May 2007 • MOP 30

Sharing is Winning In-Demand Talent The West Side Visitor It Takes a Cheat

The Cure for Macau’s Gaming Dependence Retail Therapy Global Vision. Local Outlook May 2007 In Macau. The Casino-Retail Story

For the past 75 years, the Bally name has stood for the broadest array of superior Page 4 ~ The Casino-Retail Story gaming products, ranging from the latest in video and reel-spinning slot machines Page 8 ~ Slot machines Making4 Their Mark in Macau to cutting-edge casino management and slot accounting systems. With the recent opening of our new office in Macau, we now Page 12 ~ Melco PBL8 Takes a Tumble proudly bring our global vision of excellence and innovation to this rapidly emerging and dynamic Page 14 ~ 12Macau 1Q Trends gaming market.

• We offer the broadest array of gaming technology products of any global supplier Page 16 ~ Sharing14 is Winning

• We are the undisputed world leader in slot management and slot accounting systems with more than 350,000 machines running a Bally system in 660 locations worldwide Page 20 ~ In-Demand16 Talent

• We feature an extensive library of video gaming titles on the robust, reliable and Page 26 ~ The20 West Side Visitor technically advanced ALPHA OS™, including our hot new multi-level progressive games

• We offer an exciting array of innovative high- Page 28 ~ High-Roller26 Accessories: Radiant GAS coin reel-spinning slots sharing the same ALPHA OS as our video slots

• We are the systems provider of choice at the Sands Page 30 ~ Cyber-Eyes28 on Asia Macau and a table systems technology provider to Galaxy Entertainment Group What, Me Worry? For more information about Bally products or our Page 34 ~ 30 vision for Macau, please contact Asia Managing Director Cath Burns at +853-785603 or [email protected] Page 38 ~ The Server-Based34 Revolution

Page 40 ~38 Regional Briefs

দ໊֬ށࡍૌ۾ᆣ۸࿷ᇤႼ۸ދϖ૑ޖሇ Page 42 ~ 40International Briefs

Page 44 ~42 It Takes a Cheat 44

Av: Dr. Mario Soares. 323, 31st Floor (C) Edf. Banco da China, Macau • +853-28-785-603

©2007 Bally Gaming, Inc. All rights reserved. www.BallyTech.com Editorial

Retail Therapy

According to a survey by the American Gaming Association, twice foot across Asia. Morgan Parker, president of mall developer Taub- as many Americans now say the overall “casino experience” — the man Asia, interviewed in The Casino Retail Story on page 4, concedes food, shows, other entertainment and shopping — is more fun than it will take time to build Macau’s image as a shopping paradise, but the actual gambling in the country’s increasingly expansive casino there is clearly potential for Macau to take over from Hong Kong as resorts. Over half the revenue of Las Vegas Strip casino resorts is now the preferred shopping destination for mainland Chinese travelers. derived from non-gaming sources. The amount of retail space in Macau is set to explode from a mere The emphasis on non-gaming attractions has helped to improve the 330,000 square feet on the Macau peninsula and Taipa today, to six American public’s perception of the gambling industry, with 82% of million sq. ft before the end of the decade, according to research by Americans surveyed now saying that casinos are an acceptable form Taubman. The Venetian Macau resort will open in July, and its mall, of entertainment for themselves or anyone else. combined with the adjacent Four Seasons mall, will be bigger than The dawn of the mega-resorts will likewise improve the image of the four major shopping malls of Hong Kong combined. Taubman, Macau’s casinos, transforming the city from seedy day-trip gam- for its part, will develop the retail portion of the mammoth Macao bling getaway to complete leisure and business tourism destina- Studio City project. tion. Still, non-gaming draws are having a hard time taking off in While other non-gaming draws have not met with early success in Macau. Macau, if Vegas is any guide, they will ultimately garner a greater Tentative attempts at introducing fine-dining have met with a luke- share of overall revenue. Although visitors to Macau and Vegas are warm response. The theatre at the popular Sands Macau casino has different in many respects, they do also share some remarkable yet to stage a performance, while the Tryst nightclub at Wynn Macau similarities, as discussed by PricewaterhouseCoopers’ David Green in was recently shut for lack of demand from Chinese gamblers, for The West Side Visitor on page 26. CLSA’s Aaron Fischer explains that whom the baccarat tables hold much greater allure. while “Macau’s current revenue mix is similar to that of Las Vegas in “The night-time venue did not work as we expected,” Grant Bowie, the 1960s, when the emphasis was also on gaming,” there is potential president of Wynn Macau told the Macau Daily Business Blog. “This is for non-gaming revenues in Macau to rise from the current 5-10% of part of a continued experiment, and [Steve] Wynn’s approach is to do the total to at least 25% by 2010. different things to enliven the place and create a new environment.” Also in this issue of Inside Asian Gaming, we feature our pick for one The Tryst will be turned into a private gaming area, just as some of of the most innovative gaming products to appear in Macau, the Sands Macau’s fine-dining establishments were scaled back to make LIVE Baccarat system. As innovative as the technology offering is way for more tables. the developer’s securing of a profit sharing agreement with Macau Of course, the experiment is far from over, and it may be that other casino operators, as detailed in Sharing is Winning on page 16. forms of entertainment can work in Macau, though for now, the ex- The May 1st Labour Day march in Macau once again resulted in cessively high returns derived from putting in more gambling tables violence, suggesting the fruits of the city’s breakneck economic has held back investment in other areas. development are not evenly distributed. Macau is now virtually at Other operators are also reluctant to continue the experiment, given full-employment, but discontent over rising rents and other costs is the initial results. MGM Grand Macau is scheduled to open in Decem- simmering, especially since salary raises have been largely focused ber, but MGM Mirage International President and CEO Bob Moon said on the gaming sector. his company is taking a “wait-and-see” approach to nightclubs. “We Given Macau’s acute labour crunch, recruiting top talent to staff the have not decided what we will initially do in regards to the nightclub city’s increasingly lavish casino resorts has become a difficult task, venues,” Mr Moon said “You could spend a lot of capital to build and HR outsourcing could be the answer, as highlighted in In-De- something just to tear it out. We would prefer to evaluate what is mand Talent on page 20. right for the market.” The only non-gaming draw that has thus far offered a healthy return Kareem Jalal on investment for Macau casino operators is retail. The 12 stores at Wynn Macau’s mall are setting records for highest sales per square We crave your feedback. Please send your comments to [email protected]

Editor and Publisher Kareem Jalal

Inside Asian Gaming is published by Director Must Read Publications Ltd João Costeira Varela Rua de S. Domingos, nr 16-i, Ed. “Hin Lei” 7A - Macau Business Development Manager Tel: (853) 6646 0795 Ricardo Carvalho Operations Manager For subscription enquiries, please email [email protected] Artur Sousa

For advertising enquiries, please email [email protected] Contributors David Green, Karen Tang, Steve Karoul or call Ricardo Carvalho Tel: (853) 6682 8475 Photography www.asgam.com Ike Graphic Designers Ricardo Borges Karen Yiu 3 searching the market, as it recently took a sis would do less business, but the reality is even open a third store in Macau next year, 22% stake in the retail portion of the US$2 they become destination stores. It becomes a but has not confirmed the details. billion Macao Studio City on Cotai. Work has self-fulfilling prophecy that the flagship does This multiple-outlet approach is already begun on the site and Taubman hopes the more business and productivity does not go familiar to Hong Kong shoppers, but a nov- retail development will be completed by down. elty in Macau. mid-2009. Singapore and Hong Kong took decades Mr Parker says: “We haven’t reached the to build themselves into world famous shop- stage yet where we can announce names Critical size ping destinations. Macau plans to become a “When you increase size of a store, it allows of retail partners, but we are working with shoppers’ paradise almost overnight – and all you to stock more merchandise and increase all the world’s luxury names. In the last few without even a whisper of a suggestion of a the probability of a transaction. However, months it’s become a bit clearer as to what sales tax, thanks to the government’s healthy there is a very sensitive point where if you go our positioning is – so it’s news that we’re ac- bank balance resulting from the millions of over a certain size, you can start to see pro- tually premium. We had to go through a lot of US dollars paid in tax annually by the gaming ductivity dilution. These days retailers don’t evaluation of opportunities in Macau looking industry. tend to make that mistake too often. at the spending patterns of people before we The reality of course, is that without all “You can see the retailers understand the arrived at this size and this positioning.” the new casinos, the shops wouldn’t be com- opportunities and are getting excited about In many business sectors, being first to ing at all. Retail therapy is an integral part of them. They are opening multiple stores close market can give a decisive advantage. By the business plan of LVS and other foreign in- together because they feel confident about that measure, Steve Wynn has the drop on vestors to change Macau from a destination the density of spending. his rivals in Macau’s luxury retail sector af- for low-spending day trippers, to a holiday “This is because the volume of people ter persuading Chanel, Christian Dior, Fendi, resort for high-rolling jet-setters and conven- passing through is so high. In Macau there Giorgio Armani, Louis Vuitton, Prada, Tiffany tion delegates just as interested in trawling are projects potentially attracting 20 to 30 & Co., Piaget and Bulgari to set up shop at the malls as in crowding around the baccarat million people per year. The sheer volume of Wynn Esplanade. tables. people, the extended trading hours the ven- Mr Parker from Taubman suggests ues enjoy – 24-7 very often – and the money though the reality of Macau’s retail market is to be made in these environments means the more complicated. Macau’s retail potential retailers want to have more points of distri- Total retail spending in Macau is currently He says: “A lot of those retailers that have bution. a tiny fraction of the amount generated in already committed to go into Macau retail “Another factor is that these casino proj- Hong Kong – 2.9 billion patacas (US$362.5 sites are saying to us ‘Sure we will open a store ects are almost like cities in their own right. million) in the fourth quarter of 2006 com- in DFS that might be 300 sq meters or 200 sq. It makes retailers feel they want to be rep- pared to Hong Kong’s HK$56.2 billion (US$7.2 m. but we would like to open a store in yours The mall at Wynn Macau resented in each one of them and think of billion) in the same quarter says Helen Mak, of maybe 800 sq. m.’ Retailers are looking at each one as its own market. People can go Senior Associate Director at property consul- how they’re going to use each project.” into one of these casino resorts and spend a tants Colliers International, in Hong Kong. whole day there. In Las Vegas, some people Research from Hong Kong shows that Density of outlets don’t come out of them for a week.” people who stay overnight spend more The Casino-Retail Story He explains: “Hong Kong has 11 Louis Vuitton money, even when hotel costs are left out of outlets, which is really quite extraordinary. the equation. That sort of density can only happen in cities Cotai capacity Last year, 51% of Macau’s visitors were If the devil really does wear Prada, then he should soon feel perfectly at home in Macau like Hong Kong, and in casino environments. Half the new retail capacity in Macau will be day-trippers, mostly from China, spending on These are the only two ways you can support provided by Las Vegas Sands Corp (LVS) on average only 522 patacas (US$64.79), accord- such a density [of outlets]. The Cotai Strip™, its US$14 billion city-sized ing to Macau’s SCS. By contrast only 37.3% of Prada and other famous name brands that rate, the number of annual visitors will of economic success. “In Macau we’re seeing retailers commit development on reclaimed land north of Hong Kong’s tourists were same-day visitors, have indicated they are willing to set up two nearly double in three years. to stores, and seeing them open more stores the Macau peninsula. It features The Vene- spending on average HK$1,015 (US$130). or more outlets in Macau to take advantage By comparison, neighbouring Hong Earnings dilution ahead? in more projects. Louis Vuitton for example, tian Macao Resort Hotel, a scaled up version The 62.7% of Hong Kong visitors who stayed of the tourist gold rush expected in the next Kong experienced a steady but more modest Some observers have suggested the extra has already got three commitments just on of the company’s famous Las Vegas resort, at least one night in a hotel spent HK$4,799 few years. rise in tourist numbers, of 8.1% last year. The capacity will dilute earnings per store. Early the Macau peninsula. One is at the Mandarin The Venetian. The complex will have its first (US$ 611) on shopping – 78% of it on cloth- The amount of retail space in Macau is set amount of new retail space coming on to the reports from the 12 luxury brands that set Oriental, as well as the outlet at Wynn. Before phase opening in July. Earlier this year LVS ing and cosmetics, according to figures from to explode from a mere 330,000 square feet Hong Kong market this year and next is only up home in Wynn Esplanade – the arcade of Louis Vuitton even opened in Wynn they said it had signed up 400 retailers for its on- the Hong Kong Tourism Board (HKTB). on the Macau peninsula and Taipa today, to 177,000 sq. ft according to Hong Kong’s Rat- shops at the Wynn Macau casino resort that committed to the Hongkong Land project at site shopping complex, known as Grand Ca- Chinese citizens staying overnight in six million sq. ft before the end of the decade, ing and Valuation Department, though that opened last September – seem to contradict One Central – for a flagship store. nale Shoppes, which will have a million sq. ft Hong Kong were on average from higher so- according to research by the retail developer city is starting from a much more mature this. Citing the Louis Vuitton example, Mr of active retail space on three floors. cio economic groups than day-trippers. Taubman Asia. It represents a rise of 1,718%. market. It has 34.1 million sq. ft of commercial Morgan Parker, President of Taubman Parker says the retailers’ multiple outlet strat- In addition, there will be an 86,000 sq. ft A total of 60% of them were college During that period, 23,000 new hotel rooms space – much of it retail. Asia says: “We take considerable solace from egy is to have flagship stores selling a wide mall from DFS at the Four Seasons Hotel on or university graduates, 37% of them were will also be built. The number of visitors to Taubman Asia estimates the amount of the experience of Wynn. It’s not a large proj- range of products, including shoes, ready to the Cotai Strip™ site, including plans for a in the prime 26-35 age range targeted by Macau grew by 18% last year to 21.9 million retail space per Macau hotel room will rise ect, but it’s 12 great stores – all of them set- wear and large luggage items, plus smaller 3,000 sq. ft Prada store, to complement the marketers for their disposable income and – more than half of the total coming from from 26 sq. ft last year to 184 sq. ft by 2009. ting records across Asia for their performance network stores carrying accessories. brand’s 2,000 sq ft outlet at Wynn Esplanade. fondness for branded goods, and 63% were Mainland China according to the govern- Retail space is one thing, but earnings per sq. and it’s the beginning of the story.” He says: “Those larger flagship stores you Sebastian Suhl, Prada’s chief executive officer travelling with a companion – ideal for driv- ment’s Statistics and Census Service (SCS). At ft of retail space are a more reliable indicator Taubman has a vested interest in re- would think on a per meter or per foot ba- in Asia, indicated recently the brand could ing spending on shopping and restaurant 4 5 trips, according to HKTB. Their average retail oped in Las Vegas. is part owned by LVMH Möet Hennessy Louis to achieve, namely a transformation from a spending compared favourably with western Vuitton. LVMH in turn owns scores of brands, hardcore gambling town to an all-round en- visitors, at HK$4,705 (US$602). including Fendi, Kenzo, Donna Karan, Marc tertainment destination. Although such market comparisons and Other mega projects Jacobs, Guerlain, Givenchy, Parfums Christian the growth of China’s economy suggest the Melco-PBL Entertainment, the joint venture Dior and Tag Heuer as well as Louis Vuitton new look Macau will be a success, major of Melco, run by Dr Ho’s son Lawrence and itself. DFS, originally known as Duty Free Atlantic City parallels Mr Parker says there are clear parallels be- brands aren’t entering the market purely Australia’s Publishing and Broadcasting Ltd Shoppers, was founded in Hong Kong and tween Macau’s development and that of based on guesswork. run by James Packer, will provide the gaming was once part owned by Stanley Ho’s Shun Atlantic City in the United States – another Daisy Sam, head of research in Hong licence for Macao Studio City. Tak Holdings. casino town that previously had a public re- Kong for Synovate, the international market Melco-PBL’s Crown Macau at Taipa, which lations problem. research company, says a number of clients was due to open at time of going to press, He explains: “Atlantic City and Macau are have asked it to compile reports on Macau’s will also have retail space, as will Ponte 16, Getting connected places that have had an unfortunate percep- prospects. the project part owned by Dr Ho’s Sociedade Enclosed, air conditioned shopping is partic- tion problem over the years. Both were consid- She says: “We have done work for clients de Jogos de Macau and due to open later this ularly suited to southern China’s hot and hu- ered to be hardcore gaming towns with visitor on the Macau retail market, but it’s propri- year on the edge of the old port. mid climate. An increasing amount of Hong profiles including large numbers of people etary material, so we can’t share it. Hongkong Land will be a partner with Kong’s retail space is now connected either from lower socio-economic groups. They are “What I can say though is it will take some Shun Tak Holdings, run by Dr Ho’s daughter directly to underground railway stations, now moving towards a more balanced profile time for Macau to build an image as a shop- Pansy, in One Central, a development on Ma- or to climate-controlled walkways perched of the sort we’re seeing in Las Vegas.” ping paradise, given that there are limited fa- cau peninsula, which will have luxury shop- above that city’s notoriously noxious traffic. Taubman built The Pier at Caesar’s – a cilities at the moment. Most visitors from the ping as well as up market apartments. On a recent visit to Macau, Sheldon Adel- 350,000 sq. ft luxury shopping mall as an ex- People’s Republic do not currently see Macau In today’s globalised and highly integrat- son, the chairman and principal shareholder tension to Caesar’s Palace in Atlantic City as a shopping destination.” ed business environment, retail brands are of LVS, claimed one of his friends was so en- – against the advice of some pundits Stanley Ho had a four-decade long mo- nearly all controlled by conglomerates with grossed with a visit to his Venetian property Mr Parker says: “The same nay sayers who nopoly on casino operations in Macau until a wide range of business interests. This helps in Las Vegas, that the friend had no idea what are wondering whether Chinese visitors to 2002. His children understand the direction to create investment synergies between the weather was like outside. Macau will shop or dine or stay in luxury ho- the market is now taking, and have adopted brands and resort developers not seen in There has been some scepticism in the tels – all those same questions were being the gaming, shopping, dining and general previous economic cycles. DFS, the luxury media about whether Macau can manage in asked when we started planning that Atlan- entertainment business model first devel- mall operator planning a presence at Cotai, a few years what it took Las Vegas 20 years tic City project several years ago. “Now we are six months in to operating. It’s been terrifically successful and everyone’s been saying it was about time this was done. Everyone’s a genius now!” He says retail sales in the New Jersey mall are now approaching Las Vegas levels of productivity. Las Vegas will have 324 sq. ft of shop space per hotel room by 2009.

