China is experienced, strong, 2019, the alliance also stated that the parties “will support has long tenure with the Sands organization and is capable the nomination and election of person(s) who promote of continuing to execute the Sands vision and strategy.” good governance of the SJM board, including Chairman, It might not be all smooth sailing for Sands however. Co-Chairman and Director(s). The parties will submit a As one industry commentator told IAG, it wouldn’t common proposal for the election of the board of SJMSA, surprise to see Adelson’s wife Miriam, 12 years his junior, the Macau-incorporated company which holds the gaming become more vocal in guiding the company forward, most concession.” likely via refreshment of the LVS board. This would mirror While Leong is unlikely to go quietly, the appointment the tactic used by Wynn Resorts’ largest shareholder, of Daisy Ho – a close ally of her sister Pansy – as SJM Elaine Wynn, to bring about widespread change following Holdings Chairman after Dr Ho officially stepped down the fall of her ex-husband and former Wynn Chairman and from the board last June is intriguing. Clearly there is more CEO, Steve Wynn, last year. of this saga to be written in the coming months. It’s also entirely possible that Goldstein, at 63 years of The succession plan at Sands appears more clear-cut. age, could be one of those to make way, potentially leaving a Adelson himself has laid the pathway for a relatively dearth of experience at the very top in regards to day-to-day smooth transition once he exits the company, with son- operations of the global casino giant. in-law and current CFO Patrick Dumont having long been One thing is for certain, though – while Adelson and Dr groomed to step into the leadership role. Ho will eventually make way, their legacies will live on for In a March note, analysts at brokerage Bernstein opined many decades to come.

APR 2019 INSIDE ASIAN GAMING 33 COLUMNISTS

READY PLAYER ONE

Could popular augmented reality apps like “Pokémon Go” highlight the next step forward for using such technology on casino floors?

34 INSIDE ASIAN GAMING APR 2019 By Michael Perhaes

Michael is a brand management and marketing expert who has held leadership positions at MGM Grand in Las Vegas and Marina Bay Sands. Today, he cajoles, inspires and entertains his clients until everyone in the room agrees his ideas are pure genius. When he’s not conjuring memorable advertising campaigns, Michael can often be found cheering on his son’s baseball team.

APR 2019 INSIDE ASIAN GAMING 35 COLUMNISTS

Virtual tours of neighborhoods, museums and galleries are made more compelling and immersive with this technology, but can we migrate this concept to the casino floor and fully exploit existing VR technology?

Pokemon Go introduced augmented reality to the wider public when it became an instant hit in 2016.

oday, the smart phone has redefined how we It’s easy to imagine how this premise can be applied consume entertainment, news and all manner to a myriad of scenarios, from hotel room comparisons of information, and has become for most of us to car shopping and wardrobe refreshment. We can now an indispensable appendage. Yet its utility on place our virtual selves into a myriad of virtual worlds to the casino floor for the customer is negligible; see if we “fit”. for all intents and purposes, only slot machine attendants Virtual tours of neighborhoods, museums and galleries Tand waitresses have seen their jobs embrace the mobile are made more compelling and immersive with this device to speed up service. technology, but can we migrate this concept to the casino A few years ago, “Pokémon Go” burst onto the world floor and fully exploit existing VR technology? stage and suddenly the promise of virtual reality became Here’s one interesting example. We all know that slots apparent. The idea of using a phone as a VR screen to players include a fair number of superstitious people who enable the overlaying of elements to augment reality now suspend reality when they’re sitting in front of a game. had real-world applications. Not only could you seek out Slot machines that haven’t paid a jackpot are thought to be cartoon characters imbedded into physical spaces, but “about to hit.” That’s nonsense, of course, because as any whole manufactured worlds could be synthesized in very rational human being knows, every spin of a slot machine’s interesting ways. reels is a random event – an event whose outcome has Today, before you commit to a major furniture been decided in the millisecond after the player has hit the purchase like a sofa, stores such as Ikea offer an app spin button. The spinning reels are nothing more than eye whereby you can scan the room with your camera phone candy, amusement for the player, as she watches the three and see an augmented visual of the sofa already in or six or nine reels settle on the predetermined outcome. place. You can move the sofa around to see where it fits Haven’t we all witnessed players rubbing the glass as the best or even change out colors and fabrics, all without reels spin, as if this wishful effort will somehow alter that making a purchase. predetermined outcome? Superstitious, indeed.

