March 2008 • MOP 30 Moving with Mocha Charting the evolution of Macau’s nascent slot market Online Gaming in Focus: Perfect Storm Seeing is Believing Building Asian Appeal In-Flight Gambling: Mile High Club Elixir’s Stellar Commitment RFID: The Need for Speed 6 CONTENTS March 2008 Moving with Mocha 6 Moving with Mocha 14 Mile High Club 18 Perfect Storm 25 Building Asia Appeal 28 The Need for Speed 34 Stellar Commitment 36 Seeing is Believing 40 Regional Briefs 42 International Briefs 45 Sparkling Display 48 Events Calendar 18 14 MobileMobile GamingGaming 2 INSIDE ASIAN GAMING | March 2008 March 2008 | INSIDE ASIAN GAMING 3 Editorial Surprise Turn in the Revenue Race Fickle weather could not cool the ardour for chasing fickle fortune in Macau. From mid-January, China suffered its severest winter weather in fifty years, with snow storms paralysing large parts of the country. In such conditions, it can be difficult to muster the will to step out of home for non-essential purposes. Yet crowds of mainland Chinese did just that to make their way to Macau. Visitor arrivals from China rose 23% year-on-year in January, and the city’s casino revenue for the month reached a new all-time high of 10.43 billion patacas (US$1.3 billion)—a whopping 70% year-on-year increase. If the January performance is sustained, Macau will continue its climb up the international casino performance leaderboard. Macau grabbed international headlines when, in 2006, its casino revenue overtook that of the fabled Las Vegas Strip. As Macau left the Vegas Strip in the dust, the next logical rival to pit it against in a casino revenue race—a totally arbitrary construct, designed to feed the hunger for headlines supporting the Macau hype—was all of Clark County, encompassing El Rancho the Strip, downtown Las Vegas and other southern Nevada cities. In what turned out to be a close race that brought the Macau hare onto the rear claws of the Clark County tortoise in full-year 2007, casino revenue at the former soared 46.6% year-on-year to US$10.38 billion, while revenue at the Editor and Publisher latter made a measly 2.1% gain to US$10.87. Kareem Jalal Macau was poised to finish off Clark County this year, after which an even greater race rival would have to be found. In a surprise turn, however, Macau overtook both Clark County and its next Director logical race rival, the entire State of Nevada, in January, when Nevada casino revenue fell almost 5% João Costeira Varela in the month to US$1.06 billion. Although the race has eleven more months to run, and one month does not a trend make, Macau has an early lead in clinching more hype-worthy headlines. Business Development Manager Las Vegas had, until now, avoided the slump in casino revenue seen throughout much of the US Matt Phillips over the past year, and has not experienced a dip in earnings since the country’s sense of security was rocked in 2001. Operations Manager Major Vegas operators have made a point of drawing attention to signs of market weakness José Abecasis observed at the beginning of 2008. Steve Wynn lent his voice to the chorus calling for realistic expectations when he commented: “It would be unsophisticated to think Las Vegas is a magical Contributors island unto itself immune from the effects of the communities that serve it and its visitors.” Michael Grimes, Steve Karoul Mr Wynn has already suffered the fallout of unrealistic expectations. Wynn Resorts was among the US casino companies that suffered a sharp correction in its share price following the realisation Graphic Designer that analysts’ expectations for Macau were wildly optimistic. Given how wildly successful Macau Brenda Chao has actually been over the past year, these expectations can rightly be viewed as magical. The expectations were based on the spectacular casino boom Macau embarked upon in Photography 2004, which led to the belief that operators could enjoy immediate, explosive demand for any Ike new product they brought to the market. The trouble is, while explosive growth in Macau’s casino sector has become a hot international news topic, it is only because the growth came against an already established base, so that the revenue increase was substantial in both relative and absolute Inside Asian Gaming terms. Explosive growth from a negligible base, however, will take time to ramp up and generate is published by significant absolute gains. Must Read Publications Ltd At the time of the 2004 casino boom, Macau had almost no other established markets Suite 1907, AIA Tower, 215A-301 for visitors, such as retail and entertainment. Even the casino market did not extend beyond Av. Comercial de Macau - table gaming. Macau This issue of Inside Asian Gaming profiles Macau’s slot pioneer, Mocha Clubs, which