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					                                                  January 2011 • MOP 30 • ISSN 2070-7681




           Star Performer
Larry Mullin’s mission to shake up gaming Down Under

                    Vietnam In Focus: Rich Brew
    Guardian Angel | Macau Policy: Signs of Success | High Mass: Macau Outlook
                         Wide Area Networks: Life Changer
         CONTENTS
              January 2011

         Star Performer

     6 Stellar Initiative

     14 Guardian Angel

     16 Signs of Success

     20 High Mass

     26 Disposal Option

     27 Rich Brew

     32 Centre Stage

     36 HOT Offers, WiLD Times

     40 Life Changer

     44 Regional Briefs

     46 International Briefs

     48 Events Calendar
40




                                   27
                    Cover Photo: Mika Bovan
2
3
Editorial



                                          Australia… Down Under but definitely not out
                                               “Australia is so cool that it’s hard to even know where to start describing it. The beaches are beautiful;
                                          so is the weather. Not too crowded. Great food, great music, really nice people. It must be a lot like Los
                                          Angeles was many years ago,” said American actress Mary-Kate Olsen when asked about a visit there.
                                               So there you have it from a Hollywood insider. Australia is like California when California was still
                                          fun. Add the novelty of some exotic wildlife and Australia is bound to be a winner with Asian tourists—
                                          including Asian high roller gamblers. And for high net worth Chinese people, for whom time is money,
                                          Australia is at most a 12- or 13-hour plane ride away, compared to the 16 hours at least it takes to get from
                                          China to Las Vegas. The time zone adjustment between China and Australia is also a lot less fierce than
                                          that between east Asia and the western United States.
                Publisher                      And yet there’s a mild tendency among Australians (possibly inherited on a cultural level from the
              Kareem Jalal                British and the Irish, who first made up most of the European settlers) to see the glass as half empty in
                                          terms of their country’s international appeal. That might account for why back in April last year at the soft
              Director                    opening of Marina Bay Sands in Singapore, the first question asked at the press conference was from a
        João Costeira Varela              veteran Aussie television reporter. He wanted to know if Las Vegas Sands Corp’s new Singapore casino
                                          resort was going to be poaching VIPs from Crown in Melbourne. Crown is a specialist in catering to Asian
                Editor                    high rollers and currently the leader in VIP gaming in Australia with a national market share in revenue
            Michael Grimes                terms of more than 80%. There’s a lot at stake, as the Australian casino VIP trade is currently worth about
                                          A$25 billion (US$24.9 billion) in rolling turnover per year.
              Contributors                     Sheldon Adelson, the Chairman and Chief Executive of LVS, gave a ‘glass half full and rising’ answer
     Desmond Lam, Steve Karoul            to the journalistic inquiry—in the best American tradition. He said the international market for casino
   I. Nelson Rose, Richard Marcus         services is not a zero sum game. Rich people like to travel; and many of them have to move around to
     Shenée Tuck, James J. Hodl           conduct their business in an increasingly globalised economy. More and more millionaires spawned by
         Andrew MacDonald                 Asia’s economic rise means more and more business for the whole regional casino industry.
         William R. Eadington                  If any Australian VIP gaming executives were worried about their role in life since the opening of the
                                          Singapore casino market and the expansion of Macau, there’s some good news. Tabcorp—a leisure and
           Graphic Designer               entertainment conglomerate probably best known to outsiders as an operator of off-course totalisators
             Brenda Chao                  for the Australian horse and dog racing industries and of slot halls—has reorganised its casinos division
                                          with an eye on the Asian high roller trade. In early 2009, it hired an American to lead the charge. Larry
              Photography                 Mullin is an executive credited with turning around business at the Borgata in Atlantic City after the
                  Ike                     region’s punters started deserting the boardwalks of New Jersey for the sidewalks of the Las Vegas Strip.
                                          He’s going to give his Asian high rollers fresh glamour and entertainment at Star City—Sydney’s only
                                          licensed casino—with the aim of expanding Tabcorp’s current 20% share of the country’s high roller
        Inside Asian Gaming
                                          market. The company’s three casinos further up the east coast in Queensland are also getting a makeover,
            is published by
                                          as we explain in this month’s cover story.
    Must Read Publications Ltd
                                               Mr Mullin also promises a near-forensic attention to his VIP players’ needs while they’re at the gaming
       8J Ed. Comercial Si Toi
                                          tables. That’s important. For every English-speaking, foreign-educated Chinese executive coming to visit
   619 Avenida da Praia Grande
                                          a son or daughter at an Australian university or to see an old chum from college days, there are many
                Macau
                                          more Chinese millionaires for whom a trip to Australia will be a decidedly exotic experience. Creating a
         Tel: (853) 2832 9980
                                          good cultural fit between Tabcorp Casinos and Chinese players doesn’t just mean having staff that can
                                          speak Mandarin and Cantonese. It means having a team that understands Chinese and Asian VIP gaming
      For subscription enquiries,
                                          etiquette inside out. That’s something Crown Melbourne already prides itself on, and it’s Crown that
            please email
                                          potentially has most to lose from the Tabcorp charge, whatever the latter company might say publicly.
          subs@asgam.com
                                          The Australian VIP pie may be growing—expanding at the rate of about 12% a year for the past five years,
                                          according to Mr Mullin—but Tabcorp is clearly aiming to get a proportionately bigger slice of the new
      For advertising enquiries,
                                          pie than Crown. Such competition can surely, however, only be a good thing as Australian casinos seek to
            please email
                                          build on their natural advantage of being located in beautiful surroundings in the ‘Lucky Country’.
          ads@asgam.com
       or call: (853) 6680 9419                                                                                                       Michael Grimes
                                                                            We crave your feedback. Please email your comments to michael@asgam.com
        www.asgam.com

        Inside Asian Gaming
       is an official media partner of:   The Casino Regulatory Authority of Singapore
                                               In December’s edition of Inside Asian Gaming we ran a story called ‘The Illusion of Lawmaker
                                          Control’ discussing the prospects for the licensing of casino junket agents in Singapore. The story used a
                                          photograph of Casino Regulatory Authority of Singapore Chief Executive T. Raja Kumar without copyright
                                          clearance from the CRA. The CRA has also asked us to point out that neither Mr Kumar nor any member
                                          of the CRA staff was involved in providing information for the story. We apologise to the CRA for the
                                          unauthorised use of the photograph and any confusion that may have been caused as a result of its
    http://www.gamingstandards.com        placement in the article.
4 INSIDE ASIAN GAMING | January 2011
Borgata




