June 2008 • MOP 30

The Merlion vs. Singapore’s orderly advantage

Sports Betting: Fun and Games This Summer Blue Skies and Baccarat in Vietnam Weike: Taking on the Big Boys ESL Gaming Indices

China’s Big Lotto INSIDE ASIAN GAMING | June 2008 CONTENTS June 2008 The Merlion vs. 7 Macau 7 Orderly Competitor

14 Blue Skies and Baccarat

16 Big Lotto

20 Fun and Games this Summer

26 Taking on the Big Boys

35 This Tangled Web We Weave

38 ESL Gaming Indices

41 Alfastreet Video Baccarat

42 EZ Baccarat 20 46 Green Machine 16 48 All Systems Go 53 Hot Ticket

54 Ultra High Quality

55 Hot Options

56 Size Matters

58 The Chips are Up

58 Flying Colors

60 Regional Briefs

62 International Briefs 48 64 Events Calendar June 2008 | INSIDE ASIAN GAMING 2 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 3 Editorial

Courting Trouble Sheldon Adelson is probably rather glad he held on to a controlling stake in Las Vegas Sands Corp (LVS). Otherwise, he could have been one of the richest and most successful businessmen in history to face an institutional shareholder’s revolt. If that sounds far fetched, how many public company chairmen out there do you know who could preside over a first quarter loss; experience a multimillion dollar defeat in a civil lawsuit; admit to being too ill at one time to run their own business; have the company president admit on oath that he had failed in his fiduciary duty and still expect to see smiling faces at the next stock holders’ meeting? Well it all happened to Mr Adelson in the space of just a few weeks, knocking some of the shine off his image as the man with the Macau Midas touch. At the end of April, LVS announced a GAAP net loss for the first quarter of 2008 of U$11.2 million, despite a 71.8% jump in revenues to US$1.08 billion from US$628.2 million in the corresponding quarter of 2007. LVS said that on an adjusted basis, it would have reported a net profit of US$23.6 million. Sheldon Adelson holding court with more Nonetheless, the company appeared to be showing some of the classic symptoms often brought conviction at Venetian Macao on by rapid corporate expansion—namely a surge in business costs (coinciding with global surges in commodity costs) without an immediate accompanying rise in profits. Editor and Publisher Depreciation and amortisation expenses amounted to US$113.4 million in the first quarter of Kareem Jalal 2008, compared to US$31.2 million in the first quarter last year. The company said the increase was mainly due to a rise in depreciation expenses related to the openings of The Venetian Macao and Director The Palazzo in Las Vegas. João Costeira Varela More bad news came in late May, when a Nevada jury ordered LVS to pay Hong Kong businessman Richard Suen US$43.8 million after deciding he had, as he claimed, played a vital role Business Development Manager in helping LVS get its Macau gaming licence in 2002. Things could have been worse. Mr Suen was Matt Phillips originally asking for a US$5 million success fee and 2% of LVS’s Macau gross over the lifetime of the Macau licence, which would have amounted to considerably more than US$43.8 million. It also Operations Manager looks as if Mr Suen will have to pay his own legal costs despite the win. Mr Adelson’s lawyers add José Abecasis that they plan to appeal against the verdict. Potentially more damaging in the long term for LVS than the first quarter loss or even the court Contributors payout was the drama inside the courtroom. Michael Grimes, Desmond Lam, Mr Adelson’s demeanour on the witness stand was similar to that of Clara Peggotty in David Steve Karoul, Richard Marcus Copperfield. In Charles Dickens’ novel, Mrs Peggotty is David’s nurse, a good and upstanding person, but one who is incapacitated just at the moment when some crucial decisions have to be made. Graphic Designer So it was that Mr Adelson told the jury that at important times in the LVS dealings with Mr Brenda Chao Suen during 2001, he was in too much pain from a rare neurological condition and too drowsy from properly prescribed medication to be fully focused on his business. The fact Mr Adelson didn’t Photography disclose his temporary incapacity to the US Securities and Exchange Commission is subsequently Ike being viewed as a faux pas, but not a serious regulatory lapse. Back to the courtroom and enter Mr Weidner, with some of the characteristics of Mr Barkis, Peggotty’s faithful companion. In Dickens’ story, Mr Barkis means well but sometimes gets hold of Inside Asian Gaming the wrong end of the stick. is published by During his testimony, Mr Adelson said that Mr Weidner has been dealing with Mr Suen on the Must Read Publications Ltd Macau issue, but that Mr Weidner had made a mistake in asking someone with Mr Suen’s lack of Suite 1907, AIA Tower, 215A-301 financial experience to find investors for a possible Macau project. Av. Comercial de Macau - Mr Weidner then admitted under cross-examination from one of Mr Suen’s American lawyers Macau that he had failed in his fiduciary duty to LVS in his dealings with Mr Suen. In other words, Barkis Tel: (853) 6646 0795 was willing but had just fallen short. Later, inside the court and outside, Messrs Adelson and Weidner retracted their statements, For subscription enquiries, hinting clever lawyers had tricked them. It was, though, an unfortunate turn of events. The jury please email found in Mr Suen’s favour, and now Mr Adelson and Mr Weidner’s aura of unparalleled competence [email protected] and even invincibility has evaporated. If all this wasn’t enough, it appears that monetisation—the LVS magic bullet used so effectively For advertising enquiries, to mitigate development costs in Las Vegas—may not be possible for the serviced apartment please email portion of LVS’s Cotai site. This scenario, which would apply equally to the residential portion of [email protected] MPEL’s City of Dreams site, has come about because of question marks over the rules of domestic or call: (853) 6646 0795 land title on Cotai. Sources explain to Inside Asian Gaming that this is because land on Cotai can only be legally offered on a 25-year lease, while title in the rest of Macau is either freehold or on a www.asgam.com lease ranging from 75 to 100 years. And in case anyone had forgotten, project costs have also been rising pretty sharply in line with world commodity price rises at the Marina Bay Sands construction site in Singapore, while in the US Printed by there are signs the domestic economy is slowing. Icicle Print Management (Macau) Ltd Tel: (853) 2871 2818 The year 2008 isn’t yet an Annus Horribilis for LVS, but nor is it a roaring success. The second half Fax: (853) 2871 2898 of the Year of the Rat will need to be a lot less twitchy if ‘Mr Midas’ is to win back his golden crown. www.icicleprint.com Michael Grimes INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 5 6 INSIDE ASIAN GAMING | June 2008 Orderly Competitor Macau doesn’t seem to know what it wants from its industry. Singapore does

hat were Macau’s objectives in When a casino operator enters concession or sub concession is expensive liberalising its casino industry? negotiations with the Macau government, and difficult, and just got more difficult since WClearly the goals were not he can’t be completely sure whether he’s the announcement of a moratorium on new 9.75% inflation, clogging of the transport negotiating with Macau or with . He’s casino licences and projects by Macau’s infrastructure to breaking point, the best off playing safe and assuming it’s both. chief executive Edmund Ho. Getting a junket closing down of small- and medium-sized Anyone who suggests otherwise has only a agent licence is child’s play by comparison. businesses and incitement of civil unrest. slim grasp of the political realities in Macau. The result in Macau is that the junket These have nevertheless been some of the Leaders of sovereign governments don’t fly operator tail is wagging the casino dog. Over side effects, but it’s not really the fault of the up to the Chinese capital to be lectured on 67% of Macau gaming revenue came from gaming industry. It could be argued that whether they’re doing a good job. Edmund the VIP sector in 2007, and the margins on these unsought outcomes occurred because Ho, Macau’s chief executive, does. that business are being squeezed tighter Macau’s development objectives have been This lack of genuine autonomy has and tighter by junket organisations that are muddled and incoherent from the start. helped fuel Macau’s confusion and lack of getting bigger and more powerful thanks to If you don’t state clearly what you direction in public policy regarding the aggregation in the industry. want from casino liberalisation in the first gaming industry. Macau’s politicians are place, or measure it against a verifiable serving not just the interests of the territory’s Roles reversed set of criteria, there’s not much chance of citizens, but also of the motherland. And in António Ramirez, managing partner of a satisfactory outcome. Stating what you a matriarchy, what mother wants, mother Ramirez Law Firm, a Macau-based company want doesn’t simply mean public platitudes generally gets. specialising in commercial contract advice, about building up tourism. Nor does it mean told Inside Asian Gaming: “The main issue creating a fat public surplus in case of hard Flawed here under legislative review is the growing times to come. All the money in the world This need to serve two constituencies perception of the necessity to regulate and won’t help you if you don’t have a coherent has not only failed the local community. It restrain the excessive command and control strategy for what to do with it. has also arguably failed the interests of the of the Macau casino premium market by the casino operators. local junkets. Limited power By focusing its administrative effort “Indeed, not only are the local junkets Many of these problems seem to on regulating the to protect ‘social increasingly organised and able to impose stem from the fact Macau is not an harmony’—as the mainland government ever higher commissions, but if this trend autonomous jurisdiction, whatever the calls public order—the Macau government persists they will quickly capture the larger Basic Law—the document that serves as appears to have been completely distracted share of the gaming revenues generated by Macau’s constitutional framework since the from the urgent commercial need to rein the premium market, leaving the local casino handover from Portuguese administration in the number and scope of operations of operators with shrinking profit margins and in 1999—may say. the junket agents. Getting a Macau casino becoming little more than mere suppliers

June 2008 | INSIDE ASIAN GAMING 7 Macau Junkets Cover Story vs. Singapore Junkets and managers of the casino venues and facilities,” adds Mr Ramirez. Macau’s until now laissez faire position plinary actions, including a financial penal- Macau’s government has now woken up on junkets contrasts sharply with that of ty not exceeding S$400,000, against any li- to this threat and is talking about putting a Singapore, where casinos were recently le- censed junket promoter who contravenes cap on the commissions paid to junkets. galized and two sprawling casino-centred any provision of the regulations; and To be fair to Macau, it’s also come a long integrated resorts are set to open by 2010. (i) provide that any contravention of any way from the monopoly days when VIP Here’s what Wong Kan Seng, Singa- provision of the regulations shall be an of- operators were effectively unregulated. An pore’s Minister of Home Affairs told the fence punishable with a fine not exceeding alternative to capping junket commissions country’s parliament when introducing $100,000 or with imprisonment for a term might be to offer a reduction in gaming tax the Casino Control Bill 2006 in February not exceeding 12 months or with both.” on the VIP gross, though this would have the that year: “Organising junkets is a specia- effect of strengthening the position not only lised and highly lucrative business that is Macau-style of the casino operators but also the agents— important to the casinos’ viability. Macau’s Administrative Regulation and all at a cost to the public purse. “Because of the large sums of money 6/2002 controlling junket agents was origi- transacted between the junket promot- nally drafted in Portuguese, and to the best ers, their clients and the casinos, it is im- of IAG’s knowledge, it has never been fully portant that junket promoters are well- translated into English. Brief transcripts regulated to ensure that the junkets do in English refer to the need for “constant not provide a cover for crime syndicates supervision by the DICJ” and a “duty of to engage in criminal activities, such as cooperation” on the part of junket licence money laundering. For this reason, Sec- applicants. tion 110 of the Bill shall require junket Some of these differences in substan- operators to be licensed before they can tive legal approach may be due to cultural work with our casinos.” factors rather than a lack of desire by Macau for robust regulation. Singapore’s penchant Burden of proof for clearly stated rules prominently and Not only does Section 110 of the Sin- publicly advertised may be linked to its le- gapore act emphasise the need to prevent gal system based on English common law. financial irregularity among junkets, it also That system tends to focus on permission puts a specific burden of responsibility on and prohibition, with the efficacy of the law the agents to prove they are operating an then tested in live legal cases. acceptable business model. According to Macau’s legal structure, on the other industry sources who spoke to IAG, in the hand, is inherited from Portugal and is Macau market, an agreement between based on the continental or Roman sys- an agent and casino operator is subject tem, which puts more emphasis on gener- to review by Macau’s gaming regulator, al codified principles and normally marks but prior vetting is not normally required. out clear areas of competency for politi- In Singapore, plans for such agreements cians and judges respectively in applying must be cleared first by the Casino Regula- the law and adjudicating upon it. Singapore Bay Theatre tory Authority. Rule breakers can face fines In Macau, there are also indications of and prison terms. a distinctively Chinese pattern of adminis- The Singapore law explicitly states: “In trative practice. Under this informal system, particular, the regulations may: rules are set out, but over time, custom and (e) require any contract or other agree- practice may allow for a more permissive ment that relates to the conduct of a jun- interpretation until someone either pushes ket to be in a form and containing provi- things too far or social or political pressures sions approved by the [Casino Regulatory] lead to a tightening of the rules. An example Authority; of this is what happened when Guangdong, (f) require the junket promoter or the the Chinese province next door to Macau, casino operator concerned to give speci- decided to reduce the flow of entry permits fied information concerning the conduct to Macau for a few weeks last year. The per- of the junket to participants in the junket; mit rules didn’t change, just the approach (g) require the junket promoter or the to administering them. The difficulty with casino operator concerned to give the Au- this system is that it pretty much amounts thority advance notice of any arrangement to the same thing as rule by decree. Unlike for premium players and to furnish to the the clear and proactive statement on regu- Authority specified information concern- lation of junkets, by Singapore’s Mr Wong, ing the arrangement; Macau’s regulatory system appears to be (h) regulate the conduct of licensed essentially a reactive one, responding to ex- junket promoters and prescribe the disci- ternal events or pressures. Outside the Grand Lisboa

8 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 9 Cover Story Why Regulatory Style Matters

Regulatory style matters because inter- trol Act 2006, the Casino Regulatory Authority support to investors of our Integrated Resorts. national investment is (for the time being at is in charge of the day-to-day monitoring of This is because the Integrated Resorts require least) largely run on an Anglo-Saxon admin- the industry, under the direct supervision of heavy investments. We want them to succeed istrative model that understands concepts the Ministry of Home Affairs. The Ministry of after the investors have committed to spend such as permission and prohibition and feels Trade and Industry and the Ministry of Com- billions of dollars on the projects. For instance, less comfortable with the nuanced approach munity Development, Youth and Sports are the casino tax rates will remain unchanged of guideline regulation. respectively responsible for monitoring the for 15 years. The two casino operators will also The Anglo-Saxon administrative model economic and social impact of the industry. enjoy an exclusivity period of 10 years. During involving prescription and proscription can Singapore’s approach, according to those with this period, no new casinos will be allowed. clearly be seen in former British colonies such enough knowledge to make a sensible judge- The lease of the land on which the Integrated as Malaysia, Singapore and Hong Kong. Singa- ment, is a template for how to go about gam- Resorts will be sited will be for 60 years and pore knew exactly why it wanted casinos. It ing regulation. they will be allowed to operate a casino for 30 was losing tourists to more party-orientated This robust approach did not preclude Sin- years, subject to the suitability of the casino destinations such as Bangkok, and wanted to gapore from understanding it had obligations operators to run them.” claw back market share and increase length of to outside casino investors as well as sovereign Macau’s regulatory framework has been visitor stay. It decided casino resorts were the rights over them. It couldn’t simply treat them more problematic, because it required mod- answer, but with strict terms and conditions, as a cash cow to be alternately patted, prod- ernisation of an existing system rather than including a limit on the amount of resort space ded, kicked or nuzzled as the mood or the eco- building a system from scratch. given over to and an annual S$2,000 nomic or political circumstances demanded. It is also more nuanced because it involves membership fee for Singapore citizens (or codification of a series of overlapping admin- daily entry fee for Singaporeans for every con- Certainty istrative regulations covering constitutional secutive visit occurring within 24 hours). Minister Wong said when introducing law, administrative law, tax law, company law Singapore’s casino regulatory law in parlia- and criminal law. Unlike Singapore’s Casino Clear reporting ment: “Through this Casino Control Bill, the Control Act there is no one-stop shop inves- Singapore also has a robust regulatory Government is committed to a number of tors and interested parties can go to check on structure for gaming. Under the Casino Con- measures to provide greater certainty and the rules and regulations.

Lost in Translation Macau’s gaming rules are still hampered by practical problems

Macau has been codifying its regulations Macau’s handover, and the MASR Govern- of a coherent strategy as far as economic since 2001 and now has four basic docu- ment has put a great effort into translat- planning is concerned. The Macao Eco- ments covering: framework law on casino ing existing legal documents into Chinese, nomic Services department is mainly con- concessions and sub concessions (published as well as drafting some key documents in cerned with regulatory issues. The Macau in 2001); new regulations for gaming pro- English for foreign investors, the translated government does have a body called the moters (2002); new regulation of credit for documents are far from sufficient and pre- Research Centre for Sustainable Develop- gaming (2004) and detection and control of cise from a legal perspective. ment Strategies, but it doesn’t seem to money laundering (2006). “In the event of any dispute over rule be doing much research—or at least isn’t Macau’s regulatory system is arguably interpretation, Portuguese always prevails. sharing much of it with the public. At the less transparent for foreign investors than Consequently, despite the fact hard cop- time IAG went to press, the English lan- Singapore’s because much of it hasn’t been ies of related legal documents are equally guage web page hadn’t been updated fully translated into English. available to each of the firms, the local in- since 27th March 2007. The only bit of Ricardo Siu, Associate Professor of Eco- cumbent would be better able than foreign ‘research’ mentioned on the English site nomics and Finance at the University of casino operators to grasp and have insight is a PowerPoint introduction dating back Macau, said in a recent essay: “As far as the into the practice of these rulings, hence to 2005 of the territory’s annual Quality regulatory system of Macau is concerned, dealing with legal matters relating to de- of Life study. Even the Chinese and Portu- the local community, much less foreigners, signing business strategies. In other words, guese pages haven’t been amended since does not comprehend its contents and prac- for new entrants to acquire the same level 22nd January this year. tices. Traditionally, laws and regulations have of knowledge of the relevant regulations This may say more about the Macau for the most part been written in Portuguese, as the domestic firm does, they will have to government’s online presence than it does while most people in Macau are Chinese and inject additional resources into their busi- about its policies, but it does arguably re- do not know Portuguese at all. nesses (including time, as a kind of trans- veal a certain state of mind. Any jurisdic- action cost).” tion interested in promoting debate and Limitations transparency on public policy normally “Although a small number of key docu- Strategy lite likes to have as much information in the ments were available in Chinese before Nor does Macau seem to have much public and Internet domain as possible.

