JURISDICTION UPDATES November 2016 Edition
IN FOCUS
Trends in Asian gaming Game makers tweak offerings as mass market dominance grows pg.30
MACAU
Location key to Cotai success pg.06
AUSTRALIA
China creates marketing migraine pg.36
PHILIPPINES
Pagcor asset opportunities pg.14
KOREA
Mohegan Sun shines spotlight on non-gaming pg.24 MGS 2016 SUPPLIER SPECIALS pg.44
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MESSAGE 3
Strong and steady
A
s the year draws to a close and one of the last events
Cambodia, both of whom are reviewing their gaming regulations
in the gaming calendar opens its doors, AGB takes
and set to announce updates imminently. Two IRs in Vietnam
stock of the most significant developments in the
will be allowed to offer gaming to locals, subject to various
region throughout the past year.
restrictions, though whether this will prove a game-changer
Giving the keynote address at the MGS Entertainment Show
is yet to be seen.
conference, DICJ director, Paulo Martins Chan, will be sharing
Both jurisdictions are also expected to overhaul their sports
the Macao SAR Government’s continuing efforts to achieve its
betting and online gaming regulations, which will hopefully give
goal of becoming a “World Tourism and Leisure Centre”, with
regional operators clear guidelines for operating and provide
diversity and sustainable growth the key message.
some protection against unlawful operators.
Recent GGR figures from the SAR seem to point to a steadying
Authorities in India are saying that the only real way to curb
of the ship and calmer waters. New supply that has come online
India’s massive illegal gambling market is to provide a legal
in Macau appears to be finally helping to boost monthly revenue
framework. Sikkim and Nagaland have recently permitted online
after two years of declines. However it is difficult to accurately
gambling and, to add to the mix, the Supreme Court has ruled
forecast what lies ahead, particularly in light of China’s recent
that games of skill, such as rummy, are permitted, so change
crackdown on alleged illegal marketing activities of Australian
is on the way, albeit in a piecemeal way.
operator, Crown.
The Philippines is another jurisdiction that is seeing a shake-up
Increasing the proportion of non-gaming revenues is still the
in gaming laws and regulations, with Pagcor emerging as a new
mantra in Macau, and other planned regional developments
licensor of online gaming, and preparing to divest itself of its
seem keen to be ahead of the game when it comes to providing a
casino assets in order to move towards a sole role of regulator.
diversified offering. Mohegan Sun’s planned resort in Incheon,
Other small (in comparison) jurisdictions to watch include Nepal
Seoul, will include a modern sports and entertainment arena,
and Saipan, the former counting on the swelling numbers of
state-of-the art theme park and entertainment district,
middle-class gamblers from neighboring India and the latter
historical centers that pay tribute to the Native American and
seeing soaring VIP rolling chip revenue and bookings ahead
Korean culture, as well as a range of dining, retail, nightlife,
of the official opening of the Imperial Pacific Resort & Hotel
healthy and beauty services.
in early 2017.
If Japan surprises everybody and finally passes its “Casino
In keeping with the theme of trends, our focus articles this edition
Bill” in this Diet session, we are sure to start seeing designs
concentrate on current directions of electronic gaming in terms
for some of the most extravagant casino resorts in the region.
of design and platforms, RNG or online slots, and poker in Asia.
Some experts are saying that the likelihood of the bill passing
AGB is a proud industry partner of MGS, and will be hosting
is near 100 percent, though this might be a foolish bet given
the Official MGS Networking Party on Tuesday 15 November
the track record so far.
at China Rouge. We look forward to seeing you at the show!
Rosalind Wade
Luis Pereira
Russia’s gaming zones are also hotting up. Hong Kong-listed NagaCorp is to start construction of its gaming facility in Primorye
@agbrief
in November this year. The project will include hotel facilities,
Asia Gaming Brief
Asia Gaming Brief
along with a casino and a water park. Meanwhile, Summit Ascent’s Tigre de Cristal resort, which opened in Primorye a
On behalf of Asia Gaming Brief
year ago, has seen increasing visitation and rolling volumes.
Rosalind Wade & Luis Pereira
Two of the biggest stories at the moment are Vietnam and
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Asia Gaming Briefings | November 2016
CONTENTS 4
NORTH ASIA
GREATER CHINA
AUSTRALASIA
MACAU
06
RUSSIA
20
AUSTRALIA
36
TAIWAN
10
JAPAN
22
CNMI
38
SOUTH KOREA
24
INDOCHINA
SOUTH EAST ASIA
SOUTH ASIA
MALAYSIA
12
VIETNAM
26
NEPAL
40
PHILIPPINES
14
CAMBODIA
28
INDIA
42
SINGAPORE
18
SPECIAL FOCUS
30
Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT
44
LAST WORD
66
GREATER CHINA
6
MACAU
New resorts gamble begins to pay off It’s starting to look like if you build it, they will indeed come. Certainly not in droves, but analysts say the new supply that has come online in Macau appears to be finally helping to boost monthly revenue after two years of declines.
GREATER CHINA
R
7
atings agency Fitch said it’s not expecting a V-shaped recovery in Macau, but added its voice to the growing chorus of opinion that the market may have finally stabilized. According to analysts, EBITDA at the six operators may have returned to positive territory in Q3. “Company EBITDA could grow to US$1.57 billion (+5 percent YoY, +7 percent QoQ) due to cost cutting, seasonality and higher rental income, partially offset by increased operating expenses from the opening of the Parisian and Wynn Palace,” Morgan Stanley said in a note. Union Gaming agreed, adding that the grind and base mass segments of the market continue to be the strongest performers. Las Vegas Sands’ French-themed The Parisian Macao was the latest entrant, opening its doors in mid-September. The resort was widely praised for having tapped into the right segment of the market at the right time. The $2.8 billion property aims to provide a piece of France in the center of Macau, playing into the desires of many mainland Chinese, who list Europe as among their dream travel destinations. Famous landmarks “Look at where Chinese outbound have been traveling to predominantly in the past decade. Paris and the Eiffel tour are iconic to Chinese visitors,” said Glenn McCartney, associate professor in Gaming & Hospitality Management, University of Macau. “There has been the mention of a Londonthemed resort possibility where you could imagine iconic British scenes such as the British flag, Tower Bridge to the British phone box. Sure there are many more attractions around France and the UK, but in the world of the fabricated theme environment and winning audiences, you
GROSS GAMING REVENUE Y15 MOP 230.84b
-34.3%
Y16 October MOP18,8b
+8.8%
Y16E MOP200bb (Source: DICJ)
pick those that will appeal the most.” CLSA said the resort had a much more family-oriented feel to it than the upscale Wynn Palace, which made its debut the prior month. The opening also solidifies Sands China’s position at the heart of Macau, with the Venetian next door and Sands Cotai Central across the road. In the near future, the properties will be connected so that visitors don’t have to set foot outside. “This issue of location on Cotai and
“
WE HAVE UNDERAPPRECIATED THE LOCATION OF THESE PROPERTIES AND, PERHAPS MORE IMPORTANTLY, THE CONNECTIVITY TO OTHER RESORTS. THIS SHOULD HAVE BEEN OBVIOUS AFTER WE SAW THE CHALLENGES OF STUDIO CITY
”
perception of convenience to Chinese travelers is so important,” McCartney said. The all important issue of location is seen as one of the reasons for a slow ramp up at Melco Crown Entertainment’s Hollywood-themed Studio City, due to its position at the far end of the Cotai strip next to the Lotus Bridge immigration point. The resort is expected to benefit once
neighboring Hengqin Island is built out and a planned rapid transit rail station is built, but at present it is not viewed as convenient. Location, location, location Connectivity and positioning of resorts on the Cotai strip is likely to be key to the speed of the ramp up of the properties and its importance may have been underestimated, CLSA said in a recent research note. The firm noted that foot traffic was strong at The Parisian Macao, compared with Wynn Palace. The Parisian Macao reportedly has about 45,000 visitors a day, compared with 15,000 at Wynn. “While it can be argued that a premium product is naturally going to see lower visitation, we feel that there will be a material impact on ramp up speed,” the note said. “We have underappreciated the location of these properties and, perhaps more importantly, the connectivity to other resorts. This should have been obvious after we saw the challenges of Studio City,” it said. Although, the market does appear to have stabilized, analysts are warning that the risk of cannibalization from existing properties may have been underestimated. “When fully ramped in 2018, we estimate that Parisian will generate over one-fifth of profitability at Sands China and have an ROI of over 20 percent of the nearly US$3bn development cost. However, Parisian will cannibalize legacy properties (higher than we originally had expected); although the integrated resort will be net additive to Sands’ profitability,” Bernstein Research said. There are also signs that the increased supply in the market may be driving down room rates, although occupancy remains strong.
Exclusion requests gain Macau’s gaming regulator received a total of 258 requests for exclusions in the first nine months of 2016, according to data from DICJ. A total of 240 individuals requested to be added to the exclusion list, while 18 were submitted by third parties. The gaming hub has seen a steady increase of individuals requesting for exclusion each year, from 252 in 2013, to 328 in 2015, according to data.
Asia Gaming Briefings | November 2016
GREATER CHINA 8
Reduced rates “Same-store” rates were down 13 percent year-on-year in September, according to Wells Fargo analysts. The brokerage noted that the opening of Wynn Palace, The Parisian Macao, and Studio City has seen Cotai Strip supply up 17 percent year-on-year. That follows a 12.2 percent decline in prices in August. However, average hotel occupancy reached 92.6 percent, up 4.4 percentage points compared to 88.2 percent in August 2015. MGM Resorts is scheduled to open its MGM Cotai property in the second quarter of next year, having pushed back the date due to market conditions, while ultra high end hotel project The 13 has also delayed its opening until early next year. With a gross floor area of approximately 945,000 square feet, The 13 Hotel offers approximately 200 duplex suites and villas and a suite of Rolls Royces for guests. It will be one of the most expensive hotels ever built. SJM had also been planning to reopen its revamped Jal Alai hotel and casino by the end of this year, though the timing is now uncertain.
SJM HOLDINGS (880:HK) Has 20 casinos on the Macau Peninsula. Mass market property the Jal Alai is being revamped and is now expected to reopen towards the end of the year, with 130 rooms and 45 gaming tables. The company is currently building The Grand Lisboa Palace on Cotai, which is scheduled for completion towards the end of 2017. The casino’s original plans were for 700 gaming tables and over 1,200 slot machines across a gaming floor area of approximately 27,000 square metres. The resort will feature a Palazzo Versace hotel and a Karl Lagerfeld Hotel and the total production cost is estimated at about HKD$30 billion ($3.8 billion). SJM in March opened a new gaming area at the Grand Lisboa, which includes 870 square meters of space, with 10 gaming tables and over 40 slot machines as well as a dining area. For Q3, the company reported an 11.1 percent drop in gaming revenue to HK$9.99 billion and EBITDA of $810 million, 8.4 percent lower than the prior year.
GALAXY ENTERTAINMENT GROUP (27.HK) Has three main properties and runs three City Club casinos inside hotels. The company’s Asia Gaming Briefings | November 2016
new Galaxy Macau Phase 2 and Broadway at Galaxy Macau opened on May 27, 2015, almost doubling the capacity of the resort. The group was recently granted an extra 100 tables, adding to the original allocation of 150 tables. That’s still far short of the 400 it had requested, but brings it in line with the table award given to Melco Crown Entertainment’s Studio City. In August, the group’s StarWorld Hotel officially opened its new mass gaming floor on the third floor with a 108-seat electronic table game arena. The floor will also feature 14 gaming tables and 159 slot machines. The operator said it continues to move forward with Cotai Phase 3, “with the potential to commence site preparation works in late 2016 and Phase 4 in 2017.” In Q3, the group reported an 8 percent year-on-year rise in net profit, above analyst expectations and said it was “encouraged by the continuing signs of market stabilization.” The company reported profit of HK$2.7 billion ($348.1 million) for the quarter ended in September, while revenue rose 5 percent to HK$12.9 billion. Group adjusted EBITDA rose 28 percent year-on-year to HK$2.7 billion. Galaxy mass revenue grew 17 percent year-on-year, better than market growth of +6 percent year-on-year, Morgan Stanley said. Non-gaming revenue also grew 18 percent quarter-on-quarter, driven by a 24
percent quarter-on-quarter growth in retail rental income.
SANDS CHINA (1928:HK) Has five properties in Macau. The new $3 billion The Parisian Macao opened in September and received a highly positive reaction from analysts, who called it the right product, targeting the right segment at the right time. It features a scale replica of the Eiffel Tower, nearly 13,000 hotel rooms, two million square feet of retail-mall offerings and two million square feet of MICE capacity. The company recently announced its retail line up for another 170 shops. An air-conditioned walkover bridge with moving sidewalks is also planned, which will connect The Parisian Macao to Sands Cotai Central. With the opening of The Parisian Macao, Las Vegas Sands now dominates the centre of the Cotai strip, with the Venetian next door and Sands Cotai Central across the road. Significantly the resort stands in between Melco Crown Entertainment’s City of Dreams and its new sister property, Studio City. Sands was still only awarded 100 tables at the open, like the VIP-focused Wynn Palace. The resort moved over 310 tables from other properties for a total of 410, split
GREATER CHINA 9
between 49 VIP and 361 mass. Three junkets -- Sun City, Guandong and Tak Chun -- are operating at the casino. The Parisian Macao will further be able to increase its table count by 25 in January next year and a further 25 the following year. Total net revenues for Sands China increased 3.6 percent to $1.72 billion in Q3, compared to $1.66 billion in the third quarter of 2015. Net income for SCL decreased 5.5 percent to $324.3 million. The Parisian Macao contributed more than 19 million in adjusted property EBITDA in its first 18 days of operations.
MELCO CROWN ENTERTAINMENT (6883.HK) Has three casinos. The company’s $3.2 billion Studio City opened on October 27, 2015, with an allocation of 250 tables, short of the 400 requested. All tables were initially allocated to the mass sector, a first in Macau, but it now plans to open three VIP rooms. The DICJ has said it’s considering MCE’s VIP room request. The resort features a 5,000-seat multipurpose theatre, a permanent magic show, jungle-themed river rides, Asia’s highest Ferris wheel and a Batman simulated ride. MCE says the resort will be made up of 95 percent non-gaming components. Joint venture partner Crown Resorts recently said it would sell down some of its stake in Melco Crown, selling the stock back to Melco for about $800.8 million. Melco Crown Q3 results beat expectations helped by an improved performance from Studio City. Adjusted EPS was $0.13 per ADS, up from $0.11 per ADS a year earlier and above the $0.07 per ADS consensus. Revenue for Q3 rose 22 percent to $1.15 billion and beat estimates for $1.1 billion. Net revenue at Studio City was $229.5 million. However, analysts said the improvement at Studio City may have been at the expense of City of Dreams.
WYNN MACAU (1128:HK) Opened its $4 billion Wynn Palace in Cotai on August 22 after facing construction delays. The company’s original property is on the Macau Peninsula. The Wynn Palace has 1,700 hotel rooms and 90 percent of the resort will be non-gaming. The company said the resort will feature a performance lake, casino, spa, retail and other outlets. It was aiming for
about 500 table games, but was only granted 150, with 100 at the opening, 25 in January and the remainder in 2018. Unlike other recent openings, the resort will have VIP operations, with Suncity Group, Tak Chun Group and Guangdong Group announcing they will be operating VIP rooms. Morgan Stanley said it believes the market is underestimating the potential of Wynn Palace, mainly due to a slow ramp up of the mass business. It estimates Wynn Macau EBITDA will grow from $676 million in 2016 to $961 million in 2018, with Wynn Palace to achieve EBITDA of $433 million in 2018. In Q3, Wynn reported net revenue from its Macau operations fell 11.5 percent to $518.1 million. Adjusted property EBITDA from Wynn Macau was $151 million for the quarter, down 7.3 percent from $162.8 million for the same period of 2015. Wynn Palace reported net revenues and adjusted property EBITDA at $164.6 million and $25.5 million. Company officials complained ongoing construction was making access to the resort difficult. In September, Wynn Macau announced the appointment of Ian Michael Coughlan as president of the company, effective immediately. He replaces Gamal Abdelaziz who resigned to pursue other opportunities.
GROSS GAMING REVENUE -5%
Y16E
(Fitch)
-6%
Y16E
+5%
Y17E
+6%
Y18E -17%
Y16 VIP Y17 VIP Y18E VIP Y16E mass
-4% +2% +4% +12%
Y17E mass Y18E mass
+9%
(Source: CLSA)
MGM CHINA (2282:HK) Is operating a single casino in the peninsula. The opening for its new $2.9 billion development, the MGM Cotai, has been pushed back from late 2016 to the second quarter of 2017. The resort will not feature any VIP rooms at the opening and will focus on mass gaming, while its original property will continue to offer VIP services. MGM Cotai will have approximately 1,500 hotel rooms and suites, meeting spaces, high end spa, retail offerings and food and beverage outlets. The HK$24 billion ($3.1 billion) project has a jewellry-box design and 85 percent of its gross floor area will be dedicated to non-gaming facilities. The group has begun a series of recruitment fairs for its new Cotai property. The fairs will be organized in collaboration with Macau Federation of Trade Unions, Federation of the Macau Residents Association, Macau Gaming Industry Laborers Association (MGILA) and the Macau Women’s General Association. There will be around 1,200 new positions with approximately 6,000 job openings for both gaming and non-gaming departments.
Li praises diversification efforts Chinese Premier Li Keqiang praised recent economic improvements in Macau and said the work of the local government had been very positive. On a three-day visit to the special administrative region, he said the central government also supports the local economy. “I had the opportunity to see and acknowledge the modernity and prosperity of Macau but also the cultural diversification and I believe that this will continue and the economy will reach the goal of its diversification,” he said.
Asia Gaming Briefings | November 2016
GREATER CHINA 10
TOURISM ARRIVALS Aug. 863,540 China arrivals Aug. 248,538 Jan - Aug 7,143,912 China arrivals Jan - Aug 2,658,236
TAIWAN
Penghu residents hammer nail in casino bill coffin Residents on the island of Penghu have voted against casino development, dashing hopes for long-stalled legislation to open up the industry in Taiwan.