Rendering of refurbished Star City Hotel & Casino




                               Stellar Initiative
         Larry Mullin, Chief Executive of Tabcorp’s Casinos Division, outlines his company’s
                        ambitious plan to elevate its four Australian properties


    The Borgata Hotel Casino & Spa, Atlantic City’s highest grossing       to fly four or five hours by plane
casino, opened in July 2003, injecting fresh blood into a decidedly        to Vegas, rather than drive to
stale market that had not seen a new resort opening since the 1990         Atlantic City.
unveiling of Trump Taj Mahal.                                                   Mr Mullin responded by
    Larry Mullin—who served as the Borgata’s President and Chief           introducing “more non-gaming
Operating Officer before assuming his current role as Chief Executive      and more entertainment to get
of Tabcorp’s Casinos Division in February 2009—was pivotal to              people excited about what we
establishing the Borgata as one of the premier entertainment               felt was still a good experience.”
destinations in the US.                                                    He established a reputation
    Mr Mullin points out that prior to the Borgata’s opening, table        for having “a real passion for
gaming revenues in Atlantic City had fallen for fifteen years, largely     entertainment and for the
as a result of the arrival of competition from new and better resorts in   delivery of great customer
Las Vegas. Even though Atlantic City is a mere one- to two-hour drive      service,” as Tabcorp Holdings Ltd
away for 22 million people in New York, Philadelphia and Washington        CEO Elmer Funke Kupper noted
D.C., many of the potential patrons from those cities were opting          on Mr Mullin’s appointment.          Larry Mullin

6 INSIDE ASIAN GAMING | January 2011
                                                                                                                                                   Cover Story




                                                                                     which subsequently sold the property to Tabcorp in 1999. the only
                                                                                     casino allowed to operate in Sydney, and was granted a 12-year
                                                                                     extension of its exclusive licence in 2008.
                                                                                         Soon after the licence extension, Star City embarked on a
                                                                                     major refurbishment project dubbed ‘Project Star,’ scheduled for
                                                                                     completion at the end of this year with the latest budget amounting
                                                                                     to nearly A$1 billion (US$1 billion). The scheme encompasses a
                                                                                     new 5-star hotel, more restaurants and bars and improved gaming
                                                                                     and entertainment facilities, including a 3,000-seat multi-purpose
                                                                                     entertainment venue for major international acts, trade shows,
                                                                                     exhibitions and conferences. Star City also plans to buy a fleet of
                                                                                     private jets to fly in top players and convert its own piece of harbour
                                                                                     frontage into a wharf for luxury cruisers. Additionally, while the
                                                                                     original casino entrance built by Showboat faces away from the
                                                                                     harbour, the refurb will also re-orient the entrance towards the
                                                                                     harbour, and the main gaming floor and high-end restaurants will
                                                                                     face the Sydney skyline, adding to the property’s allure.
                                                                                         Tabcorp’s Casinos Division operates three other properties in
                                                                                     the state of Queensland: Jupiters Hotel & Casino on the Gold Coast;
                                                                                     Treasury Casino & Hotel in Brisbane and Jupiters Townsville in the
                                                                                     north of the state. Last month, the company announced it would
                                                                                     invest A$625 million upgrading the facilities at the three Queensland
                                                                                     casinos. “Most of that will be on non-gaming,” comments Mr Mullin.
                                                                                     “Seventy-five percent of that spend is going to be on hotel and
                                                                                     restaurants and nightlife and pools and entertainment centres that
                                                                                     we believe will complement what we’re doing here [at Star City] for
                                                                                     a customer that might be a domestic customer or an international
                                                                                     customer. If they want to come to Sydney and play for a while, and
                                                                                     then they want to have a change of scenery, we can move them to
                                                                                     one of these other markets that are also great resorts, and we can
                                                                                     do it pretty seamlessly. We’re going to be working now to address
                                                                                     our properties in those markets to get ready to complement what’s
Adding sparkle                                                                       going to come here by the end of this year.”
    The jewel in the crown of Tabcorp’s Casinos Division is Star City
Hotel & Casino, located in Sydney in the state of New South Wales.                   Are you not entertained?
Star City, Australia’s second largest casino after James Packer’s Crown                  On 15th December, Star City hosted an invitation-only Bon
Casino in Melbourne, opened in September 1995, and was originally                    Jovi concert for its most valued customers at its current 2,000-seat
owned by Showboat Inc. Showboat was acquired in 1998 by Harrah’s,                    theatre, with the likes of ‘Gladiator’ star Russell Crowe in attendance.




Renderings of Star City’s upcoming 3,000-seat multi purpose entertainment venue, configured as a concert hall (left), and a banquet hall (right)

                                                                                                                                 January 2011 | INSIDE ASIAN GAMING   7
Cover Story




                                                                           I’ve seen around the world is people look for entertainment. If it’s
                                                                           only about the gambling, the gambling could get boring. We want to
                                                                           offer a diverse product offering, so that people have many different
                                                                           things to do while they’re here.”
                                                                                At the Borgata, Mr Mullin arranged top-notch entertainment
                                                                           experiences “to draw people from New York, Philadelphia,
                                                                           Washington D.C., where they have many different kinds of
                                                                           entertainment—sports, live entertainment, Broadway; all
                                                                           types of things that give people the opportunity to have great
                                                                           experiences. So we needed to get something that was very
                                                                           compelling that allowed you to see nightlife, restaurants and
                                                                           these big shows coming in regularly, that you might see at
                                                                           Madison Square Garden or in Philadelphia or Washington on a
                                                                           touring concert. We would bring that in a much smaller, intimate
                                                                           venue, and you have your weekend or midweek night out to go
                                                                           to a nice restaurant, go see a show, maybe enjoy the spa. And
Rendering of expansion of Jupiters Hotel & Casino on the Gold Coast
                                                                           the gambling, obviously, was another form of entertainment
                                                                           that was the only entertainment before we spent US$1.7 billion
The uniquely intimate Bon Jovi performance stood in marked                 [at the Borgata].”
contrast to the U2 stadium concert held in Sydney earlier that week,            The Borgata investment was a hefty one, but it clearly paid
crammed with an estimated 100,000 people. It is also typical of the
outstanding entertainment experiences Mr Mullin delivered during
his time at the Borgata, and plans to feature on an ongoing basis at
Star City.
    As Mr Mullin explains, “our biggest business is gambling. And
the type of offering that gets people excited about that and what