36 INSIDE ASIAN GAMING APR 2019 Using the “Pokémon Go” model as a jumping off point, real-time casino floor data could power a virtual reality app sponsored by casino operators. The customer who has downloaded the app enters the casino floor and scans the slot machines within his or her field of vision. The casino floor is now overlaid with augmented visual enhancements determined by the user’s preferences. For example, they can seek out only those machines with a minimum betting denomination of one dollar. But here’s where the experience becomes truly interesting: the app could highlight all slot machines on the gaming floor that have not paid a jackpot within a specified time frame. While this data is obviously proprietary and subject to gaming regulatory oversight, there is no good reason why jackpot frequency information cannot be shared with casino patrons. In fact, I would argue that publicizing this While this data is obviously information through a virtual reality app would enhance proprietary and subject to gaming the customer experience in profound ways, particularly with those high frequency, superstitious customers. With regulatory oversight, there is this power to better “see” the casino floor and its potential no good reason why jackpot jackpot opportunities, share of wallet would certainly increase among many tiers of loyal customers. frequency information cannot be Ready player one? shared with casino patrons.

APR 2019 INSIDE ASIAN GAMING 37 JAPAN

JAPAN’S MICE OPPORTUNITY Japan has some ground to make up if it is to become a world leader in the MICE space, but the advent of IRs presents the perfect chance to ride the MICE wave to the top.

By Makoto Katayama

38 INSIDE ASIAN GAMING APR 2019 APR 2019 INSIDE ASIAN GAMING 39 JAPAN

Tokyo’s Big Sight is Japan’s largest MICE facility at around 95,000 square meters

40 INSIDE ASIAN GAMING APR 2019 hile much of the talk around Japanese IRs has up to this point focused primarily on problem gambling concerns, one aspect that is starting to gain traction is the opportunity IRs present to grow the country’s Meetings, Incentives, Conferences and WExhibitions (MICE) industry. MICE facilities are located throughout the world and the average annual growth rate of the MICE industry (2017-2023) has been estimated at 7.5%. The market, at US$752 billion in 2016, is predicted to grow to US$1.25 trillion by 2023. The construction of large event halls has continued apace each year and the number of halls with a floor space of 100,000 square meters or more now stands at 72 globally (as of March 2019). Unfortunately, no site in Japan is included on this list with the largest being Tokyo Big Sight at 95,000 square meters (although an additional 20,000 square meters will become available with the opening of the South Exhibition Hall in July this year). The government has therefore decided a MICE facility is a requirement for the development of a Japanese IR. Moreover, the scale standard is strategic. Regulations call for a massive international hall with a capacity of 6,000 people or more. Currently, the largest in Japan are the Tokyo International Forum and Pacifico Yokohama, each with capacity for 5,000 people. The number of halls with a floor Further, a very large scale exhibition hall must be 120,000 square meters or greater, beating Tokyo’s Big space of 100,000 square meters Sight by a large margin. or more now stands at 72 The MICE facilities at Japan’s IRs will need to be on a massive scale – far bigger than anything the country globally. Unfortunately, no site has seen before. Naturally, it will be expected to compete in Japan is included on this list. globally, heralding a new era for MICE in the country.