I
n an Oct. 15 referendum, about 80 percent of those who voted rejected casino developments on the island, with about 33,000 ballots cast. This was a more resounding “no” than in a prior referendum on Penghu in 2009, when the split was 55-45. Following the “no” vote, the government said it would take other measures to try to boost visitor numbers and the economy of the island chain. Premier Lin Chuan told legislators Penghu has clean and beautiful landscapes that could be transformed into eco-tourism attractions and its islands can be given distinctive “green” energy features alongside further development of low-carbon projects. “The county’s tourism could be upgraded if it featured ‘green’ energy and its beauty and special characteristics can be seen. We believe that Penghu’s natural landscapes and features have the potential to be turned into global attractions,” he said. Simple majority Under the Offshore Islands Development Act, Taiwan’s offshore islands can create tourist areas that include casino zones if the island’s residents approve by a simple majority vote in a county-wide referendum. The proposal was designed to boost tourism and attract more foreign investment. To date only Matsu has approved casinos in a referendum, while Kinmen, a few miles Asia Gaming Briefings | November 2016
from the mainland Chinese coast and famous for its local liquor, has not shown much interest in moving ahead with a vote. The failure of the Penghu vote means it’s highly unlikely Taiwan’s Legislative Yuan (LY) will pass the Tourism Casino Administration Act, the casino gaming regulatory act which has been pending in the LY since 2013. The LY was unwilling to pass the legislation in the wake of the successful casino gaming referendum in Matsu in 2012, when both the Executive Yuan (EY) and the LY were dominated by the Kuomintang (KMT), a party which has historically been favorably disposed to the development of casino gaming in Taiwan’s offshore islands. Onerous terms The Democratic Progressive Party, which is now in power, has opposed legalizing gambling. While the LY was not willing to pass the Act for the sake of Matsu alone, it may have been more inclined to pass the Act if a majority of the eligible offshore islands had voted in favor. However, Bill Bryson, a leading gaming lawyer and Taiwan expert with Global Market Advisors said even if the referendum and subsequent act had been passed there were still hurdles to be overcome. Some of the DPPpromulgated amendments put forward in the framework legislation have been seen as too onerous to attract large overseas investors.
-3.44%
-32.4%
+6.42%
-3.9%
(Source: Tourism Bureau)
Elderly should be allowed a flutter, local politician says Changhua County Commissioner Wei Ming-ku said the central government should legalize gambling for those people who are 65 or older to help combat the effects of Alzheimer’s disease, local media reports. Speaking at an event to mark World Alzheimer’s Day, he pointed to the example of a 94-year old woman who kept her mind agile by gambling every morning.
Pigeon racing clampdown nets $3.62 Mln Authorities have cracked down on pigeon clubs, seizing about NT120 million ($3.62 million) in assets and confiscating equipment after animal rights group PETA Asia complained about the mistreatment of birds by illegal gambling rings. PETA claims pigeon racing leads to the death of 1.5 million birds a year. Agriculture Minister Chen Bao-ji said gambling on pigeon races is illegal.
Among those are amendments which would: a) shorten the license term from 30 years to 15 years; b) impose a minimum NT$60 billion (approximately US$2 billion) capital requirement on licensees; c) impose taxation in the amount of up to 62 percent of gross gaming revenue, on top of a 17 percent tax on net income; and d) impose a limit of two licenses per island. If these proposed amendments are incorporated into the draft Act, it is unlikely that Taiwan’s casino zones will be attractive to many potential foreign investors, Bryson wrote prior to the referendum vote.
11
Asia Gaming Briefings | November 2016
12
SOUTH EAST ASIA
12
MALAYSIA
No extra casino space in RWG expansion Malaysia’s only casino operator is getting set to roll out new attractions in a major revamp of its flagship property in the Genting Highlands, however, the group’s chairman is warning that it won’t include more room on the casino floor.
SOUTH EAST ASIA
G
13
enting Malaysia’s RM10 billion “We understand that Malaysians continue ($2.4 billion) expansion of its to dominate visitation to Genting Highland, of highlands resort, known as the which day trippers constitute about 70 percent Genting Integrated Tourism of total visitation. On the other hand, Chinese Plan (GITP), is seen as the biggest driver for tourists only made up about 3 percent of total potential growth at the Malaysian operator. visitations to Genting Highland,” it said in a The ten-year plan was first announced in 2013 recent report. and foresaw a budget of RM5 billion. That was subsequently doubled, mainly to account for Overseas expansion more spending on theme park attractions. The group had remained tight lipped In Q2, the group reported total revenue about the casino component of the expansion, increased by 13 percent to RM2.23 billion, while however, chairman and chief executive Tan adjusted earnings before interest, taxation, Sri Lim Kok Thay has now said the plans depreciation and amortization and profit don’t envisage extra space on the casino floor. before tax grew by 52 percent to RM662.2 While total area for gaming will not million and 89 percent to RM512.1 million increase, this doesn’t mean there will be no respectively from 2Q15. Net profit more than additional facilities, said Lim. “We will see. If doubled to RM465.3 million during the quarter. you can fit more tables into the same space, However, domestic growth was sluggish, why not?” with revenue rising just “We would start 4 percent. Revenue to ‘soft open’ part of it from the group’s U.K. WE UNDERSTAND at the end of this year, operations was up 71 and progressively roll THAT MALAYSIANS percent, with revenue everything out next year. CONTINUE TO DOMINATE from the U.S. up 13 percent. VISITATION TO GENTING Rising visitors The company has HIGHLANDS, OF been on an aggressive The company is WHICH DAY TRIPPERS overseas expansion forecast to open its Sky push in recent years, Avenue & Sky Plaza CONSTITUTE ABOUT in particular in North shopping malls, and a 70 PERCENT OF TOTAL America. new cable car station Since entering the progressively by end VISITATION. ON THE US market in 2011 with 2016. However, its much OTHER HAND, CHINESE the launch of Resorts touted Twentieth Century World New York City, Fox World theme park TOURISTS ONLY MADE Genting Group has has been delayed to late UP ABOUT 3 PERCENT OF made a number of 2017. Phase 2 will see major investments in TOTAL VISITATIONS TO the construction of more the country. luxury hotels as well as GENTING HIGHLANDS These investments a show arena seating up have included the $236 to 10,000. million purchase of According to Alliance real-estate in Miami DBS research, the opening of new facilities is in 2011, a near $250 million investment likely to drive further visitation. The number as part of an agreement to run a proposed of visitors is likely to improve from 19 million $1 billion tribal development in Taunton, in 2015 to 25 million by 2018, on track to meet Massachusetts, and, most eye-catchingly, its target of 30 million by 2020. The higher plans for the estimated $4 billion Resorts visitation, coupled with the potential availability World Las Vegas, which will be the first major of 300 new gaming tables, are expected to new development on the Strip for almost a drive its earnings, it said in a recent report. decade when it opens in 2019. The weak Malaysian ringgit is also expected Genting has explored a second license in to attract more tourists, making the country New York, missing out on a proposed Orange cheaper in relation to some of its regional County development in 2014. However, earlier neighbours. However, DBS points out that this year it was granted a license to operate the majority of visitors to the resort is likely a further 1,000 video lottery devices on site to continue to be Malaysian. and is planning for a Phase Two expansion.
“
”
GROSS GAMING REVENUE Genting Malaysia Q2 revenue RM2.23b Malaysia leisure & hospitality revenue RM1,34b
+13%
+4%
Genting UK RM504.2m
+71%
Genting US RM351.6m
+13%
TOURISM TARGET Y16 30.5m arrivals RM103b receipts TARGET Y20 36m arrivals RM168b receipts
No online gambling Malaysian authorities have noted they have no plans to legalize online gambling, saying that the people have enough options if they want to gamble. InspectorGeneral of Police, Tan Sri Khalid Abu Bakar said: “I think we have enough means for the people to gamble; we have Magnum, Toto and so on.” Khalid said Malaysian police had proposed some amendments to the Common Gaming Houses Act 1953, but these were not related to online gambling.
Genting sells Genting HK stake Genting Malaysia said it has sold its 16.87 percent stake in its sister company Genting Hong Kong for about $415 million. The sale price for the 1,431,059,180 shares was $0.29 a share, which represents an 8.2 percent premium to the five-day weighted average trading price. Genting sold the stock to Golden Hope Ltd, a discretionary trust in which Tan Sri Lim Kok Thay and other family members of the founder of the Genting Group are beneficiaries. Golden Hope owned 47.22 percent of Genting Hong Kong as of the end of September.
Asia Gaming Briefings | November 2016
SOUTH EAST ASIA 14
PHILIPPINES
A seismic shift Philippine President Rodrigo Duterte has made it clear he’s not concerned about rocking the boat. His actions since taking office have raised alarm bells across the globe due to his heavy-handed crackdown on the drug trade. While foreign investors are wary, some steps may prove positive for the gaming industry.
S
ince taking office in June, Duterte has made a series of pronouncements that have shaken the established order in the Philippines, including rejecting long-term ally, the U.S., in favor of closer ties with China. The gaming sector hasn’t escaped his reach with a crusade, since reversed, against online gaming companies and a call for The Asia Gaming Briefings | November 2016
Philippine Amusement and Gaming Corp. (PAGCOR) to shed its casino assets and focus on its role as a regulator. The position on PAGCOR is likely to be applauded by most foreign investors, who have been uneasy about its dual role. The potential sale of PAGCOR’s assets not only opens up the chance of a properly
licensed and regulated market, it also throws up opportunities for operators and investors, both domestic and international, to buy casino real estate in one of Asia’s best-performing markets last year. But what exactly does PAGCOR have on its books, and what sort of revenues is the regulator-come-operator generating from its casino properties?
SOUTH EAST ASIA 15
regulatory fees increased 32 percent YoY to $297.1 million, while game revenues were up 8 percent to $242 million. The huge rise in regulatory fees came during the second quarter, with revenues from licensed casinos increasing from $87.5 million in 2Q15 to $124.1million in 2Q16. The impact of the President’s clampdown on e-bingo operators and online gaming sites in recent months has yet to be reflected in the numbers. The property portfolio and balance sheet is likely to pique the interest of other operators and investors, but behind the numbers things are a little less impressive. “Most of PAGCOR’s properties are dated and in need of renovation,” one industry expert who declined to be named said. “They don’t compare to most private casino operations, especially Entertainment City. The majority are in good locations, but will require significant investment to be viable operations in the current market,” he adds. An inspired move
Big business PAGCOR is understood to operate 13 casinos across the country; three in Metro Manila, five in Luzon, and a further five in Visayas-Mindanao – all of which come under its Casino Filipino brand. In addition, it also runs 20 PAGCOR Clubs, a more upscale proposition where local residents are permitted to gamble. In terms of revenues, PAGCOR’s share of table game, EGMs and bingo topped US$466.2 million for FY15, while licensing and regulatory fees for the same period were a little less at $430.2 million, according to Widus International Leisure. Despite the turbulence caused by Duterte’s reign, in the first half of the year license and
Duterte’s request for the operator/regulator to divest its bricks-and-mortar assets could be seen as something of an inspired move. The value of its portfolio is undoubtedly significant, thought to be around $679 million, so the money raised from the sale coupled with the cash saved by not renovating its properties will provide a welcome boost to government coffers. What’s more, whoever buys its assets will cover the modernization costs, which in turn will drive revenues and the amount PAGCOR takes in fees and taxes. So who will be looking to get out their chequebook? “The advantages to a private operator are significant,” says Andrew Klebanow, partner at Global Market Advisors. “They would be buying a successful business in an environment where there is limited competition. While most major western operators may not be interested, there are a number of large Asian operators as well as some smaller, more nimble, mid-cap gaming companies that would find the acquisition of some of these casinos very appealing,” he adds. PAGCOR would undoubtedly like to sell its assets as a job lot, but in reality most investors will want to cherry pick the best. That said, the value of the license is massive, so even current poor performers have huge potential so long as investors are prepared to pump in significant capital in order to bring these properties up to standard.
PAGCOR’s role in the Philippine gambling industry has been a hot, and, at times, uncomfortable topic. There is a conflict of interest – despite PAGCOR chair Ms Andrea Domingo saying otherwise – in having an operator also acting as regulator. Their products and propositions may not directly compete with each other – but the blurred lines have been enough to deter more established gambling firms from entering the fray in the past. Separation of roles “It has long been argued that PAGCOR needs to define itself as the primary regulator of casinos and not as a regulator-come-operator,” says Klebanow. “A casino operator would prefer not to have a regulator as a competitor – this is what has kept most major casino investors out of the Philippines,” he adds.
GROSS GAMING REVENUE Y15 PHP 130b ($2.75b) Y16E
+17% $2.9b
Y20E
$5.8b (Source: Pagcor)
GGR 1H PHP78.23b Y15 SPORTS BETTING PHP593m H1 PHP224m
Government ends war on online gaming The Philippines government has formally ended a war on online gambling, with the government now focusing its attention on opening up the online gaming industry to more players. However, regulator PAGCOR says measures will be stringent, especially with regard to location. No eGaming cafes will be allowed within 200 meters from schools and churches. PhilWeb has formally reapplied for its license.
Asia Gaming Briefings | November 2016
SOUTH EAST ASIA 16
INSTALLED CAPACITY END JUNE CASINO
TABLES
EGMs
PAGCOR – Casino Filipino
608
10,603
City of Dreams Manila
247
1,642
Resorts World Manila
314
2,081
Solaire Resort and Casino
392
1,839
ThunderBird Binangonan
33
243
ThunderBird – Poro Point
28
291
Casablanca Casino
36
190
Fontana Casino
124
189
Royce Casino
36
264
Widus Hotel and Casino
52
300
Midori Casino
18
166 (Source: Pagcor)
Concern over FATF blacklist Julia Abad-Bacay, executive director of the Anti-Money Laundering Council (AMLC), has said that the Philippines might be blacklisted by Paris-based anti-money laundering watchdog, the Financial Action Task Force (FATF) if it fails to include casinos in the coverage of the Anti-Money Laundering Act (AMLA). Abad-Bacay also pointed out that the next mutual evaluation of the Philippines would be in 2018 and inclusion of casinos in the AMLA would be one of the major focuses of the mutual evaluation.
Stability on the horizon? The end result could be a fully licensed and regulated Philippine gambling market spanning both land-based and online gaming. However, concern over Duterte’s mercurial approach to government, which in the industry has so far manifested itself in a ban on online firms targeting Filipinos which has since been reversed, may cause concern for overseas investors. “President Duterte has made it clear he is not a fan of casinos that target Filipinos,” says Klebanow. “There remains uncertainty about how he will treat those gaming operators (who acquire PAGCOR’s assets) once they are no longer owned and operated by a government entity.” Asia Gaming Briefings | November 2016
SOLAIRE RESORT & CASINO
RESORTS WORLD MANILA
Solaire is a 16-hectare gaming and integrated resort complex along Asean Avenue in Parañaque City owned by Bloomberry Resorts. Bay Tower of Solaire consists of a casino with an aggregate gaming floor area of approximately 18,500 square meters (including approximately 6,000 square meters of exclusive VIP gaming areas), with approximately 1,400 slot machines, 295 gaming tables and 88 electronic table games. Bay Tower has 488 hotel rooms and 15 specialty restaurants. Contiguous to the existing Solaire Resort and Casino, the Sky tower consists of a 312 all-suite hotel, additional ten VIP gaming salons with 66 gaming tables and 223 slot machines. It also includes a certified 1,760-seat lyric theatre. The company’s plans to sell its South Korean property, Jeju Sun Hotel & Casino, to Macau’s Iao Kun Holding have hit a stumbling block after a deadline lapsed with no accord having been reached. The operations have been seen as a drag on profitability. An international tribunal also recently ruled against the company, saying it was wrong to terminate the management contract of former partner Global Gaming Philippines.
Travellers International Hotel Group, a joint venture between Genting Hong Kong and Alliance Global, is the owner and operator of Resorts World Manila. Total room count for the group’s three hotels (Maxims Hotel, Remington Hotel, and Marriott Hotel Manila) remains at 1,226 with the occupancy rate in Q2 at 87 percent. Phase 2 at RWM is nearing completion with the addition of 228 rooms in the Marriott West Wing in Q4 this year. Phase 3, which will consist of three hotels, Hilton Manila, Sheraton Manila Hotel, and Maxims II, will be completed by 2018. It will also include an additional gaming area, new retail spaces and six basement parking decks. As of June, PHP8.7 billion of its offering proceeds had been released and used for Phase 3. PAGCOR has approved new gaming capacity of 420 gaming tables and 4,148 gaming machines at the resort. The company recently said it expects to finalize a blueprint for its second resort by June next year.
CITY OF DREAMS The $1.3 billion City of Dreams Manila is owned by Belle Corp and Melco Crown Entertainment’s local unit. The grand opening was held Feb. 2 last year. PAGCOR has approved the operation by City of Dreams Manila of up to a maximum of approximately 380 gaming tables, 1,700 slot machines and 1,700 electronic table games. As of December 31, 2015, City of Dreams Manila had 261 gaming tables, 1,579 slot machines and 83 electronic table games in operation. City of Dreams Manila has six hotel towers with approximately 950 rooms in aggregate, including VIP and five-star luxury rooms and high-end boutique hotel rooms, a wide selection of restaurants and food & beverage outlets, a 4,612.44 square meters family entertainment center in collaboration with Dreamworks Animation, a live performance stage, two international nightclubs and a multi-level car park. It includes an approximately 260 room Crown Towers hotel, Hyatt City of Dreams Manila, a 365 room hotel managed by Hyatt International Corporation and Asia’s first Nobu Hotel with 321 rooms.
OKADA MANILA Tiger Resorts and Entertainment, the Philippine unit of Japan’s Universal Entertainment, plans to open the first phase of its Okada Manila project in December, with an investment of $2.4 billion. Parent company Universal Entertainment recently raised $400 million through a note sale and said it has secured a “significant majority” of the construction costs. The company may invest as much as $4 billion once all phases are completed. A recent jobs fair attracted 10,000 applicants for 8,000 positions on offer. Once fully operational, Okada Manila will feature two luxury hotels, a 30,000 square meters casino floor with 3,000 slot machines and 500 table games, as well as a number of dining, leisure and entertainment options. It will include an indoor manmade beach and club covered by a huge glass dome, high-end and casual dining restaurants, upscale retail shops, trade halls and cinemas. Tiger president Steve Wolstenholme has said the resort, which will feature a huge fountain as its centrepiece, aims to provide Manila with a must-see icon, as well as retail options not yet available in the Philippines.
SOUTH EAST ASIA 18
SINGAPORE
Online easing comes with restrictions, meets opposition Calling it a “safer option” for gamblers, Singapore’s Ministry of Finance has relaxed rules on online gambling to allow the island’s two incumbent operators – Singapore Pools and Singapore Turf Club – to offer internet services.
T
he easing comes some 18 months after Singapore implemented one of the world’s most draconian bans in the online gaming sphere and was immediately met with opposition from anti-gambling and church groups. The National Council of Churches called on the government to reconsider, while the Office of the Mufti also warned about the perils of online gambling.