Incentives overplayed Mr Parker thinks a recent media report that LVS was offering major incentives to retailers Morgan Parker to come to Macau, and which LVS declined to comment on, has been overplayed. interested in luxury goods, can they afford it?’ in the minds of visitors that makes those visi- He says: “Rental incentives and contribu- etc – all that stuff that’s really plagued Macau tors the perfect consumer. These projects are tions to store construction are very common over the last 12 months. That’s a redundant all about creating a fantasy and then fulfilling around the world – apart from Hong Kong argument now in our minds.” that fantasy and really providing a disloca- – that is why the article struck a chord with tion from visitors’ own realities. the local community. More recently in Hong “People have got time and they’re in the Kong we have seen incentives being given Macau stands out mindset to shop before they even walk into and we have seen important retailers getting “We are a conservative, prudent company. We the store. Once I started to understand that large contributions to their costs. looked at a few hundred deals around Asia in myself and started to think about the way my “I think it’s important for Cotai overall last couple of years, and selected Macao Stu- wife and I shop when we travel, I understood that The Venetian opening is successful and dio City in particular to be our first project in that it’s really about the human condition. the shopping centre is successful and the re- Asia. We really as a company believe in the Casino resorts are just taking advantage of tailers in there achieve the type of revenues casino-retail story – the synergies between that human condition and that’s why this en- they hope for. We’re very supportive of that gaming and shopping are very clear to us. vironment produces the revenues it does. and hope it all comes together. “The whole thing about casino retailing “We have been successful in Atlantic City, “The debate used to be about, ‘Oh will and why companies like ours are keen to in- in Las Vegas and now we expect to be suc- The Pier at Caesar’s people shop in Macau and will gamblers be vest, is that these resorts create an emotion cessful in Macau.” 6 7 cau opened on Sept. 6, and the novelty factor tables and slots, and are a fairly new innova- slot machines by the end of 2007 – a more combined with a low machine count gave tion globally. than doubling in capacity. The US$2.6 bil- Wynn Macau a high average slot win per unit At first, multi-terminal games made up lion Venetian Macau Resort Hotel alone will per day of US$418 million in the fourth quar- 70% of the machine mix at Mocha and made add 4,300 slots when it opens in July. Mocha, ter of 2006, compared to the Macau aver- up for a similar proportion of the company’s which has six outlets, is also looking to open age of US$127 and Wynn Las Vegas’ US$251. total revenue. Following a “migration we have a further two venues in 2007, though it will Wynn Macau had a mere 366 slot machines witnessed over the past three years,” multi- only make a modest addition to the total in the quarter, so had a total slot win equiva- terminals make up less than 50% of capacity count, with its outlets each containing an av- lent to only around 30% of that at the Vegas and revenue, having been replaced by regu- erage of 150 machines. Mocha’s target is to property, which boasts 1,974 machines. lar slot machines, according to Chan. have 1,400 machines by the end of this year, The Wynn Resorts fourth quarter results “Most of our players started with multi- up from the current 1,000. announcement showed the company has a terminals because they are familiar with these Some predict Macau may have as many higher slot win percentage in Macau than in games,” Chan explained. “But slowly they be- as 50,000 new slot machines by 2010. On Vegas, where the slot market is more compet- came curious about the slot machines next the Cotai Strip alone, Las Vegas Sands Corp itive, prompting higher payout percentages. to the multi-terminals. When they saw more plans to add 16,000 slot machines in the next Wynn Las Vegas had a slot handle of US$1.1 and more people actually winning jackpots, decade as it builds out seven different hotel billion in the fourth quarter – four times they began to see the point of slots.” sites. greater than the Wynn Macau slot handle of Chan believes strongly in the potential of Asked whether he is concerned about US$274.4 million. Wynn Las Vegas had a total slots, given their “variety of interface, theme the arrival of mammoth properties such as slot win only 3.3 times greater than that of and design,” which makes them “more enter- the Venetian Macau, Chan said, “I don’t really Wynn Macau, however, indicating the Macau taining” than table games, which are “always compete with the casinos. Sands and Wynn property held over 20% more of the money played the same way.” focus on visitation of property. They don’t played on its slots. Chan predicted Macau will have 14,000 care if visitors play tables or slots. Mocha’s fo- Wynn Macau increased its slot count to 477 in February this year, and construction is under way on the second phase, which is ex- pected to be unveiled in the third quarter of 2007 with 1,280 slot machines.

Hot Mocha Mocha Slot, a subsidiary of Macau gaming li- censee Melco PBL Entertainment (Macau) Ltd, operates a string of trendy venues focused exclusively on machine gaming, and at the end of 2006, had six outlets with about 1,000 Making Their Mark machines. Mocha Slot is the city’s second best slot performer in terms of average daily Gaming machines are gaining ground on tables in Macau as the market grows and manufacturers win per unit, at US$248 in the fourth quarter. Given its higher slot count, Mocha Slot leads win over players with entertaining slots Wynn Macau in terms of total slot win. Mocha Slot is the brainchild of Lawrence Ho, son of Macau casino tycoon Stanley Ho. Slot machines are finally starting to Previously, investment in slot machines Bally Technologies President and CEO During his father’s 40-year casino monopoly, make their presence felt in Macau. was held back by the high marginal returns Richard Haddrill said in a recent interview the younger Ho claims casinos in Macau only The city had 7,349 slot machines at the from putting in more tables. As win per table that Macau offers extremely promising op- included slot machines in order to “look more end of the first quarter of 2007, representing continues declining, the explosive growth in portunity for gaming systems technology like a casino,” with Stanley Ho happy to gen- an 80% increase from the 4,073 machines in slot capacity could pick up further, observers and game providers. erate huge profits by neglecting the main the same quarter of 2006 – and a whopping say. “It’s hard to not be excited about Macau,” floor and concentrating on the VIP market. nine-fold increase from the 814 machines in Macau’s slot revenue in 2006 reached said Haddrill, whose company recently re- The first Mocha Slot outlet opened in 2003. The table count in the first quarter of US$249.5 million – a 64.4% increase over the ceived a huge order to provide gaming sys- late 2003, and the company was a pioneer in 2007 was 2,970, representing a 79% year-on- US$151.8 million collected in 2005. Still, slots tems products to the Las Vegas Sands prop- gaining mass market acceptance of slots. year increase. continue to contribute only a small propor- erties, including those in Macau. “The amount Mocha Slot General Manger Ted Chan ex- Whereas both tables and slots saw simi- tion of total Macau casino gaming revenue. of development there is just so dramatic, and plained that convincing table-loving Chinese lar capacity growth in 2006, the average win Slots contributed 3.6% of total Macau casino it’s a new enough market that it really creates gamblers to try out slots required a novel ap- per slot per day only declined from US$138 win in 2006, which though paltry compared sort of a ‘green field’ opportunity for suppli- proach. Mocha Slot’s solution was to first in- on average in 2005 to US$135 in 2006 (a 1.8% to their 70% contribution in Las Vegas, is a ers like Bally.” troduce electronic versions of popular table decline), while the win per table fell from vast improvement from before 2003, when Macau’s current top slot performer is the games, such as sic bo, baccarat and roulette. around US$11,600 in 2005 to US$8,500 in they did not even make up for one percent glitzy US$1.2 billion Wynn Macau, billed as These electronic table machines, known as 2006 (a 26.4% reduction). of total revenue. the city’s first destination resort. Wynn Ma- multi-terminal games, offer a hybrid between 8 9 cus is 100% on gaming machines. No tables, though Stanley Ho’s Sociedade de Jogos de no hotel rooms, no retail. We focus on that; Biggest slice of the slot pie Macau controlled almost 40% of Macau’s Las Vegas Sands’ Sands Macau has the third we build our membership loyalty – which installed slot machine base in the fourth highest average daily slot win, at US$181 per takes time. It’s growing. They are playing the quarter of 2006, the machines were largely unit per day in the fourth quarter of 2006. same Aristocrat machines. Why are they play- located in unappealing monopoly-era prop- With 1,233 slot machines, Sands Macau ing here? Because they know this guy, they erties, and trailed the market in terms of av- earned more than US$20 million in slot reve- know this attendant, they know this floor erage daily win. Even Sociedade de Jogos nue in the quarter. Through Sands Macau, Las manager.” has now begun courting the mass market, Vegas Sands had a commanding 27% share Mocha offers conveniently located out- however, in view of what Stanley Ho recent- of Macau’s US$76 million slot revenue in the lets throughout Macau and aims to “accom- ly decried as “cutthroat competition” in the fourth quarter. modate the needs of serious gaming ma- VIP sector. In February, Sociedade de Jogos In May 2004, Sands Macau became the chine players.” unveiled its new flagship casino, the Grand first foreign-operated casino to open in the Chan also argued the huge expansion in Lisboa, featuring five floors of plush casino city following the official ending of Stanley Macau’s slot capacity could benefit the entire space with 240 gaming tables and 484 slot Ho’s casino monopoly at the end of 2002. market by promoting “leisure gambling” in a machines. The company is likely to see its At opening, Sands Macau featured just 277 city long-dominated by hard-core table-gam- average win per slot start to rise as revenue gaming tables and 405 slots. In the wake of ing. Mocha’s parent company, Melco PBL Enter- figures from the Grand Lisboa come in, and continuous expansion, Sands Macau now has tainment, will install 3,000 machines at its flag- later, as the company starts to phase out 230,000 square feet of gaming space con- ship City of Dreams mega-resort, scheduled to some of its cramped and dingy monopoly- taining 740 tables and 1,254 slots. open in 2008 on the burgeoning Cotai Strip, era properties. along which Las Vegas Sands Corp is spear- heading the development of “Asia’s Las Vegas,” Seeing the light By Kareem Jalal. Reprinted with permission anchored by its Venetian Macau property. As the largest casino operator in the city, al- from Slot Manager magazine.