                                                                           Actor and comedian Robin Williams headlined the 25th anniversary celebration
                                                                           for Jupiters Hotel & Casino on 3rd November

                                                                           dividends, and Mr Mullin believes the same will hold true for
                                                                           the planned investment by Tabcorp’s Casinos Division in its four
                                                                           properties.
                                                                               Mr Mullin believes the investment in upgrading Tabcorp’s
                                                                           four casinos will easily be recouped by helping to increase the
                                                                           Casinos Division’s 20% share of the Australian VIP market (with
                                                                           the rest going to Crown).That market amounted to A$24.7 billion
                                                                           in rolling chip volume in the twelve months to June 2010. “It’s a
                                                                           very profitable segment that we don’t get our fair share of, both
                                                                           domestically as well as internationally. The [Australian] VIP market
                                                                           has been growing at about 12.5% per annum for the past five
                                                                           years, and it’s a market that’s still continuing to grow at double
Bon Jovi played an intimate concert for 2,000 of Star City’s most valued   digits. We believe with this type of product we’ll give ourselves
customers on 15th December                                                 a better chance to grab some market share. And I believe in the
8 INSIDE ASIAN GAMING | January 2011
                                        Cover Story

  Mr Mullin acknowledges
  that the glitzy new
  properties emerging in
                                        end it will be growing the market as a whole, because, Crown,
  Macau and Singapore
                                        who have done a much better long-term job of that, have been
  have been a wake-up                   the only one pulling all the effort [having invested A$1 billion
  call for the Australian               in updating and expanding its facilities over the past four years,
  casino market, but he                 and planning to invest a further A$800 million].We hope with our
                                        efforts, the pie will get bigger.”
  says he welcomes the
  competition.                          The Macau effect
                                            It appears the explosion of gambling capacity in Macau has
                                        actually benefited the Australian high roller market by expanding
                                        the pool of VIPs—particularly from mainland China—in the region.
                                        Mr Mullin agrees “Macau has helped grow the market here for
                                        internationals.”
                                            Although there were early signs that the arrival of Singapore’s
                                        two casino resorts in the first half of 2010 was negatively impacting
                                        Australia’s VIP gaming turnover, this could be a short-lived
                                        phenomenon, and Tabcorp’s Casinos Division believes that ultimately,
                                        Australia’s international VIP play will not be cannibalised by either
                                        Macau or Singapore.
                                            Mr Mullin acknowledges that the glitzy new properties
                                        emerging in Macau and Singapore have been a wake-up call
                                        for the Australian casino market, but he says he welcomes the
                                        competition. “What I like about having competition is it forces
                                        you to improve everything you’re doing. And we’re going
                                        through a big recheck here. I think part of the issue with this
                                        [the Australian] market is it had gotten complacent, more from a
                                        product standpoint in the VIP business or the type of business you
                                        see up in Asia. We haven’t been competitive with the product we
                                        offer to those customers. So even though we’re in a great location
                                        here in a city such as Sydney, we just haven’t had the offerings to
                                        complement that visit. What’s happened in Singapore and Macau
                                        and that part of the world is they’ve significantly put new product
                                        in over the last five years.
                                            “So now we are going to make sure we offer the international
                                        customer the best suite experience in the city, and also give them a
                                        VIP experience with the gaming area. We needed to improve all that
                                        so we can compete with places like Macau and Singapore, offering
                                        the same type of product or better, but sitting here in Sydney, in one
                                        of the best resort cities in the world”

                                        Pros and cons
                                             Australia’s casinos clearly face a more favourable tax regime on
                                        international VIP play than their Macau counterparts—and hence
                                        have the flexibility to offer more attractive rebate programmes to
                                        international VIPs. In New South Wales, the gaming gross on overseas
                                        VIPs checking in a minimum of A$75,000 at the state’s casinos is taxed
                                        at just 10% (inclusive of GST). The equivalent tax rate in Queensland
                                        is also 10%, though the minimum check in to qualify is lower, at
                                        A$50,000. By contrast, all VIP play in Macau is taxed at just under 40%
                                        of the gross. VIP play in Singapore is taxed at just a shade more than
                                        in NSW and Queensland at 12% (split between a 5% tax on the VIP
                                        gross and a 7% goods and services tax).
                                             Mr Mullin recognises the importance of casino operators raising
                                        product and service standards. “One of the great advantages
                                        we have here is we’re in a great climate with a beautiful city and
                                        other attractions, but that only goes so far. At the end of the day,
                                        a customer has the ability to go to many different places. From our
                                        research, the first thing they’re looking for is quality product. But
10 INSIDE ASIAN GAMING | January 2011
  Cover Story




  then, also service.                                                         Acquisition rumours
       As for service, although the cost of labour in Macau and the rest of       In October, Tabcorp Holdings
  Asia is significantly lower than in Australia, allowing a higher staff to   Ltd announced it planned to
  customer ratio, Mr Mullin feels Australia’s better-educated workforce       spin off its Casinos Division into
  is able to offer customers a more “fun, fast and focused experience.”       a separate company from its
  Still, he cautions that even in Australia, it is important not to over-     betting shops as it raises A$430
  think processes and impose excessive regulations, so that staff can         million in an entitlement offer.
  express themselves to customers, and customers don’t feel “they’re          Investors will get a share in each
  just dealing with robots.”                                                  company on a 1-for-1 basis, in a
       Mr Mullin advises: “Allow the employee to be an entertaining part      split expected to be completed
  of that process and encourage them to have fun with the customer,           in July 2011.
  as long as it does not negatively impact the integrity of the game              Since the announcement,
  [in the gaming area]. And in the non-gaming area, encourage them            there have been rumours that
  even more so.                                                               Tabcorp’s     Casinos     Division
       “If you look at where customers have to interact with staff, what      could be acquired following
  matters at the end of the day is you want the customers to walk             the spin-off, with James Packer
  away and say: ‘I’m going back because any time I had a problem,             singled out as the most likely
  it was resolved quickly, and where there was an expectation, they           buyer. Asked to comment on Likely buyer?—James Packer
  exceeded it.’                                                               the rumours, Mr Mullin replied
       “We’re trying to look at every process we have and see how we          to Inside Asian Gaming: “I can’t even worry about that. What we look
  can change those processes to make it more easy for employees               for is we make ourselves competitive for whoever might have an
  to have fun. Do we have the right managers in place? Have we                interest in investing with us. I’m very bullish on that. But all of the
  made this too complicated or are we not giving enough support?              speculation—that’s going to sort itself out. At the end of the day, the
  All those little things add up to what ends up being the customer           customers shouldn’t be affected by that, and that’s our focus—the
  experience that you offer here.”                                            customers.”