Asia Gaming Briefings | November 2016
Since the Remote Gambling Act came into force in February 2 last year, several hundred online gambling sites have been blocked, as well as bank accounts and credit card transactions linked to remote gambling payments. However, the blocking regime was not a sure-fire way to stop locals from accessing illegal gambling websites. “VPNs are an issue in Singapore and
not just in gambling,” said Matt Pollins of Olswang Asia, the night before the Ministry posted its announcement. “I think there is evidence to suggest people will find overseas services to use and they will use technology solutions to bypass geoblocks.” This is likely why a door was left open under Section 26 of the Act in 2015 for an eligible operator to obtain a certificate of exemption.
SOUTH EAST ASIA 19
“You can close down sites, but new sites will be set up, sometimes faster than you can close them down,” Tan Chuan-Jin, the Minister for Social and Family Development said after easing the ban. “It is a global market with a lot of money to be made, and the worst thing is that it is unregulated and there are no safety measures in place.”
the revocation or suspension of the exemption certificate,” it said. Yap Wai Ming, partner of Morgan Lewis Stamford LLC, said the government’s key focus is the protection of young persons from gambling. “For remote gambling to take place in Singapore, they will want to make sure it does not encourage the young IT savvy folks to get addicted to gambling,” he said. Waiting game “When you look at the remote gambling Singapore’s not-for-profit lottery and act in Singapore, you’ll see there is a focus on gambling operators, Singapore Pools and preventing young persons from being groomed Singapore Turf Club, had been waiting nearly into the industry. In fact they say there is a serious penalty if anybody is found to target two years to tap into this new channel. The exemptions, as expected, came young people, those under 21 years old, to gamble,” he said. with a stringent set of Singapore Pools conditions. According and the Singapore Turf to a document from IT IS A GLOBAL Club will need to offer the Ministry of Home a “very strong robust Affairs website, players MARKET WITH A LOT internal system for age must be over 21 years OF MONEY TO BE verification.” of age and will be MADE, AND THE WORST required to adhere to Data collection daily expenditure and THING IS THAT IT IS funding limits. UNREGULATED AND Other conditions, Gambling on credit such as setting a limit or gambling while being THERE ARE NO SAFETY on how much one can on any casino exclusion MEASURES IN PLACE gamble - is something list is prohibited. that is particularly well From the operator suited to the data-heavy side, a self-exclusion system and the provision of responsible nature of online gambling, says Yap. “Singapore is very good at collecting gambling information would be required. The operators must also implement a statistics. If someone gambles once too often, notification system which alerts the player you’ll probably be able to see that data if it of daily deposits and winnings or losses. The comes from the same [betting] account.” It actually even offers some advantages player will also receive alerts when 75 percent over land-based outlets. of the expenditure limit has been exceeded. “As opposed to now, when someone goes to a physical gaming outlet, they queue up and Stiff sanctions they pay over the counter. It’s anonymous.” Singapore locals shouldn’t expect to see A time counter must be visible indicating the amount of time that has elapsed since any variation in betting products either. “The exempt operators are allowed to the player logged onto an account, as well as publication of the odds of winning and offer remote gambling only for their existing providing players with monthly statements products, namely: 4D and Toto lotteries and football and F1 sports betting for Pools; and of gambling activities. The Ministry also noted the exempt horse-race betting for STC,” said the Ministry, operators will be “subjected to regular audits adding that new bet products cannot be offered without prior approval.” and inspections.” “The exempt operators are not allowed to “If an exempt operator contravenes or fails to comply with the conditions, regulatory sanctions offer casino-style games or poker,” it added. While Singapore Pools and the Singapore may be imposed, as provided for by the RGA. Sanctions include a financial penalty of up to Turf Club put the finishing touches on their S$1 million ($732.8 million) for each instance online betting capable systems, it remains to of noncompliance, a direction restricting the be seen whether there is still room for outside exempt operator’s remote gambling service and suppliers to get their piece of the action.
“
”
GROSS GAMING REVENUE Y16E
-12%
Y16E VIP
-29% -1%
Y16E Mass Y17E
+2%
Y17E VIP
+3%
Y17E Mass
+2%
Y18E
+3% (Source: UBS)
TOURISM ARRIVALS H1 8,169,192
+12.5%
China arrivals 1,472,654
+55.2%
Indonesia arrivals 1,412,756
+7.3% (Source: STB)
Genting Q3 profit tops forecasts Genting Singapore posted better-thanexpected Q3 profit, helped by a focus on higher margin business and managing operational efficiency. Net profit for the quarter was S$136.6 million, compared with $66.9 million reported in the prior year period. Third quarter revenue was down 9 percent to $581.5 million, from S$636.1 million in the previous year.
Casinos improve social safeguard standards The Casino Regulatory Authority imposed $417,500 in financial penalties on Singapore’s two casino operators in 2015, up from $282,500 the prior year, according to its annual report. However, the number of social safeguard breaches declined as both casino operators have taken steps to strengthen their processes. “The casino operators have shown responsiveness and commitment to comply with the regulatory requirements, and have taken remedial actions where there are gaps.”
Asia Gaming Briefings | November 2016
NORTH ASIA
20
RUSSIA
Gaming zone activity heats up
Primorye, close to the port city of Vladivostok, is seen as the most promising of the zones given its proximity to northern China, as well as Korea and Japan.
H
ong Kong-listed NagaCorp, operator of Cambodia’s NagaWorld, will start construction of its gaming facility in Primorye in November this year, the regional government has said. The project - which includes hotel facilities, along with a casino and a water park - is on schedule. “We expect to launch our first facility in the summer of 2018. At the moment, we are finishing the preparation of the land lot. Construction teams of our Chinese contractor China Harbour Engineering Company are ready to start,” chairman Tim McNally was cited as saying. During the first stage of the project, the company plans to build a 11-storey hotel complex with a casino, allocating $70 million. The facility will include a hotel with 279 rooms and a 2,000-seat concert hall, with 300 slot machines and 30 gaming tables in the casino lobby. On track NagaCorp’s plans were confirmed by the local authorities. “Builders will come to the construction site within the time period specified in our investment agreement with NagaCorp. At the last meeting we agreed [it would happen] in the end of October or early November,” representative Andrei Folomeev said. The company began the development of its land lots in Primorye in May 2015. It is the only investor whose facilities are situated on the gulf shore. Investment in the project is expected to total $450 million, and it is scheduled to be completed by 2021. Meanwhile, Summit Ascent’s Tigre de Cristal resort, which opened in Primorye a year ago, has seen increasing visitation and rolling volumes. The company said its rolling chip turnover rose from HK$258,197 ($33,296) in November last year when it made its debut, to HK$2 billion in July and HK$2.2 billion in August. In its interim results announcement, Summit Ascent said it expected its performance to further improve in the second half of the year. Average daily visitation has doubled in the past quarter, with total visitor numbers exceeding 190,000 since the beginning of the year. Visitor boom The average daily visits expanded to 1,000 in Q3 from 500 between July and September of this year, according to a statement from the tourism department of the regional government.
NORTH ASIA 21
Some 30 percent of casino visitors are foreign tourists from Asia, in particular from Mainland China and South Korea. The casino has yielded some RUB500 million ($8 million) in tax revenue for the government over the past year. Chinese company Tianci Hot Springs has also said it plans to build a resort in the zone, although it’s not clear whether it will include a casino. “We hope that our project will be a hotel complex with an access to the sea, spa, mud therapy options, thermal springs. Such a complex won’t operate just within a short season, but will work all year round. The hotel should become an integral part of nature. It is now a very fashionable trend in China - the construction of closed parks and reserves for tourists. It has not yet emerged in Russia. And the Far East seems to Asians as a ‘pure’ place, not polluted,” the company’s chairman was quoted as saying. The businessman added that the complex will receive tourists from the Asia-Pacific region. “We also consider the option of building villas for a long-term lease, as well as houses. I am sure that Asians would wish to buy property here,” he added. The exact location of the new resort has not been decided yet. In other gaming zones, the first casino in Sochi, the site of the 2014 winter Olympics, is expected to open its doors in December, the city’s administration representative Yulia Malorodnova, said. Tax windfall “The soft-launch of the first casino is scheduled for December 24, while a grand launch is expected on 5 January 2017,” Malorodnova said at the Sochi Gaming Week. According to her, the Sochi gambling zone, which will be located in local resorts “Gorky Gorod” and “Roza Khutor”, will be able to accommodate about 1,700 at the same time. “Operators of gambling zones plan to receive up to 600,000 visitors to Sochi a year,” Malorodnova said, adding that the gambling business is expected to bring not less than RUB 120 million ($2 million) in taxes to the city budget. While in Crimea, the government is currently in talks with a major investor for its future gambling zone. According to Betting Business Russia, which cited unidentified sources, the unidentified investor plans to invest up to $150 million in its development. “There is a major investor who is willing to invest in the project
from $120 million to $150 million. He intends to rent all the areas allocated for the gaming zone to sublet them to other investors wishing to participate in the project,” the source was quoted as saying. He added the investor’s core activity is in construction. Summit Ascent denied reports it was planning to invest in either the Crimea or Sochi zones.
GROSS GAMING REVENUE TIGRE DE CRISTAL ROLLING CHIP TURNOVER Nov
HK$ 258,197 ($33,296)
July
HK$2.00b
Aug
HK$2.2b (Source: Summit Ascent)
TIGRE DE CRISTAL TAX PAYMENTS RUB500m
Bookie tax slammed as “oppressive” The Finance Ministry has published new amendments to the law on gambling which require bookmakers and totes to give part of their proceeds for the development of sports, Russian news outlet Vedomosti reports. According to the latest amendments, the ministry plans to charge bookmakers 3 percent of their revenue once a quarter and the money will be transferred to the federal budget. The industry has criticized the proposals as “oppressive.” There are currently 31 bookmakers and totes operating in Russia, according to the explanatory note to the draft law.
William Hill exits Russia William Hill Casino Club, an online casino project of the UK’s largest bookmaker William Hill, has stopped servicing its Russian clients and announced it is leaving the Russian market. “The environment for carrying out gambling activities in Russia has become more complex, despite the fact that the company has official licenses. Hence, we have decided to leave the Russian market,” gambling-related news website Newsofgambling.com quoted William Hill representatives as saying.
Asia Gaming Briefings | November 2016
NORTH ASIA 22
GROSS GAMING REVENUE
JAPAN
Y16 GGRE
$7b (Source: Fitch)
August arrivals 2,049,200 China arrivals 677,000
+12.8%
+12.%
Sega Sammy cuts H1 pachinko sales forecast
Odds rise for Japan casino bill After decades of stagnation and political infighting, Japanese legislators appear poised for another push to pass a bill to pave the way for legal casinos in one of Asia’s most promising markets.
J
apan’s ruling party appears set to re-submit the Bill for the Promotion of Integrated Resort Facilities, better known as the “Casino Bill,” to the current Diet session, which ends in late November. If the bill is indeed submitted and passed, it would legalize the establishment of a handful of casinos in Japan in the coming years, mainly in certain designated major cities. Attempts to pass the Casino Bill have been frustrated in the past by the firm opposition of the ruling coalition Komeito Party, a Buddhistaffiliated organization which is concerned about a possible negative effect of public morality, including on gambling addiction rates and organized crime. Polls have consistently shown that a majority of the general Japanese public also opposes the establishment of casinos. However, when Prime Minister Shinzo Abe reshuffled the ruling Liberal Democratic Party in August, three pro-casino officials were appointed to top spots. Toshihiro Nikai was appointed secretary general, Hiroyuki Hosoda General Council chairman and Toshimitsu Motegi was named policy chief. Majority position The LDP also now has an overall majority across both the upper and lower houses of parliament, meaning it can effectively guarantee passage should it come to a vote. Hiroyuki Hosoda, Secretary General of the Asia Gaming Briefings | November 2016
LDP and a proponent of the casino legislation, has been cited as saying the likelihood of the IR bill being debated in the session that ends November 30 is almost 100 percent. Recently elected Tokyo governor Yuriko Koike has also said she supports opening a casino in the nation’s capital. She said a casino project would “make the city more attractive” adding that Tokyo needed to attract “more visitors from overseas.” Abe is keen to promote integrated resorts to boost tourism numbers in Japan. The government is seeking to attract some 20 million visitors a year by 2020. Estimates for the potential of the market vary widely depending on how many licenses are permitted and where the IRs are built, but most agree that it is likely to be the second-biggest in Asia after Macau. No. 2 in Asia Fitch Ratings has estimated that two integrated resorts in Tokyo and Osaka could generate roughly $7 billion in gross gaming revenues. While a recent study on the likely impact of an IR in Yokohama found that it would give a 414.4 billion yen ($3.36 billion) boost to the local economy, with a direct impact of 256.16 billion yen. It would also be likely to create more than 41,000 jobs. In a note in July, Union Gaming said two large licenses are expected to be issued initially with one going to metro Tokyo and one to Osaka.
Sega Sammy has revised down its forecast for H1, 2017 revenue due to lower pachinko and pachislot sales. The group now sees revenue of 170 billion yen ($1.6 billion) in the six months to end Sept, compared with a prior forecast for 180 billion yen. It said sales of pachinko and pachislot machines are likely to be down by 15 billion yen. However, it doubled its profit forecast due to an extraordinary gain and cost savings from the re-use of components.
Simulcasting off to racing start Horse racing fans in Japan bet approximately $40 million on October’s Prix de l’Arc de Triomphe from France in Japan’s first imported simulcast since a new law went into effect this year. The new law lists 24 races of international significance that can be simulcast into Japan.
Smaller licenses may be issued at a later date. Most of the world’s biggest operators having expressed interest in bidding for a license to operate an integrated resort. However, given the ongoing delays, the original hopes to have a property up and running in time for the 2020 Olympics in Tokyo are now unrealistic. If the bill is passed by the end of this year, experts have estimated that it’s unlikely that sites will be chosen for an IR zone before 2019 in a very best case scenario. Las Vegas Sands has previously said it may be prepared to invest as much as $10 billion in an IR in Japan, while MGM Resorts has also said it would pledge the same amount. The bill has also appeared on the verge of progressing before, only to become a victim of Japan’s political infighting. The legislation fell off the agenda in late 2014 after Prime Minister Shinzo Abe called snap elections.
NORTH ASIA 23
Asia Gaming Briefings | November 2016
NORTH ASIA 24
SOUTH KOREA
SOUTH KOREA
Mohegan Sun ups non-gaming ante in South Korea U.S. tribal operator Mohegan Sun says design and permitting for its $5 billion integrated resort in South Korea is proceeding at a rapid pace, and the project is currently on schedule to break ground in 2017 and open in early 2020.
T
he Mohegan Tr ib a l Gaming Authority, operator of Mohegan Sun properties throughout the United States, along with partners KCC Corporation and Incheon International Airport Corp, were awarded the contract for the resort in February last year, following a bidding process that initially attracted a strong field of international contenders. The resort, to be known as Inspire, will be the third major project in Incheon, near to the international airport and in close proximity to the capital Seoul. South Korea’s Paradise Co. and Japanese pachinko
Asia Gaming Briefings | November 2016
company Sega Sammy are scheduled to open a 330,000 square-meter IR early in 2017, while Caesars International is heading a third project. Mohegan Sun’s Inspire will open in multiple phases, with investment for the first seen at about $1.6 billion. Non-gaming bandwagon While offering non-gaming facilities has become the mantra for many operators across Asia since the collapse of China’s VIP market two years ago, Inspire’s plans for an
integrated entertainment and leisure complex may come closest to delivering the vision. “Inspire will present an opportunity to have in one place, the best of entertainment, cultural, recreational, hospitality, culinary and nightlife amenities all under one roof,” said Mohegan Sun president and CEO Bobby Soper. It will feature a 15,000 seat arena, which will be a modernized sports & entertainment venue unlike anything currently offered in Korea. It will also incorporate a state-of-the art theme park and entertainment district, the first phase of which will primarily be indoors
NORTH ASIA 25
to provide year-round family entertainment. “Throughout the property, we will be able to showcase various cultural elements within all the amenities of the resort, including a museum and life sciences center. In addition, the concentration of the best retail, top restaurants, nightlife all connected to 5 and 6 star lodging product, will be a true differentiator as well.” Soper says 97 percent of the resort will be occupied by non-gaming facilities. “Our business model contemplates that Inspire will generate more non-gaming revenue than gaming revenue which is quite unusual for most gaming resorts outside of Las Vegas.” Medical Lift? The resort will contain 1,350 hotel rooms in a 6-Star and 5-Star hotel complex and spa; nearly 200,000 sq. ft. of convention and meeting space; more than 300,000 sq. ft. of retail dining and nightlife options, as well as historical centers that pay tribute to
the Native American and Korean culture. The resort will also contain health, wellness and beauty medical facilities that will provide body enhancement options. South Korea is viewed as the epicenter of the plastic surgery market, with more surgeries per capita than anywhere else and a booming trade in medical tourism. In terms of the gaming offering, Inspire’s foreigners-only casino will feature 250 table games and up to 1,500 slot machines. It will also have private Air Terminal access at the adjacent Incheon Airport to service high rollers. However, the resort will be targeted primarily at the mass and premium mass sectors of the market. Revenue at South Korea’s existing foreigneronly resorts is recovering after being hit hard by a drop in tourism numbers in 2015, triggered by an outbreak of Middle Eastern Respiratory Syndrome. In the nine months to end-September, Paradise Co. reported total sales rose 10.4 percent, while Grand Korea Leisure, which operates casinos under the Seven Luck brand, saw Q2 sales gain 5.4 percent. The results compare with a 5.9 percent gain in sales for Kangwon Land, the only operator with a license permitting locals to gamble. Kangwon however is comparing with a higher base, as its revenues proved resilient during the visitor downturn.
from our site. The Seoul capital area is the world’s third largest urban area. In light of the population density with powerful demographic characteristics, the under-supply of entertainment and leisure product makes this a remarkable non-gaming opportunity.” “The Korean government awarded an IR license based upon a vision of driving tourism and creating jobs, and I know our Tribe is highly sensitive in ensuring we help them to achieve these goals,” Soper said.