The Wynn Macau casino 10 5 until next quarter, and management refuses development of the Crown Macau and City City of Dreams, our integrated casino and to issue forward guidance – and massively of Dreams projects. entertainment resort in Cotai. All principal sold down Melco PBL stock. There are some In announcing the company’s first quar- sub-structure construction is complete and Melco PBL Takes a Tumble positives, however. a substantial portion of the steel podium su- ter 2007 results, Lawrence Ho, Chief Executive Melco PBL released its first quarter earn- Officer and Co-Chairman of Melco PBL Enter- per-structure has been manufactured off-site Delays in opening the VIP gaming rooms at Melco PBL’s first Macau casino, the six-star Crown Macau, ings on May 15, indicating several positives tainment, said: “During the first quarter of in China. The erection of the podium struc- prompted a major sell-off in the company’s stock. Weary investors could be neglecting the positives, however going forward. The company’s average net 2007, the company remained focused on exe- ture has commenced and it is transforming win per gaming machine at its six Mocha Slot cuting on its development projects and com- the visual status of the site. outlets rose 26% in the quarter from a year pleting construction of Crown Macau, which ago. Mocha Slot offers slot machines and on our own aircraft.” That aspiration will just formally opened on May 12, 2007. We believe Melco PBL Entertainment (Macau) Lim- machines and 216 hotel rooms. The property electronic table games in conveniently-lo- Peninsula Project have to put on hold for a little while. that Crown Macau will raise the standard for During its first quarter results announce- ited held a lavish opening ceremony for its is located on Taipa Island, off the main Macau cated café-like settings around Macau. Deutsche Bank’s Karen Tang added the servicing the VIP and premium mass market ment, Melco PBL also commented on its third six-star hotel and casino property, Crown Ma- peninsula where most casinos are clustered. Melco PBL has also committed to build- delay would not likely be rectified until June, segments in Macau. Crown Macau opened project, to be located on the Macau penin- cau, on May 12. Unfortunately, the VIP rooms “Over the opening weekend, Crown had won ing a second condo tower at its next casino and that “slow ramp-up of VIP volume would with 26 VIP tables, 142 premium mass tables sula. It revealed that conceptual designs by were not ready by the time of opening. As the battle against its disadvantaged location project, City of Dreams, which is planned to hurt market share in early months.” Melco PBL and 479 gaming machines operational. I am the Pei Partnership and Paul Steelman As- Deutsche Bank analyst Karen Tang pointed [on the outskirts of town], as the mass gam- open in late 2008. This new tower will add announced on May 15 that about 26 VIP tables disappointed that we were unable to open sociates have been presented for an iconic out in a note to clients, although Crown ing floors were as busy as Sands and Wynn,” 380 units, bringing the grand total at the were open at Crown Macau over the opening Crown Macau with a full complement of VIP twin tower building with a gross floor area of Macau debuted “with elegant décor and a Ms Tang said. project to 680 condos. Given the roaring Chi- weekend, compared to the 80 VIP tables that tables operational and with our hotel com- more than one million square feet. The pro- packed mass gaming floor,” Crown “prides Whether Crown Macau can maintain a nese stock market and growing wealth in the will eventually fill the casino in four weeks. pleted to the standard required to enable us posed property incorporates a mixed use ca- itself to be a six-star property. So we feel it busy floor after the initial opening buzz has region, sales could be brisk. The company also said that hotel rooms at the to open it to our VIP customers. We are fully sino with approximately 215 gaming tables should be judged on its VIP strength.” faded remains to be seen. Sands creates ex- Melco also said it would be willing to sac- property won’t be fully operating until July. committed to having the casino at maximum and 500 gaming machines designed to cater At the property’s opening, Crown Macau citement with its high ceilings and stadium- rifice planned restaurant space at the Crown Crown Macau is Melco PBL’s first casino VIP capacity within a month from now, and to the day-tripper mass market, a boutique chief executive Greg Hawkins declared: “What style atmosphere, while Wynn Macau’s main property to build out a larger casino floor if property in the city –until now, it has only op- the Crown Towers hotel will be open and ac- hotel and a single tower of premium serviced we want to bring to Macau is the six-star ex- gaming floor exudes luxury. By compari- demand calls for it. Granted, Macau’s other erated a chain of slot parlours. The 36-storey cepting guests within three weeks. apartments. Melco PBL targets completion of perience. We’re aspiring to the premium indi- son, Crown’s casino has low ceilings, a less casinos have sacrificed dining and entertain- tower features 220 gaming tables, 500 slot “We have made significant progress at the peninsula project by mid-2010. vidual players around the world who’ll fly in luxurious (though arguably more tasteful) ment in favour of putting in more tables, but brown colour scheme, and because of the the net result could be greater cash flow at the property’s small land area, stretches over five property. floors. It’s only major casino neighbour is the Greek Mythology, which has arrangements with travel agencies to deposit bus loads of Operating results relatively low-income mainland tourists at Melco PBL reported a net loss of $27.2 mil- its casino – not exactly the kind of customers lion for the first quarter of 2007, compared to Crown Macau is courting. Melco PBL claims, a net loss of $7.5 million for the first quarter however, that its secluded location will be a of 2006. The company’s total revenue for the draw for VIP customers. first quarter of 2007 was US$20.3 million, up Credit Suisse analyst Gabriel Chan said the 274% from US$5.4 million in the first quar- casino’s move to sign up “junket operators” ter of 2006. This is largely the result of the to deliver punters to the venue was positive. acquisition of its gaming sub-concession Melco PBL management also said that Crown from Wynn Resorts in September 2006 (for Macau would not join the junket commission a whopping US$900 million), which resulted war to draw VIP customers, and would only in a change in reporting of gaming revenues pay the prevailing rate of 1.1% of rolling-chip from the company’s Mocha Slot outlets from turnover. There had been some speculation a service fee basis prior to acquisition of the that Crown would raise the commission rate sub-concession, to gaming revenue based on further to draw VIP customers, although at net win after gaming taxes since the acquisi- 1.1%, casinos can barely cover their over- tion of the sub-concession. Average net win heads. Melco PBL believes that Crown’s estab- per gaming machine per day was US$230 lished brand among VIP players will draw the during the first quarter of 2007, up from high-rollers, though it is not clear whether it US$183 during the first quarter of 2006. will have any more allure than the US brands Total group operating costs and expens- already operating in or about to open in Ma- es were US$56.1 million in the first quarter cau, including Las Vegas Sands Corp, Wynn of 2007, up from US$15.3 million for the first Resorts and MGM MIRAGE. quarter of 2006. The increase was largely at- tributable to the commencement of amorti- zation of the company’s costly gaming sub- Positive signs concession, increased amortization of land Crown Macau’s VIP and hotel issues will be re- use rights for projects under development, solved in time, but investors saw few positive and increased pre-opening, selling and mar- signals – casino revenue won’t be recorded keting investment costs associated with the 12 13 Macau 1Q Trends As Deutsche Bank’s Karen Tang reports, 1Q 2007 data shows concerns of a mass market slowdown are overblown

O fficial data confirmed earlier press Macau gaming revenues by segment reports that Macau gaming revenues grew FindFind reliefrelief -- 45% year-on-year in the first quarter of 2007. More importantly, mass market growth re- 80% vived from 10% in the fourth quarter of VIP yoy Mass Market yoy 66% 2006 to 32% in the first quarter of ’07 – the OutsourceOutsource youryour HRHR AdministrationAdministration fastest rate of growth on record. This proves 60% concerns about sluggish growth of this high- 50% margin segment are overblown. 40% 32% Around the world, companies seeking competitive advantage are outsourcing non-strategic 27% Wynn and Galaxy 24% 24% HR processes. 20% 17% 14% improving market share 11% 9% 10% Talent2, Asia Pacifi c’s fi rst end-to-end Human Resources Outsourcing (HRO) solutions According to a trade magazine, Wynn and 3% Galaxy managed to grab a greater share of 0% business, is a proven outsourcing specialist who transforms and manages HR processes and the market in the first quarter of 2007 de- -6% technology so you can focus on what really matters. -9% spite the opening of SJM’s Grand Lisboa in -20% February. The respective market shares by No other company can claim to have the breadth of services offered by Talent2 within the operator were 46% at SJM, 18% at Las Vegas Asia Pacifi c region, including Talent Acquisition Management (RPO), Payroll and HRIS Sands Corp, 21% at Galaxy Entertainment quarter, average daily table win was diluted Group, 15% at Wynn, and 1% at Melco PBL to a blended average of US$8,000 per table Lotus Bridge opening Outsourcing, Competency Assessments and eLearning Management. Entertainment. Given Macau added 80% (VIP tables at US$27,000; mass tables at should relieve bottleneck more tables to a total of 2,970 in the first US$2,900). Mass gaming revenue grew 32% year-on- The value we add: year in the first quarter of 2007, outpacing the 23% year-to-date growth of visitor ar- Talent Acquisition Management (TAM) Payroll & HRIS Technology Solutions rivals in February, suggesting the visitors are > Over 7,500 hires through TAM in Asia Pacifi c > Over 20 years payroll experience spending more in casinos. This might be ex- > 10-30% reduction for time-to-fi ll > Over 2,500 Payroll clients plained by the shift in mix towards Chinese visitors (+37 basis points year-on-year). The > 10-30% reduction for cost-per-hire > 1,000,000 pays per month infrastructure bottleneck could pose a risk to > Positive measurable impact on retention > Servicing 8 countries across Asia Pacifi c growth, though thankfully, the government appears committed to addressing the situa- tion. The expanded immigration checkpoint If you would like to know more about the competitive advantage we offer, please visit our at the Lotus Bridge in Cotai re-opened on website at www.talent2.com or contact: May 1, in time for the Golden Week holiday (May 1-6). The re-opened checkpoint has a capacity for 26 million visitors, compared to Liviano Lacchia Lachlan Sloan the 13 million arrivals that came through the Director, Managed Services Chief Executive Offi cer Peninsula border last year. t +852 3473 3111 t +852 3473 3111 f +852 3473 3100 f +852 3473 3100 VIP segment buoyed e [email protected] e [email protected] by Chinese stock markets VIP revenue remained strong, +50% year- on-year in the first quarter of 2007 as the Shanghai Index reached an all-time high (+19% quarter-on-quarter in 1Q ‘07). Growth in the under-penetrated slots segment re- mained explosive (+72% year-on-year) in Australia > China > Hong Kong > India > Macau Galaxy StarWorld main gaming hall this segment. Malaysia > New Zealand > PNG > Singapore > UK > USA 14 and tech support costs, as well as paying the carat terminals did appear more engaged table,” says Mr Park. Furthermore, each dealer salaries of promotional staff for LIVE Baccarat, than those at fully electronic terminals. on the LIVE Baccarat system currently han- while the casino operator provides the venue dles two tables simultaneously (scaleable up Sharing is Winning and dealers. LT Game receives a 31% share of to three tables, so that three dealers working net win – i.e. after the 40% government tax on Productivity comparison over a 24-hour period on the LIVE Baccarat LT Game is the only gaming technology supplier to secure profit sharing agreements with Macau casinos. gross gaming revenue. Those net wins have A regular baccarat table in Macau sees system can deal up to 3,000 hands). In addi- The company is now set to follow up its innovative LIVE Baccarat system with the world’s first reached an average of HK$1,000 (US$128) per roughly 500 hands (blended average over tion, while a normal baccarat table seats six terminal per day, which, according to Mr Park, the past few years) dealt over a 24-hours pe- to nine players (an average of 7.5), each LIVE baccarat-based progressive jackpot allows LT Game to recoup its capital expendi- riod, with three dealers working eight hour baccarat table is linked to separate sections ture in just a few months. shifts. “Since our games are timed, we can consisting of up 25 terminals (20 in the cur- By providing LIVE Baccarat terminals to play 1,000 hands per day on a LIVE Baccarat rent configuration). All told, a dealer on the Upstart casino gaming systems sup- casinos at no cost, Mr Park argues LT Game plier LT Game is 82% owned by Hong Kong- offers operators a “risk-free opportunity to listed LifeTec Group. which, until recently, was see if these machines work for them.” The engaged primarily in the biopharmaceuticals company has also recently reached agree- business. LifeTec’s stock price has recently ments with Malaysia’s Genting Group and been on a roll thanks to the performance and the Philippine Amusement and Gaming Cor- prospects of its gaming arm – the price has poration (Pagcor) to supply 40 live terminals tripled over the past six months. To reflect its each to the casino at the Genting Highlands new success and focus, Lifetec will rename Resort and a Pagcor property in Manila. itself Paradise Entertainment Ltd. LifeTec has earned the envy of other leading gaming industry suppliers. In its lat- Testing Ground est earnings call, Shuffle Master expressed a Prior to the liberalisation of Macau’s casino desire to replicate LT Game’s profit sharing industry in 2001, table-loving Chinese gam- agreements with two Macau casino licens- blers were averse to playing on gaming ma- ees – erstwhile monopoly operator Stanley chines. In order to lure Chinese gamblers to Ho’s Sociedade de Jogos de Macau (SJM) slot machines, Macau casino operators, led and Hong Kong-based Galaxy Entertainment by Mocha Slot, installed electronic versions Group. LT Game Executive Director Aaron Park of popular table games such as sic bo, bac- says those agreements were struck thanks to carat and roulette. These electronic table ma- the company’s “local connections,” especially chines, known as multi-terminal games, offer those of Chairman and CEO Jay Chun, who a hybrid between tables and slots, and are a “has tremendous experience in Macau and fairly new innovation globally. knows everybody in the field here.” Initially, multi-terminals accounted for Still, despite its connections, LT Game the bulk of Macau gaming machine revenue, would have been restricted to either lease but gradually, players started trying out the or purchase agreements – as are all other traditional slot machines located next to the suppliers – if its proprietary LIVE Baccarat multi-terminals, and following a migration system did not offer a major value proposi- over the past three years, Macau gamblers tion to casinos. The system has the potential now spend more on regular slots than on to shave over 90% off labour costs, accord- multi-terminals. ing to Mr Park. LIVE Baccarat, like Shuffle Master’s Rapid The first LIVE Baccarat terminals were in- series of table games (including Rapid Rou- stalled in May last year at the Greek Mythol- lette and Rapid Sic Bo, available in Macau), ogy Casino, which operates under the license employs electronic terminals in order to of Stanley Ho’s Sociedade de Jogos de Ma- process bets – dramatically increasing the cau (SJM). The largest LIVE Baccarat venue productivity of a dealing table while pre- is at the Mona Lisa Palace at Casino Lisboa venting fraud and errors – but maintains a – the LIVE Baccarat hall occupies the entire live dealer. Live video of the dealt hands are third floor of the venue with 120 terminals ar- streamed to the individual terminals, and ranged in a theatre-style seating configura- also displayed on large LCD screens in front tion. LT Game announced its agreement with of the banks of terminals. Mr Park claims Galaxy in April this year, installing 40 termi- players prefer the hybrid system with a live nals at Waldo Casino that month to bring the dealer to purely electronic terminals: “As op- number of terminals in Macau to 280. posed to looking at a computer generated LT Game is “moving aggressively to have animation, they feel a live dealer is more fair 800 terminals in place by the end of the year,” and believable.” Inside Asian Gaming visited claims Mr Park. The company provides the ter- the LIVE Baccarat locations around Macau minals and bears all installation, maintenance and observed that players at the LIVE Bac- 16 17 LIVE Baccarat system is theoretically capable No. of LIVE Baccarat machines by property of handling up to 20 times more players than one at a traditional baccarat table – hence Operator Property No. of Terminals the impressive labour cost saving. Mr Park stresses the value of reducing la- SJM Mona Lisa Palace Casino 120 bour costs given Macau’s worsening labour crunch and the ban on employing imported Jai Alai Casino 40 workers as dealers. He points out that SJM is in Greek Mythology Casino 40 the process of altering its revenue sharing ar- rangements with its joint venture partners, re- Holiday Inn Diamond Casino 40 ducing its 20% share of gross gaming revenue (GGR) in exchange for the partners assuming Galaxy Waldo Casino 40 labour costs. Pre-liberalisation, dealers were Total 280 paid 5,000-6,000 patacas (US$625-750) per month. Staffing costs then were probably only capacity. “From our perspective, we have 280 of dollars and gain a huge following in Macau. around 7-8% of GGR, with other overheads terminals. There are 20-25 terminals per sec- LT Game is in the process of linking the adding up to maybe 13-14% of GGR, leaving tion, which roughly corresponds to only 10- jackpot on LIVE Baccarat across the SJM ven- SJM with a net of around 6-7% profit. With the 14 of our version of tables.” ues it is located at – the linking is expected to arrival of competition and increased demand The max bet is increasing, however – it be completed imminently, pending resolu- for dealers, SJM’s labour costs alone now prob- previously stood at HK$8,000. As more termi- tion of technical issues by Macau’s monopoly ably account for 15-17% of GGR. “The major nals are put in place, the maximum bet can internet service provider, CTM. component is the labour cost component,” be raised, at which time Mr Park expects net LT Game has also developed a system to says Mr Park, which is why SJM is now asking a win per terminal to increase considerably. implement the Paradise Jackpot on regular mere 5% in “franchise fees” and will cede 15% baccarat tables. Mr Park assumes a side bet of GGR as well as casino management control HK$20 on mass market tables and HK$200 on back to the JV owners on the main hall busi- Progress on progressives LT Game has just launched a progressive VIP tables. “We believe we’ve got a hit product. ness, in return for the owners accepting all jackpot as a side bet on LIVE Baccarat. The Over time we would have a penetration for costs. company’s trademarked Paradise Jackpot the majority of all baccarat tables in SJM and is the world’s first baccarat-based jackpot, Galaxy. We think we can get 800 mass market Low max which pays out when specific card sequenc- tables and 300 VIP tables at SJM and Galaxy The greatly reduced labour costs allow LIVE es are dealt during a LIVE Baccarat game. properties by the end of the year,” he predicts. Baccarat to offer a minimum bet of just HK$20 The “Paradise Jackpot” pays out 100% of the “If for each game 50% of players place the side (US$2.6), compared to the HK$100 minimum pool when the five cards constituting a Royal bet, the pool will grow by about half a million on normal baccarat tables. The maximum bet, Flush are dealt, while fixed payouts are also a day. The potential payout will take about one however, is restricted to HK$10,000 per sec- available for four of a kind, three of a kind month or even longer. I wouldn’t be surprised tion of 20 terminals. In other words, the total and banker or player pairs. LT Game has filed if the jackpot goes up to 50 million. Even if of all bets – banker, player, tie and the side bet patent applications in the US and Macau for 30% of people bet on the progressive each on the progressive jackpot – on each section the rules and system of LIVE Baccarat and game, the numbers are staggering,” he adds. cannot exceed HK$10,000. Thus, if one player Paradise Jackpot. For Mr Park, the Paradise Jackpot is a no- places a HK$9,000 bet, all the other players in Baccarat is hugely popular in Macau, brainer, and offers “a win-win for everyone.” the section combined can only bet HK$1,000. and progressive jackpots – “we call it the ‘life Casinos would gain a side bet offering an This creates a sense of urgency for players to changing jackpot’” says Mr Park – hold great added attraction for players and an alternative place bets before the limit is reached. allure for Chinese gamblers. Last year, Macau revenue stream to the traditional banker, play- Mr Park explains the maximum bet is set casinos generated about US$6 billion in bac- er and tie bets. LT Game, meanwhile, plans to so low because the system is still being test- carat revenue, suggesting that even assuming cover all CAPEX associated with the Paradise ed and in order to reduce volatility of wins a modest-sized side bet, a baccarat-based pro- Jackpot, in exchange for a share of a potential and losses, given the relatively small installed gressive jackpot could accrue to the millions goldmine.

