February 2011 • MOP 30 • ISSN 2070-7681 Many Happy Returns ResortsResorts WorldWorld Sentosa’sSentosa’s birthdaybirthday bouncebounce In Focus: Cath Burns on Bally’s Value Adding Apps Stanley and the Women | Macau Revenue: Lies, Bad Cheques and Statistics Market Responsive: Alfastreet | VIP Market Outlook: Crisis Looming? CONTENTS February 2011 Many Happy Returns 6 Lies, Bad Cheques and Statistics 14 Market Responsive 18 Stanley and the Women 24 Many Happy Returns 30 Value Adding Apps 34 Player Relegation 35 Shining Star 37 Crisis Looming? 38 Boutique Benefits 40 Managing Ills in Macau’s VIP and Mass Gaming Market 44 Regional Briefs 40 46 International Briefs 48 Events Calendar 14 2 3 Editorial Of Canaries and Coal Mines Claims in a civil legal case that illegal junket activity has taken place at Marina Bay Sands is not the ideal birthday present for Las Vegas Sands Corp’s Singapore resort as it approaches its one-year anniversary in April. Generalised claims of illegal junkets in the Singapore market have been made before. The issue has been discussed in this magazine. This time, more specific allegations have surfaced in a court case. High roller Lester Ong Boon Lin claims he doesn’t after all owe LVS S$250,000 in gambling losses because he got the money to play via credit issued by an unlicensed junket. LVS’s instinct will probably be to fight the case. One wonders whether Mr Ong would have been quite so keen to cry wolf with claims of unauthorised junkets at MBS if he had stayed on a Publisher winning streak. Kareem Jalal On several occasions, high rollers at the Lion City’s casinos who suddenly decide they didn’t much like losing large amounts of money have taken Singapore’s reputation for having strong and Director executable law and used it as a stick with which to beat the casinos by threatening lawsuits. Loser João Costeira Varela litigation is also an issue in the United States. But in Singapore, once a few test cases have been run and in likelihood thrown out, that trend for loser litigation may die away. Editor Letting the Ong Boon Lin case get to court could, though, be a high risk strategy. It could amount Michael Grimes to washing Singapore’s gaming linen in public. That’s something the Singapore government is unlikely to enjoy. The city-state has until now prided itself on running one of the cleanest and best Contributors regulated casino gaming jurisdictions in the world. Desmond Lam, Steve Karoul Even if MBS settles this case out of court, it could still face an inquiry by the Casino Regulatory I. Nelson Rose, Richard Marcus Authority of Singapore (CRA). That body could be placed under significant political pressure at Shenée Tuck, James J. Hodl home—including from voices in the still powerful anti-gaming lobby—to investigate further Mr Andrew MacDonald Ong’s claims. Any investigation could also put a crimp in the leeway the casino operators currently William R. Eadington have to self-report breaches or potential breaches of the Casino Control Act and its regulations. But without such an investigation and some regulatory clarity on the junket issue, how long before Graphic Designer another Ong Boon Lin emerges to threaten the Singapore operators and claim he’s a victim of Brenda Chao unauthorised credit issuers? Vexatious or not, what impact if any could these claims have on the possibility of junkets being Photography legitimately licensed in Singapore? We should be wary of making assumptions when answering Ike this question. It would be dangerous, for example, to assume that Singapore would rather set its face against junkets entirely than investigate whether unauthorised ones might have been going on under its nose. It would be equally dangerous, however, to assume that Singapore lawmakers Inside Asian Gaming will have the political courage to admit they perhaps underestimated the challenges of running a is published by casino gaming jurisdiction. Must Read Publications Ltd If Singapore can’t beat the junkets, it should at least consider co-opting them. Singapore could 8J Ed. Comercial Si Toi of course press on with its current US-style system of allowing only the casinos themselves to issue 619 Avenida da Praia Grande the credit. But if that’s not working, and as Mr Ong Boon Lin claims, the current law as it applies to Macau credit issuance is being flouted and held in disrepute, then the price of inaction could be very high. Tel: (853) 2832 9980 As New York City appears to have proven with the ‘broken windows’ theory of William J. Bratton, the former head of the NYC Transit Police, if you allow graffiti and fare dodging to go unchecked For subscription enquiries, on your bus and subway system, pretty