Underserved market
Iao Kun says Jeju Sun deal lapsed
Soper says he is “absolutely” convinced Inspire will be able to thrive, even without a locals gaming license. “As the closest gaming jurisdiction to Northern China, including the cities of Shanghai and Beijing, there are over 700 million Chinese residents within a two hour flight to Seoul,” he said. “In fact, Korea is the closest gaming jurisdiction to most of these residents relative to any other gaming jurisdiction. Three of the four largest MSA’s in the world are only 2 ½ hours away, and Seoul has been, and continues to be, the most popular destination in the world for Chinese tourists.” He also says there is a significant opportunity to tap into the Seoul market to generate non-gaming returns. “The reality is that Korea, one of the world’s top 10 economies, is an underserved leisure destination for North Asia, including Korea itself. There are over 50 million residents in Korea, and almost half live in the Seoul Capital Area which is only a subway ride
FOREIGNER-ONLY REVENUE Y15
$1.13b
Y16E
$1.15b
Y17E Y18E
$1.21b $1.33b (Source: Morgan Stanley)
Paradise Q3 sales Grand Korea Leisure Q2 Kangwon Land Q2
+22.7%
+5.4%
+5.9%
Macau VIP promoter Iao Kun Group Holdings says an accord to buy the Jeju Sun Hotel & Casino in South Korea from Bloomberry Resorts has expired. Iao Kun agreed to buy the resort in June from Bloomberry Resorts in a transaction worth KRW 117.5 billion ($102.3 million). In agreeing to the sale, Bloomberry said Iao Kun was confident it would be able to attract China VIPs to the island.
Kangwon Land mulls cooling off period for locals Kangwon Land is considering imposing tougher measures to prevent problem gambling, including a cooling off period of up to three months for those suspected of problem gambling. At present, locals are allowed to gamble for up to 15 days a month. Under the new proposals, those who gamble 30 days over two months will be banned for a month for the first violation. If they repeat the frequency they will receive a two-month ban and on the third time will get a three-month penalty.
Asia Gaming Briefings | November 2016
26
INDOCHINA
26
CAMBODIA
New gaming bill moves ahead Cambodia’s long-delayed draft gaming law has taken a step forward with a recent meeting between high-level members of the government and more than 100 members of the private sector.
Asia Gaming Briefings | November 2016
T
he bill is designed to set out a regulatory framework for the industry and is also expected to cover online activities. The Kingdom currently has 69 casinos and was one of the strongest-performing in Asia last year, benefiting from improved transport links, in particular with China and as proxy betting boomed in border casinos. Tax revenue from the casinos gained 35.5 percent in the first nine months of this year to $37.4 million. Nagacorp, the operator of Phnom Penh-based NagaWorld, contributed the lion’s share, paying about $16 million in tax. According to sources cited by the Khmer Times, the new bill will preserve Naga’s exclusivity to run a casino within a 200 km radius of the capital through to 2035. It’s license term will be guaranteed through 2065. The tax rate is expected to gain to about four percent to five percent of total gaming revenue, the newspaper said. Higher taxes “While no tax rate was unveiled we believe it will remain very modest and not a significant departure from what Naga is paying today,” Union Gaming wrote in a note, which also said the firm is “feeling positive” about the operator following a recent visit. For the nine months to end Sept, Nagacorp reported VIP rollings rose 11 percent to $6.6 billion, while mass table buy-ins were up 13 percent to $456 million. Electronic gaming machine revenue jumped 15 percent to $1.14 billion. In its interim report the company attributed its strong growth to improving visitor arrivals to Cambodia, especially from China, Korea and Vietnam, which were up by 16 percent, 8 percent and 20 percent respectively in the first half of the year. “Continued visitor growth from these gaming-centric countries is one of the key drivers of our business growth,” chairman Tim McNally said in the report. Cambodia’s secretary of state at the Tourism Ministry, Tith Chantha, quoted by AKP, said this year Cambodia was expected to welcome up to five million foreign visitors, generating jobs for 600,000 Cambodians. Cambodia Airports welcomed more
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than five million passengers and 53,000 flights in the first nine months of the year, representing an increase of 6.2 percent and 2.8 percent respectively compared to the same period last year. The ministry is aiming for 7.5 million international tourists a year by 2020, including two million from China. Union Gaming says there are “lots of drivers” for further growth, including another aircraft. The operator recently raised money through a share placement, with about $100 million expected to be allocated to the interior fit-out of Naga2 and $20 million likely to buy a 3rd A320 for Bassaka Air.
“
CONTINUED VISITOR GROWTH FROM THESE GAMINGCENTRIC COUNTRIES IS ONE OF THE KEY DRIVERS OF OUR BUSINESS GROWTH
”
“Having a 3rd aircraft will allow Naga/ CITS to hit 5 Chinese cities (from 2 today). This alone should put bodies in 300 rooms nightly (1,700 total rooms available between Naga/Naga2), and more importantly should continue to be a key driver of mass growth in the out years,” it said.
GROSS GAMING REVENUE NagaCorp 9-month VIP rollings $6.6b
+11%
Mass market $456m
+13%
EGMs $1.1b
+15%
Star Vegas Y16 revenue HB3.1b
+16.3%
VIP win
+2.97%
EBITDA THB2.2b
+21%
Donaco mulls online options Australia-listed Donaco International says it is looking at options for utilizing an online gaming license owned by Star Vegas in Poipet sometime in the fiscal year 2017. “The Star Vegas business also owns an online gaming license which has yet to be utilized,” said managing director and CEO, Joey Lim in an annual report to shareholders. “We are currently exploring the alternatives for the utilization of this license and expect some progress to occur during FY17.”
Capacity constraints The existing NagaWorld complex is reaching full capacity with 80 percent to 90 percent room occupancy on a regular basis. It’s extension, Naga2, is being built with a budget of $369 million and will have a built up area of about 110,105 square meters. It consists of the NagaCity walk with extra retail and public space and the TSCLK Complex, which will have about 1,000 hotel rooms and additional gaming space up to about 300 gaming tables and 500 electronic gaming machines. The group is also developing a resort in the Primorye gaming zone in Russia’s Far East, close to Vladivostok.
Casino tax collection jumps Cambodia collected $37.4 million in taxes from casinos in the first nine months of 2016, Xinhua reported a Finance Ministry statement as saying. The tax revenue represents a 35.5 percent increase over the same period last year, following a number of changes the government took to improve the transparency, efficiency and equity of the tax system last year. Phnom Penh-based NagaWorld casino accounted for the largest contributor of tax revenue, making up 43 percent of the total, or around US$16 million.
Asia Gaming Briefings | November 2016
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VIETNAM
Hanoi rolls the dice on locals The ruling Communist Party of Vietnam has recently made it clear that it supports the creation of a new gaming industry and will allow local Vietnamese to enter designated casinos on a trial basis. AGB spoke to Prof. Augustine Ha Ton Vinh about the new legislation during the East Meets West Regulators Summit in the Philippines in October. Vinh is a Vietnam gaming expert and Senior Advisor to the Van Don Special Economic Zone and Integrated Resorts. He was a guest speaker at the Summit.
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GB: We understand that the leaders of the ruling party of Vietnam have said they support the gaming industry and will allow local Vietnamese to enter casinos. Can you tell us what you know and where the country is heading? Vinh: Late last month, the ruling party’s leaders made it clear that they support the creation of a new gaming industry. The long-awaited decision will be fresh air in the dry season. In June 2013, the Party’s Politburo announced it supported a new Special Economic Zone and integrated resort on Van Don Island, situated in the UNESCO World Heritage Ha Long Bay. Along with its support, the Politburo commissioned research to assess the socio-economic impacts of allowing local Vietnamese to enter casinos. After three years of soul searching and policy debates, the ruling party’s leaders believe now is the time to move ahead, creating a new gaming industry. Late last month, they made clear a number of issues of great interest to investors, operators and local Vietnamese, namely: 1. Local Vietnamese will be allowed to visit designated casinos. 2. Van Don and Phu Quoc integrated resorts are the two locations authorized to accept local Vietnamese on a 3-year trial basis. 3. In addition to the four already approved locations for IRs: Van Don, South Hoi An, Ho Tram, and Phu Quoc, two more integrated resorts are under consideration: in Hue and Cam Ranh Bay. 4. Total investment for an integrated resort is US$2 billion. A minimum $1 billion has to be disbursed before a gaming license is granted. 5. Smaller casinos can be expanded, upgraded to a higher IR level if they meet financial and other requirements, e.g.
Asia Gaming Briefings | November 2016
significant contributions to local economic and tourism development. 6. The new and revised draft gaming casino has to be finalized as soon as possible. AGB: The Ministry of Finance has taken years to come up with draft gaming versions that meet reasonable expectations of international investors and operators. Will the final decree by acceptable and when will it be released? Vinh: Following the ruling party’s decision on the new gaming industry, the Ministry of Finance has come up with a new draft decree which is much more realistic than previous draft versions in 2013 and June 2016. The new version was drafted based on the Party’s decision and covered all the issues of major interest to investors, operators, etc. Some key items include: 1. MOF divides the gaming industry into two levels, large casinos with US$2 billion in investment, and small casinos with any investment below the $2 billion investment level. 2. The draft decree made it clear local Vietnamese, 21 years and above making around US$500 per month in salary, without criminal records, and no objection from family members, i.e. spouses, parents, children, will be allowed to enter casinos. 3. The Van Don and Phu Quoc integrated resorts are designated locations for local Vietnamese. There will be a trial period of 3 years from the date they receive the gaming license. 4. The gaming license will be for a period of 20 years with a one-time non-renewable extension of 10 years. 5. Investors or operators have to commit a minimum of US$2 billion for each integrated resort and a 50 percent disbursement, or $1 billion has to be made before a gaming
license is granted. 6. For each US$10 million in disbursed investment, investors can operate one gaming table and 10 electronic gaming or slot machines. Now that the Party leaders have decided on the future of the Vietnam gaming industry and the next steps, I believe MOF will soon release the final gaming decree, possibly in the next few months. AGB: Why was the Ho Tram IR not selected as a pilot project for local Vietnamese? Vinh: Asian C o ast D e velopment Ltd. (ACDL), through its wholly-owned subsidiary Ho Tram Project Company Ltd., is the developer of the Ho Tram Strip starting in early 2008. In April 2013, ACDL received its gaming license after an initial investment of about US$500 million out of a total commitment of about $4 billion. The Ho Tram integrated resort, under its current gaming license, can only receive holders of foreign passports. Since its opening in April 2013, the management of Ho Tram IR is
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FOREIGNER-ONLY GGR Aristo International Y16 net gaming revenue RM58.7m Non-gaming revenue RMB48.1m
+16.2%
+31.4%
VIP table game turnover RMB8.32b
-23%
GGR table games RMB228.4m
-5%
GGR slots RMB9.4m VIP win
-16% +2.2%
PARI-MUTUEL BETTING HANDLE Y1 AFTER LIBERALIZATION $90m - $180m Y2 HANDLE $377m to $685m Y3 HANDLE $680m to $1.1b (Source: Union Gaming)
hopeful that the government will allow local Vietnamese to enter its premises. The recent decision by the ruling party has put an end to this hope, at least for the next three years. Phu Quoc support In June 2013, the Party’s Politburo formally expressed their support for the Van Don Special Economic Zone and its integrated resort, and in October 2014, it agreed to allow Phu Quoc Island to build an integrated resort and a second special economic zone. The Party also commissioned a study to allow local Vietnamese to enter casinos in these two zones. I have written a number of reports and position papers to support the Party’s decision and most of my recommendations were accepted and reflected in the recent decision. As to why Ho Tram was not mentioned in the decision or approved to receive local Vietnamese, I believe there are a number of reasons. From what I was told, since its opening day, Ho Tram was not authorized
to receive local Vietnamese. There is no change in the party’s position on this matter. In addition, the government has made some concessions granting Ho Tram the gaming license even though ACDL has not reached the investment level required by the initial investment license. To many people, the ball is in Ho Tram’s court. Ho Tram needs to realize its full investment before attempting to attain new ground. Investor draw Since Van Don is near the China border in the North and Phu Quoc is close to Thailand and Cambodian borders in the South, having local Vietnamese in these two locations will definitely help attract much needed foreign investment to these areas which bear some resemblance to rural Macau in the past, and will help expedite the creation of the two special economic zones. I believe, under this new decision, local Vietnamese will not be allowed to enter Ho Tram, at least for the next few years.
G.O. Max ups proposed race track investment South Korean investor, G.O.Max I&D Company is pursuing a project to build a horse racetrack in northern Vinh Phuc province in Vietnam. Mr. Bui Minh Hong, Chief of the Secretariat at the Vinh Phuc Provincial People’s Committee said the investor has applied to increase its investment capital from $570 million to $1.5 billion and received a positive reception.
Ho Tram to get airport access Ba Ria-Vung Tau province has agreed in principle to allow the Ho Tram Project Co Ltd to construct a small airport to be used exclusively for the integrated resort complex. The proposed airport would cover 200 hectares in Dat Do District under the build-operate-transfer model. While the airport will be used to carry tourists from other domestic airports to Ho Tram Strip, the provincial government will consider expanding the airport for tourism and economic development in the long term, local media reported.
Asia Gaming Briefings | November 2016
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Gaming manufacturers adapt to mass reality Macau, once known as a premier gaming destination for high rollers, has been shifting its weight towards mass gamblers and that change is being reflected in trends on the casino floor.
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lsewhere in Asia, gaming jurisdictions are also seeing similar changes and gaming manufacturers are tweaking their product lines to better suit the times. “There is a move back to lower denominations in table games, slot games and ETGs,” commented Ken Jolly, vice president - Asia of SHFL Entertainment Asia. “The mass market is seeing that they want to play lower denomination games, and we’re seeing that in casinos now with tables. Before casinos [in Macau] were MOP1,500 on the main floor minimum bet, you’re now seeing MOP200-300 tables again, like the old days,” he said. SHFL Entertainment Asia recently released its Double Blessings slot game, as part of its Duo Fu Duo Cai series. Great results One of the notable changes to the series is that it is now available in a HK$0.05 denomination, the lowest available in the product line.“What we’re seeing in the market is that some of the venues are pushing that now into the 5c, obviously for the mass market,” he said. “Previously it was 10s, 20s and 50c. We’re getting great results in that.” Joji Kokuryo, senior compliance & operations manager of Aruze Macau said he has observed a similar trend in electronic table games. “We are seeing an enormous rise in popularity of electronic table games. These machines offer lower minimum bets compared with actual tables, while also having help screens to allow new players to learn the rules and odds of the games. These two points are key when catering to the mass market,” he said. But the key to attracting the mass market, is in diversity of options. Multi options “While the mass market is often grouped to prefer a low to mid volatility and eye-catching games, there is still a need for higher volatility titles. In fact, we feel that the mass market requires a wider range of games, and our main goal is to provide our customers, the casino operators, with a variety of proven titles.” But each market is different, adds Joji. “While electronic table games are a focal point in
Asia Gaming Briefings | November 2016
Macau, in the Philippines and Malaysia we are seeing an increase in linked jackpot popularity. In Singapore and their IR model, eye-catching titles suitable to the mass market are performing very well. Vietnam and Cambodia markets are taking bits and pieces of what is working in the nearby Asian markets and gradually updating their floors. Locations such as Saipan have been blooming as of late, further increasing the competition within the region.” Even the choice of machine varies from market to market, noted Albert Radman, sales director at Alfastreet. Multi options “For example in more traditional markets such as Cambodia, Vietnam, Laos and India the preference goes to the fixed cabinet... In more advanced markets, such as Singapore, Macau or the Philippines the players are looking for more gaming options on a single gaming terminal.” The differences aren’t night and day however, says Amy Ruppas of Ainsworth Game Technology. “The game design across Asia does not vary too much, with Jackpots being the main game element changed due to differing currency valuations. Games which work in Macau will normally work in regions such as Vietnam, Cambodia and Singapore. Generally, games with some cultural connection to the Asian demographics have the greatest following. The exception to this is the Philippines which has a more Western influence than its neighbours and therefore can have a broader spectrum of games which are popular with players.” While suppliers are coming out with lower denomination games, there’s also big investment in higher tech, more sophisticated games, say experts, keeping tabs on developments in virtual reality. Virtual reality, a concept relatively new to the gambling industry, is already forecast to grow nearly 800 percent over the next five years, according to Juniper Research. “My personal view is that, like a lot of these new trends, they will grow over time and virtual reality is one of those. As the millennials grow older and the next generation come along - they are looking for
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that all-in type of experience. Products will get much more interactive and more virtual reality style,” commented Jolly. Tech advances “There is definitely a shift to utilizing more technology in gaming,” added Joji. “Technology such as 3D [can] already be seen in the market. These technological advancements will definitely attract new players from the mass market. It will be interesting to see if VR can be integrated into gaming technology, although it seems better suited for social and online gaming at this point.” There is also opportunity in blending the off-casino experience with that of the on-floor experience, say our experts.
It’s the whole package, and it’s not just about gaming, says Joji. “The mass gaming market is not only looking for the casino experience, but also other facets such as dining, sight-seeing, and resort hotels. However, integration of mobile and social services with casino gaming is growing as well. We have already seen player award campaigns utilize mobile devices,” he said. Mobile games Scientific Games recently released an app that allows a customer to play real money games from their device when they are detected to be on the casino floor, and switches to a free-to-play social game once they move off.
“There is an emergence between oncasino-floor and off-casino-floor by using mobile technology,” said Jolly. However, while the mass gambler appears to be spoilt for choice, the real key to success is down to the maths, concludes Jolly. “Slots are getting more complicated all the time in the way the mathematics works, it’s an art. If you look at the top 4 or 5 companies putting a total of 100 different games a year, you can probably count in the last five years the best games that are still in the market. The equation to make an outstanding game is not easy. Pretty graphics and sound is not the main driver of a good game.” As manufacturers update and tweak their product line, we can be sure that the non-premium customer is here to stay.
Asia Gaming Briefings | November 2016
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Poker in Asia: a busted flush? For over a decade, Asia has been touted as the region where the next – and most explosive – poker boom will occur, and yet the spark has failed to fully ignite. So how much appetite is there still for poker in the Far East and what’s holding the game back?