18 15 in order to have the staff in place for “D-Day” going to the Venetian.” Macau-based business,” says Mr Lacchia. –the Crown Macau opening on May 12. The The 3,000-room Venetian Macao resort “We’ve built up skills internally to really focus company first dedicated a team to research will form the anchor-property of the Cotai on delivering to this market. We did a lot of re- the various job functions at the property Strip, where Las Vegas Sands Corp is spear- search. We’ve got a core team of people who in order to build specific talent acquisition heading the development of 20,000 hotel are very well versed now after twelve months models for each. As Mr Lacchia points out: rooms, which will require approximately to do talent acquisition management in gam- “With these operations in Macau, it’s not just 100,000 workers over the next two years. Tal- ing. Because it’s very, very specific.” recruiting for one area. It’s recruitment for ent acquisition management and other hu- Yet Mr Lacchia argues Macau’s “longevity” gaming, recruitment for hotel, for shared ser- man resources skills will become increasingly will be based on more than gaming. “It’s now vices. We had to take every area individually in-demand, and Talent2 will position itself to becoming a gaming hub, and the next stage as part of a total project.” fill that demand with the experience gained is resorts and the convention business. That’s The core Talent2 team dedicated to the from the Crown Macau project, as well as its the strategy of the Macau government with Crown Macau opening consisted of 10-15 current task of onboarding the staff at Vene- this, and if it works, it makes sense for us to be people, but went to over 70 at the peak. tian Macao – essentially management of job here long-term, because gaming will subside. “That’s the beauty of this model, says Mr Lac- offers and ensuring all the necessary paper- It’s like Las Vegas, where the convention and chia, “because it gives you flexibility. You don’t work is in place, background and security retail business is now a higher-earner per want to put on 60 people at the start and get checks have been carried out, and the staff capita than gaming.” the client to pay for it when you don’t need actually show up to work or training on the So in the near future, Talent2 will be in- them until three quarters of the way in. Our date committed to. volved in talent acquisition management in biggest intake started in November, and fin- Mr Lacchia asks: “So when the Venetian Macau for “gaming, leisure centres, retail, F&B, ished in February.” is fully running and City of Dreams and Ma- hotel and MICE [meetings, incentives, con- In building the various talent acquisition cao Studio City are about to open, can your ventions and exhibitions business].” models, Talent2 sought input from Melco internal team just do that [hire thousands PBL, and Mr Lacchia comments that not only of workers] by itself? It’s a reality now in the is “partnering with your client” the best way world – and it’s done in other areas outside Supply picture to determine their staffing needs, but in the HR – is that you need to collaborate with ex- “There’s a lot of talent in Macau, especially case of the Crown Macau recruitment in par- pertise.” on the young side,” observes Mr Lacchia. ticular, PBL’s experience in “running a num- Mr Lacchia continues: “Especially when “It may not be as skilled, because they’re ber of casinos already” proved particularly you’re doing large-scale recruitment in this young. But in terms of level of education, valuable. part of the world, it’s a very costly exercise it’s high.” For each job function, Talent2 needed doing it in the normal recruitment manner. While Macau’s workforce has potential, it to determine “where do you get them from, You can’t go to an agency that’s not set up lacks longevity of experience. “With the activ- what do you look for, what are their attri- for large-scale recruitment and say find me ity now going on it is developing depth and butes, their aptitude, etc?”, explains Mr Lac- 2,000 people in Macau. It just doesn’t work, breadth as in other cities,” says Mr Lacchia. chia. Blackjack dealers, for example, “need and by the way it’s going to cost you 25% Identifying potential in the absence of acute mental arithmetic skills, especially per placement. In terms of doing large-scale experience “really required a lot of work in when dealing with difficult customers.” In recruitment, our talent acquisition model is terms of assessing people,” claims Mr Lac- Macau, the government also restricts all set up to deliver in the most effective way, in chia. “Making sure they were the right fit. So it In-Demand Talent dealer jobs to locals, which needs to be terms of cost and ability to attract and hire was quite a detailed and strenuous interview built into the acquisition model for that talent.” programme.” It takes considerable talent to secure top talent in Macau. Crown Macau turned to Talent2, a company function. Simply put, Talent2 offers clients “the ex- Mr Lacchia also stresses that “you’re os- tensibly at full-employment in Macau,” and rapidly emerging as one of the top recruiters and human resources outsourcing firms in the region perience and capability to compliment and enhance an internal HR team,” according to as such, it’s a seller’s market for labour. “If I’m Macau first Mr Lacchia. a young Macanese University graduate with According to Mr Lacchia, “our aim was to probably an MBA, which is now the case, and The number of workers without jobs in – as well as the assessment and onboarding ing and recruitment process.” hire first Macau residents, but then take I have previous experience, I’d be saying to Macau fell to 9,300 in the first quarter of this of staff – from human resources outsourcing best of breed from around the region. We Gaming and Macau potential every employer, “Why you?” A young, bright year, and the remaining unemployed are so (HRO) firm Talent2, the first end-to-end HRO received on behalf of Crown Macau around Talent2 sees tremendous potential for the University educated Macau resident with two lacking in skills as to be virtually unemploy- solutions company in the Asia Pacific region. Mirror image 60,000 applications, 41,000 of which were region’s gaming and entertainment indus- or three years’ experience has choice – for the able. The Talent2 value proposition is not just re- Mr Lacchia was also mindful that the recruit- pre-qualified and registered on Crown Ma- try, and is seeking to position itself as the first time in their life.” The intensifying labour crunch presents a ducing the cost per hire, but also the time to ment experience for applicants had to mir- cau’s talent database.” Of those, a mere 10% leading HR outsourcing firm in the field. The race is heating up to become the em- challenge for any operator seeking to open hire. ror Crown Macau’s brand image. “Regardless made the final cut, though the database Mr Lacchia also believes Macau presents ployer of choice in Macau. a major new casino and hotel property in Talent2 Director of Managed Services of whether they get hired or not, the experi- could prove handy when it comes time to a tremendous growth opportunity for Tal- Mr Lacchia warns that employers cannot Macau. Recruiting staff of sufficient quality to (Asia) Liviano Lacchia explained the brief: ence of when they touch Crown Macau has recruit for Melco PBL’s expansive follow-up ent2 – a company founded in Australia by simply draw workers from competitors by of- match the glitzy facilities of the city’s first six- “It comes back to the [Crown Macau] brand. to be good. That’s very important.” After all, property, the US$2.1 billion City of Dreams two icons of the human resources industry fering higher salaries. “It’s wrong for the long star casino and hotel property, Crown Macau, They wanted to see the first six-star hotel and even if someone is not currently “the right resort. According to Mr Lacchia, Melco PBL (Geoff Morgan and Andrew Banks, who pre- term because all you’re going to get is cost posed a further challenge. Crown Macau op- gaming establishment in Macau. They have a fit,” they could still be a future employee, or “expects a third of the people from Crown viously founded Morgan and Banks, which escalation.” However, he believes “salaries are erator, Melco PBL Entertainment (Macau) Ltd, vision of the type staff they want – not just in be able to refer qualified friends and rela- Macau to go to City of Dreams. That’s of- had become the dominant recruitment firm always going to go up now. It’s a given.” sought assistance for the recruitment of the skills, but in aptitude, attitude, and presenta- tives. fering their staff a long-term employment in Australia and Asia). Employees are interested not just in sala- property’s 4,100-strong opening workforce tion. So we had to build that into our screen- Talent2 began work on April 28 last year strategy. The same as employees from Sands Talent2 is “aggressively building up the ries, but of course, also benefits – Talent2 had 20 21 some input on the non-salary benefits -of Other Services biggest source of revenue for Talent2, fol- fered by Crown Macau. Employees will also Talent2 categorises its HR services as “Ac- lowed by managed services, then optimi- increasingly consider “the type of company quire, Manage and Optimise.” The company sation. However, Mr Lacchia points out “we you are and what’s the growth potential of has over 650 staff and consultants with offic- have seen an 82% increase in the Managed your company. That has to be built in to the es across Australia, China, Hong Kong, Macau, Services business and we are on plan for it attraction strategy,” comments Mr Lacchia. India, Malaysia, New Zealand, Singapore, Lon- to become the largest piece of our business City of Dreams and Venetian Macao, for ex- don and the US, servicing a growing number within two to three years’ time, because it also ample, offer valuable future promotional of blue-chip companies, gives a recurring revenue stream.” One such possibilities for employees of Melco PBL and The range of services provided by Talent2 service is payroll solutions – Talent2 already Las Vegas Sands Corp in Macau. include HR outsourcing and consulting (tal- counts one of the leading Macau gaming The employee value proposition (EVP) is ent acquisition management, HRIS and pay- suppliers among its payroll solutions clients, part of an integrated gaming and industry roll solution managed services and workforce and aims to have a number of other contracts specific talent management process devel- management), eLearning, executive search in place by the end of this year. oped by Talent2, which also covers: and recruitment and assessment consulting “There was a war on talent, and talent has • People – recruited through its onsite services including psychometric tests. won,” says Mr Lacchia, Companies will increas- talent acquisition team Talent2 also knows how to run effective ingly turn to outsourcing HR functions – as they • Systems – Business Processes and Re- job fairs as part of its talent acquisition ser- have done with many other roles – in seeking cruitment management systems vices in the countries across the Asia Pacific a vital competitive advantage. “The difference • Branding – The employee value prop- it is active in. “We assisted Crown Macau with between us and an internal HR team is the way osition (EVP) one of the most effective job fairs in Macau. In we’re driven and the way we’re managed by • Support – Finance; HR and Training; December last year, 5,000 people turned up to the client is around service level agreements,” Marketing and Advertising; Project Re- the Crown Macau job fair,” reveals Mr Lacchia. explains Mr Lacchia. Thus, Talent2 makes a sources and consulting Search and recruitment is currently the pledge to deliver that advantage.