10 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 11 Cover Story People Power Singapore is much richer in human capital than Macau

One could argue that Macau was planning logjam created by the arrest, trial Vegas Sands Corp, brought by Hong Kong always going to be at a disadvantage and imprisonment of the former Secretary of businessman Richard Suen. The fact he had compared to Singapore. That city state Public Works Ao Man Long, it paints a pretty to say it at all speaks volumes about Macau’s has a large and professional civil service sorry picture. In most other sophisticated lack of political self-confidence. educated to international standards, with cities, Mr Ao probably wouldn’t have got armies of workers measuring everything a job as a clerk, let alone become the head Divide and rule from the number of pedestrians on its of a big spending government department. Macau’s lack of real sovereign power pavements to the number and type of There was nothing in theory to stop Macau can sometimes work in favour of casino tropical plants in its public gardens. hiring in the necessary administrative investors. If, as a casino operator, you There is a case for arguing Singapore may expertise to execute best practice and train a divide your hosts, you may also be able actually be over-administered, but a bit new generation of public servants (Why the to rule over them in terms of achieving of joined up civil government normally Portuguese administration didn’t bequeath your business objectives. An example of helps more than it hinders. such a system to Macau would take a this is the constant lobbying that goes Macau had a population of 446,700 in separate article to detail). Macau certainly on behind the scenes appealing for an 2003—the year prior to the opening of the had enough cash to buy in administrative exemption from a rule here or a relaxation first properties from new casino operators talent, given that it was sitting on a budget of a condition there. While lobbying is a following the liberalisation of the gaming surplus of 33.21 billion patacas (US$4.15 perfectly legitimate way for a company to industry. Between 1996 and 2003, the city’s billion) from 2007 alone and is on the pursue its business interests, there’s always population growth had averaged less than doorstep of Hong Kong and Singapore, two a danger that unless final adjudications are 1% year-on-year. As more foreign workers Chinese-speaking communities producing made in public, it leaves both sides open were imported to staff the booming casino good quality public servants by the bushel. to accusations of cronyism regardless and tourism sectors, population growth of whether there is any foundation to reached 3.6% in 2004, 4.7% in 2005, over Doth protest the claim. An example is when Galaxy 6% in 2006 and 4.8% in 2007, with the Jorge Oliveira, a Portuguese-born lawyer, Entertainment Group got hopping mad a population standing at 538,100 at the end was one of the Europeans who stayed few years ago because it felt it had paid of last year. With a string of mega resorts behind in Macau after the handover to too much for its StarWorld site on the set to open in the city over the next two in 1999. He is Commissioner for Legal Macau peninsula. It claimed Wynn Macau years, it doesn’t take a genius to work out Affairs for the Macau Gaming Commission had received special treatment by the you might just need more housing, more and was one of the masterminds behind government in the acquisition of its site, public transport and better roads. These are Macau’s casino liberalisation in 2002. He felt right next door to StarWorld. perfectly predictable needs. it necessary recently to state publicly that It would be naïve and foolish to claim Yet Macau’s answer to one of these Beijing hadn’t interfered in the awarding special case lobbying doesn’t happen issues—housing—was to tighten the rules of Macau’s casino licences. To be fair to Mr between government and business in the on non-residents purchasing property, Oliveira, he was being questioned under United States or the United Kingdom too, rather than to attack the problem from oath in a Nevada court hearing at the time but it seems in Macau it’s been elevated to the supply end. When one adds to this the regarding a success fee claim against Las an art form.

12 INSIDE ASIAN GAMING | June 2008 Cover Story

Ramshackle development in Macau Singapore: a testament to urban planning

Rule of Thumb or Rule of Law?

Government by special case is only a made clear to him he was welcome to try his government recognises, setting up casino few steps away from rule by decree, and luck elsewhere. businesses is capital intensive and operators rule by decree is pretty much whatever a The recent court case in the United States need to know that the assumptions they government wants it to be, or whatever between Hong Kong businessman Richard used to crunch their numbers will still have the most powerful lobbyists or interest Suen and Las Vegas Sands Corporation has some relevance in a year’s time. Alternatively, groups suggest it should be. Without given a fascinating glimpse behind the they need a clear and transparent timetable recourse to a rule of law, created by scenes into the decision making process for change. If gaming tax is 35% of the gross politicians but accountable to society, surrounding the issuing of Macau’s gaming today, they’d quite like to know whether it rule by fiat may protect or advance the licences. It has left many people wondering will be 35% of the gross in a year’s time. If interests of a casino operator one day, but who exactly was governing whom during not, they’d like some warning of possible serve to hurt him the next. that process. rises or falls so they can plan their strategies An example of this is the recent accordingly. announcement by Edmund Ho of a Market issues When LVS mentioned in its 2007 annual moratorium on new casino projects. Most of Clear goals matter, because as IAG report that corporate tax was due to be the existing players in Macau were delighted, mentioned last month in our editorial, introduced on its operations in Macau and their company share prices picked up provision of casino services in Macau is not from 2009, the company hinted that the as well. They were probably also pleased to a market based on perfect competition. government might be persuaded through hear that the government may move to cap It is an oligopoly, i.e., a form of imperfect lobbying to limit the imposition of the junket commissions. competition with access controlled by tax to the gross of non-gaming revenues. government. A condition of that access Lobbying goes on in all markets all the Tinkering in a rational world should be that market time, but special case lobbying is more The problem is that in the same players serve the public interest, not the effective when politicians have no clear announcement, Mr Ho indicated a possible other way round. idea of what their policy objective is in the cap on the number of gaming tables in The admission recently by Jorge Oliveira first place. the existing casinos. This is a clear case of in that Las Vegas courtoom—suggesting moving the goalposts for political rather Galaxy Entertainment should never have Focus than commercial reasons. Mr Ho even said been allowed its own Macau gaming licence What is the purpose of the proposed as much, indicating that Beijing approved of after Las Vegas Sands pulled out of its imposition of corporate tax on Macau the move, which may have come as a surprise planned partnership with the company— gaming operators in 2009? Is it to raise to those constitutional scholars who had was astonishing. Some may admire Mr money for specific infrastructure work; is assumed Macau was indeed autonomous Oliveira’s pragmatic decision to allow Galaxy it to pay for an engraved gold watch for under the Basic Law. to go it alone and bundle LVS’s permission the outgoing chief executive Edmund Macau’s leaders have gone on record as a sub concession from the Galaxy licence. Ho? Or is it simply because the politicians as saying the development of tourism and It was a way of saving Macau from possibly have realised Macau is a roaring success of a convention industry were key aims in expensive and lengthy litigation. Other less and a regular little gold mine so they allowing casino liberalisation. Did Macau generous souls might think it was another might as well squeeze the operators until simply give too much away too cheaply in case of Macau ‘rule by exception’ rather than their pips squeak? its eagerness to attract world-class resort government by rule of law. As any bartender will tell you, squeeze a operators? lemon too hard, and eventually it runs out of When Steve Wynn went public Predictability juice. Macau might be better to nurture its questioning the level of regulation attached Rule by law rather than rule by lemon grove today so it will have plenty of to Singapore’s casino business model, it was decree matters because as the Singapore juice in years to come.

June 2008 | INSIDE ASIAN GAMING 13 Feature Blue Skies and Baccarat Asia’s next big gaming strip is being built on a long stretch of unspoiled beachfront in Vietnam, offering a laid-back alternative to the congested bustle of Macau, writes R. Anders West

White sand and pristine waters offer preservation and conservation theme, a potent complement to casino gaming, highlighting the lush beauty of the but few places on earth provide it. There is area while showcasing Vietnamese and jammed, but at 10 in the morning, there Atlantis in the Bahamas, but no equivalent in Asian culture. won’t be anybody in the casino.” His task will Asia. Thailand is still deliberating whether to be to meld the indoors with the outdoors to permit gaming in some of its beach resorts Macau fallout? facilitate seamless transition between beach and developers in the have twice There is much speculation as to how and baccarat. proposed casinos along the popular Boracay major developments in Vietnam, Singapore, shorefront, only to be stymied by the Catholic and elsewhere in Asia will affect the bottom Demand drivers Diocese of Kalibo on both occasions. lines of existing casinos across the region. The resort’s developers are encouraged Sun seekers with a penchant for There is clear consensus that Macau will by the rising number of visitors coming gambling will soon have somewhere to go remain the top gaming destination in to Vietnam. In 2008, the New York Times in Asia, following the Vietnam government’s terms of visitor numbers and gaming identified Vietnam as one of 53 “hot-spot” recent approval of a gaming strip on a resort revenue for the foreseeable future. However, tourist destinations and the World Travel and location not far from Ho Chi Minh City. developments like the Ho Tram Strip will Tourism Council raised Vietnam from sixth Asian Coast Development Ltd. (ACDL), clearly take away from Macau’s previously place to fourth in its ranking of the world’s a Canadian company, is leading the project unrivalled allure. fastest-growing travel destinations. In 2007, to build Vietnam’s largest tourism initiative: The lead architect of the Ho Tram project Vietnam saw a 16% rise in foreign visitors, The Ho Tram Strip. The proposed US$4.2 is renowned casino and resort designer welcoming 4.2 million tourists across its billion destination resort will be located Paul Steelman, who previously discussed borders. The trend for Q1 suggests this year’s along the white, sandy shores of Ho Tram in the prospects of a beachside gaming tourism growth will match that of last year. the province of Ba Ria-Vung Tau, some 130 destination in Vietnam with Inside Asian Vietnamese nationals are currently kilometers (80 miles) south of Ho Chi Minh Gaming. Mr Steelman says Ho Tram offers prohibited from gambling at the few casinos City. The resort will feature 9,000 guest visitors “a multiplicity of experience”, which already located in the country. However, rooms in five luxurious 5-star properties, neither Macau nor Singapore can replicate. there is speculation that in the coming years Las Vegas-style casino facilities, and a Mr. Steelman highlights four popular travel the government may consider overturning Greg Norman championship golf course. categories to make his point. “You’ve got a this restriction. This would considerably The 169-hectare development will also city vacation like going to Madrid. You’ve boost the prospects of The Ho Tram Strip, include retail shopping, a 1,000-seat live got an entertainment vacation like coming given the considerable pent-up demand for entertainment venue, a full-service spa, and here [to Macau]. You’ve got a beach vacation, casino gaming among locals. convention facilities with capacity for up to which a lot of people like—beach, the water, Vietnam’s population tops 86 million 8,000 people. rivers, lakes, that type of thing. And you’ve and nearby Ho Chi Minh’s metropolitan Phase I of the project, which broke got the adventure vacation—you go rock population is estimated at close to 10 million. ground in a ceremony last month, will see the climbing, Machu Picchu, or something of this The population is also becoming more completion of the first 1,100-room hotel and nature.” The Ho Tram Strip offers all except prosperous, with the country’s economy golf course in 2010. Phase II, slated to open the city experience, and ACDL is betting growing at more than 7% per annum for the in the spring of 2011, includes the second that there is an untapped market of punters past decade. hotel with an additional 1,300 rooms, the first wishing to combine fun in the sun with time Vietnamese enjoy gambling as much as casino, and 10 restaurants and nightclubs. at the tables. other newly wealthy Asians, as evidenced The casino will have an 8,300-square meter Mr. Steelman acknowledges that by the thriving gaming industry in Bavet, a (90,000 square feet) gaming floor and will the Ho Tram Strip’s picturesque location gaming town in Cambodia just across the house 1,000 slot machines and 90 gaming overlooking the South China Seas (Eastern border from Vietnam, intended primarily to tables. Meanwhile the entire Ho Tram Strip Sea in Vietnamese vernacular) comes with cater to Vietnamese players. If Vietnamese should be operational within a decade. The its drawbacks as well. He points to the are allowed to gamble at home, however, Ho Tram Strip will have an environmental casinos in the Bahamas, where “at night it’s Bavet’s fortunes could take a tumble.

14 INSIDE ASIAN GAMING | June 2008 Feature

June 2008 | INSIDE ASIAN GAMING 15 XXXX

Big Lotto Gaming companies are betting on expansion of China’s industry

ommentators are fond of reminding systems and products including scratch since its launch in 2005—more than six their readers that Macau is the only cards and video lottery terminals. Pooled times in 2006 and two times YoY in 2007.” Cplace in China where casinos are fund products providing high payouts but CLSA says official lottery revenues have legal. While this is true, it does tend to leave long odds—such as Power Ball and Big recorded a 28% compound annual growth a slightly misleading impression about Lotto—are also increasingly popular. rate in the last six years and grew 22% YoY government and grass roots attitudes to China’s welfare lottery and the sports in 2007. gambling inside mainland China. lottery brought in 100 billion renminbi It gives the idea that somehow human (US$14.3 billion) in 2007—significantly Partners nature is required to slip into neutral the more than the revenue produced by Macau’s Encouraged by this growth and its moment a citizen takes a few steps north casino industry that year. China’s supply fundraising potential, the Chinese authorities or east of Macau’s border gates and that of lottery product looks likely to expand are increasingly entering into partnerships China is some kind of puritan theme park, dramatically in the next few years to meet a with commercial suppliers— with hordes of fresh-faced party cadres clear demand. including foreign companies—to standing around waiting to admonish improve and update China’s rule breakers or worse, tip off the Public Right offer lottery system. The authorities Security Bureau if someone attempts to Statistics from China’s welfare lottery may even be ready to move have a wager. suggest that when governments get into new products such as the products right, then consumers will fixed odds . Myth and reality follow. A new report from CLSA Asia- In late 2006, the China The reality of modern China is that Pacific Markets, a provider of brokerage Sports Lottery Administration millions of people are gambling every and investment banking services, says that Center, one of the two government day and often with the blessing of the when Power Ball was introduced to China’s bodies authorized to issue , authorities. The country’s onshore lottery welfare lottery system in 2005, it triggered invited Hong Kong company AGTech, the system is clearly gambling and is clearly an 80% year-on-year (YoY) rise in supplier of gaming and lottery services, sanctioned by the state thanks to its welfare lottery turnover. and several other parties to ability to raise funds for social welfare and The report adds: a private meeting, during sport development. It’s supported by a “Video lottery terminal which it’s understood fixed sophisticated and expanding network of [revenue] has also odds sports betting was outlets and by a growing list of delivery been growing fast discussed.

16 INSIDE ASIAN GAMING | June 2008 Instant Gratification The evolution of high frequency lottery games in China

All forms of gambling were outlawed in China following delayed as local governments, some of which had set up the communist revolution of 1949. The country only introduced games with other foreign suppliers, sought to put their imprint lotteries in 1987, but now, according to a Citigroup forecast, it is on the system. on track to becoming the world’s second biggest lottery market ’s Tabcorp, CLS’s original keno partner, withdrew last by the year 2010. month after losing patience and was replaced by GTech, the US- China’s booming lottery market got its start under Premier based lottery unit of Italy’s Lottomatica. Mr Liao told the Financial Deng Xiaoping, who realised that ideology had to give way to Times on Wednesday that bureaucratic hurdles had been cleared: economic pragmatism if the Party was to survive, and introduced “The whole system has passed verification by every province. his “socialism with Chinese characteristics” from the late seventies. Different provinces have different ideas about what would be the This, along with the recognition that illegal gambling was rampant most attractive to their customers,” he said. “It was a very tedious in the country, prompted the introduction of welfare lotteries in process.” 1987 in order to provide a regulated outlet for mainlanders to The initial roll-out will involve 2,000 terminals being set up in fulfil their gambling desires, with lottery profits going tofund eight provinces, with another 2,000 to follow. social welfare—the need for which has increased as a result of the Despite Mr Liao’s optimism about keno, other analysts, while economic reforms, which led to massive layoffs from state-owned impressed with the success of VLTs in China, are more cautious enterprises. on the outlook for keno. “This game is still not proven in China,” Two agencies oversee lotteries in China. The China Welfare Deutsche Bank commented in a research report: “It will take at Lottery Issuance Centre (CWLC)—the larger of the two—was least six to nine months for [the] new game to be successful.” established in 1987 to raise funds for social welfare. The China Sports Lottery Administration Centre (CSLC) was set up in 1994 to China’s high-frequency lottery games: fund sports development, and in addition to lottery-type games, also offers limited football betting on matches in the major Keno involves players choosing two to eight numbers from 1 to 80. European leagues. A central computer system randomly selects 20 numbers out of the Although Macau is likely to remain the only place in China total 80, and players receive payouts depending on how many of the where casinos are allowed, the Chinese government has sought numbers they picked fall within the selected numbers. to expand the range of legal gambling options in the country. According to ancient records, Keno is said to have originated in Prior to 2003, the CWLC only offered two games, lotto and China almost 3,000 years ago to fund military provisions, and was instant scratch cards. There is clearly considerable pent-up even said to have helped pay for construction of the Great Wall. demand for more gambling options in China. Following the It was brought to America in the nineteenth century by Chinese launch of a simple new game, 3D—in which players pick a 3-digit immigrants, and it was in the US—which accounts for over 70% of number from 000 to 999—lottery revenue soared 80% year-on- Keno sales worldwide—that the game really took off. Keno draws year in 2005. take place once every 3 to 5 minutes. In order to offer even greater gambling choice, the Chinese Keno terminals are now available in a wide range of locations, government introduced high-frequency lottery games in including restaurants, karaoke lounges, coffee shops and other food mid-2005. There are two types of high-frequency lottery games and beverage outlets. All that is needed at the point of sales is a available in China. Unlike traditional lotteries, where drawings ticket issuing machine and monitor for displaying results, with both are typically made once or twice a week, new technology allows linked to the centralized operating system. drawings to take place either every 3 to 5 minutes, as with the Although only Keno itself is available through this network in China, Keno network, or even instantaneously through Video Lottery the system can generally support four to eight different games. In Terminals (VLTs). Australia, virtual horse and car racing are also offered through the The high frequency games have proved a big hit. China’s Keno network, and the government is expected to approve more lottery revenues rose 22% to more than 100 billion renminbi games in the near future. (13.8 billion) in 2007, and more than half that growth came from VLTs, which generated revenue of 4.5 billion renminbi in Video Lottery draws are instantaneous, taking place at the the last quarter. VLTs now contribute roughly a quarter of the touch of a button. Video Lottery Terminals (VLTs) are virtually CWLC’s revenue, and given the rapid pace of expansion of the indistinguishable from slot machines, and any game that can be nationwide network of machines, Daniel Liao, deputy chief played on a —including , baccarat, , executive of China LotSynergy (CLS), expects VLT revenue to and dice games—can be played on a VLT. grow 50% this year. The first VLT hall was opened at the end of The difference between slots and VLTs is that slots determine 2004, and by the end of last year there were 22,077 VLTs across draws by means of an internal random number generator, the country, and an average of 1.5 new VLT halls (with 20-40 whereas VLTs are linked to a centralized operating system, which machines) were opening each day across the country. determines the results. The system allows lottery officials to keep According to a report in the Financial Times, Mr Liao believes close tabs on money wagered and prize money paid and to add keno has greater growth potential than VLTs, because the latter can new games without changing equipment. only be operated in dedicated gaming halls, whereas keno can also Video Lottery Terminals are restricted to parlours operated be offered in karaoke lounges, coffee shops and foot massage par- by Beijing Lottery Online Technology (CLO), and through the lours and the network will be able to support other games as well. centralized system, offer a single mega jackpot. The CLO halls are “My personal view is that keno definitely will be bigger financed, built and operated by provincial and municipal welfare than VLT,” says Mr Liao. lottery centres. CLS first announced its contract with the welfare lottery for a All CLO parlours feature a standardized layout of 200-300 sq. national keno network three years ago. But the roll-out has been metres in size, with 20-40 VLTs and one Keno monitor.