                                                                                  “One of the great advantages we have
                                                                                    here is we’re in a great climate with a
                                                                                      beautiful city and other attractions,
                                                                                           but that only goes so far. At the
                                                                                               end of the day, a customer
                                                                                                     has the ability to go to
                                                                                                    many different places.
                                                                                                        From our research,
                                                                                                               the first thing
                                                                                                            they’re looking
                                                                                                                for is quality
                                                                                                               product. But
                                                                                                                   then, also
                                                                                                                    service.”




12 INSIDE ASIAN GAMING | January 2011
  Angel Playing Cards




                                                                                Guardian
                                                                                 Angel
                                                                             Japan’s tradition for high quality
                                                                       manufacturing is being maintained in the casino
                                                                              sector by Angel Playing Cards




  A
         ngel Playing Cards doesn’t yet claim         in the Asian gaming industry for having          in management consultancy—he entered
         100% accuracy for its industry-              the lowest failure rate of any product in        the sector after graduating with a degree
         leading products, but it does claim          that category. And that shows in the sales       in Information Science from Kyoto
  100% commitment to attaining that goal.             performance. Angel has a good majority           University in 1990—probably helped
      An example of total focus on quality            share of the Macau market for casino             him keep an overview on quality-related
  is that if a casino customer raises an issue        playing cards, and 100% of the Singapore         issues when he joined Angel three years
  about an Angel product—whether it                   casino market.                                   later. He worked his way up from middle
  relates to Casino Angel pre-shuffled cards,             Consistent quality helped Casino Angel       management to become a director
  the Angel Eye baccarat shoe or one of the           pre-shuffled cards win the most nominations      of Angel Group in 1995, finally being
  company’s other casino-quality playing              in the category of ‘Best Table Gaming            appointed to the top job in 2005.
  card ranges—the company will call what              Essential’ in Inside Asian Gaming’s Supplier         Mr Shigeta and his team spoke to IAG
  is in effect a management meeting to                Awards 2010 in March. The judges praised         at the recent Global Gaming Expo in Las
  discuss the issue.                                  the quality and virtually error-free record of   Vegas and explained how Angel has built its
       “Our company director, the general sales       Angel’s pre-shuffled product.                    reputation for quality, and how it plans to
  manager and myself, we review the report,               Angel also claims a remarkable share of      develop that reputation further.
  check it, and we have a special meeting             the global market for electronic baccarat
  within a few days,” explains Yasushi Shigeta,       shoes, because of the accuracy of its card       Inside Asian Gaming: Please explain
  President and Chief Executive Officer of the        reading capability. A big portion of the         the role of the Angel Eye shoe in
  company, based in Kyoto, Japan.                     baccarat tables in Macau and Australia use the   maintaining and building your market
       “We check every aspect of the situation        Angel Eye system. That gives the economies       share among casino operators.
  to understand what has happened. Once               of scale that allow intensive research and            Yasushi Shigeta: In contrast to
  we start business with a customer, we aim           development of the product and in turn           American and European operators who
  always to keep that customer,” adds Mr              improves the security and efficiency of the      may put heavier relative importance on
  Shigeta.                                            product for casino operators.                    efficiency and convenience, what Asian
      Angel Playing Cards are acknowledged                Mr Shigeta’s professional background         operators require first is security. Use of the




  Singapore’s two casino resorts—awarded 100% market share to Angel cards

14 INSIDE ASIAN GAMING | January 2011
                                                                                                                        Angel Playing Cards




                                                    manufacture both cards and shoes in the           in 1997. In 2004, we built a new factory. We
                                                    same factory, we are constantly testing to        took our experience from those seven years
                                                    ensure they perform correctly together.           and built a purpose-built factory.
                                                         Card dealing techniques can vary                 In Asia, a large casino uses
                                                    from casino to casino and from dealer to          approximately 10,000 decks per day. If
                                                    dealer. That’s why shoe technology that           our product were even 0.1% inaccurate,
                                                    delivers accurate reading in these different      that would mean 10 decks per day would
                                                    environments is very important.                   be inaccurate. So we developed original
                                                         Shoe maintenance is also important.          inspection equipment to perform
                                                    We have a dedicated maintenance team in           total checking, and installed it to each
                                                    Macau for the Macau market, for example.          production process.
                                                    If there’s an issue, our engineer can go to           That accuracy means Angel cards don’t
Yasushi Shigeta, President and CEO, Angel Playing   the casino and check and, if necessary,           have to be checked by the casino at back-
Cards Co                                            adjust the shoe very easily. Moreover,            of-house operations before play. Angel
                                                    prevention is better than cure, so we check       does that for the operator in advance.
Angel Eye baccarat shoe means cheating at           the equipment regularly even when no                  In addition, each carton of pre-
the table is dramatically decreased. That’s         problems have been reported.                      shuffled cards has a unique barcode.
the information we get from the casinos. I                                                            When you scan that barcode, you have
think the key is that we have a wide range          Do you have plans for the next                    information on everything about that
of customers, so we have been able to take          generation of your baccarat shoe?                 batch of product.
their views and comments into account                  We have a range of requirements
when developing our product.                        from our casino customers. We are                 What is your current market share
                                                    now considering how to satisfy those              for playing cards used in the Asian
Please explain your approach to                     requirements as the industry moves                casino gaming market?
product development for the Angel                   forward. The most important thing is                   Angel has most of the Macau market
Eye shoe.                                           accuracy—100% no mistakes reading. We             for casino playing cards, and 100% of the
    In the three years from the first release,      need to develop that point first.                 Singapore casino market. The casino in
we improved the hardware platform as well                                                             Malaysia [Resorts World Genting] uses
as software for it. We have continued the                                                             our products, and major Asian cruise ship
software development after that. Almost                                                               casino also. The trend on market share is
every year we release a new version of the                                                            moving upwards. Also, Australia is very
software. The upgrade is then delivered to                                                            strong. We started in 1997 with two of the
the equipment by our technicians visiting                                                             first tier casinos in the country. And they
the casino.                                                                                           continue using our products. All but two or
    If one shoe is misreading it’s no good.                                                           three casinos in Australia have been using
So we test, test; test the platform and the                                                           our playing cards for more than 10 years.
software, and every individual unit that                                                              Once we start business with a customer, we
leaves our factory.                                                                                   aim always to keep that customer.