Blackjack dealers, for example, “need acute mental arithmetic skills, especially when dealing with difficult customers” 22

that some 13% of repeat visitors to Vegas US$30, compared with a whopping US$208 a trip, and be punctuated by much cheaper return for the primary purpose of gambling, for mainland visitors to Macau. Little wonder dining options, especially fast food and buf- compared with only 1% of first time visitors. that high-end retail is an integral part of the fets. The Macau visitor doesn’t have time on In 2003, the Study reported that only 4% of new resort developments. Presumably this his side; if he wants to splash, he has to do repeat visitors went to Las Vegas to gamble; spend will moderate as average length of it quickly! the increase to 13% in 2006 is startling. stay increases, whether overnight, or by day. Making valid comparisons between ju- This suggests that the quality of the gam- risdictions on the basis of statistical data bling experience enjoyed by visitors is a key alone is impossible. However, the Study gives driver behind their return. It also suggests Accommodation and Dining highly detailed insights to what makes up Accommodation spending in Vegas aver- that other attractions, especially entertain- the visitor population for Las Vegas. It would aged US$107 per night, compared with only ment and dining, do not detract from the be interesting to have the data to compare US$47 in Macau. Expect the Macau figure to gambling focus of repeat visitors; indeed more of these metrics, to see just how alike have moved up significantly in 2007, with they appear to stimulate it. East and West really are. more high-end resort hotel accommoda- tion on stream. In the food and beverage More Satisfied with Vegas department, visitors to Vegas spent around A former Australian gaming regulator, David In regard to the quality of the visitors’ expe- US$57, while those to the Vegas of the East Green heads the gaming practice of Pricewa- rience, 96% of those surveyed for the Study spent about US$36. This is a relatively small terhouseCoopers in Macau, having originally said they were “very satisfied” with their trip difference, but it is again evidence of the ef- come to the city in 2001 to conduct the feasi- to Vegas. Is the same true of Macau? Per- fect of time compression, and dining choice. bility study on the liberalization of the local haps not. Visitors surveyed by DSEC in 2006 While Vegas is home to many fine and ex- gaming industry. He also consults for both the recorded only moderate satisfaction with a pensive restaurants, they are likely big occa- Macau and Singapore governments on gam- number of aspects of their Macau experience, sion nights out, which may only occur once ing regulation. especially in relation to public transport, res- taurants, shops and gaming establishments, all of which had satisfaction ratings of 65% or less. The latter 3 of these are being addressed now by the new integrated resorts which are, or will, open. Public transport is however a real issue. A point of significant divergence between the two markets is that in Las Vegas, 48% of survey respondents used their own vehicles to get around. It could be safely as- sumed that in Macau, the comparable figure would be less than 1%, meaning that visitors are heavily reliant on public transport, and The West Side Visitor that provided by the casino properties. David Green compares and contrasts the profile of visitors to Las Vegas with those to Macau Spending Behaviour Visitor spending behaviour comparisons throw up some unexpected results. Aver- On April 30, the Las Vegas Conven- observers suggest that as many as 90% origi- to Macau, though it can be inferred that a age overnight length of stay in Las Vegas tion and Visitors Authority released its 2006 nate from neighbouring Guangdong prov- high proportion of visitors originating from was 3.6 nights, compared with only 1.1 in Visitor Profile Study. The result of detailed ince. Hong Kong remains a key contributor, Hong Kong are repeat, and probably serial, Macau. This suggests that Macau is not yet a and statistically robust surveys, conducted providing almost 33% of visitors to Macau visitors. Almost 7 million visited from Hong “destination”, a not unsurprising conclusion monthly, the Study indicates that the gulf last year. Taking Guangdong and Hong Kong Kong during the year – not bad for a Special in view of the preponderance of short haul between Las Vegas and its alter ego of the together, they likely provided more than 80% Administrative Region of less than 8 million travellers. Of more interest is the fact that Las East is not as pronounced as geography and of all visitors in 2006. people. Vegas visitors stayed an average of 4.6 days, economic circumstance might imply. While Of Las Vegas’s 39 million visitors, some fully one day more than the average length not all the metrics used in the Study are mea- 87% originated from within the United Prosperous neighbourhoods of overnight stay. This is not the case in Ma- sured, or reported, by the Macau Census and States, and 32% from one State…California. The similarities between the two markets on cau, where most visitors are same day, and Statistics Service, DSEC, those that are make The Western States together accounted for this account are striking. Both draw heavily their movements regulated by accessibility for interesting comparison with Las Vegas. 52% of arrivals, suggesting that while Vegas on populations nearest to them. California to transport, border gates, and the strictures In 2006, Macau welcomed some 22 mil- remains the mecca of the gaming world, its and Guangdong (including Hong Kong) are of tour arrangements. The time compression lion visitors, compared with almost 39 million pilgrims are by and large coming from areas two of the most economically developed evident in Macau has an interesting spin-off; in Las Vegas. Both markets were heavily reli- in close proximity. Only 13% of Vegas visitors regions in their respective countries. The per capita shopping spending by mainland ant upon their “local” catchments. DSEC does originated outside the US. Repeat visitors ac- repeat visitor to both markets is more likely residents far exceeds the average shopping not report mainland visitors to Macau by counted for more than 80% of the total. DSEC to come back to gamble than the first time spend in Las Vegas. The average daily visi- province of origin, but, anecdotally, industry does not provide details of repeat visitations visitor is to come initially; the Study reported tor spend on shopping in Vegas is just over 26 27 High-Roller Accessories

Radiant GAS

The GAS women’s collection for spring/summer ’07 carries un- Her jackets emphasise the figure thanks to clearly shaped ride huge waves on their boards: icons of radiant youth, with biker jackets, sweatshirts and even boxers that peep out from mistakeable hints of an idealised journey from west to east: shoulders and a high, fitted waist. Her tops go down below the hair bleached by the salt-water and fit bodies, firing the imagi- under pants. from Paris to Saigon and from Saigon to Bali, via Singapore. It waist and are made using fine, lightweight materials in soft fits nation and creating fashion. Jeans, in a wide range of washes, styles and shades of indigo, is a voyage along the real and imaginary spice route, taking that are easy to layer and mix and match. Her dresses are made A riot of colour: red, orange, hot pink and lime green represent are of course still the heart and soul of the GAS collection. in the sounds, smells, colours and flavours of a world halfway of an extra lightweight cotton muslin, which is either plain or exotic fruits, while blue and turquoise show the shades of the There is also a new addition: jeans that are bonded rather than between progress and tradition. features a Balinese print. South Seas. Digital graphics of bold, tropical flowers mingle stitched together. They are soft to the touch, feel good on and The GAS woman is sensual, feminine and at the same time re- The men’s collection conveys images of a never-ending sum- and overlap unexpectedly with classics from the male ward- above all feature an innovative design so the models really fined, with bare shoulders, deep necklines and a defined waist. mer, urban surfers who inhabit sun-drenched beaches and robe: pinstriped shirts, blazers in shirting fabric, smoking and show off the characteristics of the technique. betting on matches is estimated by UK-based 1.3 billion people and per capita income lev- appears to require at this point are business Global Betting and Gaming Consultants to els that are still very low compared with West- models consonant with the central govern- have tripled over the last couple of years to ern Europe’s, online gambling has grown in ment’s so-called “green Internet policy” de- a whopping US$33 billion, surpassing even China into a substantial industry populated signed, in the words of the ministries respon- the UK. Of course, about 90 percent of this by several hundred Chinese-language Web sible for implementing it, to “purify the cyber massive market is deemed illegal by Beijing. sites. Since the first Chinese-language portal environment.” In line with this policy, China But European matches dominate the legal was launched about six years ago, the market imposed a law last year to beef up prosecu- sports lotteries as well. And at a mere US$25 has expanded to US$12 billion in annual rev- tion of Internet pornography, spam and gam- in spending per capita, compared with more enues, according to the estimate of US-based bling. At the same time, government is said than US$480 in the UK, the reality of the mar- Christiansen Capital Advisors. Other analyses to be interested in the public revenue poten- ket, huge as it is, is dwarfed by its untapped figure the market to be several times larger. tial of legalized, controlled Web games if the potential. “China and Japan stand out to me,” said right regulatory framework can be presented Looking on from the West, the major In- Simon Holliday of Global Betting and Gaming to them. This cautious approach can be said ternet operators have long been aware of Consultants. “Increasingly China, especially in to be characteristic of governments’ official the opportunities. Overcoming the many soccer betting. The middle classes there are approach to the Web throughout Asia, and obstacles is another matter and one of some growing and they’re getting wealthier. China other jurisdictions in the region are taking a urgency given that the ability to diversify is the stand-out opportunity. But it is going similar look. geographically in the wake of the shutdown to take some time.” “Regulation is a big hurdle,” said Littlep- of the multibillion-dollar US market is key to age. “You have to get to a point where these the continued growth of the leading brands The ‘Grandfather of Mahjong’ rather unsociable political environments can in 2007 and going forward. In a development that could speed things up, be enticed with the benefits of legalization.” “The ex-US-facing companies have to the government of the Macau Special Admin- Macau, meanwhile, is testing multi-site pick up the pieces and shift their focus,” said istrative Region, home to Asia’s largest casino mahjong gaming, which could be operational Jodi Littlepage, director of corporate finance industry and the only legal one in China, an- this spring. A Toronto-listed company called for London-based Citicourt & Co. nounced earlier this year that is was crafting Dynasty Gaming, which has developed soft- Asia, where the propensity to gamble is regulations for licensing Internet operators ware for a cash wager version of the popular generally high across cultures and markets based in the peninsula. The structure is not Chinese pastime, has signed a letter of intent are well-established, is drawing more atten- expected to be in place before 2008. Neither with Sino Strategic International — a well- tion than ever. is it certain whether licensees will be taking placed investment holding company with China, the obvious giant in everyone’s wagers from the mainland, although it is dif- offices in Hong Kong and Australia and a sig- sights, is cracking down on “unlawful” Web ficult to see how the S.A.R. could proceed nificant stake in China’s US$8 billion plus wel- gambling — that is, sites hosted and man- down this road without the nod from Beijing. fare and sports lotteries market – for distribu- aged within the country — but government Tax is another unknown. But even a 25 per- tion of Dynasty’s “play-for-points” version of currently does not forbid sites from passively cent rate, which is what officials are bandying mahjong and other Asian “soft” games. These Cyber-Eyes on Asia taking wagers offshore so long as they do about, might not be insurmountable given will run on a virtual private network operat- not market or collect money within China. the enormous potential of the market. ing out of Shanghai. The VPNs are a platform The ability to process payments, then, is one “These are not features that have yet through which legal games and lotteries can Web operators look to scale the Great Wall, and sports betting may provide the ladder of the bigger obstacles. China is still predom- been passed,” said the SAR’s Commissioner be played on the mainland. Dynasty also is inantly a cash culture where credit cards are for Gaming Jorge Oliveira, “but we intend to one of the organizers of the “World Cup of rare and not always trusted. This is largely the regulate everyone. Anyone who accepts bets, Mahjong” scheduled to be played in Macau Ten years ago, facing demotion from ball Club closed a US$3.2 million shirt deal cess by signing on with state-owned invest- case throughout East Asia. including betting exchanges, will be regulat- this month. England’s Premier League and the prospect with Chinese mobile phone manufacturer ment conglomerate CITIC Group to promote “It’s been hard to crack it,” said Sue Sch- ed, and the regime will be open to all.” Combinations like these illustrate the of bankruptcy, south London’s Crystal Palace Kejian. Everton, with Kejian’s help, signed the club’s brand in China. A licensing agree- neider, chief executive of eGaming specialist What this sets up is the possibility of importance both Asian players and Asian of- football club took a chance on a couple of midfielder Li Tie, known at the time as “China’s ment the Premiership recently concluded advisors River City Group. some interesting combinations for the well- ficialdom place on brand comfort. It cannot defensemen, Sun Jihai and Fan Zhiyi, from David Beckham,” and World Cup teammate with Guandong Provincial Television’s WinTV “There are not a lot of good Asian pay- known casino brands that are already clean- be overstated. Tim Holland of TheKey2Asia, a China’s national team. Li Weifeng. Later the same year, a match be- is good for US$50 million over three years. ment solutions. And there are regional dis- ing up in Macau’s US$7 billion land-based Singaporebased firm specializing in market- The signings cost the club a quarter of tween Everton and Manchester City — Jihai Taking broadband demand as another indi- tinctions in terms of payment preferences. market — Wynn Resorts, Las Vegas Sands, ing and business development in gambling, their broadcast revenues at the time, about also was now suiting up for the Blues, whose cator, the price for streaming European foot- But there are a lot of people working on this. Galaxy, Stanley Ho’s SJM and big names that sports and media, highlighted this in a re- US$1.7 million. But it wasn’t long before 100 jerseys sported the Kejian logo in Mandarin ball over the Internet in Asia has more than It is a huge topic for the industry.” soon will be bringing big resorts of their cent issue of the trade magazine eGaming million Chinese were in front of their TV sets and English — would draw the largest TV doubled in the last year. NOW Broadband TV, There are cultural obstacles as well: a own to the peninsula, like MGM Mirage and Review: watching Crystal Palace in the first live broad- audience ever for a league game — an esti- a subsidiary of Hong Kong-based telecom distrust among the Chinese generally of ma- James Packer’s Australia-based Publishing “A quick look into the history of Asian cast in China of an English match. — That’s mated 360 million Chinese. PCCW, paid a cool US$200 million earlier this chine gambling – and this extends to com- and Broadcasting Ltd. gaming and the history of new entrants to more viewers than the NFL’s Super Bowl was Lucrative tours of China by clubs of the year for exclusive rights to Premier League puterized random number generators – and “I think we’re going to see some Asian the market explains why branding is impor- drawing. — Little-known Crystal Palace was caliber of Manchester United, Arsenal and AC matches and the 2008 European Champions there is the primacy the Chinese place on and Western joint ventures,” said Littlepage, tant. The industry has traditionally worked suddenly the hottest sports commodity in Milan are fairly routine these days. Two trips tournament. person-to-person relationships, which is as “just as we’ve been seeing a lot of the Asian on trust through a peer-to-peer network of the most populous nation on the planet. by Real Madrid a few years back brought in And where “the beautiful game” goes is powerful when it comes to placing a bet as it companies coming to London for financing.” individuals working on behalf of an opera- Europe’s top clubs have been mining US$10 million from sales of tickets, shirts and gambling ever far behind? is in every other area of commerce. That said, official recognition in Macau tor. Wagers are placed verbally and money gold in the Far East ever since. souvenirs, according to Forbes magazine. Chinese fans currently comprise 20 per- Despite all these factors, though, and de- will not guarantee access to the mainland is collected after the event. The operator has In 2002, the Premiership’s Everton Foot- The Spanish powerhouse capped this suc- cent of the world’s football audience, and spite low Internet penetration relative to her without Beijing’s approbation, and what this to trust the client that he has the money to 30 31 settle while the client trusts the bookmaker In this context, no Western company that he will record his wager and pay out could have secured a better partner than the winnings according. Second, the poor his- CMA. The association operates 23 mahjong tory of some Western operators in Asia is also chapters in 20 Chinese provinces. Among its problematic. Many Asian consumers have 47,000 members are many high-level busi- seen Western operators opening their doors ness executives and members of govern- in Asia only to simply close them. This has led ment, including the head of the China Sports to some distrust.” Bureau. CMA Chairman Sheng Qi is credited The market is “large” and “complex” and in the official rule book of the game- pub “requires a commitment and market under- lished by the China Ministry of Sports and is standing to implement systems that work known affectionately in his homeland as the for the Asian consumer,” notes Holland. “This “Grandfather of Mahjong. makes a going-it-alone strategy difficult and Qi said, “We chose Playtech over other risky.” potential sponsors as they demonstrated With an eye on the enormous potential an outstanding knowledge of mahjong, of of fixed-odds betting in China, bookmaking China and its regulatory framework and had giant Ladbrokes spent several months in Bei- extensive Asian and Chinese support opera- jing in 2005 and 2006 sharing its expertise tions already in place.” as a consultant to China Sports Lottery Sales One of these operations stems from an and Marketing Co. This led to the launch early important licensing agreement Playtech last year of the country’s first betting shops signed back in December with Sino Strate- — branded “Happy Pools,” 200 of them, offer- gic International to provide P2P game con- ing pools wagering on big-league European tent to some 600 SSI arcade venues in and football. around Shanghai. Playtech and SSI also will “While this is a very small step into China be the first major distributors in the People’s it is also an encouraging one,” said Ladbrokes Republic of Texas Hold ’Em, the most popular CEO Christopher Bell, who has expressed the poker game in the world. belief that the country “has the potential to “This is a significant deal for Playtech and be one of the biggest betting markets in the provides the company with an important world,” one which “Ladbrokes is well pre- gateway into a huge developing market,” pared to take advantage,” he said. said CEO Avigur Zmora. “Coupled with our Ladbrokes also recently entered into long-term focus to provide the right prod- a joint venture with Hong Kong-based ucts to the Asian market, this agreement also MegaInfo Holdings to form a company called further diversifies the Group’s geographical Asia Gaming Technologies with a view to reach.” increasing the bookmaker’s presence in the Looking ahead to later this year and People’s Republic. Betfair’s inaugural “Asian Poker Tour” in Sin- Interestingly, the relationship between gapore, it’s instructive to note how the Lon- Ladbrokes and China Sports Lottery stemmed don-based betting exchange giant used a from the former’s involvement in training similar approach to implementing its Far programs operated in Britain for lottery staff East strategy. Betfair partnered with a com- Bookmaking giant Ladbrokes spent in which China Sports Lottery participated, pany called Capital Events to become the several months in Beijing sharing its and Bell has credited the UK’s reputation as first gambling operator to obtain permission expertise as a consultant to China a stable, well-regulated gambling environ- from Singapore to host a poker tournament Sports Lottery Sales and Marketing ment for the welcome his company has re- in the populous city-state. The event is sup- Co. This led to the launch early last ceived from the Chinese. ported by the Singapore Tourist Board and is year of the country’s first betting featured on the board’s Web site. The APT will Among other top-tier Western opera- shops — branded “Happy Pools” be held in November and will be televised tors and suppliers, AIM-listed Playtech has — offering pools wagering on big- internationally. stood out in recent months for the bridges league European football. Said Betfair, “It’s an opportunity to raise it is building across East Asia after its US-fac- “While this is a very small step into [the company’s] profile in Asia by working ing clients had to exit the American market. China it is also an encouraging one,” with local partners who understand the sen- Earlier this year, the company sealed a three- says CEO Christopher Bell, who be- sitivities and regulatory restrictions of work- year partnership with the China Mahjong lieves the country “has the poten- ing in the region.” tial to be one of the biggest bet- Association as a tournament sponsor and ting markets in the world,” and one software provider and signed a contract to which “Ladbrokes is well prepared provide software for peer-to-peer games to to take advantage.” Foundation Group Ltd., a Hong Kong-listed By James Rutherford, International Editor of In- company with ties to the PRC’s Communist ternational Gaming & Wagering Business mag- Youth League. azine. Reprinted with permission from IGWB. 32 traded business consisting mainly of trans- to a Scottish couple who earned their living ferring funds for gambling, no longer accepts raising pigs. Ayre’s first job was raising a litter The big picture Another early business strategy Ayre had was customers from the United States and Cana- of pigs. He graduated from the University of to offer more than just sports wagering. Diver- What, Me Worry? da. Some gaming analysts speculate Neteller Waterloo in Ontario and in the early 1990s got sification has been the key to Bodog turning in probably won’t survive this year. a job as president of a heart-valve manufac- worldwide revenues of around US$12 billion So you can imagine US Justice Depart- Calvin Ayre and Bodog.com continue to prosper despite the US government crackdown on Internet gaming turer, Bicer Medical Systems, which was then in 2005, according to the research company ment’s ire when, last March, Ayre appeared listed on the Vancouver Stock Exchange. In Christiansen Capital Advisors. “We’re a private on the cover of Forbes magazine’s 2006 bil- the mid-1990s stock regulators charged Ayre company, so we don’t release these numbers,” lionaire issue with a headline that read: “Catch with insider trading. The government fined alvin Ayre is a lot of things. Daring, Ayre said. “What I can say is that we’re finding C me if you can … Calvin Ayre sticks it to Uncle Ayre C$10,000, banning him from working flashy and ostentatious are just some of the a lot more of our online gaming customers are Sam.” If this wasn’t enough, Ayre also made words that quickly come to mind when de- as a director for a publicly traded company in coming from Europe and that we’re on track People magazine’s hottest bachelor list. scribing him. British Columbia for 20 years. to exceed US$300 million across all entertain- This kind of loud attention isn’t appreci- One word you won’t find attached to Resilient, Ayre soon realized the poten- ment channels, including gaming, music, tele- ated by many Internet bookmakers operat- Ayre, however, is stupid. That’s why he prob- tial of the Internet and online sports wager- vision and mixed martial arts productions.” ing offshore trying to be low-key, hoping the ably won’t ever set foot on US soil again until ing. Building up software and programs with The US crackdown has caused great hard- Justice Department backs off its zealous cam- the Unlawful Internet Gambling Enforce- which to run such an operation, Ayre bought ship for many offshore sportsbooks. Those paign against online wagering. They believe ment Act is either abolished or liberalized. the Bodog.com URL because he liked the just relying on taking sports wagers from Ayre is creating a backlash against them. Cer- This means no more million-dollar parties sassy name. The site launched in April 2000. US customers have had to scale back their tainly the US government didn’t enjoy read- like he threw at Las Vegas hotels in 2005 and The main target was recreational bettors expenses. Some have closed their post-up ing about Ayre either, or that Bodog handled 2006 in conjunction with his online gam- from the United States. The business model business to US bettors, which was the bulk US$7.3 billion in Internet wagers from 16 mil- bling conferences, the last of which had to be was to draw smaller-stake players. Bodog did of their trade. Bodog hasn’t had these prob- lion largely US-based customers, according cancelled although the party still was held that by running lots of pictures of beautiful lems. They’ve even done some consolidation, to the Forbes article. complete with celebrities, open bars, circus women, using off-the-wall proposition bets acquiring the American customer database It probably wasn’t a coincidence that the acts, models giving massages and gymnastic and getting publicity through aggressive ad- from Bowman’s, a long-time British book that day the Forbes article hit the news stands, exhibitions. vertising and stunts. In one such stunt, Ayre had been operating in Mauritius. Ayre’s 10,000-square-foot, US$3.5 million, To those who follow Internet gaming, called himself Cole Turner and got one online Ayre has been able to cope with the ups bachelor-pad home in Costa Rica was raided Ayre is a visionary maverick with a flair for gaming portal, Gambling911, to feature his and downs of the Internet gambling industry by local police. No charges were filed, but publicity that has turned his online company, Indiana Jones-type jungle exploits into vari- by offering much more than just sports bet- following that incident Ayre moved his com- Bodog.com, into a billion-dollar worldwide ous countries, including Thailand. ting. Bodog’s poker room gives away more pany from Costa Rica to Antigua, a country at entertainment empire. But with Ayre, there’s more than just than US$1.5 million in prizes every month. serious odds against the United States’ anti- To the US Justice Department, Ayre is a hokum. He also had the foresight to come Their horse race book offers 80 tracks to bet Internet betting stance, which it claims cost modern-day John Dillinger. At least it seems up with Bodog’s own online type of e-wal- on and weekly rebates. Their online casino them millions of dollars in tax revenue and like that with the way the Justice Depart- let checks so bettors would have alternative has a download version featuring more than hundreds of jobs. ment has gone after Internet wagering. They means of transferring money to fund their 75 casino games, including progressive jack- The 45-year-old Ayre says he has done especially don’t seem to care for in-your- account. This is especially relevant now with pots. Ayre has opened a whole entertainment nothing illegal. Bodog not only is licensed in face-type companies that go to great lengths last October’s passage of the Unlawful Inter- division featuring music, mixed martial arts Antigua, but also in the United Kingdom and to draw American bettors through creative net Gambling Enforcement Act. This is the US fights and international television shows. Kahnawake, which is Mohawk Indian terri- marketing. government’s way of combating online bet- Bodog Fight, for instance, is broadcast on tory in Canada. Bodog accepts online wagers David Carruthers knows that all too well. ting by severely limiting financial transactions the Fight Network in Canada. The Calvin Ayre in places where it is legal. He was the CEO of BetonSports, one of the linked to Internet betting. The law makes it il- Wild Card Poker show can be seen American “The phrases you’re using are not mine,” largest Internet sportsbooks in the world legal for banks, payment processors and other television. Bodog has its own international Ayre said about the Forbes headline via an whose base consisted mainly of American financial institutions to transfer money from recording label called Bodog Music.com. One e-mail communication. “They were invented customers. BetonSports did heavy advertising gambler accounts to wagering Web sites. feature of that is a band search competition by reporters and editors to sell their publica- in the United States, even going so far as driv- Asked about the affect of this law, which with a US$1 million top prize. Bodog has a tion. We do not circumvent the law. In fact, we ing their own bus around New York City with has impacted the offshore industry, Ayre said, publishing division, which prints an online have gone to great lengths to ensure we are big banners advocating sports betting. Tech- “We’re studying the current landscape to de- magazine and blogs. compliant with the law in the jurisdictions nically sports wagering is illegal in every state termine what, if any, ramifications this piece of Ayre is not through, though. He has more we operate. except Nevada. The Justice Department went legislation might have on our gaming chan- ideas. The combination of gambling and “We are a legal and licensed international after BetonSports and arrested Carruthers on nels. We are, however, extremely confident entertainment is Ayre’s model of the future. digital entertainment company and that is a brief layover in Dallas during a flight from his in the strength and flexibility of our unique Those two needs are never going to go away the one message I give to all the media. A home in England to the BetonSports office in business model, which is neither confided to no matter how repressive the US govern- company as big and influential as Bodog has Costa Rica. Carruthers was charged with crimi- one particular market nor to one particular ment can be regarding online wagering. to engage the media, and the media engages nal racketeering and wire fraud and BetonS- form of entertainment. We remain confident “For Bodog you can expect to see more us because we are a good story and a feature ports ceased its US business. that we’re better positioned now than ever international expansion of its entertainment on us will bring them notoriety.” The third-party payment processing as we continue to expand all our entertain- products, with the Bodog brand making company Neteller has felt the brunt of US ment product channels, including gaming, headway into Europe and Asia,” he said. “You law enforcement, too. Their two owners have Modest beginnings into markets such as Europe and Asia. This is can also expect to see more Bodog TV—in- been arrested and charged with money laun- Ayre was born in Canada and raised in the a major reason we’re refocusing our offline cluding reality shows and documentaries. dering. Now Neteller, a US$3 billion publicly Saskatchewan community of Lloydminster, gaming marketing efforts in Europe.” Bodog TV concurrently is working on four