soon afterwards you have more serious crime as a routine please email occurrence. [email protected] Singapore could alternatively choose to try and force reality to conform to its own vision of how things should be. It could station gaming inspectors on a permanent basis in casinos’ high For advertising enquiries, limit rooms to oversee those operations. But that would be like being an occupying army without please email an exit strategy, not to mention expensive to administer and cumbersome and intrusive for players [email protected] and operators alike. That, in turn, could lose Singapore valuable gaming tax revenue by creating or call: (853) 6680 9419 disincentives for wealthy locals and overseas visitors to come and play. Another possibility would be to get the market to police itself, by licensing some junkets. They www.asgam.com could then act as canaries in the Singapore gaming ‘coal mine’. Any junket that had gone to the trouble and expense of submitting to all the background checks required for an official licence Inside Asian Gaming would chirp like crazy at the first sign of a property being poisoned by illegal junkets. The problem is an official media partner of: with this is that while Resorts World Sentosa appears willing to work with junkets if properly authorised—a number currently have applications pending with the CRA to work at RWS—MBS has shown no signs so far that it wants them. In any case, using market forces to police markets doesn’t always work—as the global financial crisis of 2008 showed—but it would arguably be the least worst option in this case. Michael Grimes http://www.gamingstandards.com We crave your feedback. Please email your comments to [email protected] 4 INSIDE ASIAN GAMING | February 2011 Market Outlook Lies, Bad Cheques and Statistics The ‘back story’ to Macau’s VIP gaming numbers he maxim “There are three types of lies—lies, damned lies, for giving up 15-17% of the gross, SJM is relieved of the headache of and statistics,” has, probably appropriately, been attributed staffing those satellites. That’s no mean concession in a market short Tto at least three famous men of politics and letters: Benjamin of reliable and cheap labour, and could have the effect actually of Disraeli, Alfred Marshall and Mark Twain. boosting SJM’s profit margin in some or all of those properties. The phrase never seemed more appropriate than when applied to Macau gaming numbers. An operator can move up a place or two Minefield in the revenue league table but it may not help very much if the The above illustration is a good indication of the minefield into price is deterioration in higher margin mass-market business, or if which any commentator steps when trying to ‘analyse’ what the the improvement was a result of a short upward blip in his VIP hold Macau revenue numbers mean in advance of company reporting. percentage, which subsequently normalises. While all businesses in all markets are subject to variables (such as As Sheldon Adelson pointed out in his third quarter earnings call last year, SJM’s share of Macau revenue looks unassailable at first glance (32.2% in January this year)—but not so rosy when one digs into the statistics. Most ‘SJM’ properties (16 out of the 20) are satellite casinos operating under the SJM licence but with varying degrees of autonomy in their management. That means SJM gets to keep a smaller proportion of the gross wagered in Macau than its market coverage and table numbers would suggest. Satellites are paying SJM anywhere from 20% of the gross (the traditional 40:40:20 model, whereby 40% goes to the government in tax, 40% to the satellite owner and the residue to SJM), to as little as 3-5% to SJM on a profit share basis. And market-wide, Inside Asian Gaming understands the trend is for a movement away from the 40:40:20 model. Even that bald statistic is somewhat misleading however, given that in return Sheldon Adelson of LVS—a few home truths about market share 6 INSIDE ASIAN GAMING | February 2011 Macau Revenue adverse weather or bad debt owed by other parties) that can affect businesses in most developed economies. That’s in terms of the year on year comparisons and ultimately profitability, Macau is way they issue credit and the way they collect that revenue after it’s arguably even more resistant to high quality analysis and forecasting actually been recorded by the casinos (not as a receivable, but as on an operator by operator basis. This is because gaining a real insight actual revenue). More on that in a moment. into the dynamics affecting the relationships between junkets and The elephant in the Macau VIP gaming room is that with 60% individual operators is difficult.