Why does the Angel Eye shoe                                                                           How does your customer care
have such a good reputation for                                                                       system work?
accuracy?                                                                                                 We have managers dedicated to
    That we believe is because of accuracy.                                                           each market. If a customer raises an issue
There are two kinds of accuracy: accuracy                                                             regarding our playing card products, the
                                                    Casino Angel pre-shuffled cards—99.99% accuracy
of the cards themselves and accuracy of the         reported by Macau casino operators
                                                                                                      manager goes to the customer, checks
matching between the cards and the Angel                                                              the playing cards, and then reports to our
Eye shoe.                                           Please explain your approach to                   company. Our company director, the general
    As to card accuracy, we developed               quality control of your playing cards.            sales manager and myself, we review the
ourselves a system for 100% checking of the             Our focus is on satisfying the customer.      report, check it, and we have a special
product. There is a code on each card that          Our aim is for 100% accuracy. Even though         meeting within a few days. We check every
minimises the possibility of foreign cards          our product is 99.99% accurate, we aim            aspect of the situation to understand what
being introduced to the system. That’s very,        always to achieve 100%. Our purpose is            the issue is. Sometimes we may find a new
very important. And the cutting accuracy            not market share. Our purpose is customer         fact relating to the manufacturing operation.
used in the production of the cards is at the       satisfaction.                                     Sometimes it may be a misunderstanding
most strict level in the market. That reduces                                                         between our customer and ourselves. The
the risk of misfeeds or misreads of the cards       Can you explain what role your factory            point is that our focus is always in providing
by the shoe.                                        plays in ensuring quality?                        excellence for the customer, not in chasing
    As to matching accuracy, because we                Angel entered the casino card business         market share.
                                                                                                                  January 2011 | INSIDE ASIAN GAMING   15
  Macau Policy




                           Signs of Success
            Macau’s money making potential more than makes up for occasional cultural
                          misunderstandings between East and West




  T
        here’s no such thing as a ‘free market’   from the negative effects of gambling.
        as far as legalised casino gambling is        They are also about a dynamic that
        concerned. All governments reserve        has repeated itself throughout history in
  for themselves the right to regulate the        the relationship between the Oriental and
  industry and in some way control access         Occidental worlds. This is the West trying to
  to the market. That can be by all kinds of      make a lot of money from trade with the East,
  methods, including limiting the number          and the East wishing to learn from the West
  of licences issued, or controlling the way      but cherry-picking those bits of Western
  operators market services to customers.         technology and expertise that it likes, and
      In Macau, however, other dynamics come      casting aside or parrying the bits it doesn’t.
  into play in the relationship between the       It happened in earlier centuries. When the
  casino operators and the government and         American mariner Commodore Matthew
  especially between the foreign operators and    Perry first visited Japan in 1853 with the
  the government. These factors are only partly   express aim of opening up the country to         American mariner Commodore Matthew Perry–
  about the issue of protecting the population    Western commerce, a high ranking Japanese        made 19th century Japan an offer it couldn’t refuse

16 INSIDE ASIAN GAMING | January 2011
                                                                                                                                    Macau Policy




official confided to his colleagues: “Our policy
shall be to evade any definite answer to their
requests while at the same time maintaining
a peaceful demeanour.”
    The problem is that Western traders in
Asia don’t always—looked at from an Eastern
perspective—play by the ‘rules’ of the game
and allow their Eastern hosts to maintain
a ‘peaceful demeanour’. Sometimes the
Westerners shout and wave their arms about.
That’s fine if you have a gunboat moored
nearby in the bay, but less helpful if you’re
armed only with a contract and a sense of
your own rightness.
    Westerners, it seems, can’t resist the
temptation to winkle out and then call out
apparent inconsistencies in the approach of
their hosts. In Western culture, the ultimate
                                                   Angela Leong—pragmatic approach                    SJM’s Dr Ambrose So, seeking ‘synergy’ with theme
smooth talker is the Devil himself, just                                                              park plan
waiting to charm and ensnare the unwary
with warm words and wicked intent. In the          meter site next to the Macao Dome for the          MOP188.34 billion (US$23.51 billion), a 58%
East, smooth talking is not only polite but        MOP10.4 billion (US$1.3 billion) scheme.           rise year on year from 2009.
also morally neutral. Easterners are more          There was some suggestion in media                      Casino gaming is a political talking point
interested in the final destination than           reports that the scheme had found favour           all over the world. What governments give—
the conversation they had on the way. As           with the government because it fitted in           either in terms of issuing formal licences
China’s reforming leader Deng Xiaoping             with the latter’s plan for diversifying the        or in terms of de facto permission via non-
was reported as saying when asked in a             local tourism industry. The really interesting     intervention (as happens sometimes with
roundabout way whether market based                part of the saga came a fortnight later, when      online casino services)—governments can
reforms to the Chinese economy were a              Dr Ambrose So, Chief Executive of SJM,             also take away. We’ve seen that with the
betrayal of the communist revolution: “Do          told journalists that SJM was talking to Ms        Unlawful Internet Gaming Enforcement Act
not care if the cat is black or white, what        Leong about a possible ‘synergy’ between           in the United States. We’ve also seen it with
matters is it catches mice”. A practical           her casino-less project and SJM’s projected        the crackdown on casinos in Russia—where
example of this East-meets-West difference         plans for a (presumably casino-centric)            casinos were moved out of major cities to
in action is a recent episode involving            property on land next door. Some Western           four remote locations in the country—and
Angela Leong, freshly installed as managing        commentators saw this as subterfuge. Many          in attempts by individual European Union
director of SJM Holdings in place of her           locals and the more experienced China              states to limit expansion of land-based
89-year-old husband, Dr Stanley Ho. Ms             hands in the Western community simply              and online gaming services aimed at their
Leong announced a new resort project on                               regarded SJM and Ms             citizens by exploiting get-out clauses in
Cotai independent of SJM and that would                                 Leong’s approach as good      European law as it relates to open markets
be a casino-free theme park focusing on                                 tactics. In other words, it   and fair competition.
sport and leisure.                                                     doesn’t matter what colour          No right-thinking person would deny
    It was reported in the local media                               the cat is, or what you call     Macau’s sovereign right to decide the
that Macau Theme Park and Resort                                    the cat, as long as it catches    direction of its casino industry. The main
Ltd had acquired a 200,000 square                                  the tourist mice.                  challenge for casino managers in Macau
                                                                     Given how successful the         and analysts of the local market is to try
                                                                 new generation of Macau’s land-      and strip away any issues relating to cultural
                                                               based casinos are proving to be,       misunderstandings and look beneath at
                                                             it’s important not to overstate the      the language everyone understands—the
                                                                 potential downside in terms of       bottom line. To that end, an interesting
                                                                      the cultural clash sometimes    question is whether there’s an obvious
                                                                           found between the          strategy underlying government decisions
                                                                           foreign operators and      on gaming regulation and policy or whether
                                                                          the Macau government.       the government is taking an essentially ad
                                                                       In early January, Macau’s      hoc, reactive position as and when particular
                                                                   gaming regulator, the Gaming       issues arise.
                                                             Inspection       and     Coordination
                                                   Bureau (DICJ), reported gross revenues for         Twin track
                                                   games of fortune during 2010 amounted to               There is some evidence to suggest it’s
                                                                                                                    January 2011 | INSIDE ASIAN GAMING    17
  Macau Policy