34 35 television series, including Calvin Ayre Wild Card Poker II and season’s three and four of Bodog Fight. Bodog’s Music’s band search competition, Bodog Battle, will be airing on TV and broadband in the next few months. Further out, you will see the Bodog brand continue to branch out into other areas of digital entertainment and lifestyle products.” By Stephen Nover, a Henderson, Nev.- based freelance writer.Sidebar by Paul Doocey, Editor of International Gaming and Wagering Business magazine. Reprinted with permission fromIGWB.

Spreading the Wealth In addition to establishing a diverse and highly-successful Internet-based gambling and entertainment empire, Calvin Ayre has found the time and money to create the Calvin Ayre Foundation, an Antigua-based private and independent philanthropic orga- nization with a charter to do charitable works worldwide. Currently, the foundation focuses on pro- moting greater equity in five broad areas: envi- ronment, education, social development, child welfare and animal welfare. Among the causes supported by the Calvin Ayre Foundation: • The ongoing support of Saigon Chil- dren’s Charity, an organization with the goal of helping the city’s poorest children escape from the cycle of poverty through education and training. • Providing the funding needed to create The Tale of Two Nazanins, a documentary about Nazanin Mahabad Fatehi, a woman who was sentenced to death in Iran after she stabbed one of three men who attempted to rape her and her 16-year-old niece in March 2005. • Leading the charge to eradicate bear farming, the cruel practice of raising caged bears in order to extract their gall bladder bile, a popular Asian folk medicine. It is estimated that 14,000 bears are involved in this industry.

Most recently, The Calvin Ayre Founda- tion has sponsored underprivileged young adults, offering them an opportunity to at- tend world-class universities in countries such as Canada and the Philippines. While ensuring that these students are afforded the best possible academic opportunities, the foundation aims to ease the financial burden felt by their families back at home. For more information on the foundation, visit www.calvinayrefoundation.com.