cultivated Tel: (853) 6646 0795 the slot machine market from an insignificant base in 2003. Slot revenue has showed much more explosive growth in percentage terms than the overall casino market, but because it essentially For subscription enquiries, started from near zero, will take time to develop to the levels seen in Vegas, where it commands the please email lion’s share of total casino revenue. [email protected] Many look to the evolution of Las Vegas to postulate how Macau could develop. The foundation for the future development of Las Vegas was laid by the development of the “casino resort” on what For advertising enquiries, was to become the legendary Las Vegas Strip. The first of these was the El Rancho, pictured above, please email [email protected] which opened in 1941 at a location several miles out of town in order to benefit from cheaper land or call: (853) 6646 0795 and to avoid city taxes. And so the Strip was born. Over four decades, Las Vegas transformed itself from obscure desert town to the self-proclaimed www.asgam.com entertainment capital of the world. While Vegas casino operators once virtually gave away food and entertainment to support their gaming operations, the revenue mix of Strip properties has shifted steadily in favour of non-gaming sources, which now contribute over 50% of total revenue. While Macau has taken an unassailable lead in the casino revenue race, the real indication that Printed by bullish investment in the city has succeeded in driving a Vegas-style evolution on an accelerated Icicle Print Management (Macau) Ltd time-frame will be Macau’s emergence as a contender in the non-gaming revenue race. Tel: (853) 2871 2818 Fax: (853) 2871 2898 Kareem Jalal www.icicleprint.com We crave your feedback. Please send your comments to [email protected] INSIDE ASIAN GAMING | March 2008 4 March 2008 | INSIDE ASIAN GAMING 5 Cover Story Moving With Mocha Macau’s slot market is evolving fast, and the shifting trends are best observed at the city’s slot pioneer, Mocha Clubs. As Chief Operating Officer Constance Hsu explains, Mocha’s personal service and responsiveness to players’ needs enables to it outperform the market by a wide margin, despite intensifying competition from glitzy new casino resorts nside Asian Gaming is tired of hearing anything significant in the non-gaming absolute gains might scarcely match one Macau called “Vegas on steroids.” realm—sporting and musical spectacles of those analysts’ annual bonuses. A well- I Casino operators—armed with over characterised by logistical problems and/or cultivated new market showing explosive US$20 billion in investment—are on a lacklustre attendance do not count. Analysts’ percentage growth will eventually grow mission to transform the erstwhile hardcore overly-aggressive forecasts have already led into something formidable, however, such day-trip gambling getaway into a diversified to disappointment and a sharp correction as the entertainment market in Vegas. It tourism and entertainment hub in the Vegas in the prices of US gaming companies with just takes time. mould. Pundits predict they could replicate Macau exposure. When Venetian Macao’s results for the in five to ten years what took fifty years to It is a pity the analysts did not look fourth quarter of 2007—the first full quarter create in Vegas. to the evolution of Macau’s nascent slot of operation—were announced, analysts Macau may have left the Vegas Strip market to predict how a completely new accused the property of failing to “live far behind in terms of casino revenue, market could take root in the city—showing up to the hype.” It probably will not take but beyond hosting a few conventions at explosive growth in percentage terms, but as long as fifty years for significant retail Venetian Macao, has yet to accomplish against a near-zero base, so that the initial and entertainment revenues to emerge in 6 INSIDE ASIAN GAMING | March 2008 Macau, but if the time-frame is to be set in which enabled the cultivation of a new stock and Sands tapped into it. To its credit, Sands single-digits, it should at least be in years, market-darling, to the latter, which involves played a key role in drawing crowds of mass- not quarters. rehashing the tired analogy of throwing market gamblers to Macau, although it did The lofty expectations that preceded the open the floodgates. abandon its exclusive mass-market focus steep sell-off in gaming stocks were inspired The 2004 boom led to the widespread to also pursue the lucrative VIP baccarat by the spectacular casino boom that Macau application of Sheldon Adelson’s supply- business, which continues to command the embarked upon in 2004. Beijing’s easing of creates-demand thesis to Macau, even lion’s share of the city’s casino revenue.