  a bit of both. The ‘one for one’ policy on        industry is an oligopoly (a government-
  imported labour for casino construction           held monopoly divided between a limited
  sites announced in late April appeared            number of concessionaires and sub-
  to be in reaction to local unemployed             concessionaires), unlike the all-comers free
  demonstrating outside the Labour Affairs          market (subject to probity checks) found
  Department. Then again, the government            in the US. If an operator in the US runs
  may have used the protests as a convenient        into regulatory or political problems of
  cover for something they already had in           the sort first encountered in 2009 by MGM
  mind—i.e. to slow growth on the gaming            MIRAGE (now MGM Resorts International)
  supply side.                                      in Atlantic City, that operator can always
      Opinion is divided both inside and            pull out of the market with the option of
  outside Macau about how much the local            coming back in when the political dust
  leadership calls the shots on policy and how      has settled or trading conditions have
  much it’s the central government in Beijing       improved. Alternatively, a casino operator
  that drives the process. Perhaps a more           in the US can use the threat of market
  relevant point is that Macau’s unusual, semi-     withdrawal and loss of local jobs and taxes
  autonomous status within China, and its           as a form of leverage with local lawmakers.
  special political set up (neither a one-party     No such leverage is possible in Macau. The
  system nor a representative democracy)            operators know that if they pull out there
  means the Macau government tends to               will be any number of operators ready and
  seek legitimacy by courting the approval          willing to take their place. The withdrawing
  of both the local population and Beijing          operator would also take a huge hit on lost     is why doesn’t the Singapore government
  in almost equal measure. The needs of the         infrastructure costs.                           play faster and looser with its guest casino
  guest casino industry tend to trail some way           There’s a striking illustration of the     operators by changing the rules for its
  behind in third place.                            difference between the political influence of   casino investors at short notice? One
      That’s largely because Macau’s gaming         the gaming industry in Las Vegas compared       possible answer is that Singapore’s goals
                                                    to Macau. In February last year, Democrat       in introducing modern casino resorts were
                                                    party lawmakers in the State of Nevada          very clearly spelled out from the outset.
                                                    proposed levying a relatively modest US$32      They were to boost tourism numbers to
                                                    million per year on casino operators as an      17 million arrivals by 2015 and tourism
                                                    additional contribution to the costs of the     receipts to S$30 billion annually by that year.
                                                    Gaming Control Board. The industry said         The Singapore government can measure
                                                    no and lobbied hard against it. The State’s     the performance and success of its casino
                                                    Republican governor said he wouldn’t            operator guests against that yardstick and,
                                                    support a tax increase unless there was         if necessary, ask those operators to operate
                                                    consensus. That pretty much killed off the      more conservative or more liberal business
                                                    initiative.                                     practices (in relation to say credit issuance
                                                                                                    for VIP players) as circumstances allow.
                                                    Toe the line                                         By contrast, Macau’s aims in market
                                                         In Macau, by contrast, when the            liberalisation appear much more vague—
                                                    government says ‘Jump’, the industry tends      i.e. a diversification of the tourist industry
                                                    to ask ‘How high?’ Resistance on the part of    away from hard gambling. This vagueness
                                                    operators to this trend may not be entirely     means the implied social contract and the
                                                    futile. But Inside Asian Gaming has yet to      actual legal contract between government
                                                    see evidence that confronting the Macau         and operators is open to much wider
                                                    government either overtly or covertly on        interpretation and can become effectively a
                                                    regulatory issues has actually improved the     hostage to political expediency. Singapore’s
                                                    commercial position of operators. It may        clarity on casino policy and strategic
                                                    actually have made things harder for them.      economic aims is also arguably a function
                                                    That’s because Asia’s cultural secret weapon    of the fact it operates an administrative
                                                    for dealing with troublesome individuals or     system much closer to Western norms than
                                                    corporations—passive resistance, whereby        does Macau.
                                                    permissions slow to a crawl and piles of             The broad idea from the Macau
                                                    paperwork become ever-larger—functions          government side seems to be that limiting
                                                    in such a subtle way it’s difficult even to     the supply of gaming by curtailing further
  MGM MIRAGE voted with its feet in the row with    prove it’s happening.                           table supply and property expansion will
  New Jersey, selling its stake in the Borgata in        An oligopoly also exists in Singapore’s    somehow control demand for gaming. The
  Atlantic City                                     casino market, so an interesting question       thought following on from that is this will
18 INSIDE ASIAN GAMING | January 2011
                                                                                                                                        Macau Policy