- Paul Doocey 36 21 times a day in a matter of minutes and put in for gamblers to play progressive jackpots by outside the gaming room. the more in-demand games when and where giving them the chance to win multi-million players want them. dollar prizes that were not available outside The Server-Based Revolution As well as controlling the layout of the of the United States. Floor change The floor of gaming establishments will gaming floor, casino managers can also con- change dramatically with the integration of Server-based gaming is expected to take off this year, bringing a string of benefits to casinos trol the hold percentage within regulations. server-based technology. One of the biggest During a special event or busy period, casino New ways to gamble and their customers Not only will a server-based system change challenges with this new technology is not to managers could increase the hold percent- the slot machine market it will also create overwhelm the player with options. Server- age on the fly to boost profits. To attract play- new ways to gamble. Remote handheld de- based technology may alienate current play- ers to the gaming floor, the payout of certain t has been over a century since Charles come to expect from slot machines. The differ- gamblers to select different games, denomi- vices could be used by gamblers through- ers by the myriad games on offer. How casino I slots could be increased to create excitement Fey invented the first slot machine in his ence is, when you make a bet the real gaming nations, wagering limits and payouts. This out the casino property, from karaoke bars operators manage the integration of this by the presence of ‘loose’ slot machines. The basement. Slot machines have come a long would take place on a central sever located in could all be done at one location – no more to hotel lobbies. Wherever there is a secure technology while maintaining the look and appearance of ‘loose slots’ may produce more way since Frey’s invention, which was made a back room or even another country. moving from machine to machine. The abil- wireless network, guests could use portable feel of a traditional slot machines will be inte- volume and more revenue than a higher hold from cast iron weighing over 100 pounds. ity to choose the most popular games would remote devices to play their favorite games. gral to maintaining a base of loyal players. percentage. Technological advances such as the micro- not only maximize the life cycle of a slot ma- Another possibility from the new technol- We are just beginning to understand Whatever the casinos decide, the entire chip; ticket in-ticket out (TITO) and random chine cabinet but also significantly increase ogy is playing live table games from a slot the benefits of server-based gaming.- Gam Impetus for software investment gaming floor benefits from a dynamic cen- number generator (RNG) have dramatically So why has this latest technological wave got revenues. machine. With live streaming from a remote ing machine manufacturers expect to see an tralized management system. changed the slot industry for both operators slot machine manufacturers investing mil- Due to the multitude of themed games location, gamblers that become tired of slots explosion in player benefits as this technol- and players. We now await the much-antici- lions in software development? Server-based in today’s competitive market, games have will have a full suite of options of live table ogy is established over time. Analysts have pated roll out of the next generation of slot gaming opens up a world of possibilities for much shorter lifespans. What is considered Customer retention games – from live baccarat to roulette – with- touted 2007 to be the year casinos roll out machines that looks set to revolutionize the both gamblers and casino operators. We are to be popular today may lose its attraction Maintaining market share through customer out having to leave their seats. server-based slots. They expect investment industry with server-based gaming. only beginning to touch on the advantages after six months. Server-based gaming will retention by rewarding loyal players is im- Perhaps the most attractive feature for in the new generation of slot machines to Slot machines have traditionally been of this gaming technology. Technology asso- reduce lost revenue opportunity from older portant for all sectors of gaming. Customer operators is server-based gaming’s cross- drive profits of gaming equipment suppliers stand-alone devices with a single game ciated with server-based slot machines may slot games. Operators will be able replace retention programs have evolved in the platform networking. Casinos could leverage for the next five years. hard-wired into their circuitry. This is all set even have more potential than the slot ma- older games by a click of a button with the slot industry since the introduction of elec- off their land-based slot machines by offer- The transformation will not occur overnight. to change with the new server-based slot chine manufactures are willing to disclose. most popular up-to-date games. The casino tronic loyalty card programs. Information on ing players their favorite games at home on Software upgrades that take a few months to machines in which the games will be stored With the endless opportunities for both slot would not only benefit from the increased players can be stored on loyalty cards, from the internet or on their mobile phones. When implement in other industries can take at least on a central server, ready to be downloaded player and operator, manufacturers want to revenue but also reduce downtime of ma- simple demographics to average bet size or players register, they would be given the op- two or three years for casinos. While there is still in seconds. Terminals will be nothing more protect the special features they are plan- chines. Staff would no longer be required favorite games. A centralized sever-based tion to use the same account to play from a some speculation as to what features will be than generic or dumb terminals that look like ning to install into their particular brand of to open up every single slot machine and slot management system could track every PC at home and/or on their mobiles. Cross- adopted, over the next 12 months one thing traditional slot cabinets. The devices will have server-based slot machine. change the components; new games will spin of the reel as it happens for each player platform networking would generate mul- is certain – the sever-based revolution will be digital screens, graphics and sounds we have Server-based slot machines would allow simply be downloaded and peripheral soft- no matter what slot machine they choose to tiple revenue streams, even when players are coming to a casino near you. ware can be updated for bill validators or play on. When inserting their loyalty card into ticket printers. a slot machine, a menu of their most liked games would be displayed in their preferred language. The ability to tie player preferences Floor management to the content will significantly enhance the Savvy gaming operators have always under- player experience. stood the importance of managing the gam- Frequent player rewards such as compli- ing floor. Having the right layout and selec- mentary rooms or meals can be communi- tion of machines is essential to maximizing cated via real-time player marketing by a mes- revenues. During certain times of the day, the sage displayed on the machine. The ability to player demographics may change. Early in communicate via your slot machine is not lim- the day, a casino may attract gamblers who ited to the operator – it can also be utilized by prefer classic slot games or bingo, while at the player with a direct link to the bar. Players night, it could switch to gamblers who enjoy would be able to order a drink or something high stakes table games or slots with large to eat without even speaking to a waitress. progressive jackpots. Large progressive jackpots have al- The advantage of server-based gaming ways been a big draw card for casinos. An is casino managers can monitor the per- example of this is IGT’s Megabucks®. Intro- formance of each machine with up-to-the- duced to Nevada in 1986, it is still pulling minute customized reporting identifying in the crowds. The Megabucks® game links “hot” and “cold” zones. Within minutes, the machines from various casinos to one pro- gaming floor could be remotely configured gressive jackpot and offers casinos a larger down to each terminal for optimized perfor- jackpot than they can offer on their own. mance. The time-consuming days of chang- Sever-based technology would give the ing the layout of slot machines on a weekly ability to link slots from different casinos or monthly basis would be gone. The casino around the world to progressive jackpots. manager could change the layout several This would provide an additional incentive 38 39 US$1.7 billion a year earlier. Pre-opening expenses in the first quarter But wealth distribution in Macau is uneven, and towering con- rose 10-fold to US$22.5 million from US$2.2 million a year earlier. In- struction cranes and occasional shining new casinos sit alongside Regional Briefs terest expense climbed 62% to US$34.6 million. narrow streets and old, decrepit housing estates. The Sands Macau, which opened in 2004 – becoming the first for- Public resentment over corruption has been rising due to the re- eign-operated casino to open in the city – accounted for 57% of LVS’ cent revelation that a former transport and public works official led a mum bets of half a million renminbi (US$65,000). Like most Chinese revenue last year. LVS spent US$12 million in marketing to help stave ring of nearly 30 people who skimmed as much as 800 million pata- gamblers in Macau, his favorite game was baccarat. off increased competition in Macau, President William Weidner said cas (US$100 million) from public construction projects between 2002 He told a Lisboa VIP room operator that he ran his own steel ma- on a conference call. Wynn Resorts opened the US$1.2 billion Wynn and 2006. Only one in 400 packages of land sold by the Government terials company and often paid off debts by issuing company checks Macau in September 2006. MGM Mirage is also building a new resort since Macau reverted to Chinese sovereignty in December 1999 has to mainland businesses affiliated with the room operators – a means in the city. been subject to public tender. to bypass Chinese restrictions against debt collection by Macau casi- LVS will unveil the US$2.4 billion Venetian Macao resort in July, Macau responded last month to a public outcry against rising nos on the mainland. as part of its Cotai Strip developments which the company recently housing prices by ending a popular immigration program that gave Last December, a Communist Party official from prosperous - Ji reported could cost up to US$14 billion. LVS also plans to spend US$2 away Macau residency to foreign investors, many of whom came angsu province next to Shanghai was sentenced to life for gambling billion over the next five years to develop hotels and condominiums from China, when they made real estate purchases of more than 1 away Rmb170 million (US$22 million) in public funds at overseas on nearby Hengqin Island, where it awaits final Chinese government million patacas (US$125,000). The government also pledged to stem gaming tables. approval for its plans. the inflow of foreign workers — mainly skilled construction workers Last year, LVS was also awarded the right to build Singapore’s first from Hong Kong who are perceived to be taking jobs from aging and Foreign Online Casinos Targeting Koreans integrated casino resort last, scheduled to open in 2009 at a cost of less technically sophisticated local laborers, and to build more public The Korea Internet Safety Commission announced on May 10 that it US$3.6 billion. In the US, LVS is set to add the Palazzo Resort Hotel housing units. had asked the country’s Internet service providers to block access to Casino to the Venetian, giving the company more than 7,000 hotel However, the day after the Labour Day march, the Macau gov- 549 foreign-based Korean-language gambling websites in March. rooms on the Las Vegas Strip ernment indicated its intolerance to public demonstrations, stating Sub-Concession Sale Yields Wynn Profit The sites target Koreans but operate overseas due to the country’s The growth of LVS has helped make Sheldon Adelson, 73, who it would pursue all who broke its laws and plotted against the city’s Wynn Macau recorded an overall profit of 6 billion patacas (US$750 ban on online gambling. Such sites have been proliferating – there owns about 70% of the company, the sixth-richest man in the world, development and stability. million) in 2006 on revenue of 2.1 billion patacas. The company had were only 96 in December 2004, but the number doubled to 170 by according to Forbes magazine. His net worth of US$26.5 billion as of actually incurred an operating loss of 410 million patacas during its December 2005 and 342 by December 2006. This year, there were 395 the end of last year ranks him behind Bill Gates and Warren Buffett. almost four months of operation since opening on September 6, but in January and 493 in February. its earnings were pushed into the black by a one-off gain of 7.2 billion By contrast, the number of pornographic Internet sites servicing patacas from the sale of a Macau casino sub-concession to Melco-PBL Korean’s has fallen over the past few years. The Korea Internet Safe- Man U to Play Venetian Cup Entertainment for US$900 million (7.2 billion patacas). ty Commission required Internet firms to cut access to 440 foreign Las Vegas Sands Corp, parent company of The Venetian Macao Re- websites that provide obscene content in Korean in December 2003. sort Hotel, announced that The Venetian Macao will serve as the title Taiwan Online Casino Busted However, the figure has headed south ever since, reaching 310 in De- sponsor of The Venetian Macao Cup – a football match pitting English cember 2004, 237 in December 2005 and 209 last December. Premier League powerhouse Manchester United against the Chinese Taiwan’s China Post reported in April that prosecutors and police had Super League’s Shenzhen Football Club. uncovered Taiwan’s biggest-ever online gambling website – which The battle for The Venetian Macao Cup will take place on July allegedly recorded total “revenues” of over NT$1.5 billion (US$45 mil- 23 at Macao Stadium. It will mark Manchester United’s first ever ap- lion) within half a year – and found police officers were involved in pearance in Macau and their only appearance in China as part of the the operation. team’s Asia Tour 2007. Macau “Golden Week” Visitors Surge Nearly 590,000 visitor descended upon Macau during the Labor Day Labour Strains in Macau Despite Macau’s recent stunning economic growth and apparent “Golden Week” holidays, which lasted from May 1 to 7. Visitor num- political stability, there are clearly strains under the surface. During bers to Macau during the week-long mainland Chinese holiday were the Labour Day march on May 1 - with protesters numbering 2,400 up 29% year-on-year. Some 60% of visitors to Macau during “Golden Singapore Gives Genting All Clear according to police, and 10,000 by the organizers’ count - police shot On April 16, Genting International broke ground on its US$3.4 Singa- Week” hailed from mainland China. five warning shots at the crowd of low-income construction workers pore integrated casino resort project, called Resorts World Sentosa. and civil servants, who had taken to the street to voice anger over The Singapore government gave Genting the go-ahead to build the More Misappropriation for Macau Gambling a raft of social problems in the city. One person was hit by a bullet resort following extended probity checks after the group announced Hu Jianping, the president of the Shanghai branch of state-owned and clashes between protesters and police continued late into the links with Macau tycoon Stanley Ho. China National Light Industry (Group) Corp, went on trial on charges evening. Genting International and sister company Star Cruises Ltd, which of embezzling company funds to pay off gambling debts incurred in Among the protesters’ grievances was a widening wealth gap, are both controlled by Genting Bhd, won the bid for the Sentosa re- Macau, effectively bankrupting his company and forcing it to close. LVS Profit Down on Building Costs widespread corruption, housing problems due to high real estate sort – Singapore’s second integrated casino resort – in December, but Mr Hu allegedly misappropriated Rmb25 million (US$3.25 mil- Las Vegas Sands Corp (LVS), announced its first quarter 2007 profit prices and an influx of foreign laborers, as well as complaints over the group upset Singapore authorities when it unveiled a tie-up with lion), of which Rmb167.4 million was used to pay off debts owed to fell 25% year-on-year as it spent more on developing new hotels in government policy on civil servants’ compensation for early retire- Stanley Ho a month later. operators inside the Lisboa casino. The rest of the money remains Macau and Las Vegas. ment and rights of abode for divided families. Genting International later withdrew from the Macau partnership missing. First-quarter net income decreased to US$90.9 million, or 26 cents The protest occurred at a time when Macau appears to have with Stanley Ho and bought out Star Cruises’ stake in the Sentosa Shanghai prosecutors began investigating Mr Hu in March last a share, from US$121.8 million, or 34 cents, a year earlier. Revenue achieved unprecedented prosperity. It has overtaken the Las Vegas project to allay concerns of Singapore authorities – Star Cruises re- year after receiving a tip-off that he was misusing company funds. Mr climbed 18% to US$628.2 million. Strip as the highest grossing gambling destination in the world, and mained in the Macau deal. “There is no issue now. We are only looking Hu was appointed head of the Shanghai subsidiary in 2001 and was LVS borrowed money to open the first phase of a 20,000-room its full-year per capita GDP in 2006 was higher for the first time than at our jurisdiction – who the partners and shareholders participating found by prosecutors to have made more than 30 visits to Macau in project on Macau’s Cotai Strip and a new addition in Las Vegas. LVS’ Hong Kong’s - US$28,439 vs. Hong Kong’s US$27,526. Meanwhile, the in Resorts World Sentosa are,” said Minister for Trade and Industry Lim the three years between 2004 and 2006. Mr Hu was said to place mini- total debt as of March 31 was US$4.42 billion, more than double the unemployment rate has stayed at a historic low of 3.2%. Hng Kiang. 40 41 International Briefs