APR 2019 INSIDE ASIAN GAMING 41 JAPAN

CUTTING-EDGE MICE City Region, Steve van der Molen, highlighted, “This is how At a study session hosted by the Japanese IR Association many people MICE will bring in. It is, therefore, essential in Tokyo in March, local government and congressional to build an ecosystem in advance. representatives interested in attracting an IR heard expert “We have succeeded in this with new MICE in Atlantic observations on what Japan’s MICE industry needs to City (opened in 2015).” compete with other leading nations. This ecosystem, van der Molen said, was realized “Japan should start with its three IR locations – the via strong cooperation between the government and big cities and the regions – and in the long term, these local authorities. will provide a good test,” explained Niall Murray, founder of Murray International, on the topic of expanding the “CAMPUS-STYLE IR” nation’s event facilities. “I think you know about Google’s Tech campus,” “Of course, the scale of each MICE is different. There explained Caesars VP of Sales Lisa Messina, pointing to are 10 exhibition halls in Germany of a scale of 100,000 Caesars Forum Las Vegas, a large MICE facility due to square meters or more. In the future, Japan will expand open in March 2020 “There are entertainment facilities to match this.” and activities built around the core office. IR facilities are the same. There are many experiences in one location, "A PARADIGM SHIFT WILL OCCUR" each with great access. I think a ‘campus-style’ IR is very The Chief Sales Officer of US-based IR operator appealing.” Caesars Entertainment, Mike Massari, explained that a Caesars Forum will offer 51,000 square meters of “paradigm shift” will need to occur in Japan’s hospitality meeting space and two of the world's largest event halls industry all centered around embracing MICE. at 100,000 square meters. It utilizes state-of-the-art “First of all, hotels in the vicinity – there should be technology to control partitions so the large spaces can be around three hotels with 3,000 rooms each providing easy arranged into various smaller meetings rooms, with over access for MICE visitors,” he said. Currently only Tokyo’s 1,000 possible layouts. It also happens to be within a short Shinagawa Prince Hotel boasts more than 3,000 rooms walking distance of the Las Vegas Strip. nation-wide. Likewise, Japan’s IR MICE facilities can exploit late- “The data shows that visitors who come to an IR for entry advantage, implementing cutting-edge technology business like MICE will also spend a lot of money during while also benefiting from the lessons learned from their stay on tourist activities.” previous MICE facilities. Adding to Massari’s call for many more hotel rooms, There are great expectations that Japan’s MICE will Caesars Vice President Meeting Operations for the Atlantic break the mold and set a new international standard.

The government has decided a MICE facility is a requirement for the development of a Japanese IR … Regulations call for a massive international hall with a capacity of 6,000 people or more.

42 INSIDE ASIAN GAMING APR 2019 Caesars Forum in Las Vegas will open in 2020

Caesars Forum will feature a unique 100,000 square meter outdoor meeting space called Caesars Forum Plaza.

APR 2019 INSIDE ASIAN GAMING 43 JAPAN

Inside running

IAG spoke with Etsuko Kawasaki, MICE promotion manager at the Japan National Tourism Organization (JNTO), about what Japan’s long- term MICE industry should look like.

IAG: Thank you for speaking to us. Could you start by appealing. The third is the intellectual property in Japan giving us your definition of MICE? such as world-leading knowledge and talent. The fourth Etsuko Kawasaki: MICE is an acronym. It represents is the high quality of service provided by Japanese staff corporate meetings (Meetings), incentive and training – for example, the accuracy of Japan’s transportation trips for those corporations (Incentives), international infrastructure. Things running on schedule is very conventions such as international company or group important when coordinating a MICE event. conferences (Conventions) and events (Exhibitions/ Events). The four categories are entirely different, IAG: I have heard that Japan’s local cities have opened but they have a lot in common in that companies and distinctive MICE facilities. groups seek them out as a destination. Therefore, these EK: These are called “unique venues.” For example, in business events are collectively called MICE. Yamagata they have a MICE with sake and hot springs. Kyoto’s Nijo Castle holds banquets in the gardens for IAG: What is the current state of the global MICE market conferences. In May of last year, the approach to Miyazaki when compared to Japan? Shrine was opened to host an academic conference EK: If we only consider international conferences then reception party with 1,000 visitors. there were 414 held in Japan in 2017. That puts Japan seventh in the world and first in Asia. However, in the IAG: It’s a place where people from overseas can get Asian region other countries such as South Korea and a taste of the extraordinary, much like why people go China are fast catching up. In the 1990s, Japan had 50% to casinos. market share in Asia, but today it is closer to 30%. EK: I agree. Even conference participants need downtime. If you can relax in a place with a feeling of IAG: So competition is getting more fierce? openness, you will be able to deepen your relationships EK: Exactly. During the “Japan is Back” Japan with those around you. Revitalization Strategy of 2013, the goal was to “continue to be the number one in Asia until 2030 and IAG: So what is an ideal MICE facility? establish a permanent position as a hosting country for EK: It needs to feel like it is really Japanese. If it is a international conferences.” regional city, you have culture and aspects unique to the area. MICE resorts overseas have everything in one IAG: What is the main selling point for Japan if we want place, including entertainment. That’s convenient and to compete? the MICE facility becomes a hub. People who gather EK: Japan’s MICE has four strengths. The first is its there will go for dinner at night and that’s when they unique culture and hospitality. Many foreigners feel that will come in contact with the local community. They’ll special warm welcome that Japan has. The second is the get a feel for the area’s history. In Japan, I think that sense of security. The safety and cleanliness of Japan are would work.