                                                                                                  Singapore—aims of casino liberalisation clearly spelled out




somehow mitigate or control the negative               to gamble will also rise. Even if the number      main gaming floors then becomes the norm,
social impacts of Chinese citizens spending            of tables were capped in the market beyond        higher pricing in the mass market will assist
too much money in Macau casinos. The                   2013, all that would happen then is that table    the operators in boosting margins across the
problem with this thinking is that such a              and slot occupancy will simply rise to a point    calendar year. Pricing may also possibly push
strategy arguably only works if the supply             where the casinos are forced to use pricing       out the lower earners who can least afford to
issue is controlled from both ends—i.e. from           to control demand and overcrowding, as            splash on gambling what little discretionary
the industry side and the visitor side. As ever        they do already by raising minimum bets           spending they have.
more Chinese citizens become economically              during peak times. If the ‘peak’ seen at               That may be the point. Perhaps the
eligible to visit Macau, the numbers coming            Chinese New Year in terms of players on the       central government and the Macau
                                                                                                         authorities would rather have the lower-
                                                                                                         earning visitors to Macau eking out their
                                                                                                         spending on fairground rides or a trip to see
                                                                                                         the newly-arrived giant pandas from China
                                                                                                         in their new home at Coloane than splashing
                                                                                                         a week’s wages on a few games of baccarat
                                                                                                         at HK$100 a time.
                                                                                                              Pricing barriers certainly seem to be
                                                                                                         an effective mechanism for controlling
                                                                                                         demand for other consumer services such
                                                                                                         as luxury hotels. But even modest earners
                                                                                                         will stretch their hotel budget for a special
                                                                                                         occasion such as a honeymoon or wedding
                                                                                                         anniversary. Would some of Macau’s less
                                                                                                         well-heeled visitors be resistant to pricing
                                                                                                         mechanisms as applied to minimum table
                                                                                                         bets? Certainly there is some anecdotal
                                                                                                         evidence that deeply held ideas in Chinese
                                                                                                         culture about fate and luck may provide
                                                                                                         enough motivation for those consumers
                                                                                                         predisposed to gamble to stretch their
                                                                                                         budgets as the need arises. Don’t rule out
                                                                                                         the return of visa restrictions some time in
                                                                                                         2011 if operator supply-side restrictions and
                                                                                                         minimum bet pricing—as well as possible
                                                                                                         caps on win-rate sharing to match the
                                                                                                         existing caps on rolling chip commission—
Panda to the masses—Fairground attractions not table play for Macau’s poorer visitors?                   don’t dampen player demand.
                                                                                                                       January 2011 | INSIDE ASIAN GAMING   19
  Market Outlook




                                         High Mass
    Will 2011 mark a shift in the balance of power between high roller action and main floor
             gaming in Macau? Morgan Stanley Research considers the possibilities




  M
            organ Stanley Research Asia/Pacific’s latest report,
            ‘Macau Gaming & Property 2011: Another Year of
                                                                       Mass Revenue: Less Volatile than VIP
                                                                       100%    YoY %
            Outperformance’, presents a number of potential                                        VIP Roll YoY %

  scenarios for the coming year. It refers to them as ‘themes’ and                                 Mass Revenue YoY %
                                                                        80%
  provides data in support of each hypothesis, while being careful
  not to state any of them overtly as ‘predictions’. One of these
                                                                        60%
  potential scenarios is titled “VIP in the Near Term; Mass in the
  Medium Term”. Morgan Stanley offers an argument that the
                                                                        40%
  trend in the growth of mass market gaming revenue is likely to
  continue.                                                             20%
      Under a sub-heading titled “Mass is for the long run: Revenue
  growth less volatile than VIP”, the report, by Praveen Choudhary,      0%
  Executive Director, and Calvin Ho, Research Associate, Morgan
  Stanley Asia Ltd, offers the following analysis:                      -20%
      “Mass gaming revenue tends to be less volatile than VIP, which
  tends to follow cyclical indicators such as new loan creation and     -40%
  Chinese property prices. Hence the former should be more defensive        May-08     Sep-08   Jan-09    May-09    Sep-09   Jan-10   May-10   Sep-10
  than the latter in an industry downturn.”                            Source: Industry data, DICJ, DSEC, Morgan Stanley Research

20 INSIDE ASIAN GAMING | January 2011
January 2011 | INSIDE ASIAN GAMING   21
  Market Outlook




      Under another sub-heading, “Infrastructure is shaping the                                                     sector, including specific economic and social catalysts.
  landscape”, the report adds: “We believe the various infrastructure                                                    “This is driven by an additional attraction (Galaxy Macau),
  improvements could offer major upside potential for the mass                                                      infrastructure improvements (Guangzhou-Zhuhai Intercity Mass
  market. They should alleviate the infrastructure bottleneck within the                                            Rapid Transit), and wealth effect. However, in 1H 2011, VIP could
  territory and make the mass-focused Cotai strip an easier destination                                             continue to grow faster due to easier credit conditions,” state the
  for visitors. Most visitors to Macau arrive at the northern Gongbei                                               authors.
  border with Zhuhai.”                                                                                                   Morgan Stanley also adds some insights on the potential upside
                                                                                                                    risk in the VIP sector.
                                                                                                                         “We expect Macau Gross Gaming Revenue (GGR) to grow at 15%
   Mass Revenue per Visitor Trending Up…
                                                                                                                    YoY in our base case for 2011 and we think risk is on the upside.
    3,000 MOP$
                                                                                                                    We expect Mass Revenue is going to increase by 21% YoY while VIP
                                                                                                                    Revenue is going to increase by 12% YoY. We see upside risk from
    2,500                                                                                                           VIP revenue growth while we see limited downside risk for the
                                                                                                                    mass revenue growth. We make our projection through bottom-up
    2,000                                                                                                           approach from respective projections of the operators.”
                                                                                                                         The report’s authors emphasise they see the risk in the VIP
                                                                                                                    segment as principally related to structural issues in the wider
    1,500
                                                                                                                    Chinese economy and unlikely to feed through to the market for
                                                                         +126% since Mar07
                                                                                                                    some time.
    1,000
                                                                                                                         “Market is worried about the recent credit tightening started in
                                                                                                                    November by the PRC will have impact on the Macau gaming sector;
     500                                                                                                            we think it is too early to worry about that. Gross gaming revenues
                                                                                                                    continued to grow during the last tightening cycle starting 2004.
     -
                                                                                                                    Both Macau GGR YoY growth rate and Gaming Index increased
         Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10   with the China PBoC [People’s Bank of China] Lending rate and the
   Source: DICJ, DSEC, Morgan Stanley Research                                                                      Required Reserve Ratio (RRR) until 2007-08.”