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en years ago, more than 300 poker professionals and amateurs congregated in the fourth-floor ballroom at the Meritus Mandarin Hotel in Singapore. With a buy-in of $5,000 and a first-place prize of $451,700, this was the first real poker event of significance in the Far East and the inaugural leg of the new Asian Poker Tour (APT). Three days later, one man was left standing as businessman, philanthropist and notorious poker player Antanas Guoga, known simply as ‘Tony G’, was crowned champion. The gregarious Australian promptly (and unexpectedly) donated half his winnings to charity and handed the trophy depicting a ‘Merlion’ – Singapore’s tourism symbol – to runner up and local player Joshua Ang so that it stayed in the country. This tournament was a big deal in poker circles back in November 2006 as it was seen as a potential catalyst to expand the game to a new frontier and the world’s most populous continent. At the time, the socalled ‘poker boom’ was in full swing in the US (despite UIGEA being signed into law in October) and much of Europe, as millions of people were discovering the game. Meanwhile, Macau was soon earning a reputation for playing host to some of the biggest cash games in the world where high-stakes professionals and super-wealthy businessman locked horns over pots worth millions of dollars. And it wouldn’t be long before PokerStars launched the Asia Pacific Poker Tour (APPT) to complement its successful European Poker Tour (EPT). Legal issues Yet in the ten years following that APT event in Singapore, poker has never truly taken off in the Far East; a couple of obvious major reasons being that online poker is illegal in most countries while landbased poker rooms and poker events are not that widespread. In fact, poker still barely gets a look in compared with baccarat in gambling’s epicenter, Macau. “Given that Macau is the world’s gambling hub with the best casinos in the world, it should follow that Macau would lead the way in poker, but it does not,” says APT CEO Jeff Mann. “To put things into perspective, there is one independent poker room in Manila that on any night runs more poker cash tables than the total of all poker tables available in Macau. “The root cause for this is the imposed and strictly regulated gaming table cap for all casinos in Macau, so it would be career suicide right now for a casino executive to even suggest replacing a few profitable baccarat tables to establish a small poker room.” Mann says eradicating the table cap makes logical sense. “This would encourage casinos to expand their product offering to customers and would immediately open the door to major poker event organizers like APT, WPT [World Poker Tour] and
Asia Gaming Briefings | November 2016
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WSOP [World Series of Poker] that would quickly rival anything on offer in the US or Europe.” Mainland prize The prized jewel from a poker promoter’s point of view is Mainland China, home to some 1.3 billion people and where high rollers and a burgeoning middle class flood into Macau to gamble. Both the WPT and APPT have managed to stage events on the mainland, though the latter suffered the ignominy of having the Nanjing Millions raided by police and shutdown in 2015. Nevertheless, Alex Dreyfus, CEO of Mediarex, creators of the Global Poker League – a high-profile poker competition involving 12 franchise teams from around the world – is confident the game will eventually take off in the country. “I believe China will be one of the next to have a poker boost – not boom,” he says, choosing his words carefully. “Why? Because in the last decade the boom never reached China and there are dozens of millions, if not more, ‘white collars’ that can embrace the game of poker – plus it is a skill game.” Dreyfus also highlights the popularity of free-to-play mobile poker in China. “Tencent offer a social poker mobile application that reached almost 100 million registered users, so the potential is there but you just need to find the spark to ignite it. But it will not be real-money online poker as we know it; we believe it will be very different – a mix of social poker, video games and eSports.” Manila thrives As Mann mentions, the one country to boast a thriving poker scene is the Philippines. As well as being a regular stop for the main tours and having an abundance of poker clubs, it is where much of the high-stakes action can now be found. Indeed, Poker King Club, which is synonymous with high-stakes cash games at Macau, launched a sister poker room in Manila at the Solaire Resort & Casino last year. In January, the poker room hosted the first edition of the Triton Super High Roller Series featuring a $200,000 buy-in tournament, which attracted 52 entrants and generated a prize pool of $10 million. However, a breast cancer charity event in September outstripped that with a buy-in of $500,000. “High-stakes games are becoming more popular in the region,” says Jason Jastrzemski, marketing executive for Poker King Club Manila. Yet Mann worries that the country’s poker market is becoming too crowded. “In my view, the Philippines
has now reached saturation point in terms of number of poker rooms in operation and the number of tournaments staged.” Another fly in the ointment in terms of poker’s expansion in some countries is the fact casinos only permit entry to foreigners or locals holding overseas passports. Indeed, while Cambodia and Vietnam are “potentially big markets”, says Mann, banning locals isn’t conducive to growing the game in this corner of Southeast Asia. “It meant that when Asian Poker Tour went to both countries we had a great line-up of international players but not one local was able to experience an international poker tournament atmosphere and buzz, which, unfortunately, did absolutely nothing for grassroots development of poker in those countries.” TV exposure In the US, much of the grassroots development was kick-started by poker’s exposure on television. After cable TV’s Travel Channel began screening WPT events with hole cards revealed in 2002, it led to an avalanche of poker programs flooding the networks. This encouraged millions to deposit money and try the game online. Subsequently, the more skilled players saw their bankrolls grow while some went on to become the game’s professional superstars with lucrative poker site sponsorships. A select few even transcended the world of poker. Asia hasn’t experienced this, however land-based poker in the region still manages to attract recreational players, suggests Jastrzemski, which is vital to sustaining the poker ecosystem, “There still are casual and young players discovering the game because poker is more of a social game and different to that of blackjack and baccarat. Players can find it exciting to sit and play with a celebrity one day, a professional poker player the next day, so by getting to talk to them can increase their ability and enjoyment of the game.” On reflection, Mann says Asia experienced what he describes as a “mini-boom” a few years ago, but this has “settled down considerably” since. He states there is still a great deal of interest in the game, but there is no escaping one key issue: “The bottom line is that poker is not happening in most countries in Asia – both cash-game play and tournaments – because it is still illegal.” This situation doesn’t look like it is going to change anytime soon, and until it does, poker appears set to remain a somewhat niche gambling game across much of Asia.
Asia Gaming Briefings | November 2016
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RNG on the rise as Asia’s online gamers hit the reels After struggling for a generation to make serious headway in Asia’s online markets, a new breed of random number generator (RNG) game is finally surmounting a number of issues which had previously stalled the growth of online slots.
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nline slots had been blighted by trust issues in Asia, where a large black market had left many players dubious of the legitimacy of titles where payouts are determined entirely under the hood. The predominance of table games in Asia’s landbased casinos had equally made the transition of RNG titles to the online sphere less of a natural progression for customers than in Europe or the US. These two factors combined to ensure Live Casino’s position as online gaming’s key growth driver in Asia, but this might finally be changing as technology, demographics and better game design make slots a
Asia Gaming Briefings | November 2016
viable proposition. “Slots is probably the area of single biggest growth within the Asian online gambling business right now,” iGaming consultant Keith McDonnell, CEO of KM iGaming, told AGB. “Live Dealer and sportsbook have maintained healthy positions, but as a product category, slots is the one taking increasing shares of overall revenue.” A lack of listed companies in the Asian online gaming sector makes it tough to estimate the precise nature of slots’ recent growth, but AGB understands that Asia is the single most important growth market for a number of the industry’s most high-profile and
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of “more professional, trusted and licensed operators” offering the games. Max Niehusen, CEO of Booming Games, said historical distrust has tended to stem from a more general misunderstanding of RNG, that has led to many of the myths and misconceptions which have plagued online slots in Asia. But he too said this is quickly changing as operators and providers, aided by more effective legislation, take a more transparent approach. Player mistrust
best-respected slots developers. Meanwhile Peder Lindfors, CEO of online casino provider Flow Gaming, said growth in Asia had been particularly strong over the past two or three years, with the biggest RNG providers reporting annual increases of around 50 percent for Asian revenues. Trust issues This rapid growth of RNG games suggests they have overcome the historic distrust with which many customers had traditionally treated online slots. “There has been a general distrust for online gambling in Asia and in particular for slot games, which have been perceived to be easy to manipulate,” said Lindfors. “In markets where non-regulated operators can offer their products, it is often the end customers who take the biggest hit, which creates the distrust.” However, this is beginning to change as a more legitimate online sector emerges in Asia. Lindfors said the growth of RNG slots in Asia has been driven by an influx
“We work towards providing better clarity of our maths and the systems governing RNG,” said Neihusen. “Once major players start trusting the product, the masses follow.” McDonnell argued that a generational shift is doing a lot to negate distrust in slots. He said it tended to be older players who believed RNG titles provided a stronger house edge than traditional table games. “Of course, we know that online RNG reflects the house edge from land based casinos - and in many cases is better for the player - but it’s easier to be skeptical of something that is not physically in front of you,” said McDonnell. “As demographics shift, technology developments become more widespread and online e-commerce generally continues to grow, trust in RNG builds with these trends, particularly when players can see the games come from credible suppliers and are licensed by known operators,” he added. This broader shift towards RNG titles in Asia has in no small part been aided by the slew of Asian-themed online slots produced by operators in recent months. This year alone has seen the launch of major new titles from the likes of Yggdrasil (Monkey King), Habanero (Fa Cai Shen) and Microgaming (Lucky Twins). Neihusen at Booming Games said that adapting titles to the specific market demands is critical to success of RNG titles in Asia. Booming Games, which has recently launched an Asian-facing arm, Booming Games Asia, has added staff with a knowledge of the region to its maths and design teams to better facilitate the creation of targeted content. “Up-to-date and thorough research help us to deploy games that chime with the contemporary preferences of Asian player groups. Games that may have been successful in the European market can easily flop if they don’t adapt to the differentiation,” he said.
He added that as online slots remain a new proposition to many in Asia, titles which have established trust in the landbased arena often prove popular, and can act as a stepping stone to more dedicated online play. Replacing Live Casino Despite slots’ impressive growth, there are still questions over whether they can replace Live Casino as Asia’s preferred online vertical. “Without question, Live Dealer has dominated the online market in Asia for years,” Kelvin Chiu, sales director at Asia Gaming, told AGB. “What makes Live Dealer games more appealing than other options is the interaction between player and dealer.” While Chiu said the demand for slots in Asia is “undoubtedly rising”, particularly among younger players, he added that RNG games were unlikely to surpass Live Dealer in the next couple of years. Lindfors argued the move towards mobile gaming will give slots a unique advantage over Live Casino. “As modern slot games are developed in HTML5, they are well suited for the mobile channel. In this very important channel, the customer will have a superior experience playing slots compared to the more technically heavy Live Casino,” he said. “As the mobile channel is growing drastically in Asia, this will be a very important factor for the success and growth of slots.” Both Lindfors and Neihusen also called for better legislation and certification of RNG games in Asia as a means to build trust in the sector. It is likely no coincidence that those slots providers which undergo the vigorous requirements of Europe’s regulatory jurisdictions tend to be more trusted in Asia. Slots gain Regardless, both Lindfors and Neihusen agreed the slots opportunity was huge. For Neihusen, it presented “opportunities for us to satisfy a large section of players with our content.” For Lindfors and Flow Gaming, which serves as a slots aggregator, the timing of bringing new RNG suppliers to the Asian market is “exceptionally good right now”. If providers can continue to build trust in Asia with locally-adapted RNG games, there is no reason why they cannot ultimately challenge Live Casino as the region’s primary online casino vertical. Asia Gaming Briefings | November 2016
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AUSTRALASIA
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AUSTRALIA
Crown arrests cast shadow down under The arrest of 18 Crown Resorts employees accused of illegal marketing activities in mainland China is reverberating through the casino industry in Australia and New Zealand, as operators weigh the potential impact on their business.
Asia Gaming Briefings | November 2016
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asinos in both Australia and New Zealand have seen strong growth in their Asian high roller business since Beijing began its crackdown on corruption, triggering an exodus of VIPs from Macau in favor of locations further from the Chinese government’s spotlight. John Mortensen, interim CEO of New Zealand’s SkyCity Entertainment Group acknowledged that the arrests would have an impact. “It is clear that these changes in the immediate future will impact our international business from China,” he said. “The outlook is relatively uncertain and we don’t want to speculate on what the implications could be as we go forward for the next few months.” Last fiscal year, roughly 50 percent of SkyCity’s group turnover was contributed by Chinese customers. Crown, which reportedly had been warned once before to halt efforts to woo high rollers from China, says around a third of its revenues are from overseas. However, it said the contribution to group profits from international VIP gaming business from mainland China is “substantially” less than 12 percent. No let up The arrests of Crown Resorts staff in China underscores the risk associated with global casino operators’ Chinese VIP business, Fitch Ratings and other analysts noted. “The detainment is a sign to Fitch that high roller gambling by the Chinese nationals outside of China remains top of mind for Chinese authorities,” said the ratings agency. The clampdown follows arrests in China last year of marketing teams from Korean operators Paradise Co. and Grand Korea Leisure. Analysts say it shows that China has no intention of letting up on these efforts, but also implies it is not happy about other destinations seeking to woo clients away from Macau. “We have argued previously and we reiterate our view that over the long run, Macau’s loss is no one’s gain when it comes to regional gaming competition,” Bernstein Research wrote in a note “While regional markets may have some regulatory arbitrage opportunities vis-a-vis Macau (e.g. lower tax rate, and
AUSTRALASIA 37
potentially a more lenient gaming regulatory regime and/or AML requirements), over the medium-term, we believe that Macau and China authorities will exert pressure on junket operations that aim to lure gamblers into the regional markets.” “Further, last year’s crackdown on Korean casino marketing and what appears to be a crackdown aimed at Australian VIP casino marketing is reflective of our view that China and Macau do not wish to see significant casino revenues flow to overseas casinos (especially those without ties to China).” China dollar Australia’s casinos have counted heavily on attracting more Chinese visitors, teaming with Asian investors to develop new multibillion dollar resorts in Queensland and spending to revamp existing properties. Visitors from China were up 20.7 percent in the eight months to the end of August, making it the second biggest source market after New Zealand. Matt Bekier, CEO of Star Entertainment recently told a local newspaper that the group would be doubling its efforts to attract more Chinese tourists. “The typical Chinese visitor to Australia spends about $8000 [on their trip],” Bekier told The Australian Financial Review. “Twenty five per cent of them find their way to one of our casinos and on average they spend about $150, so out of that big wallet, we only get a very small proportion … It should be double digits.” Crown is building a $2 billion VIP-only property in Sydney, which many analysts had expected to rely heavily on Chinese high rollers. The company is also scheduled to open a new Crown Towers hotel in Perth in December targeted at the same market segment. Positive feedback Chairman Robert Rankin has played down the impact of the arrests on the viability of the Sydney project. “The rise of the Asian middle class is the backbone of Australia’s tourism industry and the feedback from tourism operators is extremely positive, especially for Sydney. It’s these tourism numbers and changing demographics that help underpin our future plans and investment decisions.”
T OTAL GAMBLING EXPENDITURE All gambling Y14/15 A$22.73b Sports betting $814,6m
+7.7% +30.1%
Racing $2.81b
+2.7%
Total gaming (incl. pokies and lottery) $19.1b Casinos $5.17b
+7.7%
+17.8% (Source: Queensland Treasury)
Star plans revamp of Sheraton Mirage An international joint venture led by Star Entertainment is finalizing a deal to pay up to A$160 million ($121.7 million) for a beachfront resort in Queensland, local media reports. The gaming company, which is working in conjunction with Hong Kong developer Far East Consortium and retailer Chow Tai Fook, is hoping to see a revamped Sheraton Mirage to complement its Queen’s Wharf development and nearby Jupiters Hotel and Casino.
Tabcorp and Tatts combine in AS11.3b deal Tabcorp Holdings and Tatts Group have agreed to a A$11.3 billion ($8.7 billion) merger, in a deal the companies say will create a national footprint and may create a pathway to larger wagering pools. The transaction will see Tabcorp offer 0.8 Tabcorp share plus A$0.425 in cash for each Tatts share. That implies a value of A$4.34 per share. “This transaction is expected to deliver significant value for both sets of shareholders, and material benefits to other key stakeholders including the racing industry, business partners, customers and Governments,” said Tabcorp chairman Paula Dwyer.
Asia Gaming Briefings | November 2016
AUSTRALASIA 38
CNMI
Sept. best month yet for Best Sunshine Imperial Pacific International Holdings says it’s already accepting advance bookings from China and Japan for its new luxury resort scheduled to open on Saipan at Chinese New Year 2017. The company is counting on the new property to ease capacity restraints and unlock the island’s growth potential.
I
mperial Pacific reported its best month yet in VIP rollings in Sept., with the numbers picking up after several flat months that raised concern the temporary casino may have reached saturation point. The casino took in $3.95 billion, its best month since opening. The figure tops the previous high set in April of $3.18 billion, after which the casino reported several months of declining or flat VIP roll. The company has previously warned that until more facilities come online, further growth is likely to be limited due to capacity constraints at the temporary casino. For the first half of this year, total revenue reached HK$3.98 billion ($513 million),
Asia Gaming Briefings | November 2016
with revenue from VIP gaming operations making up the bulk at HK$3.82 billion. Mass gaming operations generated HK$122.2 million, while slots and ETGs came in at HK$26.8 million. Adjusted EBITDA was HK$1.24 billion, compared with a loss on that basis of HK$82.59 million. The company will open its new resort early in 2017. The Grand Mariana hotel is scheduled to have 350 hotel rooms and 15 villas. The casino will open with 300 tables, 180 VIP only, and 500 slot machines. Meanwhile, junket operators have been lining up to operate on the island and supply Best Sunshine with international VIP players. The Commonwealth Casino Commission
said it has returned some of the applications of junket operators and is still going through the vetting process for the junkets. “We have 17 other applicants but we took some of them and we turn them back. There are certain areas that they are missing and have not yet completed or complied with. Some of them have re-submitted their applications,” commission executive director Edward Deleon Guerrero said. In September, CCC issued a provisional license to Korea-based junket operator, Big Bang Entertainment, which remains the only one through the gates at the moment. Tourism numbers from South Korea in particular have been booming, helped by new
flight connections and a marketing drive by the Marianas Visitors Authority in Korea. Arrivals from Korea more than doubled in August, jumping 154 percent to 21,528 visitors. With direct double daily flights from Seoul by Jeju Air and double daily service from Seoul by Asiana Airlines in the summer season, the tourism authority projects arrivals from Korea to the NMI are projected to remain extremely strong through the end of this year. In addition to new flights launched in June by Korean Air’s low cost carrier Jin Air, Jeju Air is expected to launch a new service from Busan to Saipan at the end of the year. Eastar Jet has also started direct flight links with the island. Overall arrivals to CNMI soared 63 percent in August 2016 compared to August 2015, due in part to the low base last year when Typhoon Soudelor devastated the island. Arrivals from China increased 47 percent compared to August 2015 to 18,786 visitors. Meanwhile, Imperial Pacific is putting the financing in place to finish the construction of the resort. The company is offering a highyield bond, which will be secured on the
casino assets and resort under construction. The notes are expected to be rated B1/BB(Moody’s/Fitch) and will be issued through its subsidiary, Imperial Pacific International (CNMI) LLC (Saipan). According to a report from Reuters, the company still needs around $380 million to finish the project and is seeking raise around $300 million from the bond issue. Fitch Ratings said it expects to assign Imperial Pacific International Holdings Ltd a Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘B(EXP)’ with a stable outlook. According to the ratings agency, the rating reflects the operator’s short operating history in Saipan, driven mostly by the volatile highrolling VIP segment. The ratings are also “supported by a low tax regime, attractive location, the use of junkets/guarantors in its VIP gaming business and addition of tourist amenities in Saipan by IPI and other parties,” said the firm. On the other hand, the rating is constrained by the “high mobility” of VIP players, who already have a number of options of established casinos to choose from.