June 2008 | INSIDE ASIAN GAMING 17 China Lottery Market

The CLSA report states: “While traditional partners, China is a very big cost intensive and least lottery and scratch card products will gain country requiring significant attractive part of the greater focus as video lottery terminal (sic) investment to build the market. When cable undergoes an upgrade process, sports lottery official lottery system. At television services is also expected to introduce the scratch present, penetration of were developed in card component to its offering, followed by official lottery products is North America in the single match betting potentially before the largely confined to the urban 1980s and in Europe in Olympics, and fixed odds afterwards.” areas. CLSA says there are the 1990s, for example, currently only 160,000 sales most of the companies Doubts terminals for China’s sports and tendered to provide Industry insiders are rather sceptical, welfare lotteries serving a potential infrastructure in the urban however, about the possibility of single market of around a billion adults. areas rather than the rural ones, match betting being introduced to the because it offered a better yield on their regulated gambling market in China before New outlets investment. the Beijing 2008 Olympics. CLSA’s report states: “In sports lottery “All the indications are that this is still where it is allowed, retailers are building up Motive some way off,” one source told IAG. their own chain stores with modern designs As we mention in our article on sports AGTech said in a statement it was and customer services, creating their own betting, one of the major incentives for “committed” to becoming a leading brands in sports lottery; Melco has Luckypool the Chinese government in expanding technology and service provider for the and AGTech has StarLott.” domestically regulated gambling games is to licensed sports lottery in China. As for welfare lotteries, the report compete with the unregulated and also the “China is on the track of continues: “Other than expanding the offshore markets. The 800 billion renminbi becoming one of the fastest number of traditional lottery sales (US$114 billion) that Peking University growing and ultimately outlets, alternative distribution thinks Chinese people spent on unregulated one of the largest sports will see further growth. gambling in 2006 is equivalent to around lottery markets in the For example, this would ten times the entire gaming revenue of world,” says AGTech. include selling scratch Macau for 2007, which stood at 83.85 billion cards and deploying patacas (US$10.48 billion). CLSA estimates New products -type high frequency that 40-50% of all ‘illegal’ gambling revenue AGTech is reported games in restaurants and in China is related to single-match betting. to be working with karaoke rooms, mobile Beijing now appears to be moving UK company Ladbrokes sales terminals to penetrate towards the view that if you can’t beat them PLC on the development less densely populated areas with alternative products, you might as well of new sports and high and cooperative distribution join them with directly competing ones. frequency games. Ladbrokes arrangements with major retail This is essentially the position adopted already operates a consultancy in China with chains. Already piloted in a few provinces, by the Hong Kong government, one of the the Beijing Sports Lottery. customer loyalty programmes will few jurisdictions in Asia where it’s Hong Kong-listed China LotSynergy stimulate higher lottery sales via very clear that online betting Holdings Ltd, a lottery system and rebates, prizes and tailor made and other forms of non equipment provider, and Las Vegas-based marketing schemes.” government-sanctioned International Game Technology (IGT), gambling are illegal. the world’s largest manufacturer of slot Town versus country machines, have been active in the video Until more sports Potential lottery terminal sector in China. and welfare lottery Gavin Ho, a senior US-based Scientific Games Corporation, distribution systems and investment analyst at an integrated supplier of instant tickets, products are developed, CLSA, concedes that systems and services to lotteries worldwide, options for entertainment even if such products announced in February it was providing a in many rural communities are introduced to China’s “national instant ticket sales system and in China and other parts of Asia regulated market it’s unlikely related services” to the China Sports Lottery. are likely to depend on (officially) to kill off the demand for non profit making community activities unregulated or offshore betting. This Investment such as mahjong, or on commercial but was certainly Hong Kong’s experience. Hong Kong-listed investment holding unregulated activities such as backstreet “Illegal gambling may not be completely company Rexcapital has reportedly entered betting or online gaming via local agents. eradicated [by this strategy] but it suffices into a joint venture with a mainland Chinese The government seems especially keen to see the potential as the government partner to distribute sports lottery products. to introduce or improve lottery services introduces more interesting types of games The challenge is that even with strong in rural areas, but from a commercial and fixed-odds betting to lure money to the domestic and international gaming standpoint this could prove to be the most legal market,” he says.

18 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 19 Sport Betting

The Beijing National Stadium, also knows as the “Bird’s Nest” for its distinctive design, will host the 2008 Olympics opening ceremony and main track and field events Fun and Games This Summer Asian governments would be better off meeting demand for sports betting than complaining about offshore or unregulated suppliers

he launch of soccer’s Euro 2008 generated as much as 800 billion yuan because the games are more entertaining tournament this month and the (about US$114 billion at current exchange than the official ones. It’s a serious TBeijing 2008 Olympics in August rates) in 2006 according to the China Center problem,” Wang Xuehong, director of the will again draw media attention to one of for Lottery Studies at Peking University. centre, said recently. Asia’s highest grossing leisure industries— That’s ten times the amount spent on both sports betting. But unlike other elements of China’s state-run lotteries last year. Definitions of Asia’s economy such as the hotel and “People are drawn to the illegal market Care needs to be taken with the use of tourism sector, governments complain they can’t get their hands on much of the revenue raised by sport betting. This is because most of it isn’t being spent in domestically licensed betting shops but is reportedly going instead to the offshore betting market or to backstreet unlicensed . Football, football, football In Asia, sports betting means essentially football betting. Industry sources told Inside Asian Gaming that gambling on football matches accounts for 90% of all fixed odds sports betting in Asia, and the sums being staked are mind boggling. In China alone, all forms of unregulated betting (of which soccer is just one part)

20 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 21 Manchester United is often given a heavy handicap by bookmakers in Asia

the word ‘illegal’ when discussing Asian ones. An example would be for a civil servants, not entrepreneurs, which gambling in general and sport betting to offer a three-goal start to this season’s is essentially what a bookmaker really is. in particular. Many governments have a English Premier League no-hopers Derby Civil servants think the Asian handicap is tendency to define any form of betting they County in a fixture against Manchester too commercially risky and that the forms do not directly control as ‘illegal’ regardless United. The handicap automatically of sports betting that are less risky from a of whether this assertion has been tested in eliminates a draw result and means anyone government perspective won’t be popular the courts. In the case of online operators, betting on United to win would need at with punters. all the reputable companies are licensed least a 4-0 victory. ‘Win’ bets on Derby, the So, instead, most Asian governments and do pay tax, albeit offshore and often EPL’s worst ever team, would pay out on any seem to prefer standing by the touchline, at a lower rate than the official onshore United score inferior to that. booing the industry players who are already gambling industry. The Asian handicap came about because out on the pitch. Part of this campaign Given that many governments dislike of the nature of soccer game scoring. Given involves briefing media sources about the fact they’re missing out on a source of that there are normally only a limited range alleged levels of ‘illegal’ sports betting. potential taxation, an obvious question of outcomes for result and score in a soccer is why don’t they simply set up shop as match, odds based only on final outcomes Raids sports bookmakers and go head to head tend to be short, and margins for bookmakers As the first cuckoo song heralds spring with the competition? An important factor and returns to player on such betting tend to in Europe, so the arrival of UEFA’s European against this strategy seems to be that be low. In Europe, one of the answers to this Football Championship on Asia’s television many are concerned about the business problem was , where the pay- screens this month is almost bound to risk. Excitement for punters comes at a off is based on the accuracy of the wager, provoke a ritual of police raids on alleged price, and that price is a decent margin for rather than a simple ‘win or lose’ outcome. A gambling dens in China, Vietnam, Malaysia bookmakers, but also significant commercial spread is a range of outcomes, and the bet and elsewhere, just as the advent of FIFA’s hazard. Losses from trading on any given day is whether the outcome will be above or World Cup in 2006 did. can be significant with implications for the below the spread. While in some countries backstreet bookmaker’s working capital and liquidity. In Asia though, where trust of bookmakers and even agents channelling When several of the big western bookmakers institutions tends to be low, spread betting funds to legitimate online betting companies tried to enter the Asian sports market they is simply considered too complex and too may be at risk of breaking specific laws, the took a bit of a spanking. vulnerable to fraud. patchwork of different national regulations means that in the Internet age it is very hard Volatility Groupthink for online betting companies to know where One reason for the volatility is that Group logic from the government they stand. One of the few exceptions is traditionally in this region the format sector seems to be that sports betting Hong Kong, where it’s black and white clear for football betting has been the ‘Asian means Asian handicap betting and that that online offshore gaming is illegal. handicap’ system. Here, customers are things will stay that way until doomsday. offered bets based on notional handicaps The public sector by its nature tends to Collusion placed on stronger teams playing weaker be risk averse, and is populated by career In other jurisdictions, allegedly ‘black

22 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 23 Sports Betting

market’ onshore bookmakers appear to have with soccer betting, and it’s now turned into It seems unlikely, however, that this will been operating with either the collusion or a very good business for them.” include betting on Olympic events—not support of individuals or organisations inside In 2001, the Hong Kong Government even during the Olympic soccer tournament. the state sector. An example is Vietnam, conservatively estimated annual turnover on The International Olympic Committee where one of the masterminds of a sports illegal football betting to be approximately (which has itself not always been a beacon index turned out to be a senior official from HK$20 billion. Two surveys conducted in of virtue when it comes to corruption and the country’s road development authority 2001 and 2005 found that some 4.2% and business ethics) actively discourages betting who got arrested, presumably because 2.1% respectively of Hong Kong’s adult on Olympic events, though a wide variety of he either fell out with or failed to pay off population had bet on football with a local online companies across the world will offer someone higher up the food chain. illegal or unauthorised offshore bookmaker such services. If the logic for states cracking down on in the year preceding the surveys. There are no restrictions, though, for unregulated sport betting is the protection Olympic-themed products. In March the of public morals (China banned gambling in Tax take Chinese government announced trial sales 1949 after the communists took over), then Since the introduction of regulated of an Olympic-themed instant lottery game it is a bit of a paradox that many of them football betting by the Hong Kong Jockey in four provinces with ticket prices set have created their own domestic gambling Club in late 2003, the proportion of people between five and ten yuan. industries in the form of lotteries. China’s betting with illegal bookies has decreased, welfare lottery has been going since 1987 according to the government. HKJC now Ostrich-like (a lot longer than the United Kingdom’s offers a wide range of ‘in play’ fixed odds Incorporation, rather than criminalisation, National Lottery) and the sports products including Asian handicap is the only sensible way forward for sports began in 1995. and HiLo (where a player may bet on whether betting in Asia. Police raids look good on the total number of goals scored in a match television but tend to mask an important Flawed logic is higher or lower than the number specified truth. Non state-sanctioned sports betting is If the logic of police action is to curb tax by the operator), as well as traditional forms hugely popular in China and other countries evasion and anti-social behaviour, then it of soccer betting such as first half and full in Asia because it is fun for players, rewarding conveniently ignores some important facts. time score predictions. for operators and satisfies a need not filled Asian gamblers are choosing offshore and After the new products came on the by most state-sponsored betting products. unregulated gambling not because they market, tax revenues from regulated football The Greek philosopher Aristotle once have a desperate desire to thumb their betting in Hong Kong have risen 64.3% observed that in the physical world nature nose at authority, but because it’s fun, and from HK$1.65 billion (US$211 million) in the hates a vacuum. What he meant, say scholars, because most state-sanctioned gambling 2003-04 season, to HK$2.71 billion (US$347 is that in nature something will always move doesn’t offer anything nearly as exciting. million), according to the local government. to fill up an empty space. It’s the same There’s evidence from Hong Kong, principle with goods and services. Unless though, that when consumers are offered Olympic bets or until governments have the courage and alternatives to offshore or unregulated AGTech, a Hong Kong-based company foresight to enter the sports betting market betting, they are happy to take them up. that provides technical support to China’s with good quality products that players find There’s also evidence from Hong Kong sports lottery, said recently that the exciting, then they and the rest of the world that Asian consumers are also willing to mainland government was considering the really cannot complain if Asian punters seek move beyond the regional obsession— introduction of fixed-odds sport betting via their thrills in the offshore or unlicensed Asian handicap betting—if they are the official sport lottery. betting world. offered the right products. Hong Kong success The daily volatility of working capital associated with Asian sport betting did cause some initial problems for the authorities in Hong Kong. When the Hong Kong Jockey Club (HKJC) introduced fixed odds and ‘in play’ soccer betting in late 2003, the government was thrown into panic on the first day of business after the HKJC recorded a trading loss for the day amounting to many millions of Hong Kong dollars, according to an industry source. The source told IAG: “For some reason— I’m still not quite sure how—the people running it managed to persuade the HKJC hierarchy and the government to persist

24 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 25 Weike

Taking On the Big Boys Weike gets ready to rumble

avid Kinsman, the newly appointed proclaiming his willingness to go to the CEO of Weike Gaming Technology mountain if the mountain would not come D(S) Pte Ltd, is poised to take his fleet- to him. According to Mr Kinsman, one of footed Singapore-based gaming machine the pillars on which Weike is built is its manufacturing company into battle against commitment to serve the needs of casino the industry’s international Goliaths. Inside and slot hall clients, rather than dictating Asian Gaming visited Mr Kinsman at Weike what products they should use. “We’re here command HQ in Singapore, and from what to listen to them, learn from them, and give David Kinsman we saw, we fancy his chances of following them what they want,” he states, adding in the footsteps of the Old Testament giant “all our clients will have access to the CEO. Systems and recently served as COO of the slayer. I’d like to see them get the same access at Mansion group in Europe. “The benefit of being small is we’re like a Aristocrat or IGT.” speed boat versus a 135,000 tonne tanker,” Mr Kinsman has a successful track record Talkin’ ‘bout a revolution says Mr Kinsman. “It takes the tanker 20 of taking on the big boys. Under his leadership, Just as downloadable music decimated miles to stop; we can turn around on a dime. Olympic Video Gaming became Australasia’s the bottom lines of complacent record labels, When we’ve got to change direction and do number two manufacturer to Aristocrat and the advent of server based gaming leaves something that is important for our clients was sold to IGT in 1997 for A$178 million. the current gaming machine monoliths at and ourselves, we can do it instantaneously. In addition, as former General Manager of risk of losing their dominance as the next The larger companies are like monoliths. To Vidco, he developed that company’s multi- gaming revolution takes hold. move them is like moving a mountain.” player gaming machines and paved the Slot machines are only about a century An old story from another monotheistic way for it to be sold and renamed in 2001 as old and remained more novelty than faith tells of the prophet’s humility in Stargames. He also headed Online Gaming serious casino revenue generator until Bally Technologies introduced what is considered the “granddaddy” of the modern slot machine in 1963. Bally then led the industry before it was usurped by upstart IGT in the mid-80s. IGT was founded in 1981 (which, incidentally, was the first year slot machine revenue exceeded table revenue in Nevada), and was able to capitalise on Bally’s slowness to adopt new computer technology, along with quality-control problems, to rapidly win market share. IGT is now the world’s largest manufacturer of slot machines, but has notably failed to secure the lead in Australia and Asia, where Aristocrat reigns. Macau is now the most hotly contested gaming machine market in Asia, and while Aristocrat has taken an early strong lead in the city, Mr Kinsman believes Weike’s strengths could win it significant sales as it showcases its products at G2E Asia at Venetian Macao this month. The most immediately apparent of

INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING Weike

those strengths is the exceptional graphics of Weike games, enabled by the company’s decision to use a standard off-the-shelf Pentium motherboard for its system, whereas larger manufacturers opt for proprietary motherboards in what Mr Kinsman regards as a misguided attempt to protect their intellectual property. “You’ll notice the resolution and effects in internet gaming are now spectacular,” points out Mr Kinsman, “and we can do those same things because we’re using the same board that sits in that PC. An important factor is the graphics card we use—a simple thing Mr Kinsman. “It takes the game like that. When you’re using a proprietary “Where control function out of the hands or industrial board, you’re often not able to Weike will of the gaming machine companies and run the same sort of graphics card. So all excel is that puts it in the hands of the sites. We believe someone has to do is look at our product, we’re building a that’s where it should be. No one knows and they can see the difference.” game development better what the players want than the sites. Mr Kinsman also explains that Weike’s team here [in Singapore] International gaming machine companies Windows XP embedded platform “makes that will be the envy of the based in America or Australia find it very it enormously quick for things like game rest of the world.” hard to know what players in Macau really development, product development, etc. Mr Kinsman explains want, whereas an operator knows what they And it’s not just a matter of speed. It’s also that the game development want.” a capacity issue, where game development functions are split between the can be literally unlimited. Whatever you company’s offices in Singapore Branching out can do graphically on a PC, you can do on and Kuala Lumpur, Malaysia. “We Weike is hardly a newcomer to the our machine.” Meanwhile, the proprietary have all our game development, gaming world. It was established in 1998 and software used by other manufacturers maths teams, structure teams, etc, here in has built a solid business supplying gaming “makes their product more complicated. Singapore. Our graphics team is in Kuala machines, link systems They do this to protect their IP, but our Lumpur, so we’re using both our operations. and electronic table games to Malaysia, security is just the same as everybody else’s. “I’m delighted with our graphics team Cambodia and Vietnam in particular. Since It’s certified and tested accordingly.” because they’re doing excellent work. What assuming the helm in April this year, Mr Weike’s platform “also makes our we’re doing here [in Singapore] is developing Kinsman has recruited key staff to add a product server-based ready at any time,” our structure and game development team, dose of international expertise to help move adds Mr Kinsman. Our next generation, and we’re bringing them right up to a very Weike beyond its hitherto regional focus which is a year away, is going to be very high standard. We’re bringing in one key into international markets. “We’re taking an much a server-based product, because we person to head that up,” says Mr Kinsman, existing company that was pretty successful see the industry moving to server-based though he remains tight-lipped on whom and all we’re doing is internationalising it gaming.” that key person will be ahead of the official w i t h o u t Weike slot machines also come appointment. From the sounds of it, standard with two touch screens on top however, expect someone with an and bottom, giving operators “the capacity impressive track record. “After to utilise all of the real estate on the that we’ll be developing local machine, which is not provided by most talent. We’ll be taking manufacturers. So as we develop product, local mathematicians we’ll be using more and more of this real from the university estate.” In future, the belly panels on Weike in Singapore and machines will also feature touch screen turning them into interactivity, opening up further options game specialists.” for operators on three screens. The rise of s e r v e r - b a s e d What’s inside? gaming also presents While graphics and interactive screens a tremendous opportunity Pal X are a bonus, Mr Kinsman points out that for not only Weike, but also “ultimate to the game” is the mathematics. operators of gaming venues, believes 28 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 29 Weike

on the screen at their stations— also used by the competing products. “One thing that we’ve got here is expertise in poker to a greater degree than anybody else,’ says Mr Kinsman. “There’s an enormous market in Europe for this product.” The five-seat Revo is the market leading electronic gaming table in Asia, says Mr Kinsman. “We believe our table is more attractive than the other electronic tables. in my It looks like a gaming table and plays former more like the real game. Everybody else chief poker is making a product that’s either theatre technologist, who’s style, or an arcade machine.” On baccarat, a professional poker for instance, the Revo incorporates card Revo player, to work with peeping technology allowing players to us to get the game peel back cards in typical baccarat fashion, absolutely fine tuned.” and follows the protocol of allowing the Whereas other player at the table with the largest bet to changing its heritage,” he products only allow players reveal the cards. comments. The initial push will be into to load credits using cards, “we can The Revo has been available for Macau, heralded by the company’s presence deliver the table to customers with a bill about three years, and Mr Kinsman adds at G2E Asia.” acceptor at each station,” says Mr Kinsman, “technology-wise it’s a great product. Very Although Mr Kinsman only officially “and that product with bill acceptors sells reliable. Very secure. We have hundreds of came on board in April, he had been giving for a little less than the US products.” The them in the field, and it’s been tested and the company direction for several months other advantage of the Pal X is that Weike tested and tested.” prior, and Weike products on show at G2E is happy to sell it to operators outright, The Revo also features a sixth station Asia will have already been modified to whereas the US suppliers prefer to enter which can either stand empty or at which a give them greater international appeal. For into joint operation arrangements. simulated dealer can be placed (one of the example, the slot games had “previously Notably, Weike claims to hold the patent stations on the Pal X can also be used as a been designed in a more regional market on the card peeping technology—which dealer station). Since the person standing at style. They were less volatile, a little allows players to peep at cards by simply the sixth station will not physically deal or different in the way the feature and the touching the edge of the cards displayed touch cards, “it doesn’t have to be someone main game ratios were set up. So we’ve changed those things now more towards the international market style. “Every company in this business guards its game development, and it’s something we’re putting a lot of money and a lot of time into developing. Our brochures do talk about percentages and show people how our games split up in structure, because we believe clients need that information.” Ten games are currently available on Weike’s Triton and Cytron cabinets, including themed titles such as Uniquely Singapore and Discovering Macau, as well as old favourites Sea Orchestra and King of Prosperity. Also on display will be the company’s impressive multi-player electronic (METG) range. Inside Asian Gaming tried out the ten- seat Pal X electronic poker table at Weike’s Singapore showroom, and found the game play was noticeably faster and smoother than on other competing products. Mr Quad Kinsman explains this is a result of “bringing

30 INSIDE ASIAN GAMING | June 2008 employed as a dealer. It can be just an advanced product. All you’ve got to Weike CEO David Kinsman attendant.” This is an attractive proposition do is come and look at the screen on for casino operators in Macau, where only our gaming machine, and you can see adds: “I believe we’ve local residents can be employed as dealers, that this product is far, far in advance got a technologically resulting in dealer salaries surging, whereas of any.” much cheaper foreign workers can work as iv) A desire to be competitive. “We’re advanced product.All attendants. Furthermore, the Revo comes out there to do business. We’re smaller, you’ve got to do is come standard with a mystery jackpot, providing we’re leaner, we’re hungrier, and we’ll a further attraction for players. do more to get a deal. We can offer a and look at the screen The Revo comes with a package of customer much more flexibility than the on our gaming machine, five games, including multiple varieties of big manufacturers can, and we’re able baccarat and blackjack, with more games to personalise our business to suit the and you can see that in development. “Sites can change their customer in each marketplace.” games to suit the market environment at v) Providing support and “standing this product is far, far in a particular time of day. Here’s a table that behind our product. It’s very important advance of any.” looks like a normal gaming table and fits in for us to be able to back exactly the same footprint, so you can put it up our product and there together in little mini pits of four, or normal will be a service team pits of eight,” says Mr Kinsman. in Macau—fully trained The four-seat Quad will offer a series and fully skilled—by of peer to peer games, starting with the the time we launch most popular street game in China, “Dou Di products there.” Zhu” (beat the landlord)—the first time the game will be available as an electronic table On this foundation, Mr game. “Like the Revo table, the operator will Kinsman aims to establish be able to configure which game he wants Weike as “Asia’s number one to show at a particular time,” points out gaming machine manufacturer. To Mr Kinsman. Similarly, while the Pal X will us, that doesn’t mean the biggest. It initially feature Texas Hold ‘Em, other games means the best.” will be developed for the table. Weike will also showcase its systems range at G2E Asia, including jackpot, table management and floor management systems. The five pillars Mr Kinsman reiterates the five pillars on which Weike is built: i) The company’s Asian heritage makes it “perfectly placed” to understand the needs of Asian players and develop games and equipment that appeal to them. ii) A dedication to serving clients. During two decades of experience in the industry, “the main thing I found when I was going around to sites is that the gaming machine manufacturers don’t listen to clients.” By contrast, “when I ran companies in this business before, part of my policy was to get out in the field, to spend time with the sales people and to spend time with the clients, because that’s the way I learn.” iii) A commitment to technology, “not just for technology’s sake, but in order to build a better mousetrap.” He adds: “I believe we’ve got a technologically 31 32 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 34 INSIDE ASIAN GAMING | June 2008 This Tangled Web We Weave

ndeterred by the indifference of a unregulated gambling operated by various nation, Jim McDermott has introduced straw entities from file servers in offshore Uin the US House of Representatives tax havens. his second bill in a year calling for federal It’s “one of the stupidest things I ever taxation of Internet gambling. saw,” he has said. That’s code for legalization, in case you Now in his third decade on Capitol Hill didn’t know. The congressman is satisfied one imagines the Massachusetts lawmaker that bringing this giant illegal business into has seen some pretty stupid things too. As the regulatory mainstream, onto the home an example, he has been trying for years computers and mobile phones of millions of with no success to redirect Congress away American consumers, is a good idea because from its longstanding enmity toward remote it would generate billions for the US Treasury, gambling, which as an illegal activity is or so he believes. proscribed by a list of federal laws as long as McDermott also is one of 46 co-sponsors Mr. Frank’s arm, not to mention the laws of of fellow Democrat Barney Frank’s Internet several states. The latest is the US Unlawful Gambling Regulation and Enforcement Act Internet Gambling Enforcement Act, which and humbly refers to his own measure as a was enacted in 2006 and forbids banks and “companion bill” to Frank’s more detailed financial services providers from processing plan for legalizing and regulating remote Web gambling transactions. gambling—and taxing it—which, again, is You know what the congressman thinks the key selling point here. of UIGEA, don’t you? You guessed it. “One Frank makes no secret of what he thinks of the stupidest laws ever passed,” he has of the US government’s view that there is termed it. much that is problematic about unlicensed, These days, since becoming chairman of Barney Frank June 2008 | INSIDE ASIAN GAMING 35 Online Gaming

Then there is Oregon Congressman Peter DeFazio, who wants the office of the US Trade Representative to disclose the details of concessions made to the European Union late last year that bought the EU off Antigua’s victorious World Trade Organisation complaint against the US Web ban. It might be a gross disservice to those crafty Old Europeans to suggest that they sold out their own gambling companies by waiting until little Antigua won its case before joining in the free-for-all for compensation, then got out quickly with whatever bennies they could wring without too much trouble — but that’s sure how it looks. For some inexplicable reasons the Bush administration has classified the details of Capitol Hill this on grounds of “national security”. DeFazio wants to know why. So do those gambling the powerful Financial Services Committee, a from their casinos as possible. operators across the Pond. Antigua won its position he was awarded after the Democrats There is a double irony here because case by arguing that Washington’s policies took back the House in the 2006 mid-terms, it’s this very states’ rights thing that must are discriminatory because they exempt Frank is playing to much larger audiences. be finessed if remote gambling is ever to horseracing, which legally accepts Web bets But even he hasn’t been able to muster the be viable as a legal industry in the United in dozens of states. The Bush administration votes to get his bill out of committee. States. Seven states specifically prohibit Web eliminated this apparent contradiction ex Its several “companions” are languishing gambling. Five more have issued opinions post facto by withdrawing gambling from in similar fashion. opposing its legality. Most of the remaining the WTO’s General Agreement on Trade McDermott’s had one co-sponsor as this 38 don’t want it either. (McDermott’s own in Services, saying it was never intended went to press. That was Neil Abercrombie of state of Washington classifies gambling on that US gambling policy be subject to the the great state of Hawaii. “The Frank bill is the Internet as a “Class C” felony, equivalent to global free market. And how could it have the lead bill, and it must move first before possessing child pornography, threatening been, given that the Internet was largely Jim’s legislation,” a spokesman for the the governor or torturing an animal. Violators an unknown quantity back in the early ’90s congressman explained. can be imprisoned for five years and fined when GATS was crafted? And also there are Florida Democrat Robert Wexler had up to $10,000.) Of the 50 state attorneys those prohibitions to contend with on the gotten one committee hearing for his bill general, 49 are on record as supporting state level. to exempt poker from the federal fatwa, his Frank’s “stupidest law,” and 45 have put their The Remote Gambling Association, argument being that it’s a . signatures to a letter to Congress opposing infuriated by how Brussels played an Las Vegas Democrat Shelley Berkeley had his legislative bid to undo it. Nevada’s was apparent winning hand, has now gone to one hearing last year on her bill calling for a not one of them. No surprise there. But the the European Commission claiming US study of Internet gambling by the National big sports organizations whose games are enforcement activities before the GATS Academy of Sciences. the mainstay of the Vegas sports books — withdrawal—measures that have included Berkeley is co-chair of the Congressional the NFL, the NBA, Major League Baseball, the fines, forfeitures and the arrests of European Gaming Caucus, and her bill is the only National Hockey League and the National nationals—still amount to discrimination. one endorsed by the American Gaming Collegiate Athletic Association — all have The association, which represents many of Association. This is worth mentioning signed a strongly worded letter urging the Europe’s largest Web gambling operators, because the AGA, the federal lobbying arm of members of Frank’s committee to resist any has brought its case under the EU’s Trade the land-based casino industry, has a history attempts to repeal UIGEA or water it down. Barriers Regulation, which obligates the of success when it comes to commissioning Frank’s response? He scheduled a hearing Commission to respond. So now a Common academic studies to promote its members’ last month to examine the burdens UIGEA Market awash in court cases over gambling image and economic agenda. The big will impose on the banking and financial industry protectionism and sloshing about Vegas-based operators that dominate the services industries charged with enforcing in gambling-related sports scandals is association have been hankering for years it. What did this hearing uncover? It was investigating gambling in the United States for a slice of the multibillion-dollar Internet impossible to know, as of this writing. But I with a view to achieving a “constructive and pie. The problem is they also oppose federal think the chairman tipped his hand when he mutually satisfactory solution.” taxation and regulation, which they hold to said, “The hearing is going to show — I want be the exclusive purview of the states where to show — that it’s not that the regulations By James Rutherford, editor of Interna- they operate. Indeed, they formed the AGA weren’t done well, it’s that they can’t be done tional Gaming and Wagering Business (IGWB) specifically to keep Washington as far away well given the inherent nature of the issue.” magazine. Special to Inside Asian Gaming. 36 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 37 ESL Gaming Indices

Last Month Top/Bottom 10 Performers in ESL AGI

102% Global Approach 44% CY Foundation 34% Pacific Lottery ESL Gaming 30% Sino Strategic 27% Tencent Holdings 25% Nagacorp Ltd 18% Vo done Ltd 17% AGTech Holdings 16% Webzen Inc 16% PacificNet Inc Indices -12% Sega Sammy Hold -12% Leisure &Resort -12% Matrix International -14% Mark Sensing Starting last month, Inside Asian Gaming began bringing readers -12% Astro Corp a snapshot of Asian gaming capitalisation trends via ESL’s Gaming -13% Progressive Gaming -24% Esun Holdings Asian Gaming Index Indices. -27% Period 1 Month Royal Internatinal Average Return 0.22 Two Way Ltd ESL, the creator of the indices, is an Asia-focused online and -31% Base Currency USD -60% Odyssey interactive gaming company. Its services include management and marketing of and poker rooms, live videostream Top Ten Constituents of ESL AGI by Market Cap gaming and mobile and sports betting. Name Ticker Market Cap Price Change Price Change Inside Asian Gaming points out that the publication of the indices (USD) Last 12 Months Last 30 Days

and the accompanying commentary is not an endorsement of any TENCENT HOLDINGS LTD 700 12172.40 +84.73% +23.80% particular stock or a solicitation to purchase any such stock. Neither GENTING BHD GENT 7526.98 -24.71% +2.41% ESL nor its employees, parent company, associated businesses and CROWN LTD* CWN 6942.69 -22.63% -1.21% agents, nor IAG, its employees, agents, publisher and printer accept any responsibility for any financial losses or other liability incurred by RESORTS WORLD BHD RNB 6375.59 +1.80% +7.59% any person taking a position in such stock. MELCO PBL -ADR MPEL 5423.03 -29.28% +2.67% KONAMI CORP 9766 5388.45 +25.19% -0.26% ESL Asian Gaming Index (AGI) KANGWON LAND INC 035250 4607.48 +11.51% 4.12% 1800 Last Price 1339 GENTING INTERNATIONAL PLC GIL 4269.04 -29.90% +4.31% High 10/30/07 1700 1700 Low 03/20/08 1246 Last 12 Months -1.00% SEGA SAMMY HOLDINGS INC 6460 3256.21 -56.23% +15.87% 1600 ARUZE CORP 6425 2562.34 -15.91% +10.65%

1500 *only since de-merger 1400 making it the biggest gainer on both the ESL Asian Gaming Index 1300 and ESL Global Gaming Index over the period. It qualifies for the lists

1200 as a casino resort developer. Its parent, Berjaya Corporation Berhad, which takes second spot in the year-to-date AGI Top Ten with stock 1100 growth of 175.6%, also owns interests including lottery management 1000 and gaming investments.

900 Drivers of the Group’s and Berjaya Land’s stock price include Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 appreciation on the value of its land bank and news confirmed early in May that Berjaya Land is to be master developer of a resort-style Last 12 Months Top/Bottom 10 Performers in ESL AGI residential and commercial complex including a 500-room casino 422% Berjaya Land hotel in the city of Jeju in . The Group’s chairman and 176% Berjaya Corp Bhd 105% Advani Hotels chief executive Vincent Tan recently joined Forbes.com’s Malaysia’s 104% Tencent Holdings 40 Richest list with a net worth of US$1.3 billion. 61% Galileo Holdings 49% Comtec Systems The Global Gaming Index for the month is definitely a list of two 39% Konami Corp halves, with the top ten performers putting on a minimum of 44.31% 45% Macau Success LT 22% Astro Corp in the case of Hong Kong-listed CY Foundation, the only provider 21% Adores of play-for-prize online tournaments in the Chinese market. That -66% Abilit Corp -70% Mark Sensing performance also guarantees CY Foundation number two spot in -64% Paradise Ent the Asian Gaming Index to 23rd May. Earlier this year, CY Foundation -67% Esun Holdings -70% CY Foundation announced a software licensing agreement with Las Vegas From -73% PacificNet Inc Home.com Entertainment, a software developer of popular Asian -72% Progressive Gaming Asian Gaming Index -77% Period 12 Months Dore Holdings multi-player games listed on the Toronto Stock Exchange. Average Return -4.63 -77% Odyssey Gaming Base Currency USD CY Foundation would have been the best performer in the -80% Vo done Ltd Asian Gaming Index for May had it not been for an aberration in Malaysian property developer Berjaya Land has seen a the share price of the Australia-listed online gaming company whopping 422.2% gain in its shares in the 12 months to 23rd May, Global Approach, which put on a hefty 102.3%. Global Approach’s

38 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 39 ESL Gaming Indices

Last 12 Months Top/Bottom 10 Performers in ESL GGI The ESL Gaming Indices were launched on June 6th 2005 with 422% Berjaya Land a base value of 1000. The ESL AGI comprised 76 companies as of 140% Redbet 23rd May 2008, the cut-off date of the data featured herein, while 176% Berjaya Corp Bhd 135% Table Trac Inc the ESL GGI comprised 271 companies. To be eligible for inclusion 105% Advani Hotels on ESL’s AGI, a security must be publicly listed, i.e., permitted to offer 104% Tencent Holdings 103% Gaming VC Hldgs its securities (stock, bonds etc.) for sale to the general public with on 95% Deq Systems average more than 80% of revenues derived from gaming related 45% Waltech PLC 40% Playtech activities in Asia, excluding and Australia. To be eligible 77% Odyssey Gaming for inclusion on ESL’s GGI, a company must be significantly involved -80% Vo done Ltd -87% Trackbets Inter in gaming related activities anywhere in the world. -91% Solstice Resorts Closed-end funds, convertible debentures, exchange traded -95% Winwin Gaming -95% Cash Systems Inc funds, preferred stocks, rights, warrants, units and other derivative -95% Global Gaming Index Mirada PLC securities are not included. If at any time a component security no -96% Period 12 Months Neville Porter Average Return -17 longer meets the above criteria, the security becomes ineligible for -100% Base Currency USD Specture Gaming -100% Invicta Group inclusion in the Index and is removed.