44 INSIDE ASIAN GAMING APR 2019

FEATURES

RISE OF THE MACHINES

IAG speaks with Herman NG, CEO and Executive Director of Macau’s Asia Pioneer Entertainment, about the company’s strong 2018 growth, its Asian expansion plans and the state of the EGM industry in Macau.

By Ben Blaschke

Ben Blaschke: You recently released your 2018 financial results which showed increases in both revenue and net profit. What pleased you most about those results? Herman Ng: I think it shows that our hard work over the past 18 months is paying off. It was a very positive year for the company and as you say we enjoyed some strong growth across a number of our segments and also across a few jurisdictions in Southeast Asia. Our revenue grew by 27% to almost HK$110 million and our profit was up more than 350% to HK$20 million, so we’re going in the right direction. We also made some progress in places like Cambodia and the Philippines.

46 INSIDE ASIAN GAMING APR 2019 BB: For those who might not know Asia Pioneer “Southeast Asia is growing quicker. Entertainment, can you explain a bit about what you do? HN: Yes. We are a company from Macau that specializes There are a couple of new casinos in the sales and refurbishment of electronic gaming opening in Vietnam this year including equipment and parts. We represent numerous companies in Macau who we help with getting their products approved the Suncity project in Hoi An. We’re and also with sales and distribution. We refurbish and sell seeing some strong demand for old EGMs and we offer consultancy and technical services to clients. eTables in Vietnam at the moment.”

APR 2019 INSIDE ASIAN GAMING 47 FEATURES

BB: Which companies do you represent? very appealing to a lot of customers. It’s very different to HN: It is still the same as it has been for a while now, with anything else in Macau which I think is something the companies like Jumbo, Konami and Spintec. market is looking for.

BB: What advantages do those companies see by using BB: It’s been about 18 months now since APE listed APE’s services in Macau? on the Growth Enterprise Market of the Hong Kong HN: The main thing is getting their products approved. Stock Exchange. How important has that been for the As you know it can take quite a long time for product company’s development? approvals in Macau but it’s a process that we know well HN: It has made a big difference for us. It has allowed and can help finalize a lot quicker. It usually takes at us to invest more capital into the business which has least three months for a new product to be approved but therefore allowed us to expand further outside of Macau. it can be up to six months in many cases. If a company It has also done a lot in terms of getting the name of Asia makes an error during the approval process, they have to Pioneer Entertainment out there. People are more aware start all over again and then you’re looking at 12 months of who we are and what we do now. before you can distribute your product into the market. We make sure that doesn’t happen. BB: Are there plans to list on the main board of the Hong Kong Stock Exchange? BB: While we’re talking about bringing new products HN: It is something we’re considering. We haven’t made into the Macau market, are there any new products a decision on that yet but we’re still discussing. We will right now that have impressed you in terms of concept probably make a decision on that sometime in 2019. or innovation? HN: Actually, yes. We have just installed a new product BB: APE has spoken before about its plans to expand from Konami called “Fortune Cup” in two Macau casinos further into Asia. In what countries does APE currently and I am very interested to see how it performs. It’s a conduct significant business? horse racing game with commentary that I think will be HN: Well Macau is still our biggest market but we have

48 INSIDE ASIAN GAMING APR 2019 “EGMs comprise only a small part of Macau’s gaming floors, but they are very big floors. The EGM market is still quite large which I think people sometimes forget Konami’s “Fortune Cup” has been when they think about Macau.” installed in two Macau casinos

seen some strong interest across Southeast Asia over the places we are conducting a lot of new business the past year or so. Macau was a little bit slower last right now. year but there have been some openings in Cambodia We are also receiving more enquires for the leasing and there is more coming up both there and in Vietnam of EGMs in all of those markets – the Philippines, later this year. Cambodia and Vietnam.