GROSS GAMING REVENUE IMPERIAL PACIFIC ROLLING CHIP VOLUME Y16 Oct.
$3.8b
$3.95
Sept. Aug. July June May April
$1.55b
$1.74b $1.65b
$2.52b
$3.18b
March
$1.88b
Feb.
$1.94b
Jan.
$2.26b
Korea junket gets Saipan license Saipan’s gaming regulator has issued a provisional license to Koreabased junket operator, Big Bang Entertainment. The provisional license was issued by the Commonwealth Casino Commission on August 11, 2016 to Du Young Jang who owns Big Bang Entertainment LLC, and will expire on August 31, 2017. Most of Big Bang Entertainment’s clients are from South Korea and Japan.
Rota Resort owner files lawsuit against regulator The owner of CNMI’s Rota Resort and Country Club has reportedly filed a lawsuit against the Rota Casino Gaming Commission and its commissioners for unfairly deeming their conditional casino license expired. SNM Corp., owner of the Rota Resort and Country Club said that the Rota casino commission violated the Open Government Act by holding a special meeting without giving notice to the company or the public.
Asia Gaming Briefings | November 2016
40
SOUTH ASIA
40
NEPAL
Casinos eye untapped India potential Casinos are reopening their doors under a new regulatory regime designed to bring the industry in line with international standards and attract greater foreign investment.
Asia Gaming Briefings | November 2016
N
epal’s casino industry is recovering from a series of deadly earthquakes and a temporary border blockade with India last year, with international casino operators increasingly eyeing the market as a way to tap potential from neighboring India. Visitor numbers to the Himalayan nation by air jumped 12.77 percent in the first half of this year to 313,512, compared with about 277,992 visitors in the same period last year. In the first half of 2014, tourist arrivals had reached 412,461. However, those numbers don’t reflect visitors from neighboring India, which is seen as key to the growth of Nepal’s casinos. This is because Indian nationals do not need to show a passport to enter Nepal, and are able to move across the border freely. Nepal was once home to as many as 10 casinos, however operators failed to keep up with tax payments and so change was needed. Keen to attract international operators and foreign investment into the tourism sector, which includes casinos, Nepal introduced a new regulatory regime in July 2013, called the “Casino Rules 2070”. After a grace period of 12 months, all seven casinos that failed to comply with the rules were closed down and the incumbent operators were required to file for new licenses. New licenses Today, Casino Mahjong, housed in Hotel Soaltee Crown Plaza, the oldest five-star hotel of Nepal, The Millionaire’s Club & Casino at Hotel Shangri-La, and Casino Pride in Hyatt Regency Hotel have all received licenses under Nepal’s upgraded gaming regulations. Mahjong is operated by India’s Mahjong Entertainment, The Millionaire’s Club & Casino by Hong Kong-based and Australia-listed Silver Heritage Group, and Casino Pride by Goabased Goa Coastal Resorts and Recreational. Silver Heritage has also announced a major development 12km from the Indian border in Bhairahawa, where it is building South Asia’s first integrated resort, Tiger Palace Resort, which will house 52 tables and 200 EGMs, as well as a five-star hotel, conference centre, retail and entertainment facilities. Three other casinos, including the Casino Royale at the Yak and Yeti Hotel, have been re-opened after securing an interim stay order from Nepal’s Supreme Court. The casinos at Hotel Malla and at Radisson Hotel re-opened temporarily on August 18 and August 25 respectively. All of these are run by local
SOUTH ASIA 41
operators, none of whom have yet been issued a license under the new regulations. Kumar Shrestha, a veteran local casino manager, who ran casinos under the old regime and who has recently been appointed the operations manager of Casino Venus, said re-opening casinos based on a stay order was only a temporary solution. “We hope the government would amend the regulations under which we will be able to operate casinos,” he told AGB. Affluent Indians Shrestha said Nepal was well-placed to cater to the affluent Indian gamblers from northern India - New Delhi, Punjab and Haryana. The casinos of Nepal are easier to access than Goa and Sikkim, the only places where gambling is currently available in India. “If you live in New Delhi and the surrounding region and want to gamble over the weekend, it would make more sense for you to take an hour-long flight to Nepal than to fly for more than three hours to Goa,” he said, adding there are no direct flights to Sikkim, which is only reachable after a long drive from the nearest airport in the northeastern Indian state of West Bengal. A surge in visitors from China, Nepal’s other giant neighbor, also augurs well for the casino industry. Earlier this year the Government waived visa fees entirely for all Chinese nationals in an attempt to drive tourism from the mainland. “We must tap into these two big markets. And, if our government supports us with amendments (to the regulations), this sector will really take off again,” Shrestha said. Silver Heritage CEO Mike Bolsover said the group welcomed the new casino regulations, which are likely to improve standards across the industry. “We fully support continued regulation of the industry and the steady improvements being made will likely result in higher levels of inbound tourism, a higher quantum of local employment, higher standards of compliance and regulation within the sector and a higher standard of entertainment product for international visitors from India, China and other countries, such as Korea, and in turn higher tax revenues for Nepal.” Revisions call However, some local operators who ran the casinos under the old regime still feel the new fee structure is too onerous, pointing in particular to a US$300,000 per annum per
property “Casino Royalty”, and a US$100,000 per annum license application fee. “We have been demanding to the government for the revision of some of the provisions. They are related to the amount of paid-up capital, the annual license fee, the fee for applying for renewal of license, keeping the record of CCVT for six months etc,” said Chiranjibi Acharya, a spokesman for Casino Association Nepal. They have been meeting with officials from the government to push for change. Sudarshan Prasad Dhakal, the director general of Department of Tourism, acknowledged that the industry had suffered a downturn and said the government had been considering operators’ demands. However, insiders say that the government is most likely to stand firm as it notes growing interest from international operators in this near neighbor to India’s vast middle class. Executives from regional Hong Kong-listed casino operators Melco and NagaCorp have been spotted in Kathmandu recently, fueling speculation that this forgotten but 50-year old gaming jurisdiction may have been rediscovered.
TOURISM Y15 Tourism arrivals 538,970 Tourism arrivals to end June 313,512
+12.7%
IMF cuts growth outlook to 4 percent The International Monetary Fund has revised Nepal’s economic growth forecast for the current fiscal year, bringing it down to 4 percent from 4.5 percent. The revised growth outlook is much lower than the government’s growth estimate of 6.5 percent and comes despite a good monsoon, which is expected to boost agricultural output.
Repayment sought for Casino Nepal staff The parliamentary Social Justice and Human Rights Committee has taken action to recover about Rs45.42 crore in salaries owed to employees of Casino Nepal. The committee asked authorities to issue a red corner notice through Interpol against Indian nationals Rakesh Wadhwa, Shalini Wadhwa and Shanti Chaddha.
Asia Gaming Briefings | November 2016
SOUTH ASIA 42
INDIA
Legalization key to tackle rising illegal gambling The approach to tackling India’s massive illegal gambling market is too piecemeal to make a real dent in the problem and experts say the only real way to curb the practice is to provide a legal framework.
I
ndia’s authorities lack a coherent approach when it comes to tackling rampant illegal gambling, with criminal syndicates often enjoying political patronage from a ruling class which has publicly opposed legalization of the industry. Gambling is mostly forbidden in India, but legislation is drawn up by individual states, creating a patchwork of mixed rules. Casinos are allowed in Goa, Sikkim and Daman, while about 12 out of 29 states allow lotteries. Sikkim and Nagaland have recently permitted online gambling and, to add to the mix, the Supreme Court has ruled that games of skill, such as rummy, are permitted. Despite the restrictions Indians remain keen gamblers. Six years ago an oft quoted report by the Federation of Indian Chambers of Commerce and Industry put the size of the market at about $60 billion, with much of that being wagered illegally. That number appears to have since ballooned with the Doha-based International Centre for Sports Security in a report released in January putting the amount illegally bet on sports alone at $150 billion, with most on cricket. Piecemeal approach However, the country’s approach to tackling the problem is as fragmented as the legislation covering the sector. While central investigating agencies like the Enforcement Directorate and the Central Bureau of Investigation do look into some high-profile cases with a panIndia impact, at the state level the matter is generally dealt with on a case-by-case basis by the police. In July, the Delhi police claimed to have unearthed a major betting racket running all
Asia Gaming Briefings | November 2016
over India, with millions of dollars being bet annually. It was allegedly being run under the protection of a former member of parliament. Powerful protectors A.K. Singla, the deputy commissioner of police (DCP), north-east Delhi, who is investigating the racket, told AGB that he had been brought in last year especially to handle increased incidents of illegal betting in the area, mainly in the east and north-east
districts of Delhi. A police source told AGB that the previous DCP handling north-east Delhi was himself found to be involved in the ring, along with junior policemen. “Political patronage is essential to their operations as the market is cut-throat and violent. They started running this racket after toppling someone else’s business in 2005, for example,” said Singla. He added that the commission agents usually rigged the process to ensure maximum profits for themselves.
SOUTH ASIA 43
Lotteries were banned in Delhi in the late 1990s following a campaign by current Minister of Sports Vijay Goel. However, the state, like several others where lotteries are banned, has no special unit to look after violations. “It remains a low priority area for us as we are more focused now on issues related to terrorism and others,” a highly placed police source told AGB. “It is not that we are unaware that stakes can be very high in some of these modules. We also know that money laundering takes place. But our hands are further tied by the fact that plenty of business is also conducted online now and we do not have ways to track them yet.” “Moreover, in the past, when we have cracked down hard on such modules, there have been cases of misuse of the law and innocents got targeted which is why we have to maintain extra caution,” he said. Given the widespread nature of the problem, experts agree the only real way to make a meaningful dent in the black market would be to have a proper legal framework. At a recent event in Delhi to discuss the potential for legalization of gambling in the country, former director of the Central Bureau of Investigation, Ranjit Sinha noted that money laundering often takes place in instances of illegal betting and some of this money also funds terrorist activities, further compromising the security of the country. Sinha said that this could be curbed by legalizing gambling in India.
GROSS GAMING REVENUE $10.1b
GGR Y21E Maharashtra GGR Y21E
$1.1b
(Source: Global Market Advisors based on estimates for a legal casino industry)
Delta Corp Q1 gaming revenue 96.20 crore
+37%
Essel dusts off offshore casino plans Conglomerate Essel (Zee) Group is reviving plans for an offshore casino in Goa by the name of Casino Maharaj. The group first announced the offshore casino in 2009, but the vessel has remained in limbo for more than seven years since, stuck in need of a permit. It was billed to have been South Asia’s largest floating casino at the time and would be the sixth offshore venue in Goa.
Legal solution
Illegal betting on lotteries is known as the Satta and usually bets are made on single digits. The agents, locally known as the Khaiwal, distribute paper slips or tickets to those betting with numbers marked on them. “It is called parchi katna (distributing slips.) The money is bet on numbers. The announcement of the winners is made after all the bets have been collected and winners selected, which is called ghadi kholna (dismantling the clock). The act of announcing the winners is called awaj lagana (to give a call),” Singla said.
“It seems that the series of scams and problems relating to gambling and black money is only due to the hypocrisy of the political class. None of these investigations would have been necessary if betting and lottery was legal and if the trade was carried out in a legitimate fashion,” Jay Sayta, an expert on gambling laws in the country, said that legalizing lotteries would create opportunities for employment and generate revenues for the government. “Several states in the north-east India have legalised lotteries and they earn a substantial chunk of their revenues from it. In Kerala, the revenue generated from lotteries is used for social welfare schemes,” Sayta elaborated. The lottery business in Kerala was worth around $1 billion, with the state making revenues to the tune of a few hundred million dollars, said Sayta.
Andhra Pradesh gets six casino proposals The Andhra Pradesh state government has received six proposals to open casinos in the state, including one on the Krishna River. However, the state government has yet to make any decision on the proposals, some of which have been pending for at least two years, according to local media reports. The state would also need to amend the Andhra Pradesh Gaming Act, 1974, which currently bans gambling.
Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT 44
MGS 2016
Economic diversity is a key theme for this year’s MGS Entertainment Show – Creativity and Innovation 2016, say organizers. One of the focal messages of Chinese Premier Li Keqiang’s recent trip to Macau was one of economic diversity, adding he was encouraged by Macau’s progress in this regard.
“I
had the opportunity to see and acknowledge the modernity and prosperity of Macau but also the cultural diversification and I believe that this will continue and the economy will reach the goal of its diversification,” he said. Celebrating its fourth iteration this year, held at the Venetian on November 15-17, 2016, the MGS Entertainment Show’s very name is said to be a reflection of the SAR’s moves towards becoming a tourist and entertainment destination. “The MGS Entertainment Show is more than an exhibition. Its intention is to reach every level of industry that plays a crucial part in driving business in a tourist and entertainment destination. Gaming and its pioneering technology will always sit at the heart of our show. It’s what we are and where we come from. But business does not stop there. Our economy - both here in Macau and throughout Asia - is about opportunity. And as the city and region opens up to economic expansion, the show must provide the platform for this. Our casinos go hand in hand with entertainment. They go hand in hand with new technology, new delivery platforms, new innovations - everything that makes a destination work. That’s why diversity on the showfloor must reflect diversity in our economy”, said Jay Chun, chairman of the MGEMA, organizers of the show. With an exhibition floor spanning 10,000 square meters, the MGS Entertainment Show will feature suppliers from six major gaming industry segments including gaming equipment and accessories, gaming promoters (junkets) and VIP clubs, casino fixtures and fittings, promotional services, F&B, and Entertainment & Performance.
Asia Gaming Briefings | August 2016
The event will also feature a three-day Summit, titled “New Frontiers: Gaming’s Giant Leap Forward”, which is said to explore legislation, innovation and investment - while exploring topics such as: new technologies, iGaming and esports; sports betting in global markets; Government legislation; how old markets like Las Vegas can still shape new ones; and how investors will step up to the “financial plate”. Speakers will include officials of the Macau SAR government as well as leading figures in Asian gaming. “We’re on a long journey; the MGS Entertainment Show is here to stay and, together with the most important voices in the Asian and international gaming and entertainment industry, we are determined that come 2020, this exhibition is the stand-out business event in the Asia Pacific region,” added Chun. In the following pages, you’ll find a Supplier Special Report dedicated to the MGS Entertainment Show 2016, covering all of the latest products and innovations coming from global suppliers to Macau and Asia’s gaming industry. For those headed to the show, AGB will be hosting the Official MGS Networking Party at China Rouge in Galaxy Macau on the evening of 15th November. With supporters including MGS, Angel Playing Cards, Aristocrat, Aruze, Betsoft Gaming, IGT, MGIA, Orion Art, Play’N Go, San Marco Capital Partners, Scientific Games, Transact and Walker Digital, it is sure to be another roaring success. We hope to connect with you at the event. If you would like to book a meeting with us while in town for the MGS write to us at MGS@agbrief.com or look for us at the floor.
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ICE 2016
Warm welcome for new ICE exhibitors Organizers of ICE 2017 have unveiled a new, never before seen feature of the show. Named the ‘innovation quarter’, the ICE organizing team says it has secured an additional hall at the ExCeL Centre, enabling new exhibitors to have their own designated home and identity.
T
he new hall will be supported by a dedicated pre-show and in-venue marketing and promotional programme. Explaining the thinking behind the initiative, Kate Chambers, said: “The additional space we have invested in means that all first time and returning exhibitors can be hosted in what we are describing as an ‘innovation quarter’, enabling them to demonstrate their products/ services and represent their brand personality in what is gaming’s most popular and prominent shop window.” She added: “It’s often said that new exhibitors are the lifeblood of established events and we want to ensure that, alongside initiatives such as the Pitch ICE competition for gaming start-ups, we provide a positive and nurturing environment for companies of all sizes and at all stages of their development.” The show, held at the ExCel Center in London from February 7-9, will also introduce for the first time introduce Clarion’s ICE VOX, the gaming industry’s newest knowledge-exchange and educational brand. ICE VOX, which replaces conferences, will comprise a programme of paid for learning and networking modules which will take place at London’s ExCeL Centre alongside the ICE Totally Gaming exhibition. Explaining the thinking behind ICE VOX, Chambers, said: “The learning and knowledge-exchange opportunities that are available at ICE are widely recognized as being amongst the very best in the industry. The ability to engage with the industry’s preeminent authorities and thought leaders and then meet with the people responsible for creating the very latest online and offline gaming technologies on a show floor of over 500 exhibitors, is unique to ICE. “ICE VOX will retain all of these stand out credentials at the same time as reaching out to new communities
Asia Gaming Briefings | November 2016
of knowledge hungry gaming professionals. The ICE VOX content team will be introducing dynamic new concepts and approaches which will help re-shape the learning experience for gaming and engage with our stakeholders in a contemporary and compelling way.” “This is part of the on-going programme of initiatives that we undertake in order to keep our brands fresh and relevant.” The show has also embarked in a new creative campaign - using unconventional cultural sources of William Shakespeare and graffiti artist Banksy as inspiration for the campaign in support of the 2017 show. The ICE 2017 ‘World theatre of gaming’ campaign, which features a Banksy style treatment depicting the world’s most famous dramatist, was unveiled at a special photo shoot featuring an ICE liveried London taxi and attended by senior members of the team responsible for delivering what is gaming’s biggest and most influential business event. “Gaming, whether it is online or land-based is about theatre, about entertainment and in the process, delivering a compelling customer experience. The message I would like to extend the industry, is that with over 500 leading commercial players occupying a stage of 39,000 square metres (420,000 square feet) the world theatre of gaming is coming to London in February, said Chambers. Bringing together the online and offline gaming sectors, ICE Totally Gaming features world-leading innovators drawn from the casino, betting, bingo, lottery, mobile, online and street sectors, ICE provides the most comprehensive shop window on world gaming. Gaming professionals wishing to secure their place at ICE Totally Gaming 2017 can register at icetotallygaming.com.
ExCeL, London 7-9 February 2017
the world theatre of gaming
To join the world at ICE visit icetotallygaming.com
#theatreofgaming Asia Gaming Briefings | November 2016
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SUPPLIER SPECIAL REPORT 48 ANGEL
Quality playing cards
A
ngel Playing Cards is a pioneer in the manufacturing of superior casino grade playing cards with over 50 years of experience. Since its inception in 1949, Angel Playing Cards has consistently been providing the global market with the best quality playing cards, following its policy of “aspiring for perfection.” At present, Angel Playing Cards has a number of casinos, including the leading casinos in Asia and Australia, as customers. The company believes that ongoing communication with customers is essential in building a mutual understanding, and ultimately increasing customer satisfaction. There is a high value placed on face-to-face meetings, to ensure that the company provides the highest possible quality, service and security. Angel Playing Cards’ staff will be pleased to find out more about their customers’ needs at the show at stand U38.