ing, had sued the ministries of Justice and Economic Affairs for the Jersey, though the survey showed a slowdown in the rate of revenue banquettes set for VIP bottle service while the raised DJ booth sets Merger Creates Russian Slot Giant right to compete against Holland Casino with a property in Orion’s growth. Casinos in those two states took in US$238 million in poker rev- the pulse of the nightclub. Two ultra-VIP sections and two bars will sit Unicum and SmartGames, leading manufacturers and distributors of home city of Bergen op Zoom. enue in 2006, a 15% increase over 2005, when revenue had jumped 37%. on the outskirts of the dance floor. gaming machines and systems in Russia and the CIS countries, have The Council, in refusing their petition, stated that even though its Other Phase III additions that have recently opened at Atlantis merged to create the largest company of its kind in the region. decision could not be squared with EU law, it nonetheless was in the include: Financial terms were not disclosed, but the deal has been ap- public interest. A spokeswoman for the Council explained, “The Neth- • AQUAVENTURE, a non-stop water experience consisting of thrill- proved by the boards of directors of both companies, and the new erlands has deliberately opted for a single license holder in its desire ing new water slides, a mile-long river ride with high intensity rapids entity will trade under the name Unicum Gaming. It will be headed to protect the consumer, combat illegality and criminality and reduce and wave surges, and never-before-seen special effects. • Dolphin Cay, by Unicum President Boris Belotserkovsky as chairman. SmartGames gambling.” a dolphin interaction and education center created with the goal of CEO Valery Klesov will assume the post of chief executive. Peter Moffit, CFR could pursue the case through the European Union, where enlightening visitors about these remarkable ocean inhabitants. Unicum vice president and CTO, will be vice president for product de- it may get a more sympathetic hearing in the aftermath of March’s • The Cove Atlantis, a new 600-suite resort featuring designs by ac- velopment, and SmartGames Commercial Director Lyubov Loginova Placanica decision in the European Court of Justice. The European claimed interior architects Jeffrey Beers and David Rockwell, unprec- will head sales and marketing with the same title. Commission has launched investigations into alleged anti-EU protec- edented services and amenities, private all-adult and family pools, The combination of established contacts and distribution part- tionist policies in several countries, including the Netherlands. The EC lavish cabanas and breathtaking views of the ocean. ners, vast distribution and service networks, game portfolios and earlier this year issued “reasoned opinions” against Denmark, Finland manufacturing and R&D capabilities will give the new company an - Paul Doocey, IGWB and Hungary, which could be a precursor to infringement proceed- “inestimable advantage over its competitors,” said a press release an- ings against those nations, which were given two months to respond. nouncing the merger. The Commission is similarly scrutinizing trade practices in Germany, In addition to its own line of games and systems, Moscow-based Harrah’s Tops Listed LV Companies Italy, Sweden and France. The In Business Las Vegas newspaper released its rankings of Southern Unicum is well-known also as the Russian distributor for Atronic In- Nevada’s publicly traded companies by revenues. Harrah’s topped the ternational, Bally Gaming, Aristocrat Technologies, Ainsworth Game list with US$11.1 billion in revenue, but it will not qualify for the list Technology, Konami and WMS Gaming. Mixed Results for Online Gaming Software Makers next year if the announced buyout of the company by two private Unicum Gaming plans to extend its international reach. Both Two of the world’s leading online casino software providers recently equity firms proceeds. companies already enjoy a presence in Latin America and South Afri- reported their first quarter 2007 results. Harrah’s isn’t the only company making the transition from public ca, and these markets will “top the list” of expansion plans, they said. Playtech’s Q1 revenues rose to US$19.8m, up 14% year-on-year. to private, a trend analysts say is part of the maturation process of Online poker made a particularly strong contribution to Playtech’s the casino industry. Station Casinos, No. 9 on the list with revenue of revenue growth, with the company’s revenues from that sector up Kerzner’s New Line-up US$1.43 billion, is also being acquired by a private equity partnership, 58%. Kerzner International Resorts, whose Bahamas-based flagship prop- Fertitta Colony Partners LLC. Playtech was one of the gaming software makers that pulled erty Atlantis is currently the largest casino in the Caribbean and South In addition, No. 15 American Casino & Entertainment Proper- out of the American market following the US crackdown on online American markets, has made a couple of moves to further solidify its ties, making its initial appearance on the list, is being acquired by gaming. The company’s revenues from the non-US market were up leading position in the region. the Goldman Sachs Financial Group for US$1.3 billion in a deal an- 22% compared with the fourth quarter of 2006, and Playtech saw first Kerzner announced the appointment Robert F. Cotter as the new nounced last month. quarter 2007 non-US player revenue increase 85% compared to the president of the company. In this role, Cotter will be responsible for The fact that every public company in the top 10 had revenue first quarter of 2006. Playtech expects revenue growth to continue overall operations and marketing of Kerzner International Resorts, in excess of US$1 billion is indicative of industry growth. A year ago, into the second quarter of 2007. and will be actively involved as a member of the executive manage- eight companies had US$1 billion in revenue and No. 1 Harrah’s had Canadian gambling software provider CryptoLogic, on the other ment team in the strategic growth and development of the compa- US$7.11 billion – 56% less than this year’s top amount. hand, reported a 27% year-on-year drop in revenues for the first quar- ny worldwide. The functional areas of marketing, human resources, In 2000, when 40 companies were on the list, the top company ter of 2007, with its first quarter profits at US$1.5 million. CryptoLogic public affairs and entertainment, information technology and global had $696 million in revenue. Park Place Entertainment Corp, which also pulled out of the US market last year. The company forecasts its communications/public relations will report directly to him. operated Caesars Palace, held the top position, followed by MGM Mi- second quarter revenues will also decline. Cotter was most recently president and COO of Starwood Hotels rage, Harrah’s Entertainment and the Mandalay Resort Group. Since & Resorts Worldwide, Inc. He will be based in the company’s Planta- that time, Park Place and Harrah’s merged as did MGM Mirage and US Casino Revenue Reaches Record High tion, Fla. offices and will report directly to Sol Kerzner. Mandalay. Gambling revenues at US commercial casinos rose 6.8% year- Meanwhile, Atlantis Paradise Island continued to unveil new en- Two of the companies currently in the top 10 could make leaps in on-year to a record US$32.4 billion in 2006, according to a sur- tertainment amenities as part of its ongoing Phase III expansion. The the rankings with the outlook of higher revenue generated by casino Holland Casino Maintains Monopoly Status vey released recently by the American Gaming Association. latest to open is Aura, a nightclub developed by Las Vegas-based Pure properties opened in Macau. Las Vegas Sands Corp, which climbed Holland Casino has beaten back another challenge to its protected The survey assembled data from about 460 commercial casinos in 11 Management Group, the firm that created PURE, the Pussycat Dolls from No. 5 to No. 4 this year with US$2.34 billion in revenue, will open status as the Netherlands’ land-based monopoly. states from those states’ regulatory agencies. Lounge, Tangerine, Coyote Ugly and other well-known Sin City night- the Venetian Macau in July and should have about four months of The Council of State turned down a request by casino group CFR The survey did not include the gambling revenues from spots. revenue in 2007 counting toward next year’s revenue totals. for a casino license, essentially overturning a 2005 ruling by the Ad- 372 American Indian casinos in 28 states, 713 cardrooms in five Designed by internationally renowned architect Jeffrey Beers, Wynn Resorts Ltd., which climbed from No. 11 to No. 8 with US$1.6 ministrative Court of Breda, which many observers at the time consid- states or 11,567 video lottery terminal locations in six states. Aura is a 9,000-square-foot nightclub that aims to transform Bahamas billion in revenue, will have the benefit of a full year of revenue from ered groundbreaking as it questioned the state-owned monopoly’s The biggest gambling states by commercial casino rev- nightlife through exceptional service, distinguished staff and impec- its Macau property after opening there in September 2006. justification in light of EU treaty guarantees for the free provision of enue were Nevada at US$12.6 billion, New Jersey at US$5.2 cable design. Elevated off the casino floor, a grand staircase greets One other company, No. 2 MGM Mirage, will also have the benefit goods and services within the Common Market. billion, Indiana at US$2.6 billion, Mississippi at US$2.6 bil- Aura guests and invites them into a club experience. Once at club of some revenue generated in Macau with the opening of a property Compagnie Financiere Regionale, a partnership between French lion, Louisiana at US$2.6 billion, and Illinois at US$1.9 billion. level, guests will enter Aura where the dance floor and DJ booth com- toward the end of the year, but like Las Vegas Sands, it won’t have a casino operator Groupe Tranchant and Dutch slot maker Orion Gam- Poker continued its four-year rise in popularity in Nevada and New mand attention at first sight. The sunken dance floor is surrounded by full year counting toward next year’s list. 42 43 spa

It Takes a Cheat Armed with only “my hands, my brains and my balls,” Richard Marcus claims to have cheated casinos around the world out of US$20 million. Steve Karoul spoke to the man considered the world’s greatest casino cheat about his perfect record thwarting casino security

A fter twenty five years as a profes- sought to stop him. Unlike Mr Abagnale, the world’s greatest casino cheat? sional casino cheat, Richard Marcus retired however, Mr Marcus was never caught, and Richard Marcus: Well, it was a combina- on New Year’s Eve in 1999. The casinos are now that the statute of limitations on his mis- tion of three things: courage, brains and still after him, but not with a view to claiming deeds has lapsed, he never will be. lack of greed. First and foremost, you have back their losses. The following are excerpts from Steve to overcome whatever fear you have of get- Since his retirement, Mr Marcus has Karoul’s interview with Richard Marcus about ting caught. Then you have to be intelligent written four books on his exploits. He was how he managed to cheat casinos from Las enough to design and carry out creative inspired to tell his tale after watching the Vegas to Europe to Macau for so many years, casino cheating moves that work. Third, and Steven Spielberg film “Catch Me If You Can,” and his current career educating casino staff certainly as important as the first two req- BY APPOINTMENT ONLY based on the true story of legendary con on how to better protect their tables from uisites, you have to know when to stop – in Avenida da Praia Grande, China Law Building GF, Macau artist and impersonator, Frank Abagnale, Jr people like himself: other words, don’t be greedy. The old say- Tel: 331521 (played by Leonardo DiCaprio). ing about going to the well too many times Like Frank Abagnale, Richard Marcus applies to casino cheating as much as any- now consults for the very people who once Steve Karoul: What did it take to become thing else. 44

31 I guess it’s hard to find people with all I was a chip (check) manipulator. Either I right? Well, maybe so, but it made millions me. After all, who is better able to teach this three of those prerequisites? pastposted bets after they won, or did the and the casinos never figured it out until I stuff than someone who’s spent most of his Very. Some guys out there have tremen- opposite; greatly decreased the size of my wrote about it in my memoirs, “American adult life doing it? Practically all of the so- dous courage, some have rocket scientist’s bets when they lost, which is called dragging Roulette.” called experts who teach game protection brains, but few have both. And some guys or pinching. to casinos have never been out in the actual have courage for many things but not for So now you’re no longer a casino cheater. field like I have. They’ve never been cheat- casino cheating when they know that so The first part about pastposting, -I un Are you actually helping the casinos now? ers so there is a limit on their knowledge. In many different people and the surveillance derstand. But what about decreasing the Well, I retired from cheating seven years fact, at the WGPC [World Gaming Protection cameras will be watching every move they size of your bets after they lose? How is ago and have since written four books, the Conference] in Las Vegas, two surveillance di- make or might make. A funny story occurred that possible? Once they lose, doesn’t the first of which, “American Roulette,” is being rectors from major Las Vegas casinos told me back in Atlantic City one night after a big dealer take the chips? made into a feature film. I’m not yet ready to that they came to the conference only to see heavyweight fight. I was standing next to a [Chuckles]. Yes they do. But it’s actually a completely retire, so what better way for me my presentation. Both admitted they were New York wiseguy watching my partner do dragging move that I’m most famous for, or to stay busy than by consulting to casinos? enlightened by what I had to say like never a blackjack pastpost move, which is switch- should I say “infamous?” I came up with a Gaming is the only thing I know in life, so before. I certainly appreciated those com- ing in higher denomination chips after the roulette move where I bet a $5,000 chip un- that’s what I’m doing to keep occupied. ments. I really do enjoy teaching casino peo- bet wins. It so happened that this wiseguy derneath a red $5 chip on outside roulette ple the tricks of the trade. And I do guarantee was an acquaintance of my partner. He had prospective casino clients that my services bets. When the bet won, I collected either What services do you offer casinos? nothing to do with our casino cheating op- will save them thousands and thousands of five or ten grand, depending whether it was Complete game protection training for eration. However, after witnessing the move an even-money or 2 to 1 bet. When it lost, I dollars each year. and my partner’s coolness under pressure, educating their floor staffs and surveillance lost only ten bucks. I named the move “Sa- departments including everyone from deal- the wiseguy whispered, “You got guts kid. I’d Do you ever miss it? The thrill of cheating vannah” after a stripper I knew at the time. ers to cage employees. I teach dealers how sooner fight Mike Tyson than try that!” And, and getting over on the casinos and their This move is widely considered by the upper to be less vulnerable to cheaters and what believe me, he’d give Mike Tyson a good multi-million dollar surveillance equip- echelon surveillance people as the best ca- methods they can employ to sharpen up fight. Guts and courage are only part of ment. sino cheating move ever. I surely agree with their defenses. I actually give them a men- what’s required to be a good cheat. Skill is I guess that’s like asking a retired athlete them. I demonstrated it at the recent World tal checklist to perform before each deal of an even more important requisite. Not ev- if he misses the spotlight. You know, some- Game Protection Conference (WGPC) in Las cards, roll of the dice, or spin of the roulette eryone has both. times I think about those days and say, “Boy, I Vegas, and the audience, which consisted of ball. I teach floor people how to spot the had fun, I made good money and I never got key casino personnel from all over the world, scams and how to spot the ones that their caught or arrested,” but as long as I stay busy How hard is it to know when to stop? was quite impressed. very own dealers may be involved in. I teach now, I don’t really miss it. I do, however, love That depends on the person. For some- surveillance observers to recognize things telling war stories about some of my greatest one levelheaded enough, as I’ve always But how did you pull off such a move their cameras are showing them that are cheating experiences. considered myself to be, it was just a mat- without getting caught? not always evident. ter of surveying a casino after I did a cheat- [Chuckles again, louder]. Well, the key was ing move. If the move was absolutely clean I placed the $5,000 chip underneath the $5 What do you find to be the casinos’ ma- with none of the casino personnel having chip in a way that it was hidden from the jor weaknesses against cheaters? Steve Karoul concludes: “Richard Mar- been bothered, then I would go right back dealer. In other words, the dealer knew there On the floor, it’s mainly that dealers, floor- cus is the real deal, dealer and cheater. I and do it again, and again, as long as no were two chips there but couldn’t make out men and pit bosses are all far too dependent have spoken to several high level gaming one was picking up on what I was doing. the denomination of the bottom chip and on the “eye in the sky” or the cameras. They friends that have seen Richard’s seminars But once a little heat started coming down, therefore assumed it was another $5 chip. So figure that since every square inch of casino and conferences and they all say that he is I would just cash out and go to another ca- when the bet lost, I raked it off the layout be- space is taped 24/7 they don’t have to be on very, very good if not the best cheater that sino, even another gambling town if it got fore the dealer could sweep it. If I was caught, their toes. Not so. I like to say, “Remember, a they have ever seen. Richard is available hot enough. I’d just go into a drunken routine and claim in camera is not going to tap a pit boss on the and puts on a great educational program Some cheaters take the attitude to keep slurred words that I didn’t realize that the ball shoulder and say, ‘The guy on blackjack table for your staff. Remember, we train dogs and working under adverse conditions, until had dropped. Then I would put back the two number four just made a move.’” It has to we train dolphins but we educate people. If they’re taking tons of heat. This is impru- $5 chips I’d had palmed in my hand. Since work the other way. The people on the floor anyone would like additional information dent and often leads to getting caught. I al- the dealer believed my original bet was just have to know what they are looking for, as about Richard’s ‘educational programs’ de- ways had the attitude that the casinos were that, two $5 chips, there was never much of well as looking at. The cameras are just like signed to help casinos better understand always there for the taking, so if conditions a problem. computers. If you don’t give them proper in- cheating and enhance their staffs’ ability to were not right, I’d just let them hold on to put, you don’t get proper output. So I teach guard against such scams, please email me “my” money until the next time. Schedules What happened when the bet won, espe- not only the scams but the subtleties that for details.” vary and staffing varies especially in large cially if the dealer didn’t know the $5,000 indicate a scam might be in the works. It is casinos, so with a little patience I would chip was there? a different type of educational approach that wait until I found the weak links and then I immediately started ranting and raving the casino staffs really enjoy. Steve Karoul is one of the world’s leading casi- make my moves. But if I sensed any pres- with joy, pointing to the bet, screaming, no marketing consultants with almost 30 years sure or heat at shift change I would simply “There’s my $5,000 winning chip!” The beau- Are high-level surveillance people com- of experience with top casinos both in the US cash out and leave. ty of it was that when they went to surveil- fortable with learning from the world’s and internationally. Steve can be reached at tel: lance to verify that it was a legitimate bet greatest casino cheat? I mean, is there (1-860) 536-1828, fax: 536-1898, or by email: What was your specialty in cheating the and not pastposted, the cameras backed me ever reluctance on their part? [email protected]. His website: www.euroa- casinos? up every time! The move sounds ridiculous, If so, it dissipates quickly once they listen to siacasino.com. 46 47 48