BB: So those are the two countries where you see the BB: Macau’s gaming industry is obviously dominated greatest opportunity for expansion? by table games. What are your thoughts on the state HN: Yes, to an extent. There is still some opportunity in of the EGM market in Macau right now? Macau. There are two new casinos in Cotai due to open HN: EGMs comprise only a small part of Macau’s by 2020 – Grand Lisboa Palace and Lisboeta – which gaming floors, but they are very big floors. Even though can bring new opportunities to APE because Macau has table games are the driving force, the EGM market is slowed down a little bit since we had all those openings still quite large which I think people sometimes forget close together a few years ago. when they think about Macau. But I think Southeast Asia is growing quicker. There We are also seeing steady growth in the mass market are a couple of new casinos opening in Vietnam this sector and our clients – the six casino operators – are year including Hoiana, which is being developed by Hoi looking for new ways to serve this sector which provides An South Development. Hoiana Casino will be managed a great opportunity for companies like APE because by Suncity Group Management and Consultancy Ltd EGMs and ETGs are a great way to do so. (SGMC), which is under Suncity Group Holdings. It’s also why a product like “Fortune Cup” which I Suncity has also signed up with casinos in countries like mentioned earlier has so much potential. The operators Cambodia, Vietnam, Russia and Korea. are looking for new and exciting products that stand We’re seeing some strong demand for ETGs in out on the casino floor which opens the door for us to Vietnam. Also, Cambodia has quite a lot happening provide what they are looking for. It’s all about giving in Sihanoukville and a few other places. Those are them something new and exciting.

APR 2019 INSIDE ASIAN GAMING 49 JAPAN

HOW OSAKA’S IR COULD SPARK LOCAL CRUISE BOOM

50 INSIDE ASIAN GAMING APR 2019 Cruise liners are in increasingly high demand globally and Japan is no exception. Osaka has been a little late to the party, but is becoming more and more active in developing its port and attractions to meet this new demand. Turning Yumeshima into an international tourist center, the 2025 World Expo planned development of an integrated resort are major factors in this flurry of activity.

By Tomo Yamamoto

APR 2019 INSIDE ASIAN GAMING 51 JAPAN

IAG paid a visit to Japanese luxury liner Asuka II

he 2008 collapse of investment bank Lehman Brothers, which sparked the global financial crisis, had little impact on the cruise industry, which has continued to grow impressively. The number of people using cruise ships globally Treached 27 million in 2018, creating an economic ripple effect of US$125 billion. This has been supported by the new wealthy class as well as the casual demographic. As the size of ships has increased, the unit price per customer has fallen, meaning cruises are no longer a luxury out of reach for the wider population. If we look at the domestic Japanese market, the number of port calls for large passenger ships continues This is a Japanese ship, so all to increase year-on-year. According to the Ministry of Land, Infrastructure, Transport and Tourism (MLITT), casino games are just for fun. 2018 was a record year with 2,928 port calls. There were Even so, it is usual for 40 to 50 2.44 million foreign visitors to Japan, even with a 3.3% decrease from the formerly hot China/Shanghai market. people to be enjoying this space In terms of country of departure, China is still the top of from its opening at 18:00 each the list with 961 trips. day to its closing at midnight. REGIONAL REVITALIZATION The benefits of cruise ships are obvious. They bring multiple tourists at once to a port and local consumption of dining and shopping flourishes. Further, prosperity in the region is fueled by foreign tourists visiting these destinations. Yoshikazu Terao, Planning Manager of Hanshin International Port Co., Ltd. states, “The luxury liners of today have come a long way from the days of the Titanic and the models have changed, offering more affordable trips. “But even with the affordable price, passengers can still enjoy onboard hotels, casinos and bars as well as shows. In other words, they are basically small-scale MICE.