ARUZE
Cube-X Vertical
A
ruze Gaming is changing the game at this year’s Macao Gaming Show. Stand AA29 will be showcasing the newly introduced Cube-X Vertical along with other multiple products. The newest titles coming out exclusively on the Cube-X Vertical are, Tower Stack Bison, Tower Stack Feature Panda, and Tower Stack Slide Wolf allow the player to play up to three frames adding up to 150 lines. The Tower Stack titles will be available on the recently launched Cube-X Vertical 80 with a 4-level progressive jackpot. Cube-X Vertical 80 encompasses two 42-inch vertical monitors to bring the most realistic visual experience to players. Dragon Sic Bo, the extravagant sequel to Aruze’s finest Electronic Table GameTG Lucky Sic Bo, cannot be missed. With a brand new dragon motif, and a thrilling new jackpot feature, Dragon Sic Bo brings a whole new gaming experience to electronic Sic Bo machines. This beautiful creation is sure to have players on the edges of their seats, as they push the shoot button and shoot the dice to new heights of excitement. Cash Locomotive is the newest link progressive series for the Cube-X Video platform. In the Collect Feature, special symbols with credits amounts are held on the reels after appearing during the free games. The Prize Pick feature brings even more excitement as the player picks locomotives on the screen that reveal credit prizes. Aruze also continues to support their core Cube-X Innovator and Video products. Joji Kokuryo, senior compliance & operations manager at Aruze Gaming Macau Limited, states “At this year’s MGS, we are highlighting the Cube-X Vertical platform as well as our new electronic table games. With new titles on all of our platforms, Aruze’s devotion to entertainment and innovation will be on full display.” Aruze will be at stand AA29.
ASIA GAMING
All about localization
A
sia Gaming is a designer and manufacturer of live dealer casino products in the Asia-Pacific region. The company has a unique advantage in the market due to its ability to serve players in this region, and this has equipped the company to expand its business to the global gaming market. All of its games are designed by teams of talented individuals with the aim of appealing to the local cultures and player experiences in the target market. And with our Complete Gaming Solution, it is the fastest way to start a full-fledged online casino business from scratch for every operator. Asia Gaming is offers an extensive portfolio of games, including table games and a market-leading Live Dealer platform to operators in order to drive revenue across the likes of baccarat, dragon tiger, roulette and sic bo, targeting the overseas Chinese population residing in Europe, players enjoy the thrills of a land-based casino experience from the comfort of their own home whilst maximizing interaction with dealers.
Asia Gaming Briefings | November 2016
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Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT 50 BETCONSTRUCT
Existing and future partners
B
etConstruct, with a recently inaugurated office in Taipei, Taiwan, came closer to its existing and future partners in Asia. The company heads to this year’s Macao Gaming Show with an enhanced product line up. “Asia is a sophisticated gaming and betting market due to its diversified political environments and policies. The gaming events in Macau are attractive to this region’s key players. We cherish the chance to meet our partners and discuss product development strategies face to face,” says Lichun Hsiao, head of BetConstruct Regional Office in Asia. Everything BetConstruct offers will be showcased in Macau, including the recent Sportsbook developments, such as new margin, limit management and liability tools. Now partners have greater freedoms to choose which sports, competitions and markets they offer to players. They will also enjoy the enhanced ability to affect the competitiveness of their odds. Since BetConstruct unveiled its Asian View Sportsbook, it has been refining localised versions of Sportsbook that appeal to Asian players. BetConstruct’s Sportsbook offering is empowered by Sports Data Solutions, Agent
System, Retail Betting Shop Solutions, etc. BetConstruct will also present its greatly enlarged RNG and Live Dealer Casino Suites, along with Virtual Sports and Games, Poker, Skill Games, Social Gaming, etc. “We have comprehensive gaming products and services, 24/7 technical support and allembracing marketing tools,” says Lichun Hsiao. “Our Asian office is dedicated to offering intuitive and localized service for partners in Asia. Such approach will eliminate the language barrier and, most importantly, lead to fast and responsive support.” The BetConstruct team will be located at stand AD25 at the show.
Online services demand
aming testing laboratory and technical consultancy BMM Testlabs, is pleased to be exhibiting at the Macau Gaming Show. One of the important topics BMM will be discussing at MGS will be the increase in demand for online services. Yu-Chiang Lim, director business development for Asia commented, “During 2016 BMM Testlabs in Asia has partnered with an increasing number of customers to provide market entry guidance and compliance testing services for online gaming products, including RNG games.” Lim continued, “Market knowledge and technical expertise are critical to meeting product release plans in the Asian markets. BMM benefits from local offices managed and staffed by Asian locals, strong regulatory relationships and continued partnerships with local institutes like the Macau Polytechnic. These factors all enable BMM Asia to provide their customers with a deep understanding of the technical and regulatory requirements for their online RNG games in the various Asian markets.”
Asia Gaming Briefings | November 2016
Highest industry standards
T
BMM
G
FIRST CAGAYAN
Lim added, “BMM provides substantial benefits to our customers by delivering higher quality services, shorter time-to-market and controlled costs. Customers are recognizing these superior services, and this is why BMM Testlabs continues to be the number one gaming certification testlab in Asia and around the world.” BMM encourages any manufacturer with questions regarding online, technical compliance, technical standards or market entry to visit BMM’s booth at MGS and talk to their industry experts. Visit BMM at Stand U32.
he Cagayan Economic Zone Authority (CEZA) is a government-owned and controlled corporation that was created by virtue of Republic Act 7922, otherwise known as the “Cagayan Special Economic Zone Act of 1995”. Under Republic Act 7922, CEZA has the authority to operate or license tourism-related activities including games, amusements, recreation and sports facilities, independent from and duly recognized by Philippine Amusement and Gaming Corporation (PAGCOR). Its gaming regulatory operations meet the highest and strictest industry standards and are commensurate with best industry practices. For over a decade, First Cagayan Leisure and Resort Corporation (FCLRC)—the duly appointed Master Licensor of the Cagayan Economic Zone Authority (CEZA)—has regulated all activities pertaining to the licensing and operation of interactive games on behalf of CEZA. FCLRC (a subsidiary of Leisure and Resorts World Corporation—a publicly-listed corporation at the Philippine Stock Exchange) has been developing the jurisdiction with state-of-art technology and infrastructure to create one of the world’s leading interactive gaming jurisdictions. Beyond licensing, it offers value-added services ranging from business-related (i.e. legal consultation services, technical and technological expertise, pre-opening setup and post-opening operation assistance) to leisure and family oriented care, to guarantee a peace-of-mind business environment and enhance a hassle-free lifestyle with work-life balance. To assure protection, comfort and ease of doing business for both its online gaming operators and their clients, it is under both CEZA and FCLRC’s responsibility to accord gaming operators the opportunity to be part of a promising business environment and to provide a strategic base to penetrate the gaming markets of the Asia-Pacific Region and the rest of the world.
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Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT 52 GOLDEN RACE
Virtual sports
T
his year, Golden Race´s 3D Virtual Football League received major updates. They will proudly demonstrate the many benefits of their 3D virtual football at the upcoming Macao Gaming Show – join them to see the huge variety of localized leagues, and how their full customization experience makes it adaptable to any customer, market, language, currency, and country. Their in-game customization branding service is a key feature. They customize whole leagues, teams, badges, uniforms, and skin tones for their customer tastes and location. Clients can have animations announcing their website, logo, current offers and promotions, or whatever they wish fully integrated inside the game. They use highly detailed 3D models and realistic animations for players, the crowd, even the goal nets; professional commentators for voice-overs in all major languages, and real bookmakers to create odds for each league - players play a real sportsbook with virtual events, and have a real gaming experience. Golden Race delivers live rendered 3D virtual soccer on an Android device for a cost of less than 100€ (US$110) setup per shop. Competitors´ setup costs are significantly higher, says Golden Race, because they use live rendering instead of pre-rendered video files, the storage space required is significantly less – around 500MB - and with that amount they run more than 12 leagues at the same time. Of course, Golden Race is also known for its re-recorded video races (they now have six types to choose from), and their Real Fighting MMA game is revolutionary. Add casino and numbers games, and you’ll see why Golden Race offers everything you need to start winning today. Join them at stand AN38 to see The King in action, and to learn about all their internationally proven solutions.
Asia Gaming Briefings | November 2016
IGT
Market-attuned games
I
GT’s stand AJ37 at MGS will feature a mix of market-attuned gaming innovations including linked progressives, and standalone themes and progressives. IGT will spotlight the standalone theme Legend of Chang’e video slots which is inspired by the well-known fable of Chang’e, Hou Yi the Legendary Archer and the Jade Emperor. Housed on the company’s CrystalDual cabinet, the high-volatility theme is part of IGT’s “MultiWay Xtra” game family and offers players 1,024 ways to win. Legend of Chang’e includes an exciting symbol replacement feature where the Arrow symbols are replaced by a mystery symbol revealed from beneath a row of suns sitting atop of the reels. After the Arrow symbol replacement, each instance may also reveal individual multipliers with cumulative multipliers ranging from 2X to 81X. Lucky players can engage Legend of Chang’e‘s free games bonus where they can trigger, or retrigger, up to 81 free games on any given spin. Building on the success of Gong Xi Fai Cai, IGT will spotlight Wan Shi Ru Yi from the company’s standalone progressive
portfolio. The theme is housed on the G23 cabinet and offers players a high-volatility, four-level progressive that includes a wealth play mechanics that heighten player anticipation. The game features a unique 4x3x3x3x3x reel configuration and includes two dynamic bonus events – the “Choose your free spins bonus” where players can pick between a greater number of free games with a lower multiplier, or a smaller number of free spins with a larger multiplier; and the “Progressive Pick Feature” where players pick big gems with the hope that they correspond with those displayed with the progressive payouts. Other standout products in IGT’s stand include the linked progressive Fu Gui Ji Li on the CrystalDual cabinet and the game themes 99 Riches and Majestic Gorilla. Visit IGT at stand AJ37 at the show.
ISOFTBET
Paranormal Activity
O
nline and mobile casino games provider, iSoftBet will be returning to MGS this year with the latest collection of outstanding games. Possessing a diversified portfolio, the London-based company will be showcasing at the event its complete games suite that includes a wide range of original video slots, traditional table games and stunning branded titles from world-renowned TV & films. The team from the UK & Manila offices will be happy to talk about the company’s newest releases like Paranormal Activity, Skulls of Legend along with some future ones lined up for 2016! iSoftBet will be at stand A028 during the exhibition and encourages everyone to come by and experience the technology advancement. With proven knowledge and experience in regulated markets, iSoftBet is a global powerhouse in the online casino industry. Boasting a remarkable collection of fully licenced and certified Flash and HTML5 mobile games, the iSoftBet portfolio also includes exclusive
branded content from some of the world’s largest TV and film studios. iSoftBet also offers an unparalleled online and terminal-based sports betting platform alongside an advanced Game Aggregation Platform (GAP) allowing operators to benefit from over 20 additional game providers’ content in one swift integration. iSoftBet creates each of its products to ensure that it meets industry standards and combines innovation with experience to provide world class gaming software to its partners. Feel free to drop by at stand A028.
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Key Features • Lightning Link™ is our first multi denom link that players can select on the same machine CABINET
• 2 progressive jackpots & 2 scalable bonus prizes that scale by denom • Each game title has the same jackpot and bonus prizes feature • Credit Prizes, Bonuses and Jackpots are all displayed on the reels • Free Game Feature - Each game titles has an unique free game feature • Happy Lantern Free Game features ▪ Golden Palace feature is triggered with 3, 4 or 5 scatters ▪ Player chooses a Dancing Lion to reveal Free Games or the Hold & Spin Feature ▪ If Free Games are awarded 6, 9 or 15 free games with 25, 100 or 200 wilds added may be won
• Jackpot Feature - Hold & Spin feature is consistent across all game titles - Players can win: Credit Prizes, Bonuses & Jackpots - Grand Jackpot is won when 15 Lanterns are collected
RTPS
VOLATILITY
85
88
91
94
86
89
92
95
87
90
93
96
medium high
DENOMS & BETS DENOM
0.01-10 ?
LINES / WAYS
50L
MULTI – DENOM
Yes
ENTRY BET
25cr, 50cr
MAX BET
500cr
JACKPOT
Yes
©2016 Aristocrat Technologies Australia Pty Limited, Aristocrat, it’s all in the game, VIRIDIAN WS™, HELIX™, ARC™, Behemoth™, Wonder Wheels™, game names and the Aristocrat logo are trademarks or registered trademarks of Aristocrat Technologies Australia Pty Limited.
Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT 54 JCM
Increasing customer connections
F
rom its local service office, JCM Global helps operators in Macau and throughout the region make deep and meaningful customer connections. Now JCM’s local team will present the next generation of better, smarter, faster solutions at the Macao Gaming Show. JCM will be on stand AA24 where the company will present the new GEN5 thermal printer, the new PromoNet technology, and the award-winning iVIZION bill validator – the combination of which present powerful opportunities for operators to connect with their players. JCM’s new GEN5 printer is the next generation in printers. Building on the foundation of the universally successful GEN platform, the GEN5 is fully compatible to work with existing platforms, server-based and USB machines. GEN5 has an even faster CPU and faster print speed than previous generation printers, and it is flexible enough to print TITO and promotional tickets, plus various wager tickets and templated promo coupons. The GEN5 is operationally sound with Intelligent Ticket Handling technology, dual channel communication and jam-prevention technology. JCM’s PromoNet 2.0 technology is a
breakthrough product because it delivers the right promotion to the right customer at the right time. PromoNet 2.0 allows operators of all sizes to identify high-value anonymous players, direct promotions to most valuable players, enhance player experience, and maximize results using business analytics. PromoNet enables operators to identify valuable players, target both carded and non-carded players, link promotions to game-play and deliver promotions exactly where and when they are needed, helping to increase player base and future marketing potential. JCM’s award-winning iVIZION bill validator is the Foundation of Intelligent Validation and sees better, thinks smarter and runs faster. iVIZION is field proven globally with more than 250,000 units shipped to date. iVIZION has the unique capability to read 2D barcodes, and its Contact Image Sensor (CIS) technology scans 75 times more data points than any bill validator in its class, capturing the full image of both sides of a banknote or ticket. The CIS validation technology is combined with a patented anti-stringing device to detect and prevent manipulation or mechanical cheating.
JUMBO
168 Jackpot
J
umbo Technology provides a complete one-stop solution including: gaming machines, management system, operation management, and technical service support. This is the fourth year Jumbo Technology has participated in the Macao Gaming Show and it is proud to share its renowned 168 Jackpot by Alphabet Technology this year. Highlights of the 168 Jackpot is the mystery jackpot which reward up to 376 percent offering three kinds of Chinese style games including GongXiFaCai, Fortune Horse, and Xi Yang Yang. Jumbo Technology’s strategic partner, GAMA Technology has also announced the new GAMA table management system and the new version GAMA II, providing a visual report that is color coded for the status for both machines and members and is user friendly. Jumbo Technology is ready to present itself in the emerging market of Macau. To see the company at MGS, visit stand AS34.
LAXINO
Cloud-based gaming platforms
F
ounded in 2008, Laxino Systems Limited has become a leading cloud computing, multimedia and gaming technology provider in Asia. With over 100 employees, the company continues to recruit local and overseas IT talents to cope with their rapid business expansion as well as supporting and enhancing the local gaming technology and cloud computing industries. Laxino will make its fourth appearance at the Macau Gaming show 2016 this November. They will showcase the latest and upgraded cloud-based gaming platforms and a wide variety of electronic games, and introduce their Asian-themed new games such as Lion Dance and Flaming Mountains this year. Their subsidiary company, Blue
Asia Gaming Briefings | November 2016
Technology Limited, is a local Macau slots accredited distribution company to represent Hydako throughout Asia and a sales agent for Novomatic and Apex within Macau, is also exhibiting together to showcase a variety of top notch Asian-themed slot machines. Blue will be adding Casino Technology, Gold Club and Amatic to their current distribution portfolio in the near future in
order to complement its product offering with uniquely developed products like the EGM, automated EGT, stand alone progressives and link progressives that they believe will complement their customers mass market needs and strengthen their position through solid product performance. You can find the team at MGS at stand AD37
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Asia Gaming Briefings | November 2016
SUPPLIER SPECIAL REPORT 56 LT GAME
Virtual horse racing
L
T Game, a subsidiary of Paradise Entertainment Limited, will exhibit a variety of its products at stand AP19 at MGS. Visitors will be able to learn how the company’s latest innovations will benefit casino operators in further improving game efficiency and provide casino patrons a revolutionary gaming experience. The key highlights on LT Game’s booth include all the latest Live Multi-Gaming products, as well as brand new Electronic Table Gaming products such as a Virtual Horse Racing Game and LT Game FAFA Slot Machine which will be introduced to the market soon. We are thrilled to present our award-winning LMG-6 terminal, the newest Fast Betting Machine, brand new LT Game FAFA Slot Machine, Multi-Roulette terminal and the first ever Virtual Horse Racing Game. The new innovations showcased at the MGS are the result of our commitment to extensive market research and listening to casino in order to address different patron needs across multiple markets, said Jay Chun, chairman and managing director of Paradise Entertainment. “With our strong presence in Macau, our cutting-edge innovation and well-defined product differentiation, LT Game is positioned to become one of the world’s unique gaming equipment and system suppliers.” Some of these new products will be on display at LT Game’s booth at the MGS 2016, including LT Game’s Virtual Horse Racing Game, which features amazing visual content and variety of odds to enhance player’s gaming experience. Virtual horse racing is an animated version of the thrilling races that take place at racecourses. It concurrently offers games to multiple players every minute. Like all betting, wins are instant, with credit sent straight to the players. Most virtual horse racing results are generated at random; each horse has a different computer-generated likelihood of winning. Operators are taking full advantage of LT Game’s unique product range in the ETG category and players are enjoying an unparalleled betting and gaming experience. LT Game FAFA Slot Machine is a brand new product by LT Game Limited, launching by the end of 2016. The machine is equipped with the newest and most innovative idea with 3D mechanism effect design, which takes players to the whole new playing experience with attractive feature games. All lighting is efficient and cool LED along with powerful sound system. FAFA Slot Machine is designed with amazing anime characters and stunning animation. When players win a features game, players can enjoy the amazing animation with 3D mechanism virtual effect. Visitors are welcome to stop by and learn more about the new and exciting ways that LMGs continue to innovate and revolutionize the gaming industry. LT can be found at Booth AP19
Asia Gaming Briefings | November 2016
MATSUI
Security innovations
M
atsui has extended its gaming currency portfolio with new security innovations and newly designed moulding segments. Added to the traditional security features such as Visible & Invisible UV, Matsui introduces their exclusive MG EYE security, new generation EAS gate check, Material Track, and newly added Laser Trace security. The innovative PEARL decal chips will be introduced. Shigeki Machida, managing director of Matsui Asia, Matsui’s Macau office commented “We are very excited to introduce those new gaming chips as well as other core products of Matsui such as high durable heavyweight layouts to our customers at MGS 2016. We are also very excited to announce at MGS a licensing agreement for PJM RFID gaming chips. With high quality MATSUI Chips, PJM RFID is a perfect match. This will surely provide even more choice and performance for our customers.” To respond to customer’s very high demand to Matsui’s Table Layout, Matsui recently has expanded the production capacity. New machineries and equipment have been installed to further speed up and improve the quality of products while the facility has also strengthened manufacturing security for gaming chips with state of the art technology which lead it to extremely high standards. “We have been re-investing a lot of our revenue to upgrade our production facility and improve the quality of our products. This is the reason Matsui Chips and Layouts are chosen by more and more operators. We are looking forward to meeting our friends and new customers at MGS 2016 to share what we can offer,” said Machida. Visit Matsui at stand U33.