Last Month Top/Bottom 10 Performers in ESL GGI ESL Global Gaming Index (GGI) 1600 102% Global Approach Last Price 1135 99% Youbet.com High 10/30/07 1556 73% Diamond I Inc 1500 Low 03/21/08 1097 Last 12 Months -14.09% 67% Global Tech 63% LaserLock 52% Redbet Holding 1400 51% Empire Resorts 50% North American Gaming 1300 43% Angelciti 44% CY Foundation -31% Two Way Ltd 1200 -31% Pokertek Inc -31% Myriad Entertainment 1100 -32% DQE Designed Qua -33% Players Network -36% Inspired Gaming 1000

-37% Global Online Index Mirada PLC -38% Period 1 Month Solstice Resorts Average Return 2.38 900 -60% Base Currency USD Odyssey Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May -63% Sona Mobile Holdings 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008

performance was largely linked to speculative investment after it Top Ten Constituents of ESL GGI by Market Cap

announced a change of business activity to non-gaming services. The Name Ticker Market Cap Price Change Price Change company announced to the Australian Securities Exchange in late (USD) Last 12 Months Last 30 Days

March that it planned to change business with a 100% buyout of the LAS VEGAS SANDS CORP LV S 23108.61 -16.67% -21.56% Australian property management company Teys Proprietary Ltd. MGM MIRAGE MGM 13999.06 -27.05% -22.37% Shares in Global Approach were suspended from trading on the ASX OPAP SA OPAP 12141.19 -13.19% +20.00% on 22nd May because of the announcement. Sona Mobile Holdings, a provider of secure software systems TENCENT HOLDINGS LTD 700 12172.40 84.73% +23.80% for server-based gaming and entertainment, fell back 66.3% for the INT’L GAME TECHNOLOGY IGT 10966.77 -8.08% -24.15% month. Sona is the software provider behind the development of WYNN RESORTS LTD WYNN 10722.37 -6.53% -10.94% Shuffle Master Inc’s popular Vegas Star Wireless™ platform. Sona had GENTING BHD GENT 7526.98 -24.71% +2.41%

good news in the first quarter after the New York State authorities CROWN LTD CWN 6942.69 -22.63% -1.21%

gave a 25-year extension on a horse racing licence issued to one RESORTS WORLD BHD RNB 6375.59 1.80% +7.59% of Sona’s business partners. The state’s decision means Sona can MELCO PBL -ADR MPEL 5423.03 -29.28% +2.67% continue to develop a new mobile wagering application under the three-year, exclusive deal it signed in October 2007. Sona Mobile Inc Chief Executive Officer Shawn Kreloff will be speaking at the G2E Asia 2008 seminar Beyond Baccarat: What Other Games Work in Asian Casinos? on 4th June. AGTech Holdings, the Hong Kong-listed provider of lottery services mentioned in our China Lottery story, performed solidly in May, adding 17.26% to its value and reaching number eight on the AGI list. It followed reports in mid-May that AGTech will pay HK$777.7 million to buy Shining China, a private firm that has consulting contracts with local branches of the state-run China Sports Lottery.

40 INSIDE ASIAN GAMING | June 2008 Feature Alfastreet

Global Launch for Alfastreet Video Baccarat

lfastreet, a leading maker of multi- Exciting products player electronic devices for the Other products on show include an Acasino and gaming industries, is updated Sic-Bo game for multiple players, using G2E Asia for the global launch of its the Alfastreet Multi-wheel game and popular new video baccarat game. classic the R8 multi-player roulette. “This game is our first video based The privately owned European company game that will allow casino operators says it is exhibiting at G2E Asia to show the to extend the offer of multi-player company’s commitment to the Asia Pacific games in their casinos,” says Matjaz market. Petek, Alfastreet’s marketing and sales manager. Market share At the time of going to press, pictures “Our goal is to increase the market share of the new baccarat game weren’t of Alfastreet with the help of our partner and available, so here Inside Asian Gaming is distributor RGB,” explains Mr Petek. showing a couple of the company’s other “We are also strengthening our ties with popular products. RGB and planning some important new projects,” he adds. Compatibility Mr Petek was able to share some Exhibitor insights on the new offering: “The new “This year we have decided to take our Video Series of games will be compatible own exhibitor stand during the G2E Asia and operators in mind. with existing Alfastreet gaming terminals show, because we wanted to present the “They are world renowned for their player so operators will be able to use existing Alfastreet brand to Asian customers in a friendly interfaces and extreme profitability,” terminals with new games. Multi-player different way and we wanted to show our says Mr Petek. games are gaining popularity all around commitment to the Macau market and to the world and in particular in Asia, which the region in general,” says Mr Petek. Transaction management is always ahead with the adoption of new Alfastreet says its multi-player The company says its terminals can be games and features,” adds Mr Petek. products are designed with both players supplied with a wide range of equipment including bill acceptors, coin acceptors, ticket printers, various player tracking and cashless systems. They also support Slot Accounting System (SAS) protocol. All Alfastreet equipment holds Gaming Laboratories International (GLI) certification. The company Alfastreet is a private limited company based in Slovenia. It entered the world’s gaming and amusement market in 1997 with its first multi-player roulette machine. After years of rapid growth in European sales, Alfastreet has expanded and is now selling multi-player gaming equipment all over the world and considers itself one of the pioneers and trendsetters in the field of multi-player electronic games.

June 2008 | INSIDE ASIAN GAMING 41 EZ Baccarat Casino marketing consultant Steve Karoul checks out a new form of Baccarat that speeds up game play by doing away with the messy commission

ust as once mighty sailing ships, steamboats and horse carriages innovative operators have therefore concentrated on developing were rendered obsolete by innovation, so too can casino games and incorporating high percentage “proposition” bets into the game. Jsuch as Baccarat. Even if Baccarat is not replaced by a completely The unintended consequence of these offerings is that they cause new table game, it can at least be superseded by a modified form of the game to slow down even more by offering more options to the game, just as film cameras gave way to digital ones. just a few players. The great majority of players are too educated True casino innovation is rare these days, so when something to actually bet expensive “prop” bets in Baccarat. innovative does come along it is especially exciting. We also know How many players would bet boxcars on a that our industry is known as a copy cat industry, with most casinos regular basis? Consequently, the big money for copying new or innovative ideas in lieu of developing them. There is the casino lays with the low odds bets—Pass / nothing wrong with that if the innovative idea is a productive one. Don’t Pass, Banker / Player—period. Casino gaming has constantly evolved and has experienced its Breaking Baccarat down into the different fair share of innovation. Just look at the development and success components of the game under actual of slot machine gaming. Slots now outperform table games in operating conditions, one will find that the revenue terms in most markets around the world except Asia. commission process takes up to 60% of the That could possibly change too as innovation continues with the total process time in Baccarat. That’s right, development of machines and games designed to attract Asian 60% of the time, since the dealer is involved players. For now, though, table games and Baccarat in particular in calculating, taking, mistaking, fighting, still dominate in Asia. apologizing and defending the unwieldy Baccarat is the only one of the traditional big four table games commission. By the way, looking at the other (Roulette, Craps, Blackjack and Baccarat) that does not have a built in side of the table, the customer is taking the mechanism to produce the House Advantage. It is unique in relying opposite position and also going through upon an external devise, i.e. the collection of commission. Baccarat, the same process. This is not a formula for especially in Asia, is the only traditional game that has forfeited the happiness for either casino management rhythm (hands per hour) of the game to the players or customers. or customers. The thought of a customer holding a pair of dice while thinking So, how does one resolve such a what to bet next (or what to have for dinner) sends shivers down the bugaboo or dilemma in casinos around spines of seasoned casino managers that have this phrase forever the world? One can resolve it via casino imprinted in their minds: “MOVE THE DICE!” Time is money and innovation. A relatively new version the number of hands per hour represents money to most casino of Baccarat known as EZ Baccarat is operators. Yet this is exactly what happens in Baccarat pits today. just such an innovative new product Consequently, Baccarat usually suffers from a very weak overall that plays without the commission hold. In some casinos, the Baccarat HPH (hands per hour) is down to dilemma. This is not a new game 35 HPH or even lower. Baccarat (Mini- Bac) was a that but rather a new operating system used to clock over 100 HPH. As a result of today’s “squeeze” games for Baccarat. It is the Microsoft where the players slowly squeeze open the cards, the speed of the Windows of the world of Baccarat. game has decreased dramatically, and as a result, the turnover has It is that innovative. This is one of also decreased. the best solutions to the problem In an effort to compensate for the low Baccarat hold percentage, that Baccarat has faced for the past

42 INSIDE ASIAN GAMING | June 2008 100 years or before Baccarat was bankrolled by the customers themselves resulting in casinos being forced to take the 5% commission from the pot. This new version called EZ Baccarat now puts the game on par with other table games that do not stop the winner every time to ask him or her to fork over part of the winnings to the casino. The last time a traditional table game was superseded by an innovation that proved to be unstoppable was French Roulette (the game with tuxedos, 3 dealers, one or two supervisors, the same color chips, etc.) by a brash newcomer called American Roulette. Every one of the arguments being brandied about in the defense of Baccarat versus EZ Baccarat were heard before in the defense of French Roulette, e.g. “the players love it; it’s tradition and will never change to a new style of Roulette; possibly only the little players will play it but the VIP player will never change from French Roulette, etc.” You remember French Roulette—or do you? Along the same lines, for long suffering table game managers who fall asleep waiting for the next hand of Baccarat to be played, there is help available today via EZ Baccarat. EZ Baccarat solves the dilemma of how to collect commission without affecting the traditional game, which is favored by Asian players in particular. With a EZ Baccarat

single rule, borrowed from Craps where the 12 is barred on the “don’t developers of come / don’t pass” bet, it manages to avoid collecting commission EZ Baccarat also with effectiveness, practicality and pure elegant simplicity. point out some Here is the trick: when the Bank wins with a 7 made of three of the benefits to cards, it is a “push” on the bank. That’s it. As long as those three the customers and why they must-have conditions are met, then you have what is known as believe that many players will want to a “Dragon Seven” (more on this later). This little piece of DNA or convert to the EZ Baccarat game. The equivalent casino innovation changes everything that needs to be changed, commission percentage in EZ Baccarat is 4.94% versus the traditional namely, no more collecting of 5% commission on winning Bank 5%, which even though small is still advantageous to the customer. bets. Everything that is related to the commission collection Correspondingly, the overall house odds go from 1.058 % to 1.018% process magically disappears; from figuring out the amounts to which is also a reduction—albeit very small—in favor of the customer. collecting it, from disagreements to doubts and calls to Surveillance, In addition, the player will now enjoy a hassle free, commission free and from customers complaining to the Table Inspector or Pit game along with a chance to cash in on the new Dragon Seven bet boss fighting with the customer. All of this disappears and the which pays 40 to 1. qualitative indicators of the game become superb in the eyes Casino innovation for table games is fairly rare. RFID Chips are of the player. The dealers are less stressed, the supervisors now another innovative new product. There may be others on the horizon have time to take care of the customer’s needs without risking the so stay vigilant and be prepared to capitalize on innovative new integrity of the game and the customers, yes, the customers, are products for both your casino and your players. EZ Baccarat is off to a also happy and stress free so they hopefully will also do what we great start and is beginning to appear in casinos in Las Vegas, Macau want them to do—stay and play longer at the table. and many Native American casinos. If anyone would like additional Qualitative advantages for customers are oftentimes quickly information, please feel free to contact the author. dismissed by frustrated casino managers or supervisors. However, if each customer stays at the table for just an additional 30 minutes of Steve Karoul is a leading casino marketing consultant and a member play because they are having a good time, the results will show in the of the Gerson Lehrman Group Council consulting on casinos. Steve can revenue increase or hold percentage of the game. Remember, time be reached by phone: (1-860) 536-1828 or email: [email protected]. is money and EZ Baccarat can result in more HPH and seat time. The You can also visit Steve’s website: www. euroasiacasino.com

44 INSIDE ASIAN GAMING | June 2008 What is EZ Baccarat? EZ Baccarat solves the principle problem of Baccarat, which is how to do away with the messy commission issue without changing the nature of the game. The solution took over five years of research to develop and uses advanced mathematics. It does not change the drawing rules of the game, yet it can deliver 40% to 60% more revenue per game.

How it works: EZ Baccarat replaces the taking of commission on every winning Bank hand by “barring” (when a winning result on a wager is not paid and not taken, such as the “Don’t Pass” in a Craps game) on a specific winning Bank hand—a three card total of seven. A three card banker hand totaling seven is called a “Dragon Seven.” Customers can make an insurance bet called the Dragon Seven bet that pays 40 to 1 when a three card winning Bank hand totaling seven occurs. The solution is simple, easy and fast. Therefore, EZ Baccarat is characterized by: - no changes in drawing rules - table decals on existing table layouts - game is much easier to deal - player game experience is less stressful - new table layouts are also available - the game is much faster than regular Baccarat - requires no electronics. Can integrate with EZTRAK hand tracking system

Mathematical Methodology: Here is a closer look at the mathematical methodology which allowed us to replace Baccarat commission with a barred hand.

Current Baccarat commission rules Under current Baccarat rules, which include the 5% commission on all Bank wins, the expected outcome for a Bank wager is: E (Bank Wager) = 0.4585974(+0.95) + 0.4462466(-1) + 0.0951560(0)= -0.0105791, or roughly -1.06%. Similar calculations for the Player and Tie wagers yield expectations of -1.24% and -14.36%, respectively.

Proposed replacement of commission If the 5% commission is eliminated and, instead, the Bank is “barred” from winning on a Bank total of X, the expected outcome for the Bank Wager becomes: E (Bank wager if Bank is barred from winning on a total of X) = (0.4585974 - p)(+1) + 0.4462466(-1) + (0.0951560 + p)(0), where X represents the barred Bank total and p the contribution to the overall Bank winning percentage for X (i.e., p = Prob. {Bank total = X and Bank wins}). Barring the winning 3-card totals of 7: 1.018% house edge 4.914%, which is equivalent to the 5% commission. The odds of this happening are 43.4 to 1. The odds stated in connection with the above specific barred situation represent the odds of the bank obtaining the given total and this total exceeding that of the Player. For example, on any given hand, the odds against the Bank obtaining a 3-card total of seven and winning (under current unrevised rules) are 43.4 to 1.

45 Green machines Aristocrat is leading the way in hi-tech but eco-friendly gaming equipment

he gaming industry is known for its cabinet as well as universal game offerings theme), Fa Fa Fa (an Asian theme) and bright lights and glamour. With energy across all markets. Multilink (as it sounds, a multi-game link). Tcosts rising all over the world, though, Aristocrat adds that the Viridian is also There are also new second screen features, and conservation becoming a hot topic, 100% compliant with the European Union’s new four-level hyperlink themes, and equipment suppliers and gaming operators Restriction of Hazardous Substances innovative multi-pack games designed to are finding new ways to get eco-friendly. (RoHS) directive. This means no lead solder heighten players’ enjoyment with new and Aristocrat Leisure Limited, a major or other potentially harmful materials unique features. supplier of slot machines, automated table such as mercury or cadmium are used in games and casino management systems, is a its manufacture, making it easier and safer Poker Pro™ leading player in gaming’s green revolution. to recycle the cabinet at the end of its Aristocrat is also displaying its PokerPro The company is using the setting of G2E working life. game, famous as the first ever poker game Asia 2008 for the global launch of its new available on Macau casino floors. At G2E Viridian™ cabinet and GEN7™ platform. GEN7™ Asia, there will be a number of exciting new The GEN7 platform is driven by an features. A strong emphasis this year will be Viridian™ embedded Intel® processor, allowing more on PokerPro Rewards; an automated and The Viridian cabinet is named after the interaction between player and machine, comprehensive promotions and rewards Latin word viridis, meaning ‘green’. Aristocrat including onscreen player selectable bets system for players. Aristocrat will also be says the new offering features some major and credits. The GEN7 can easily be upgraded explaining how operators benefit from technological advances from the previous for downloadable and server-based gaming. the revenues offered by PokerPro’s pre- Xcite cabinet and MKVI platform, with a shift Powerful and innovative games for the paid voucher card system, and from the towards a more open architecture and a GEN7 platform include Geisha Power Pay marketing information gathered on players modular platform. and Double Happiness, as well as a suite of and transmitted to operators via the game’s The Viridian is designed for maximum MKVI classic games. The processing power hi-tech server. player excitement and operator friendliness of the GEN7 platform allows operators wrapped up in an energy efficient package. to run high-resolution graphics, dynamic Systems It is slimmer than many cabinets currently scorecards (GEN 7 Games) and an enhanced Aristocrat’s top quality gaming on the market, but still stands out from player interface. management systems, including the ground the crowd, says the company. The Viridian Aristocrat’s newest hyperlink themes breaking System 7000 PRIME Enterprise, offers dual LCD displays, but still with eye- on display at G2E Asia include Viridian will also be shown off at its G2E Asia stand. catching art work around the ‘belly’ of the Thunderheart (an exciting motorcycle It’s a technology suite to oversee gaming

46 INSIDE ASIAN GAMING | June 2008 Aristocrat

“SBG is the definitely where the future forefront of gaming in the region, combining direction of the gaming industry is heading, our best games with this new technology,” combining games and network technology says Mr Punter. in a single system,” says David Punter, Marketing Director, Asia Pacific, Aristocrat Partnership with Microsoft Technologies Ltd. A key element in Aristocrat’s ability to “The emergence of SBG in the Asian maximise the potential of its products and region will see gaming operations move systems is its strategic ties with Microsoft, from a fixed ‘game in a cabinet’ to a dynamic the world’s leading producer of computer network allowing a whole library of games software platforms. Aristocrat is certified to be stored on a server and then deployed as a Microsoft Gold Partner, and for the across gaming machines in a single venue or first time at a major gaming exhibition potentially even across a whole jurisdiction in Asia, Microsoft representatives will be or country,” he adds. at Aristocrat’s stand. The guest team will SBG will also allow new styles of games to be highlighting the Microsoft Gaming & be deployed, offer players greater choice in Hospitality strategy, with an emphasis on terms of game themes, game functions and the value of system integration within customer service, and enhance operators’ casinos and the use of business intelligence ability to manage the games, says Aristocrat. to develop product offers and make guests’ Aristocrat SBG combines the strengths visits even more enjoyable. of centralised management of the gaming floor with the flexibility of an open system Aristocrat signage that can be integrated into the existing Aristocrat will also be displaying some management structure of a casino, including classic designs at this year’s G2E Asia, its customer relationship system. including a range of signage products that Aristocrat says it has tailored its SBG offer utilise the latest low-energy technologies, specifically to meet the needs of its different including LED and fibre optic lighting. markets, including casino operators in Asia, According to the company, Aristocrat’s operations, marketing and business thanks to the support and input of the sign products can be customised so that intelligence needs of operators. Aristocrat company’s global research and development finish, lamination and artwork suit the says the system offers new levels of departments. individual venue. Aristocrat believes the excellence in the management of customer “The Aristocrat SBG system represents combination of striking looks with eco- relationships and market intelligence. The the future direction of gaming services and friendly and money-saving technology is a suite has a particular focus on identifying will ensure that Aristocrat will remain at the winning combination. player needs and then helping operators to make sense of the data in order to build improvements in the business. As well as dealing with core functions such as metering and reporting, the System 7000 PRIME Enterprise product line offers back of house, gaming and frontline applications. The company says System 7000 PRIME Enterprise represents an innovative approach to casino and gaming management, from Ticket In-Ticket Out (TITO) and Cash Redemption Terminals (CRT) through to the most powerful suite of gaming-related customer relationship management (CRM) tools and business intelligence (BI) in the market place today. Server based gaming Aristocrat Server Based Gaming (SBG) will also be displayed in the region for the first time at G2E Asia 2008.