52 INSIDE ASIAN GAMING APR 2019 Asuka II’s simulated offshore casino

“Depending on nationality and ship, it can be free for “If a new port is built at Yumeshima, we will be able children under 13 to board, making it easier for families to simultaneously dock two ships of 220,000 tons and 360 to enjoy. This is a growing industry.” meters long which is how the world’s largest measure up. Osaka still has a long way to go in tapping this market. “By connecting the rail terminal and bus terminal which According to data from MLITT, Hakata Port (Fukuoka will be under construction at the same time, we hope that Prefecture) is the country’s top port of call with 279 calls Osaka will become the gateway for tourism in Japan. That in 2018, Naha Port (Okinawa Prefecture) is next with 243 is the enormous potential that Yumeshima holds.” calls and Nagasaki Port (Nagasaki Prefecture) follows Coincidentally, the domestic ferry companies with 220 calls. that depart to and from Kobe and Osaka are making Osaka sits 14th with just 45 calls, although Masafumi changes, with Orange Ferry and Sanfurawa both Arita, Secretary General of the Osaka Port Promotion investing in new ships. Association explained, “A few years ago we only had around 30 calls [annually]. This year looks to be our best ON-BOARD THE ASUKA II FOR CASINO NIGHT year ever with more than 60 calls scheduled.” IAG was recently granted an up-close look at luxury There certainly seems to be plenty of potential for an liner Asuka II, the pride of Japan, at Kobe Port. Of course, improved Osaka port. it was this humble reporter’s first experience on a cruise ship and the scale was beyond anything previously THE GATEWAY TO JAPAN’S TOURISM imagined. The ship measures 241 meters long and In response to this, Osaka City is going to start weighs 50,142 tons. It really is just like a floating hotel … infrastructure development in the Osaka port area. and apparently this is only a mid-sized ship! An international terminal will be built at Yumeshima The purpose of our boarding was to visit the “Monte for the 2025 World Expo and the IR that local officials Carlo” where you can enjoy a simulated experience of an hope to open by 2024. There are plans for this to be the offshore casino. home port for cruise liners. Yoshiharu Tanimura, who manages the Japan Casino Furthermore, the idea is to provide smooth travel to School, kindly showed us around. There is a roulette Kyushu, Shikoku, West Japan and the Kinki region such table, two blackjack tables and 19 slot machines on the as Kyoto and Nara for inbound passengers. casino floor. The concept is a facility on the north coast of Of course, this is a Japanese ship, so all casino games Yumeshima measuring 1,350 meters long and 100 meters are just for fun. Even so, it is usual for 40 to 50 people to wide, connecting to the Yumemai Bridge on the west side. be enjoying this space from its opening at 18:00 each day Yumeshima was selected as a candidate location most to its closing at midnight. of all because of its calm waves, although the presence of “Casinos and cruise ships are very compatible,” an IR alongside would provide a significant added bonus. Tanimura explained. As it stands right now, “The central jetty is only 210 When will a real offshore casino be legal? This was the meters … and only one large ship can be accommodated question that ran through my mind as I stacked my chips at Tempozan Harbor,” Terao explains. on the Asuka II. INDUSTRY PROFILE

JASON TOMAS: EXPLORER’S SPIRIT

Having recently arrived in Macau as Product Marketing Manager for SG Gaming, Jason Tomas sits down with IAG to discuss his career journey from the Philippines to his new home.

By Oscar Guijarro

Oscar Guijarro: Can you tell us a bit about your in the marketing industry because I think every company in background? every industry needs good marketing to be competitive. Jason Tomas: I'm from Manila, Philippines and have just moved to Macau. It's been three months since I moved OG: How did you come to join the gaming industry? here. I am actually Filipino Chinese. My grandparents came JT: Actually my first job was with a gaming company, from Fujian, China, and then settled in Manila. I think that although it was a computer games company – RPG was back in the 1940s or ’50s. So, my parents were born gaming, role playing games. I was in that industry for five in Manila. My father is a businessman and my mother years. After that I decided to go to a different industry so I helps him. Right now, my siblings, they all run the family joined a marketing consultancy company. Their specialty business, but I chose a different path. I chose a corporate was public relations and I was there for a year. From there path and that’s why I’m here. I joined Solaire Resort and Casino. Their recruitment was very aggressive. A friend of mine invited me to tryout. It OG: How was your childhood back in Manila? was in the pre-opening recruitment office and the property JT: I went to the Lasalle College of Saint Benilde and took up wasn't even up yet. It was still a construction site. a Bachelor of Science in Business Management, majoring in But I was curious and interested, so I got into the marketing management. Brand management and marketing casino marketing department under the events and research are some of my favorite subjects. I wanted to be promotions team. I was there for almost three years and

54 INSIDE ASIAN GAMING APR 2019 APR 2019 INSIDE ASIAN GAMING 55 INDUSTRY PROFILE

56 INSIDE ASIAN GAMING APR 2019 “It’s on my bucket list to see all the UNESCO heritage sites in the world. I don’t know if I can get to see them all in my lifetime, but there are quite a few of them here in Macau.”