NOVOMATIC
Gaminator Scorpion
A
s momentum continues to build for Novomatic throughout the Asia-Pacific region, a range of products will be brought to MGS – Macao Gaming Show – to showcase the company’s growing commitment to the region. MGS is an opportunity for Novomatic and its local partners to show Asian operators the company’s depth and breadth of innovative gaming products. Supported by Novomatic’s principal distributor in the region, Jade Entertainment and Gaming Technologies and its local subsidiaries, an open-plan booth provides the setting to present a variety of products. The line-up starts with three banks of the new GAMINATOR Scorpion featuring three game compendiums, including the Macau mix; NOVO LINE Interactive Edition. The successor to the original GAMINATOR, this new cabinet is set to take the gaming industry by storm, bringing the latest and greatest Novomatic content to life in stunning high definition. Next up and being presented for the very first time in Asia is the stunning NOVOSTAR V.I.P. Royal that makes a standout impression on any casino floor with its huge 65” upright curve screen. Returning to Macau following its popularity at G2E Asia earlier this year is the V.I.P. Lounge, an ideal solution for casinos to introduce V.I.P. slot gaming with a smaller footprint. Also on show will be the DOMINATOR Curve as well as electronic roulette terminals that are spreading like wildfire throughout Asian markets. You can find Novomatic at stand AP25 at the show.
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GAMINATOR Scorpion
®
Sharpen the Game. The GAMINATOR® Scorpion brings the latest and greatest NOVOMATIC content to life in striking high definition. Three ultra-sharp screens and the elegant game-dependent LED glow boast excellent design and breathtaking graphics to create a truly electrifying experience on the gaming floor.
One of 15 games in the Macao Mix: NOVO LINE™ Interactive Edition 1
Novomatic
–
WiNNiNg
techNology
NOVOMATIC Gaming Industries GmbH Jens Einhaus, sales@novomatic.com
Phone: +43 2252 606 319 www.novomatic.com Asia Gaming Briefings
| November 2016
SUPPLIER SPECIAL REPORT 58 PALTRONICS
Covering all areas
A
re you aware of the Paltronics’ range of products? PALTRONICS provides digital marketing creation suitable for casino/restaurants/hotel rooms and non-gaming hotel areas. In addition, the company offers scalable multichannel/multi screens, digital weather warning alert system, emergency messaging capabilities, live streaming for major events as well as live TV streaming. Its jackpot link management is scalable for all venues, plus the company offers custom or standard LED jackpot meter displays and graphics. For Baccarat, PALTRONICS have the Lucky Tie
progressive jackpot bonus, Spectra 27” and 23.8” LCD trend displays; for Sic Bo - Clarity LED playing surface, Infinity dice shaker, and Spectra 29.33” LCD trend display. Roulette products include Lucky Ball side bet, Clarity LCD playing surface, Spectra 29.33” LCD trend display, while poker rooms benefit from live jackpot, high hand bonus, wait list manager and tournament manager. PALTRONICS - A complete offering! Talk to them at the Macao Gaming Show - stand AD27.
SCIENTIFIC GAMES
Double Blessings
S
cientific Games’ unrivaled lineup of diverse products and system solutions will be on display at MGS 2016. As a global supplier of choice for casino operators, Scientific Games’ stand will feature several exciting new slot titles, table games options and system solutions, which cater to both large enterprise customer environments and standalone gaming venues. This year, the company has featured its new “Double Blessings” slot title, as part of its Duo Fu Duo Cai series. Duo Fu Duo Cai is one of the most successful progressive jackpot links released by SHFL entertainment
SEGA SAMMY
More fun, more excitement
E
stablished in 2013 as a gaming machine manufacturer, SEGA SAMMY CREATION develops gaming machines with the spirit “More Fun! More Excitement!” The company has now developed two cutting-edge machines “SICBO BONUS JACKPOT” and “Exciting Baccarat”. SEGA SAMMY CREATION will showcase one of the latest products -“Exciting Baccarat” at MGS Entertainment show 2016. It’s the first time for the show, but the company says it is convinced that it will be accepted by visitors. It has four interesting features including: 1. Along with the standard Baccarat game, the player can also play the EXCITING REWARD feature, a side game that allows the player to obtain even higher payouts by the result of the Cai Shen Slot. When a bet is placed on the EXCITING REWARD Asia Gaming Briefings | November 2016
(Asia), which is a subsidiary company of Scientific Games. It was awarded awarded Inside Asian Gaming’s “Best Progressive Slot” as part of the magazine’s 2012 Supplier Awards. Meaning “much luck and much wealth” in English, Duo Fu Duo Cai has been one of the company’s top performers since debuting at G2E Asia 2012. There are currently more than 8,500 games installed across the globe.” Scientific Games can be found at stand AG28 during the show.
feature, player can win the PROGRESSIVE JACKPOT or one of the 5 bonus multipliers [x1,x1.5,x2,x5,x10], but a tie game counts as a loss. 2. Stunning visual effects take place on the screen depending on what’s happening at the table, such as a PLAYER or BANKER winning 5 times in a row, or trading wins and losses back and forth, etc. Players can enjoy building your own strategy based on historical data. The player can also pick
their preferred dealer from 5 beautiful and alluring girls. 3. It has eye-catching “squeeze” effects that adapt to how the user thinks. That effects start automatically based on a proprietary algorithm, and get the player’s blood pumping! 4. It is fully automated, so anyone can play the game by simply using the touch screen on the cabinet. You can find SEGA SAMMY CREATIONS at stand AZ34 at the show.
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SUPPLIER SPECIAL REPORT 60 SILVER HERITAGE GROUP
February soft opening
T
iger Palace Resort, Bhairahawa, a beautiful casino resort being constructed in Nepal on that country’s long border with India, is due to have a soft opening in February 2017. About 430 million people live in India’s capital Delhi and three Indian states that border Nepal; and 15.5 million “middle class” Indians live within a six-hour drive of Tiger Palace Resort, Bhairahawa. There is also a 24-hour international border crossing between India and Nepal at Bhairahawa. Global Market Advisors LLC said in an April report that casino gambling by the growing middle class of Indian nationals had the potential to generate nearly US$10.2 billion annually by the year 2025 provided there was the right product close to home. Tiger Palace Resort is scheduled to have a casino with a gross floor area (GFA) of 2,471 square metres (26,600 sq feet), containing 52 tables and 200 electronic gaming machines. The venue will have 100 rooms of five-star standard, plus two villas; and will have a built-up GFA of approximately 14,000 sq ms, within a 10-hectare (24.7-acre) site. With followup phases – eventually the venue will offer 400 hotel rooms. The first phase of the property will have a pool, spa, tennis facilities, gym, conference hall, meeting rooms, facilities for weddings, six food and beverage outlets, and shops. Construction of “auxiliary buildings” is 98 percent ready, and interior fit out of those areas 50 percent finished. The first phase of the resort has a budget of US$40 million. Silver Heritage launched in the Millionaire’s Club and Casino, Kathmandu, in Nepal’s capital in early 2015, with 22 tables and 38 gaming machines, and access to 120 rooms at the on-site Shangri-La Hotel. Silver Heritage was founded in 2003 and currently manages gaming facilities in Vietnam as well as in Nepal. The company began trading on the Australian Securities Exchange on August 29 2016 (ASX:SVH), following an AUD25-million (US$18.8-million) initial public offering. Silver Heritage will be at stand BB30 at the show.
Asia Gaming Briefings | November 2016
SUZOHAPP
Cash handling solutions
S
UZOHAPP is looking forward to welcoming visitors to the forthcoming Macau Gaming Show. As a proud member of the MGEMA (Macau Gaming Equipment Manufacturers Association), SUZOHAPP is pleased to support the local Gaming Industry as well as meeting visitors at stand AN32. SUZOHAPP will have the opportunity to show a world of components and solutions including a selection of well-known products alongside a range of new innovative solutions. The particular focus on the SUZOHAPP stand will be on the range of cash handling solutions. The CashComplete SDS-25 is a secure, smart and high performing note deposit to securely validate and store banknotes. The SDS-25 is the ideal way of upgrading the cash handling process to improve accuracy, cash visibility and shrinkage protection. Extremely user friendly, the 4-way read bill validator accurately reads notes inserted in any direction, simplifying the depositing process. The new SC8220 is a 1+1 Pocket Value and Multi Currency Counter with the latest features such as UV LED for higher accuracy and minimal effort when detecting bad and counterfeit notes. The counter also has serial number recognition which is an increasing
TRANSACT
Industry leading ticket printers
T
ransAct Technologies Incorporated, a global leader in developing software-driven technology and printing solutions for highgrowth markets with a significant presence in the casino, gaming and lottery industries looks forward to presenting their award-winning casino printing solutions and innovations at the Macao Gaming Show. TransAct, in conjunction with their international distribution partner SUZOHAPP, will demonstrate their product line at stand AN32. TransActwillshowcasetheirlatesttechnologically advanced, industry-leading ticket printers and promotional bonusing systems. Taking center stage will be the new Epic Edge casino ticket printer. Epic Edge debuted at G2E 2016 and is the only casino printer in the industry that prints tickets at 300 dpi, a 50 percent improvement over all current casino ticket printers in use in
requirement on the market today. The SC8220 comes with approximately 20 currencies preinstalled – the required currencies can be easily set by the distributor and end user. Updates are simple via the front-load SD card. Another highlight at the SUZOHAPP stand will be the VC100D Mini currency counter, ideal for rapid and accurate counting of both new and used banknotes, as well as counting bundles. As a global distributor for TransAct Technologies, the EPIC 950 and EPIC 880 printers will be showcased. The proven coin validators RM5 Evolution and RM5 HD will be also on display. The MGS will be also a great opportunity for operators to learn more about the benefits of the DisplayPro signage - a 42” HD Screen that is ideal for visual campaigns. This contemporary display has been specifically designed for flexible end of bank signage applications. It can be put to varied use – for example, for information, promotions or third party advertising. The SUZOHAPP solutions will be rounded off by the InteractivePro range, including the InteractivePro Booth TV and the InteractivePro Snapshot LCD Button. Geoff McDowell, SUZOHAPP managing director APA, sends out a warm welcome: “The entire SUZOHAPP team invites you to come and visit the stand to find out how our solutions can really support and improve your business”. Find SUZOHAPP at stand AN32.
the industry. This feature provides enhanced graphics capability on tickets, and crisp and clear bar codes which improve bill validator acceptance rates resulting in reduced attendant calls. In addition, it features an adjustable ticket bucket that allows operators to install up to 800 tickets and the option to utilize smaller, paper-saving tickets for their “green” initiatives. Also featured will be the Epic 950 Table Top Enclosure which addresses a growing need in the industry for a tidy, compact option for use on table games, player’s club desks and cash desks. With all the features of the Epic 950 this latest product has an internally mounted power supply, is Epicentral compatible and is a significant enhancement to table game player recognition and reward promotions. In addition, TransAct will demonstrate the advanced features of Epicentral 3.8, their ground-breaking promotion and bonusing system which introduces innovative new capabilities and features that deliver enhanced options and greater flexibility for casino marketing teams.
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UNCOVER NEW OPPORTUNITIES IN CASINO RESORTS AND ONLINE GAMING IN SE ASIA 15-17 March 2017, Manila, Philippines The inaugural ASEAN Gaming Summit is designed to help you identify and capitalize on opportunities in the fast-changing landscape of gaming in SE Asia. Covering both land-based and online gaming, the event draws together the region’s leading operators, regulators and providers who are shaping the future of SE Asian gaming.
CONFIRMED SPEAKERS INCLUDE: AGTech | Donaco International | Miura Holdings | Mohegan Sun | NagaCorp | Neomancer | North Cagayan PaddyPowerBetfair | Playstudios | Silver Heritage Group Webe Gaming | Widus Hotel & Casino
AGENDA-AT-A-GLANCE: Conference Day One, Wednesday, 15 March 2017: Casinos & Integrated Resorts • Regulation, Tourism, Infrastructure • ASEAN - The Big Picture • Regional Developments & Competition Conference Day Two, Thursday 16 March 2017: Omni-channel • Marketing & Growth Strategies • Technology & Game Design Innovations • Land Based/Online Convergence Conference Day Three, Friday 17 March 2017: Online & Mobile Gaming • Regulation & Trends in Sports Betting • New Products & Innovation • Marketing & Customer Acquisition
Sponsors
www.aseangaming.com
CALENDAR OF EVENTS 62
NOVEMBER MACAO GAMING SHOW (MGS) 15-17 November 2016 The Venetian Macao, Macau www.macaogamingshow.com OFFICIAL MGS NETWORKING PARTY 15 November 2016 China Rouge, Galaxy Macau www.facebook.com/AsianGamingNetworking
BRAZILIAN GAMING CONGRESS 20-22 November 2017 Tivoli Sao Paolo - Mofarrej, Brazil www.braziliangamingcongress.com BALKAN ENTERTAINMENT & GAMING EXPO 23-24 November 2016 Inter Expo Center, Sofia, Bulgaria www.balkangamingexpo.com
DECEMBER
MALTA IGAMING SEMINAR (MIGS)
SBC AWARDS 2016
SUMMIT OF IGAMING MALTA (SIGMA) 16-19 November 2016 Intercontinental Arena, Malta www.maltaigamingsummit.com
GO GAMING TLV - INTERNATIONAL SUMMIT 8 December 2016 Leonardo City Tower Hotel, Tel Aviv, Israel www.ofxgtlv.com
15-18 November 2016 Corinthia Hotel St George’s Bay, Malta www.maltaigamingseminar.com
7 December 2016 Chelsea FC’s Stamford Bridge, London, UK www.sbcevents.co.uk
Become a member EXCLUSIVE ACCESS TO AGB INTELLIGENCE BE THE FIRST TO RECEIVE OUR DAILY BRIEFS PRIORITY REGISTRATION FOR OUR EVENTS REGISTER NOW AT AGBRIEF.COM
Asia Gaming Briefings | November 2016
2017 FEBRUARY ICE TOTALLY GAMING 7-9 February 2017 Excel London, London, UK www.icetotallygaming.com
MARCH ASEAN GAMING SUMMIT 15-17 March 2017 Solaire Resort & Casino, Manila, Philippines www.aseangaming.com
63
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Asia Gaming Briefings | November 2016
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LAST WORD 66
Doors open, doors close Sharon Singleton
Managing Editor, AGB
It’s been another active year in Asia’s casino industry, from new openings in Macau, to a new government in the Philippines through to new legislation finally emerging from Vietnam. However, it’s the potential reopening of a door to allow casinos in Japan that’s perhaps drawing the most attention right now.
A
fter appearing to be definitively on the time Taiwan. back burner, the possibility of the passage A framework bill that would allow gambling on of framework legislation before the end outlying islands has been stalled in the country’s of the year has lurched back to life, with parliament, with the ruling Democratic Progressive experts saying they are quietly optimistic that this Party firmly opposed to casinos. There had been time it will pass. a slim chance that an October referendum among Sceptics will say they are not holding their breath residents on the island of Penghu could have helped and we have come this far down the road before. In to break the deadlock. Some argued that if Penghu late 2014, hopes were dashed when Prime Minister islanders joined those of Matsu in approving casinos, Shinzo Abe, who favors integrated resorts to boost the central government may have been pressed into tourism, called a snap election. action. The move came amidst political However, that wasn’t to infighting over his efforts to happen, with Penghu rejecting reboot the struggling Japanese the potential for IRs for a second THE MINIMUM economy and, although not time. Although much more directly linked, hopes for the INVESTMENT IS HALF limited in terms of potential casino bill dissolved along with OF THE COMMITMENT than the giant prize of Japan, parliament. it was nevertheless seen as an REQUIRED IN PRIOR However, a landslide July interesting addition to Asia’s election win for Abe’s Liberal VERSIONS OF THE BILL, gambling jurisdictions. Democratic Party, the promotion Another long-running BUT IS STILL A HEFTY of key gambling figures in the regulatory saga also looks as LDP and a relatively uncrowded SUM though it may be on the verge parliamentary schedule mean of resolution. After countless that casinos may now finally drafts, the content of which get the green light. alarmed many foreign investors, If the bill is reintroduced...and one senior politician Vietnam appears to be on the brink of pushing out says the likelihood of that is 100 percent...it’s almost its new casino legislation. certain to pass, given Abe’s renewed political strength. As widely expected, it will bring down the Casino majors were quick to reaffirm their interest minimum investment required to $2 billion and will in what is expected to become Asia’s second-largest allow locals to gamble on a three-year trial basis. The gaming market after Macau. MGM Resorts has said sting in the tail is they will only be allowed into two it may be prepared to invest as much as $10 billion, resorts at disparate ends of the country, leaving out potentially through a real estate investment trust Asian Coast Development’s Grand Ho Tram, which structure. Rival Las Vegas Sands has previously also some had expected to form part of any pilot scheme. pledged a similar amount. The minimum investment is half of the commitment Despite the interest, estimates vary widely as to the required in prior versions of the bill, but is still a hefty potential size of the market, which will come down sum. The bill also envisages a $1 billion disbursement to just how many licenses are allowed and where they before a casino license can be granted. Many analysts can operate. The frequently cited figure from CLSA have said that may be too high for the market, especially of $40 billion once all players are up and running if IRs are not located close to major metropolitan seems a very best-case scenario. areas and locals aren’t permitted entry. As often seems to be the case in Asia, as one door While, a step in the right direction, the bill may still stands a chance of opening, another slams shut...this fall short of its aim to spur tourism and investment.
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Asia Gaming Briefings | November 2016