June 2008 | INSIDE ASIAN GAMING 47 Feature

All Systems Go Gaming machine intelligence is taking off

system must have an aim. Without over two years has described it as like the aim, there is no system.” So ‘flying a space shuttle with a compass’. The “A said William Edwards Deming, implications of that statement are that you the American management consultant need the right navigation tools to bring and academic who helped create Japan’s this kind of technology to the customer,” economic miracle after World War Two. explains Mr Rowe. What, then, is the aim of gaming Bruce Rowe, Senior Vice President Strategy & management systems? They must add Bally’s offer Business Development for Bally Technologies value for consumers by improving their Bally’s management offer covers entertainment experience and add value for four broad areas: Bally Slot Management sure it’s actually adding value and not taking operators by boosting revenue-generating Systems® (SMS); Bally Casino Management away from the win per unit of those games,” opportunities and return on investment, Systems® (CMS); Bally Power Bonusing™ explains Mr Rowe. says Bruce Rowe, Senior Vice President products; and the Bally Business Intelligence “We’ve got many solutions but the ones Strategy & Business Development for Bally Solutions. What they all share is delivery via we are bringing out this year include testing Technologies. digital technology that can be customised command and control right now for dynamic “There are tangible benefits from system to an individual operator’s requirements, revenue management. gaming as we start to build the network of backed by research and support from Bally. “We’re doing IP downloading today, the future,” says Mr Rowe. “If we’re considering, for example, adding which saves you extraordinary amounts of “We have been very disciplined about to the functionality of our gaming machines labour by not having to visit each machine the way we’re rolling these things out. A through technology, we very carefully to load up content,” adds Mr Rowe. good friend of mine who has been involved measure the value proposition. We do a lot “In addition, we’re working on in testing server based applications for of focus groups with customers to make management of multimedia content to the

48 INSIDE ASIAN GAMING | June 2008 Bally Systems

allowed by open networks. shown would also need to be carefully researched to establish whether it had the New era potential to add value. “I’ve been in the gaming industry for “It might be advertising for an operator’s almost three decades now and had a role commercial partner,” says Mr Rowe, “or it in opening a number of casinos around might be a video clip of a show at your the world, but I’ve never been involved at a property.” time when there’s been this kind of exciting The ‘slot TV’ example neatly sums up capability on the horizon,” says Mr Rowe. the opportunities and the challenges of “In the past, the pattern was to implement the digital age as applied to the gaming slight improvements over years and years. industry. Use of IP technology and media Now we’re talking about new functionality servers allows machine/human interactions that hasn’t existed in gaming before.” not previously imagined, but it also offers If operators are increasingly working opportunities to turn consumers off or to on the same platform, what does that do take operators down blind alleys. for differentiation and competition in the marketplace? It actually has a positive effect, Trial and error says Mr Rowe, because the differentiation “These new transactions and comes from how operators configure experiences—we’re not exactly sure what the system and what levels and types of those mean. Many of our customers have big functionality they choose. ideas and we’re going to build those,” says Bally’s digital technology costumised to “In any given jurisdiction you will find a Mr Rowe. individual operator’s requirements lot of gaming companies using Bally systems, “Some of those ideas will work better but everybody uses them differently and than others, but the idea is that this Bally iVIEW™ so that you can do dynamic competes with them differently. I want networked environment will provide data marketing and communications with your to emphasise the fact we are building a for us to experiment with on those things.” customer. lot of custom applications for our system The good news from the casino operators’ “As far as game content download customers,” he says. viewpoint is that science can also help them is concerned, we’ve already got that reach their decisions. demonstrated, but we’re just not sure about Win versus loyalty the value yet, so we’re going to be working With slot management, for example, Model systems with operators and regulators to see if there he suggests there may be circumstances The Kano Model, developed by the is a value proposition for that.” where operators would be willing to accept Japanese management scientist Professor Bally says it understands that every a reduction in win per unit if the increase in Noriako Kano in the 1980s, sets out to operator has different needs. Some want functionality strengthened the fundamentals distinguish between ‘core’ functionality to build a new management system from of their brand. (which he refers to as ‘threshold’ or ‘basic’ scratch in a new property, while others want “We’re not sure, for example, whether it attributes);‘linear’ attributes (where increased to enhance or build on existing systems. makes sense to watch TV while you’re playing functionality or improved execution results Bally says it has products that can be built a game. It may actually decrease your win in improved customer satisfaction) and either on an Internet protocol (IP) platform per unit, but it might also increase loyalty ‘attractive’ attributes, which can potentially using IBM media servers or can be adapted to your facility,” explains Mr Rowe. “We don’t excite and delight customers and take the to a property’s existing network needs. The know those things yet, but the technology is product to a new level. aim is always to achieve as open and as certainly capable of doing it.” flexible a network as possible, and to provide Multimedia functions via the Bally solutions that are scalable. iVIEW™ display—an interactive screen about three quarters the size of a seatback display Open networks in an in-flight entertainment system—will be “We have scalable solutions regardless available from the second quarter of 2008. of what kind of a casino a company is The iVIEW display can be fitted to all slot operating,” says Mr Rowe. machines produced by the major suppliers. “For years, casino systems have been Bally says this makes it more flexible than purpose-built networks, which are very other companies’ technology that will only different from open networks. The lessons work with certain manufacturers’ machines you learn from dynamic and open networks and then only those fitted with dual LCD are very different from the ones you learn screens. when you have a purpose-built system.” One important lesson, says Mr Rowe, Content matters is the pace of change and innovation In the case of ‘slot TV’, the type of content Kano Model

June 2008 | INSIDE ASIAN GAMING 49 markets with significant volumes of play, you actually have situations where people aren’t able to play the game they want to because cash cans are literally too full or because the printers have run out of paper. In those cases the industry has migrated the problems we used to have in handling coins to a different part of the game.” Bally iVIEW™

Some forms of operator-to-machine communication, such as cash can alerts, are automated and require no involvement from casino patrons. Others are about increasing player comfort, choice and product awareness. With Bally CMS, the channel for this communication is Bally iVIEW. “Bally iVIEW is essentially a distribution channel,” says Mr Rowe. “It allows us to move content to and from a digital gaming device.” Marketing as content In this digital world, ‘content’ includes not just server-based games, but also marketing messages. The problem with the latter category brain activity when using new products. “This is where we’re able to differentiate is that attractive attributes can be so One of the advantages of Bally SMS, the marketing experiences at the game. revolutionary that consumers haven’t even says the company, is that functionality can Things that we used to do via a mailbox or conceived of the need for them. When be added or adjusted without the need for in another part of the casino—whether it was the last time you used the ‘player cam’ expensive re-tooling. be promotions or customised offers based function on your digital television or set on the value of the customer—can be done top box while watching a sports broadcast? Communication via tier or type of customer at the game,” Yet when Sky Sports introduced this “As we start to think about networked explains Mr Rowe. feature to the United Kingdom TV market floor capability, the definition we use in Bally in 1999 as part of a package of interactive is that what we’re moving to is the ability to Losers become winners functionality, the broadcaster won a Royal communicate dynamically, on demand and “Second ways to win is something that Television Society Award for innovation. As bi-directionally, with gaming devices. In the operators are really starting to compete Mr Rowe suggests, some gaming machine past we’ve only been able to ‘listen’ to those on. The idea of using your system across all innovations will make perfect sense in the gaming devices,” says Mr Rowe. your games is to create the same experience planning stage, but may not work so well on “The question is: how does it add value?” on every game regardless of who the the casino floor. he adds. manufacturer is. You can differentiate by “Many of the things we are trying to do creating loyalty to your brand as opposed to Brainpower involve differentiating the operator’s brand the game they’re playing. Games are going Outside the gaming industry, businesses by service. An example is getting the right to come and go over time, but your business planning expensive product launches with employees to the right customers at the is going to be there and your system is going high fixed production costs go to extreme right time with the right skills. As the global to be there. lengths to guarantee consumer acceptance. industry increasingly moves to ticket-in/ “We want to be able to create second Some research companies rely not only on ticket-out with slots, the ability to know ways to win that create loyalty to an verbal reporting, which has inherent bias when to empty the cash cans and when operator’s property. And in the event that and margins of error, but on measuring users’ to fill the printers is critical. Today, in some players are potentially losing on their

50 INSIDE ASIAN GAMING | June 2008 Bally Systems

The Bally Technologies Offer

Bally Slot Management validator. Casino management has the ability iSeries® platform, or a data warehousing system, Systems® (SMS®) to restrict coupons by patron, club levels, date Bally CMS provides player-tracking, bonusing Bally SMS® solutions allow operators to and time, meaning top slot customers will stay and promotions and immediate in-house access handle slot monitoring, slot accounting, slot and play. to player’s club reward points. operations, bonusing, sweepstakes, promotions, Bally Power Bank™ allows players to deposit cashless transfer, ticketing, jackpots, promotional money at the casino cage. The funds are then Bally Business Intelligence coupons, redemptions, and soft count. associated with their unique player account Solution (BIS) This can be done via the graphical user number which is magnetically imprinted on The Bally Business Intelligence Solution is interface of the Microsoft® Windows® platform, their player card. Using a secure personal an advanced application that allows operators the IBM iSeries® platform, or the UNIX platform. identification number (PIN), players can then to analyse and visualise data for gaming floor The key aim is to provide a robust solution that access their money by inserting their card into performance; player and game interaction; is scalable to the size of individual properties the slot machine. Players can even upload their player behaviour and trends and player loyalty and the scale of the operator’s business. winnings directly to their Bally Power Bank and value. account and keep on playing. Bally Visual Analysis allows operators quick Bally Power products Bally Power Sweepstakes™ brings powerful access to how changes in the floor environment Bally Power Bonusing™ gives access to marketing to your casino, says Bally. Players can are likely to influence their business. The Data what Bally says is the industry’s most complete earn power sweepstakes incentives based on the Analysis Dashboard provides management with and proven package of bonusing, gaming and amount of coins played at the slot machine, slot indicators and tabular data that show the status promotions. Operators can pick from a range floor or entire casino. This adds what Bally says of their operation, and can be customised to suit of predefined bonus events, sweepstakes and is a ‘silver bullet to the bonusing arsenal’. Used each operator’s analytical needs. promotional programs. No matter which Bally in conjunction with the Bally iVIEW™ display, it CMS platform you are using, Bally Technologies allows operators to realise the full marketing Bally Table Management says Bally Power Bonusing offers flexibility, potential of sweepstakes programmes and Systems™ (TMS™) integration and powerful capabilities not growing jackpot amounts. Bally TMS™ is a suite of technologies that available from other solutions. Bally Power Winners™ creates casino-wide the company says changes the way table games Bally Power Rewards™ gives players the or area-specific player excitement and increased are managed and boosts the level of excitement ability to achieve additional awards based gaming revenue. At a random time during the available to patrons. Bally TMS allows operators on play levels established by the casino. Bally progressive growth the award is triggered and to design and create their own solution Power Rewards promotions are flexible to work current progressive value is given to one or more depending on the size of properties and the across multiple departments including slots, winners based on criteria set by the operator. scale of operations. tables, keno, and all other departments where The system allows operators to run concurrent TableView™ allows operators to replace the casino may offer patrons rewards. When multi-level progressive promotions, adding a their existing manual rating process with Bally Power Rewards are used on the slot floor, greater degree of interest and marketability. In electronic automation. Bally says this creates an rewards can be downloaded directly from the addition to the progressive jackpot levels, the almost paperless environment in the casino pit slot machine. Credits can be used to promote Bally Power Winners features allow specialty and eliminates the need to enter and update increased play for chosen time periods, locations, awards, such as points or promotional dollars, to ratings into a casinos management system. or individual players. be awarded to all or selected players currently Information and transactions recorded at Bally Power Promotions™ gives the casino eligible within the casino. each table can be integrated into Bally CMS®, the ability to extend electronic incentive cash and provide casino personnel with secure and offers to its players automatically. With Bally Bally Casino Management instant access to table ratings and financial Power Promotions, slot club members can use Systems™ (CMS™) accounting data. their slot club cards to convert their valuable Bally® CMS™ provides casino accounting, accumulated points and promotional dollars financial audits, credit lines / markers, into playable credits without the hassle of reconciliation, regulatory reporting, and going to the slot club booth. Not only does that compliance; management of player ratings keep club members playing longer, it means for slots, tables and other games; less labour to manage slot club operations, marketing functionality including says Bally. patron loyalty programs, multi- Bally Power Coupon™ eliminates the property support, single player problem of slot players cashing in casino free- cards, player extracts, direct mail, play coupons they’ve received in the mail and group and promotion tracking, then going to play elsewhere. Bally Power and hotel integration. Coupon’s playable value must be played on site Whether operators prefer and can’t be redeemed for cash. A customer using a Microsoft® Windows® simply inserts the coupon directly into the bill PC-based environment, the IBM

June 2008 | INSIDE ASIAN GAMING 51 Bally Systems

base game, they need to feel like they’re limited only by a regulator’s tolerance for “You can do this with any number of people. still having a great experience by winning innovation. If you have retail partners on site, they may something else on their trip. In terms of the customer service offer, also want to advertise on it. “Bally Live Rewards™ is another kind of Bally iVIEW delivered via media server “Whether or not these things make second chance to win. These products look has the potential to offer not just gaming sense to an operator is something they have much more like a game as opposed to a entertainment but also online banking, to figure out. marketing program. We’re going to continue ‘what’s on’ listings and point of sale to develop these and get them displayed functionality including issuing of tickets Changing times on the iVIEW display or as we move towards for casino shows and even the ordering of “We’re starting to think about new display manager, on the main game or the drinks. definitions that apply to all different parts second string, as long as there’s a touch “Slot machines in many cases don’t have of gaming,” says Mr Rowe. Digital gaming screen involved.” slots any more,” says Mr Rowe. devices are any gaming device that uses a digital infrastructure to both deliver and Flexibility Point of sale manage content, communications and In the digital environment ‘content’ “In our demo system in Las Vegas we security for the gaming device. We don’t becomes a fluid concept. Games can morph have iVIEW connected to a point-of-sale know exactly what these are going to look into marketing exercises and marketing system so you can order a drink. If five drink like in the future but we’re pretty exercises can become entertainment. This orders come up, the system will dispatch certain they won’t always look has been going on in the ‘real’ world for the drinks waiter in the order the operator like traditional gaming devices.” years. Think about paper beer mats in bars decides based on the operator’s rules for with quiz-style questions printed on one business. So the most valued customer side and the answers on the reverse. might get their drink first, based on the “Where we want to end up as we move to priorities set up under the system. The networked gaming is that we have strategic operator might also negotiate deals with delivery of both data and information to the drinks manufacturers in order to get particular employees as well as particular some marketing money back because the guests, so we can differentiate by type of operator is now advertising their brands.” customer, by day of week and time of day— iVIEW can also turn a gaming machine anything we want, even in terms of the way into a miniaturised box office. we communicate through mailbox and “If you have a show in your theatre marketing,” says Mr Rowe. you might want to offer your most valued Peripheral software downloading and customers two free tickets. For a brand game content download via server will be new player you might not offer them a free available from the second quarter of 2008, ticket, but if you have a few hundred seats says the company. left over after 5 p.m. on the day of the show, Another feature of digital control, the those seats are going to go empty whether ability to interrogate individual gaming you put anyone in them or not. It’s your machines, allows for more effective floor choice—you as an operator paid for them. management when it comes to regulatory You may want to link that customer into compliance, says Mr Rowe. the value of your property by giving “The Advanced Code Analyzer allows them a free ticket because you know it’s us to go into the slot master file and look their first time there.” at approved microchips and chips that are soon going to be disapproved. If there are Customised offer any on the revoked list, the operator can By programming a player take them off the floor before the property database to record a customer’s is put in jeopardy.” likes and dislikes, operators can Download Configuration Manager not only advertise to them, but is a scheduling system for being able to can customise the advertising by download and change games by time of day focusing on products or services and day of week, adds Mr Rowe. that appeal to their known tastes. “Whether we turn games on or off or iVIEW can also be used as a public whether we change the configuration of a announcement system. game is critical.” “For example, if you have a convention group you may Multiple functions automatically have a display that With these increasing levels of comes up and reminds them they interactivity, operators’ horizons may be have a special event,” says Mr Rowe.