my first assignments were on slot operations. Most of OG: What do you like to do when you are not working? the slot promotions were handled by me, actually using JT: When I’m not working, I sleep and eat. Well sleep and Scientific Games EBS. That’s how I got into the gaming eat are my top two. But when I was younger, I was a very industry after all those years. active person. So my number three is trying to keep active. When I was younger I could never stay in one place – run OG: What excites you the most about your job? here, run there. Now I try my best to go to the gym three JT: I’ve been in the gaming industry for less than five years times a week. and there’s so much for me to explore. There’s a bigger world out of the Philippines. Right now I’m here in Macau, OG: You mentioned you like eating. Do you have a favorite you know, getting a broad idea or view of how gaming in Macau restaurant? Asia will be. But there’s still the world. There’s so much to JT: There are so many good restaurants. The Macanese see, so much to know, so many people to meet. restaurants, the Chinese restaurants, those amazing Portuguese restaurants … it’s so hard to pick one, but ever OG: This takes us to our next question … how have you since I started visiting Macau I have enjoyed Janice Wong found Macau compared to Manila? at MGM Cotai. Whenever I have friends coming in from JT: Well land-area wise Macau is smaller than the Manila I take them there to have coffee, dessert and just Philippines and I think it's smaller than Metro Manila. talk and enjoy the ambience. I think Macau is more relaxed, maybe because I’ve only been here for three months. OG: Where do you see yourself in 10 years’ time? The one thing I really like about Macau is how they have JT: In 10 years time I see myself maybe with Scientific preserved their heritage. The Historic Centre of Macau is Games in Bermuda or Las Vegas, or maybe with Scientific one of my favorites. You know, it’s on my bucket list to see Games in Sydney. all the UNESCO heritage sites in the world. I don’t know if I can get to see them all in my lifetime, but there are quite a few of them here in Macau.

APR 2019 INSIDE ASIAN GAMING 57 EVENTS CALENDAR

15 | 16 May 2019 1st Japan IR Expo 2019 Intex Osaka, Japan www.ir-expo.jp Although we still do not know which three cities will be named to host Japan’s first IRs, Osaka is seen as a leading candidate and has been actively working on attracting an IR to the artificial island of Yumeshima from early on. Under such circumstances, the idea of hosting the 1st Japan IR Expo in 21 May 2019 Osaka was developed. Through this exhibition, which aims G2E Asia Awards to attract 200 exhibitors and 10,000 visitors, it is hoped that the Japanese IR industry will develop soundly and promptly. Parisian Macao, Macau www.G2EAsiaAwards.com The G2E Asia Awards is an annual gala dinner co-organized by Inside Asian Gaming and G2E Asia organizers Reed Exhibitions and the American Gaming Association. It recognizes excellence and innovation within Asian gaming while celebrating the success and outstanding contributions of not only gaming but also the non-gaming aspects of the entertainment industry in Asia. This year’s G2E Asia Awards will be held in the Ballroom 16 | 17 May 2019 at Parisian Macao on the evening of 21 May 2019 and features Japan Gaming Congress 12 awards categories, to be judged by a panel of 50 esteemed industry judges. The awards evening will provide an unrivaled Conrad Tokyo, Japan industry networking opportunity. www.japangamingcongress.com With a relatively short time to go before the first licenses are issued, now is the time to fully understand the fantastic potential of IRs being constructed in one of the superpower regions of Asia. The Japan Gaming Congress is a ticketed two- day intelligence gathering for gaming professionals in Japan looking to find out the best way forward for IRs. As such, the 17 | 19 July 2019 conference is designed for operators, regulators, government Casino Integrated Resort Show representatives and suppliers and is a focused business-to- business forum. Incheon, Korea Casino Integrated Resort Show (CIRS) Asia 2019 presents opportunities for the land-based and digital gaming sectors to help strengthen connections and understand practical strategies for profitable business and sustainable growth. CIRS 21 | 23 May 2019 will gather leaders from industry, governments and academia G2E Asia to debate what needs to be incorporated for future innovation in the Asian gaming industry. Held in Korea’s new gaming hub of Venetian, Macau Incheon, it begins with the theme “Next Market”. www.g2easia.com Global Gaming Expo Asia (G2E Asia) is renowned as a key gaming and entertainment business hub across the continent. It is the must attend marketplace for the Asian gaming-entertainment industry, offering a one-stop platform to industry professionals to network, forge fresh connections, source new products and solutions and gain a deeper insight into the latest global 13 | 15 August 2019 industry trends. Every year, over 95% of Asian casino operators Australasian Gaming Expo attend G2E Asia to look for cutting-edge products and solutions and gather upcoming industry trends. Sydney, Australia www.austgamingexpo.com Established in 1990, the Australasian Gaming Expo is the world's third-largest casino gaming equipment trade show. Featuring over 200 exhibitors across 19,000 square meters of exhibition space, the Australasian Gaming Expo is the biggest event of its type in Australia. Entry is complimentary to gaming industry executives, courtesy of the Gaming Technologies Association.

www.asgam.com