52 INSIDE ASIAN GAMING | June 2008 Transact

Hot Ticket TransAct’s best-selling thermal printer for slots

ransAct Technologies Incorporated is widely regarded as the world’s leading company for financial transaction printers. This Textensive experience has helped US-based and listed TransAct expand their gaming industry presence through the development of the acclaimed Epic 950®—a thermal printer for slots. Normally, the Epic 950 is tucked away out of sight inside slot machines, efficiently getting on with the task of transforming the slot industry into a Ticket In Ticket Out (TITO) business rather than a cash per play one. But, at G2E Asia, the Epic 950 will be on very public display at TransAct Technologies’ stand #525 where they are co-located with partner JCM Global. It’s a reminder to slot suppliers, gaming operators and the general public that this is a high quality piece of technology. In recognition of its qualities, the Epic 950 was recently named as the default printer for the world’s largest slot manufacturer, IGT. TransAct believes that key selling points for the Epic 950 include its innovative technology, reliability and ease of deployment. The printer is also suitable for use in the casino cage, increasing its flexibility. We also offer an extension that transforms the 600-ticket tray to “It’s all about making sure customers maximize uptime on an 800-ticket tray. It’s all about maximizing uptime by reducing the machines,” says Andrew Hanley, TransAct’s Sales Manager Asia frequency of paper fills,” he adds. Pacific, Global Gaming & Lottery Division. Another Epic advantage is that it is “hot swappable”. Slot “Our highly reliable Epic 950 ensures casino properties are machines do not need to be switched off in order to have a new maximizing revenues and guarantees that the player experience printer fitted, saving valuable player time. “The printer has no leads is flawless.” attached. You can simply open the slot machine, pull the printer TransAct offers innovative and flexible features that meet the out, and replace it with another printer within about 10 seconds.” needs of a diverse group of customers. For example, paper tray explains Mr Hanley. Because the Epic 950 offers two-colour printing, capacities are available to suit every market, from low intensity play it can produce tickets sophisticated enough to carry marketing to the most intensive use. messages and allows tickets to double as sales literature for casino “We offer 200-, 400- and 600-ticket trays,” says Mr Hanley. operators. In addition, its multi-language capability allows for “The 600-ticket tray is obviously suited to marketing in different languages. markets with high intensity play. It’s all “IGT’s decision to choose the Epic 950 as default printer for their about ensuring the printers don’t slot products is something we are extremely proud of,” says Mr have to be loaded too often. Hanley. “Their commitment shows faith in our company and in our product. A lot of people at TransAct have worked hard to make that happen.” “I now see my job as making sure that as many people as possible in the Asian gaming industry know about our brand and our product. We want people to understand we’re not flying in from the US or Australia. We’re local. We’re on the ground offering service and support on

June 2008 | INSIDE ASIAN GAMING 53 Transact

a daily basis,” points out Mr Hanley. “It’s also important for customers to know we have a base in Macau and that I’m merely a short flight away from all the major gaming markets in Asia. With our partner JCM Global (Japan Cash Machine), we have two full-time engineers on staff in Macau specifically trained in the Epic 950 and available to offer technical support to customers.” Although the company has a dominant market share in local Asian markets such as Australia, Mr Hanley says there’s no room for complacency. “It’s all about understanding what casinos want, what management teams want, what players want and then working with OEMs to get our printer integrated into their machines to meet those requirements.” Ultra High Quality Matsui unveils its new RFID chip and security products at G2E Asia

Japanese gaming equipment supplier Matsui will launch its new are stacked quite high. But UHF doesn’t have this problem and radio frequency identification (RFID) chip and security system at G2E Matsui can even provide security gates that work alongside Asia 2008. this technology. We believe that the impact of Matsui-BIZ900 “We are proud to introduce our new RFID solution, Matsui-BIZ900, will be enormous. It is going to change the security of casinos at G2E Asia,” says Shigeki Machida, Managing Director of Matsui’s for the better and give the industry a whole new dimension,” Macau subsidiary. adds Mr Machida. “Casino operators’ demand for even tighter security solutions for casino chips is increasing day by day. We have been supplying Table trappings Matsui chips to casinos all over the world and the quality of both The company will also use G2E Asia 2008 to show off best our products and services are very well appreciated. We are very selling gaming table equipment such as its wool/synthetic playing excited that we can now let our clients know about our latest security surfaces and new products including card cutters and also electronic product, which will surely enhance security at their tables, the cage table signs made by the award winning Canadian firm Carmanah and even back of house.” Technologies Corporation. Card cutters are particularly popular in Macau casinos because Ultra the answer of the pounding given to playing cards by excited Chinese players According to Mr Machida, most RFID gaming chip suppliers have during games of baccarat. until now been using either low frequency (LF) or high frequency (HF) “A card cutter is used on baccarat tables to cut off the corner of magnetic field systems, but Matsui says its technology is different. used playing cards during the game. We have already sold nearly “Our RFID is using a 900MHz frequency system. It is the first system 1,000 units of this product to casinos in Macau, and the latest version to use ultra high frequency (UHF) RFID gaming chips and make them is going to be introduced at the show,” says Mr Machida. available in the whole marketplace,” explains Mr Machida “This is yet another exciting step by Matsui and we’re looking “The problem with LF/HF is the accuracy of chip counting forward to meeting all our customers at the show,” he adds. because they have difficulty in recognising the chips when they Matsui Asia is located at Stand 935 during G2E Asia 2008.

INSIDE ASIAN GAMING | June 2008 Ainsworth

Hot Options Ainsworth Game Technology continues its commitment to provide customers an ongoing supply of quality choice and innovative products for every type of gaming venue

Ainsworth Game Technology (AGT) is launching The player has the choice of playing several new brands at G2E Asia 2008: Fireworks™, either 20, 15, 12, 10 or 5 free games House of Fortune™, Play 50Lines™ and Play 40Lines™. with a respective multiplier of x2, The additions to the successful GamePlus™ product x3, x4, x5 or x10 for all wins with a wild “Phoenix” range offer slot managers an array of new options to substituting. In each of the 5 choices a special “Dragon” symbol is mix and match games into a variety of exciting formats, including link introduced and is stacked across all reels during the free games. mystery progressives and standalone mystery progressives. The stacked “Dragon” symbols combine with multiplying wild AGT is also unveiling a range of electrifying new game themes, “Phoenix” symbols creating great anticipation and a high incidence all of which will benefit from AGT’s unique 26” LCD superior high of coinciding wins to excite players. resolution graphics presentation and feature rich, headlining rapid hitting free game features, player choice feature options, frequent Fireworks™ is a new release 3 level mystery link progressive, retriggering free games and exciting stacked substitute symbols. allowing configurable prize levels, offering an array of all new Play 50Line and Play 40Line games, with each offering a 2 level mystery House of Fortune™ is Ainsworth’s all new 3-level mystery link stand alone progressive option. Ainsworth’s all new Play 50Line & Play progressive, allowing configurable prize levels, complimented by a 40Line range begins with games Purple Moon™, Dragon Lines™, Secret library of AGT 20, 25, 30, 40 and 50Line Asian themed games and each Garden™ and Wild Wins™, with the action packed Barrel of Monkeys™ including a 2-level mystery standalone progressive option. Central to to follow. Ainsworth offers a unique Play 50Line & Play 40Line pay the progressive link package is Ainsworth’s all new House of Fortune™ line structure implemented with a simple 3 symbol x 5 reel array to game, which features highly realistic Asian themed graphics and a create a greater concentration of coinciding wins, as opposed to the choice free game feature, including 5 choices for players to select 4 symbol x 5 reel array offered by other manufacturers. All Play 50Line from. The base game includes the wild “Phoenix” symbol which and Play 40Line include high frequency free game features and are substitutes for all symbols except scattered combined with stacking substituting symbols to create great “Gong” which triggers player anticipation and big prizes. t h e feature. Fireworks™ and House of Fortune™, fully optioned, provide up to 5 big levels of progressive, complimented with an exciting array of new games, graphics packages and signage options. Danny Gladstone is “very excited by the release of the Fireworks™ and House of Fortune™ products and is confident they will both provide excellent performance results and enhance any gaming floor”.

June 2008 | INSIDE ASIAN GAMING Atronic

Size Matters Bigger is often better in an increasingly globalised gaming equipment market

ermany’s Atronic Group, a supplier of slot games and gaming Gmanagement systems, has been purchased by US-based GTECH Corporation. The move is viewed as a timely strategic alliance as gaming equipment suppliers move from being regional players to truly global ones. Gerhard Burda, Senior Vice President GTECH Gaming Solutions & CEO Atronic, explains the thinking behind the move.

IAG: Why did GTECH decide to acquire Atronic? Mr Burda: Over the past 15 years, Atronic has successfully positioned itself as a leading global provider of casino games and services. Today, Atronic games entertain and excite players in 91 countries worldwide. With the backing of its former parent company, the Gauselmann Group, Atronic was able to reach out to the world’s fastest-growing gaming markets, providing an impressive portfolio of exciting games, platforms and cabinet styles. The ever-increasing race for more game titles, advanced technologies and the shift from a platform-centric to a content-centric business environment, required further growth beyond the support of the Gauselmann Group, especially since Atronic´s main competitors have been publicly-traded companies with access to the international capital markets. A review of potential strategic partners began in 2003, and soon GTECH Corporation was identified as the perfect fit. product and services offerings. American jurisdictions, including the GTECH is a leading gaming technology important market of Nevada, and those and services company, providing Why was the deal done now? approval processes concluded in May 2008. innovative technology, creative content, A purchase agreement between and superior service delivery. Together Gauselmann Group and GTECH Corporation What positive impact will the with its wholly owned subsidiary, Spielo, was signed in November 2004, but we deal have on the delivery of GTECH perfectly complements Atronic’s needed approval from the various North Atronic’s goods and services? 56 INSIDE ASIAN GAMING | June 2008 Atronic

One of the major benefits of Atronic´s integration into GTECH´s Gaming Solutions division is the wide array of technology available between GTECH, Spielo and Atronic. The access to this extensive pool of technology will enable Atronic to further advance in the development of our products and solutions as well as to further drive innovation in our industry. As we are streamlining our platform strategy between Atronic and Spielo, we are developing a modular system that allows us to design solutions that exactly fit the various markets. Atronic will continue to develop ground-breaking and stimulating products and solutions now drawing from an even larger toolbox of innovative game and system components created by Spielo and other companies of the GTECH family. We furthermore will be able to leverage GTECH’s global infrastructure and information networks.

What are the benefits of the deal for Lottomatica and GTECH? Atronic is a global player in the gaming industry and has developed award- winning products. With the acquisition of Atronic, GTECH will become one of the top five suppliers to the worldwide machine gaming market. The addition of Atronic to GTECH’s Gaming Solutions division, which includes Spielo, a leader in the government- sponsored gaming market, creates an organisation of considerable scale that will have the content, products, and services to successfully compete in commercial gaming and government-sponsored market sectors. From Lottomatica’s perspective, the There are also very interesting and profitable have significantly stepped up our research decision to acquire all of Atronic has been niches yet to be explored which would not activities to better understand Asian culture a clear indication of their commitment to necessarily justify specific development but and Asian player needs. support and invest in GTECH’s strategic- could be supported by the vast portfolio of growth plan. GTECH solutions. Please explain what you hope to achieve at G2E Asia 2008. For strategic reasons, is it Please sum up what Atronic’s G2E Asia 2008 will see Atronic unveil going to become more goals are in the Asian market a wide range of new products targeted important for companies over the coming 12 months. specifically at the Asian market. For the first to achieve a certain size The emerging Asian market is a key time in Macau, Atronic will be exhibiting at in order to maximise their factor in our global business strategy. Our our own booth, unlike previous years where competitiveness in the world goal is to further increase the presence we shared a booth with Asian distributor market? of Atronic and our products within Asia RGB. Atronic´s presentation at the show will As the gaming industry thrives on by focusing on the specific needs and underline our strong commitment to the technical innovation, the support of a large requirements of this market. We have Asian gaming market and our determination business operation becomes a must for a developed solutions and tailored services to be successful in this market by supporting company to be able to compete with the to suit the particular needs of our Asian our customers to offer the right product mix main players in the global marketplace. customers and players. Furthermore, we to their players.

June 2008 | INSIDE ASIAN GAMING 57 TheFeature Chips Are Up

Gaming Partners International (GPI), the world’s leading supplier of casino chips, will be showcasing its innovative range of products at G2E Asia, with RFID solutions in focus

PI supplies all the casino operators in Macau and has a 90% trusted casino chip supplier. As Mr Leparoux share of the booming market. At G2E Asia 2008, the company explains: “With or without RFID, a casino chip needs Gwill be showcasing an unrivalled range of chips, including to be sophisticated enough to deter counterfeiters and address each the Bud Jones®, Paulson® and B&G® brands. GPI will also showcase casino’s operational requirements. In that respect, we will be showing innovative and exclusive security features to fight counterfeiting and exclusive security features such as high security holograms, see- a new collection of its famous state-of-the-art plaques, and will hold through inserts, UV inks and pigments and laser pigments, as well a demonstration of its leading RFID applications in both 125 KHz and as a large range of available chips patterns and designs that only a 13.56 MHz frequencies. specialised, reputable manufacturer such as GPI can provide” According to Christophe Leparoux, Manager International Sales GPI is at the forefront of gaming chip innovation and promises & Marketing for GPI, the company will focus on highlighting its RFID to roll out new technologies to secure the chip bank. “We will be products at “our biggest-ever booth at this year’s show.” Mr Leparoux showing for the first time a new and very innovative technology says the company has been successfully deploying its RFID products aimed at protecting the casino’s asset, the chips, with a very unique, throughout Asia, and at G2E Asia, plans to hold demonstrations of its cost-effective device necessitating no addition or alteration to the 125 KHz technology readers and software—or CIDs™—with various chips,” says Mr Leparoux. applications of chip inventory and tracking. Also on display will be GPI’s chips have proven extremely successful in Asia and the ECS™ detection system and the company’s unique RFIDPoker™ particularly Macau over the years. Mr Leparoux attributes this to “our table. He adds: “Following our recent agreement with Progressive ability to understand and address our Asian partners’ specific needs Gaming, we will also display 13.56MHz PJM technology enabled as well as to our ‘do first, talk after’ approach.” He adds: “In that respect readers allowing interfacing with PGIC’s gaming software and table we are looking forward to participating this year again at what should management systems such as CIS™.” be a hugely successful G2E Asia gaming show in this world class new In addition to its RFID solutions, GPI will showcase other security venue of the Cotai Strip Exhibition Centre at The Venetian Macao. This features that have earned the company its status as the world’s most promises to be a major event in the industry 2008 calendar.”

Flying Colors

Aruze’s stunning 3-D graphics offer new heights of excitement to slot players

Aruze’s G-Series gaming machines offer dual transmissive LCD monitors that display high-resolution 3-D video animation effects during physical reel spins, drawing slot players into a uniquely high tech entertainment experience. Among the company’s latest game releases is the eye-catching Phoenix Seven™, a beautifully styled 3-reel, 1-line hybrid slot game, that features a blazing phoenix that soars through the background and appears to literally pop out onto the screen on the game reels. At G2E Asia 2008, Aruze will be exhibiting its latest G-WAVE and G-ENEX cabinets, as well as new games including Phoenix Seven and Magnificent 7™. The company has updated its older popular games and offered Chinese translations. Also, most of the games on display at Aruze’s stand feature the RESCUE PAY to increase its share of the lucrative Macau gaming market, which function, which offers players it believes will become the largest market in the world. Towards insurance in the form of a meeting its growth aspirations, the company plans to release several payout if they are unable to land new games in the second half of this year. a jackpot following an extended The symbolic phoenix is not only the theme of Aruze’s new game, period of play. RESCUE PAY is but is also featured prominently on its logo. “We hope to have casino an original system devised by operators understand who we are and where we are coming from Aruze. once they see the symbol of the phoenix featured on our machines,” The company is seeking the company told Inside Asian Gaming. 58 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 59 Briefs

“In the span of a few short months, Crown Macau has become the busiest casino in the world in terms of gaming volume,” Lawrence Regional Briefs Ho said in the statement. “The dramatic improvement in the core rolling chip business at Crown Macau in the first quarter has been maintained into the second quarter.’” Macau Casino Operator Dialogue If the property can continue to operate at the impressive levels of On May 21, Macau’s six gaming concessionaires and sub- the first quarter, then Melco is set to surpass earnings estimates this concessionaires held an unprecedented meeting to discuss gaming year. However, two factors make that difficult to predict. market regulations in a special meeting initiated by the Macau Firstly, Melco PBL benefited from a better-than-expected VIP government. baccarat win percentage in the first quarter. The win percentage of High level representatives of the six gaming operators, including 3.1% was higher than the 2.4% reported in the previous quarter and local gaming magnate Stanley Ho and Las Vegas Sands Corp’s Asian above Melco’s expected long-term average of 2.7%. So, although Region President Steven Weaver, attended the meeting with top the company reported better than expected earnings in Q1 2008, government officials. adjusting for a normalized hold, it may simply have met (or slightly The meeting was originally aimed to discuss future development missed) expectations. of the industry following the local government’s announcement in Secondly, following the new Crown Macau junket deal, other March that it would impose a moratorium on issuing new casino operators are rushing to raise their junket commissions too. This licenses and approving new casino projects. will erode Crown Macau’s competitive advantage and could see The main issues discussed at the meeting, however, were its market share dip again. The true test of whether the new junket escalating junket commissions and the increase in gaming table deal has permanently reversed the previously ailing Crown Macau’s capacity, according to Secretary for Economy and Finance Francis fortunes will therefore come in the second half of this year. Tam, who also attended the meeting. Mr Tam said that most of the representatives agreed at the meeting that the commission should be capped at a lower maximum rate than the current market level, while opinions differed when it came to the number of gaming tables each operator should be allowed to have. On the topic of rising junket commissions, erstwhile monopoly operator Stanley Ho said: “The only way to control this crazy cutthroat competition is to control two things, the number of [gaming] tables for each licensee and the commission rate.” Casinos in Macau generally pay commissions on chip sales to the junket operators, who bring high-rollers to play in private VIP rooms within the casinos. Last year, the VIP market contributed more than 67% of total casino revenue, and the share crept up to almost 70% in Crown Macau the first quarter of this year. Will Melco Profit Rise Last? Expanding Genting Eyes Macau Macau’s VIP gaming market was shaken up by Melco PBL In a recent interview with Forbes Asia, 30-year old Justin Leong, Entertainment Ltd’s Crown Macau casino hotel, which increased the grandson of the founder of Malaysia’s Genting Group, says he its maximum junket commission to 1.35%—reportedly one of the would still like to find an investment opportunity for the group highest rates in the local market. Following the deal, which began in in Macau. December 2007, Melco PBL’s share of the city’s total gaming revenue As Genting Group’s head of strategic investments and corporate rose from about 5% in November last year to 18% by March 2008. affairs, Mr Leong is charged with identifying new areas of growth Melco PBL’s higher junket commission helped it swing into a first- for the conglomerate, which includes casino, energy and plantation quarter profit. The company reported earnings of US$43.2 million in businesses Q1 2008, compared with a loss of US$27.2 million in the same quarter Despite the recent announcement by the Macau government a year earlier—though notably, Crown Macau only opened in May that it has placed a moratorium on awarding more casino licenses last year. and approving new projects, Mr Leong is sill hopeful of finding a Melco PBL’s sales after promotional allowances for the first quarter project for his company in the lucrative market. soared to US$482.9 millian—more than double the US$179.8 million Genting is Malaysia’s monopoly casino operator, and runs the revenue posted in the fourth quarter of last year (when Crown was sprawling Genting Highlands casino resort outside Kuala Lumpur. fully operational but prior to the new junket deal). Melco PBL credited The resort boasts the world’s largest hotel, the 6,118-room First the improved operating performance to greater VIP gaming volume World. The company is also building one of Singapore’s two at Crown Macau following the new junket deal. planned integrated resorts. Genting’s Resorts World at Sentosa, Melco PBL is a joint venture between James Packer’s Publishing & located on the resort island of Sentosa, will include a casino and Broadcasting Ltd and Hong Kong-listed Melco, headed by Lawrence Universal Studios theme park, and is expected to open in 2010 at Ho, son of Macau casino tycoon Stanley Ho. a cost of S$6 billion (US$4.4 billion).

60 INSIDE ASIAN GAMING | June 2008 Briefs

Genting has also become the largest casino operator in the UK, Gary Woollard, General Manager of Grand Waldo Casino where it owns 46 venues after buying out Stanley Leisure for US$1.3 commented: “The arrival of poker as a gaming option in Macau’s billion at the end of 2006. casinos will encourage more people to come and enjoy all Macau has to offer. We are delighted to have a company with the reputation Japanese Visitors Complain of Macau’s Poor Service of PokerStars to manage what is sure to be a very successful and According to a report in the Macau Daily Times, Japanese travel popular poker room.” agents are holding off sending tourists to Macau because of the The full schedule for the Asia Pacific Poker Tour’s second “unsatisfactory” experience an increasing number are having in season will be announced shortly, but will kick-off at Grand the city. Waldo Casino, with the September 1-6 APPT Macau Main Event, According to Tetsuya Yamada, general manager of JTB (Macau) a HK$25,000 buy-in No-Limit Hold’em with a Travel Ltd, a travel agency specializing in bringing Japanese tourists guarantee of HK$10 million. to Macau, many Japanese visitors to the city complained of poor service from tour guides, shop assistants, waiters, hotel staff and MGM to Step Up in Macau bus drivers. Las Vegas-based MGM Mirage New air routes have resulted in the number of Japanese announced that its Macau venue visitors to Macau increasing 36% year-on-year last year to almost is under-performing and that it 300,000. The signing of an agreement earlier this year to increase needs to increase its marketing air rights between Macau and Japan will provide further impetus efforts in Mainland China. for visitor growth, while greater marketing efforts by new Macau MGM Mirage holds a 50% casino resorts, such as the Venetian Macao, have raised awareness stake in the MGM Grand Macau, of Macau among Japanese. and made the statement in its According to Kuroishi Junichi, managing director of JALPAK, the quarterly earnings report, in which Hong Kong based travel agent attached to Japan Airlines: “Japanese it reported a 30% drop in total tourists used to travel to Hong Kong for three nights and maybe profits due to a fall in revenues as spend a day in Macau. These days they are only staying in Hong Kong well as the temporary closure of its for one day and spending the rest of the time in Macau.” The share of Monte Carlo resort. the company’s business that comes from Macau trips has jumped to MGM stated that its Macau 30% from 10% two years ago. property generated net revenues of around US$298 million for the Unfortunately, many Japanese visitors are returning home with three-month period alongside property earnings before interest, tax, complaints about Macau. The Venetian Macao is the focus of much depreciation and amortization of US$43 million. criticism with guests finding its size impractical and service levels “We are generally pleased with the resort’s performance thus poor, the Macau Daily Times quoted Mr Kuroishi as saying. far but clearly know that we have several areas to improve on going forward,” said MGM Mirage Chairman and CEO Terry Lanni. Poker Stars Opens Room in Macau “We expect margins will improve at this joint venture as it grows PokerStars.com, the world’s largest online poker operation, in this dynamic marketplace and remain focused on improving announced that it is managing a land poker room in Macau. results in all operating segments.” Isle of Man-based Poker Stars has teamed up with the Grand MGM stated that the venue was not meeting expectations Waldo Hotel and Casino on the Cotai Strip to operate its poker room, because it holds approximately nine percent of the gaming which has a capacity to hold 250 players and will offer cash games as capacity in Macau but reported a market share of approximately well as a full tournament calendar. eight percent. The new poker room was launched last month with a No-Limit Lanni stated that MGM would be increasing its marketing efforts Texas Hold’em Charity Poker Tournament to raise money for the in China in order to draw more tourists and lift the performance of its victims of the recent earthquake in Western China. mass-market gaming tables and slot machines. “You are able to advertise non-gaming aspects in a judicious matter in the People’s Republic of China and that’s something we had failed to do and it is something we are now addressing,” said Lanni. Like other operators, MGM also said it regarded the government’s moratorium on new casino development as positive and it does not expect the new policy will hold back its expansion plans for the Macau peninsula or Cotai Strip. “We do not believe that it [the moratorium] will have an impact on our expansion of MGM Grand Macau, which is under way or on our plans for a resort on Cotai,” said Mr Lanni. “We have submitted a development plan for that site (Cotai) and each of those initiatives seem to fall within the statements that chief executive Edmund Ho made and we’ll define that as we have upcoming meetings with him but we feel pretty Grand Waldo comfortable with that.”

June 2008 | INSIDE ASIAN GAMING 53 Briefs

US$5 billion mega resort in Atlantic City. MGM hopes to start construction this year on a development that International Briefs would feature three hotel towers totalling 3,000 rooms, the largest gaming floor in town and 500,000 square feet of retail, dining and entertainment space. Chairman Terry Lanni said the company is refining the designs Credit Crunch to Weed Out Weak Plans with its New York architect, Kohn Pedersen Fox Associates, and is in The credit crunch that is delaying some casino plans is nearing the advance stage of selecting the general contractor to oversee an end, even though it still may kill some poorly conceived projects, construction. according to a panel of Wall Street experts. Mr Lanni said the company is awaiting approval of a key Speaking at the East Coast Gaming Congress, officials with Wall construction permit from the New Jersey Department of Street firms said credit is still available, although at a higher price. Environmental Protection. Dubbed MGM Grand Atlantic City, the Joel Simkins, senior vice president of Macquarie Securities, complex would open in 2012 on a 72-acre site next to Borgata Hotel was asked to compare the duration of the credit crisis to a Casino & Spa, which MGM already co-owns with Boyd Gaming Corp. baseball game. MGM Mirage also recently announced that the cost of building “I’d say we’re in the bottom of the sixth,” he said. “I think we’re its massive CityCenter development in Las Vegas has increased to nearing the end of the credit crisis. You have investors starting to US$9.2 billion, from the previous budget of US$8.1-8.4 billion. come back and look at the sector, and you have vulture investors coming in to look at distressed properties.” In Atlantic City, proposed projects by Pinnacle Entertainment and Revel Entertainment have been affected by credit markets; Pinnacle has said it may abandon its Atlantic City plans if credit markets don’t improve within a year or two. Lawrence Klatzkin, managing director of Jefferies & Company, said he thinks both Pinnacle and Revel will ultimately build their Atlantic City projects. Revel CEO Kevin DeSanctis said his project is progressing on schedule for a 2010 opening. “An obvious question is does it still make sense to invest in this market,” he said. “Of course.” John Maxwell, managing director of Merrill Lynch, said credit markets are open now, although at a more expensive price for borrowers. He said the tighter credit has made gambling companies look more closely at their plans. “Maybe a new project in Atlantic City is not at the forefront of Rendering of MGM Grand Atlantic City that,” he said. Within the next five years, all three panelists predicted even MGM Mirage spokesman Alan Feldman said the budget increase more competition in the East Coast gambling market, including reflected continued rising construction costs development projects the possibility of casinos or slots parlors in Massachusetts, are experiencing nationwide. The new price also takes into account Maryland and Ohio. an increase in the value of the assets. Last year, Dubai World, the investment arm of the Persian Gulf state of Dubai, purchased a 50% interest in CityCenter. Other enhancements to the project’s budget include $1.7 billion for the cost of land, $2 million the company has spent on preopening expenses and $1 million for intangible assets. When the expected residential sales proceeds of $2.7 billion are factored into the equation, CityCenter has a net project budget of $8.5 billion. Last month, construction workers topped off Vdara, CityCenter’s 57-story non-gaming hotel and condominium project. At the topping-off ceremony, MGM Mirage officially revealed the name of CityCenter’s 61-story, 4,004-room centerpiece resort: Aria. Designed by noted architectural firm Pelli Clarke Pelli, Aria’s two curved glass hotel towers and its 150,000-square-foot casino Rendering of entrance to Revel’s Casino in Atlantic City space are expected to open in December 2009. Aria is expected to be topped off in August. CityCenter will include three other high-rise projects: the Mandarin MGM Moves Ahead with AC Project Oriental, Harmon Hotel and the residential-only Veer Towers, all of MGM Mirage continues to work with its architects and is preparing which are in various stages of construction. In all, the company has to hire a construction contractor as it moves forward with plans for a sold a little more than half of the expected 2,750 residential units.

62 INSIDE ASIAN GAMING | June 2008 Briefs

Aria will house a Cirque du Soleil theater that will host a production Rank Sales Drop Eases show based on the music of Elvis Presley. The hotel will also display portions of CityCenter’s planned $40 million public arts program. The development will also include Crystals, a 500,000-square-foot retail, dining and entertainment complex. Wynn’s Alternative to Nevada Casino Tax Hike Eager to avoid the imposition of higher casino tax rates, Steve Wynn and other Nevada casino operators have devised an alternate plan to raise taxes on hotel rooms. The Nevada State Education Association, the union that represents teachers, has been circulating a petition that calls for an increase in the tax rate on gross casino gambling revenue from its current 6.75% to 9.75%, generating an additional US$250 million annually. The casino industry has fought the issue strenuously, both Rank Group Plc, owner of the UK’s second-largest bingo-hall chain in court and politically. The alternative proposal to raise the room tax and Grosvenor Casinos, said a sales decline eased after managers would generate tens of millions, but probably not approach the sum took steps to counter a decline in customer numbers caused by a that would be raised by an increase in the casino tax rate. ban on indoor smoking. While there are strong signs the education initiative raising the According to a Bloomberg report, the company’s revenue fell casino tax rate would pass if voted on by a public ballot, there are 8% at outlets open at least a year in 2008’s first 17 weeks. That was several large obstacles in the way of the proposal becoming law less than the 10% slide in the first eight weeks. Cost-savings have because it would require a constitutional amendment. Even if the strengthened the company’s “profit performance,” the company said bill were to earn a ballot spot, it would need to pass the general in a statement. election this fall, and then again in 2010 to become permanent law. Rank opened sheltered outdoor gaming areas and installed In the meantime, casino lawyers continue to file appeals to get the electronic gear that permits remote play at its bingo halls to counter petition dismissed. a fall in sales after England barred indoor smoking in public places in Nevada’s state casino tax is the lowest in the US. Some US states July last year. The company is vulnerable to prohibitions on tobacco have rates as high as 50%, while Macau’s rate is 39% (35% as direct use because about half of bingo players smoke—twice the rate of tax, and 3-4% as mandatory social and welfare contributions). the general populace, according to executives. “We have achieved a degree of success in adjusting to the smoking Gas Prices Could Fuel Online Gaming ban and the new gaming regulations and have taken timely action A report by Gambling911.com highlights how soaring gas prices to protect profits,” Rank said. “Nevertheless we are conscious that the and a looming recession are taking their toll on Las Vegas casino difficult consumer climate is likely to make 2008 a challenging year operators and driving gamblers to online casinos. for the gaming sector.” “Individuals are now cutting back on their travels both by air and Rank, the owner of Mecca bingo halls and Grosvenor Casinos, had by car,” according to the article. to remove some higher-jackpot electronic gaming machines because “Carlos Bueno and his wife, Mayra, serve as perfect examples of changes to gambling laws. The company also owns Spanish bingo of how escalating gas prices are now beginning to hurt the Vegas clubs, Belgian casinos and the Blue Square betting Web site. economy and other gambling dependent regions, proving that Profit doubled to 311.5 million pounds in Rank’s last fiscal year on gambling is not ‘recession proof’ as previously believed.” a gain from selling the Hard Rock restaurant, hotel and casino unit. In an interview with USA Today, the couple said they drove three The disposal capped asset sales that sharpened the company’s focus times last year from their home in Houston to a casino in Lake Charles, on gaming. La., but they won’t be making the two-hour drive this summer. “Gas prices are the main reason,” says the 32-year-old father of James Packer Leaves Scientology Behind three children who works for a utility company and also is cancelling Scientology has lost one of it’s most prominent members—casino the family’s annual vacation to the Dominican Republic. “The mogul James Packer. Mr Packer, who had ranked as Scientology’s economy is harsh right now, and the little money saved for vacation wealthiest member, believes he no longer needs the religion he was will have to be spent on fuel for our vehicle.” introduced to by high profile Scientologist and friend Tom Cruise. Thomas Jensen of Point-Spreads.com, a website devoted to online Some suggest James Packer’s expanding casino empire has betting odds news, speculates that a harsh economy is good for the presented issues difficult to reconcile with Scientologist beliefs. online gaming sector. Scientology’s founder, science fiction author L. Ron Hubbard, “People are looking to make a quick buck so they are joining denounced gambling. online casinos and more specifically, online jackpot websites,” James Parker, who is currently Australia’s second richest man, he stated. is the son of the late billionaire media mogul Kerry Packer. James While casino revenues in Atlantic City and Las Vegas have Packer is the Executive Chairman of Publishing and Broadcasting declined in recent months, affiliate gambling revenues in the Limited (PBL), and after taking over from his father, has focused on Internet casino arena have exploded, according to anecdotal expanding the company’s gambling businesses around the world, reports from online operators. while reducing its media interests.

June 2008 | INSIDE ASIAN GAMING 63 Events Calendar Events Calendar A more comprehensive events listing is available on our website, www.asgam.com.

27 May - 1 June, 2008 8 – 10, September 2008 2008 - Philippines Asian Casinos Executive Summit Dusit Thani Hotel, Makati, Philippines Grand Hyatt, Singapore Contact: Martin Elliott Contact: Pauline Oh Tel: +63 2887 2525 Tel: +65 6322 2762 Email: [email protected] Fax: +65 6226 3264 Website: www.asianpt.com Email: [email protected] Organizer: Asian Poker Tour (APT) Website: www.terrapinn.com/2008/aces_SG Organizer: Terrapinn 3 – 5, June 2008 G2E Asia 9 – 11, September 2008 Venetian Macao, Macau, P.R. China BetMarkets Asia Contact: Yolinda Wong Singapore Tel: + 852 2965 1632 Contact: Rosalind Wade Fax: + 852 2824 0246 Tel: +852 2531 6100 Email: [email protected] Email: [email protected] Website: www.g2easia.com Organizer: Beacon Events Ltd Organizer: Reed Exhibitions 19 – 21, September 2008 8 – 10 July, 2008 World Series of Mahjong Gaming Executive Summit Europe Wynn Macau, Macau, P.R. China InterContinental, Madrid, Spain Email: [email protected] Contact: Julia Wallace Website: www.world-series-mahjong.com Tel: +44 (0) 207 092 1276 Organizer: World Mahjong Limited Fax: +44 (0)207 242 1508 Email: [email protected] Website: www.terrapinn.com/2008/gamingeu/ 23 – 25 September, 2008 Organizer: Terrapinn European i-Gaming Congress & Expo 2008 (EiG) 22 – 24 July, 2008 CCIB Barcelona International Convention Casino Marketing: The 2008 Conference Centre, Spain Paris, Las Vegas Contact: Elisabeth Quesseveur Tel: +1 256-852-4490 Tel: +44 (0)20 7370 8574 Website: www.casinomarketing2008.com Email: [email protected] Organizer: Raving Consulting Company & BNP Media Website: www.eigexpo.com/2008/ Organizer: Clarion Gaming 24 – 26, August 2008 22 - 23, October 2008 Australasian Gaming Expo The Betting Show Convention & Exhibition Centre, Sydney Contact: Ross Ferrar Hall 9, NEC, Birmingham, UK Tel: +61 2 9960 0125 Contact: Jon Hales Email: [email protected] Tel: +44 (0)20 7370 8581 Website: www.austgamingexpo.com/austgamingexpo Email: [email protected] Website: www.bettingshow.co.uk Organizer: Clarion ATE

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

64 INSIDE ASIAN GAMING | June 2008 June 2008 | INSIDE ASIAN GAMING 65 66 INSIDE ASIAN GAMING | June 2008