       Morgan Stanley adds the caveat, however, that in the short term,                                              Macau GGR YoY% Vs China PBoC Lending Rate
  the VIP market will remain the key driver of balance sheet and stock
                                                                                                                      8.0   Lending Rate %           China PBoc 1-Year Lending Rate (LHS)                    YoY %   100%
  performance for the Macau operators.                                                                                                               GGR YoY% (RHS)
       The report states: “The VIP business has been growing at a faster
                                                                                                                                                                                                                     80%
  rate than mass since August 2009 and stocks more leveraged to                                                       7.5

  that have performed better. This is driven by easy money and credit
                                                                                                                                                                                                                     60%
  access, plus strong GDP growth in China and Hong Kong. We do not                                                    7.0
  expect these to change in the near term. Mass revenue per visitor                                                                                                                                                  40%
  is increasing but the growth would not be as fast as VIP in the near                                                6.5
  term. Average stay for hotel remained stagnant at 1.5 nights as well.”                                                                                                                                             20%

                                                                                                                      6.0
   …but Occupancy Rate and Length of Stay Are Flat                                                                                                                                                                   0%
         90    %                   Occupancy Rate (LHS)          Length of Stay (RHS)           Nights     1.6
                                                                                                                      5.5
                                                                                                                                                                                                                     -20%
         80

         70                                                                                                           5.0                                                                                            -40%
                                                                                                           1.5
                                                                                                                        Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
         60
                                                                                                                     Source: CEIC, DSEC, DICJ, Industry Data, Morgan Stanley Research
         50
                                                                                                           1.4
                                                                                                                        But Morgan Stanley cites potential changes in Shanghai money
         40
                                                                                                                    markets—the de facto financial capital of China—as having a knock
         30                                                                                                         on effect for the Macau VIP business; albeit with a nine-month time
         20
                                                                                                           1.3      lag. Much of China’s high-end wealth has been generated out of
                                                                                                                    equities listed in Shanghai, or via loans for property development
         10                                                                                                         done via the Shanghai banking system.
      -                                                                                                    1.2          “Rising SHIBOR (Shanghai Interbank Offered Rate) could impact
              Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10                          VIP Roll YoY growth % in 9 months: Our correlation tests show that
   Source: DSEC, Morgan Stanley Research                                                                            SHIBOR has strong inverse relationship with VIP Roll YoY% (SHIBOR
                                                                                                                    leads VIP Roll YoY% by 9 months). SHIBOR has been increasing and
     The suggestion from Morgan Stanley is that the potential growth                                                thus could impact VIP volume growth, but as long as the growth
  spurt in the mass will be linked to a positive upside on the mass                                                 rate remains higher than 15% (for which PBoC rate needs to go up
22 INSIDE ASIAN GAMING | January 2011
                                                                                                                                                               Market Outlook




another 100 bps), the surprise to investor expectations would be
                                                                                               Mass Revenue Share by Operators (Nov 2010)
positive,” says the report.
                                                                                                                               MGM, 9%

 Macau VIP Roll YoY% Vs China Overnight SHIBOR                                                                                                               Sands China, 25%
                                                                                                               Galaxy, 5%
  0.0   SHBIOR %         Correlation: 82%                                       YoY %   100%


 -0.5                                                                                   80%


 -1.0                                                                                   60%


 -1.5                                                                                   40%

                                                                                                                                                                     Wynn Macau, 11%
 -2.0                                                                                   20%
                                                                                                           SJM, 41%

 -2.5                                                                                   0%
                                                                                                                                                         MPEL, 9%

 -3.0                                                                                   -20%
                                                Inverted Overnight SHBIOR (LHS)
                                                VIP Roll YoY% - 9mths backward (RHS)
                                                                                               Source: Industry Data, Morgan Stanley Research
 -3.5                                                                                   -40%
     Jan-08 May-08   Sep-08   Jan-09   May-09    Sep-09   Jan-10   May-10    Sep-10

 Source: CEIC, Industry Data, Morgan Stanley Research                                          VIP Roll Share by Operators (Nov 2010)

     Set against potential upside risk on the VIP trade is the                                                              MGM, 11%                Sands China, 12%
possibility that growth of the mass market—with its higher
margins—could make a proportionately greater contribution to
the bottom line.
                                                                                                        Galaxy, 14%
     “We expect Macau Gross Gaming Revenue (GGR) to grow at 15%                                                                                                      Wynn Macau, 17%

YoY in our base case for 2011 and we think risk is on the upside.
We expect Mass Revenue is going to increase by 21% YoY while VIP
Revenue is going to increase by 12% YoY. We see upside risk from
VIP revenue growth while we see limited downside risk for the
mass revenue growth. We make our projection through bottom-up
approach from respective projections of the operators.”
     Table games in general and baccarat in particular will                                                                                                      MPEL, 14%

undoubtedly remain the dominant gaming action in Macau during                                                         SJM, 33%
2011, as Morgan Stanley suggests. Until now, the main battleground                                                                                           (Totals 101% due to rounding)
for the six concessionaires and sub-concessionaires in Macau has                               Source: Industry Data, Morgan Stanley Research
been market share of the VIP baccarat trade. Baccarat hold volatility
(aka house ‘luck’) affects both the high roller and mass-market
businesses and thus the profitability of both segments. But the mass
segment clearly offers greater underlying profitability to operators                           Sands China: Staff Cost as % of Revenue Falling
(typically 35% gross margin on the mass versus typically 7% or even                             400   US$ mn                                                                         20%
                                                                                                                   Employee benefit expenses      Staff cost as % of Net Revenue
as little as 3% on the VIP because of fierce competition on rolling chip
                                                                                                                                                                                     18%
commissions and win-rate sharing). Important factors in the greater                             350

profitability of the mass segment are its lower marketing and player                                                                                                                 16%
                                                                                                300
incentive costs because the casinos don’t need to use junkets to                                                                                                                     14%
bring players to the table. The performance of Sands China in the                               250
                                                                                                                                                                                     12%
third quarter of 2010—when its EBITDA margin was boosted by a
combination of the company continuing aggressively to control                                   200                                                                                  10%

costs and it capturing a large percentage of the mass market (23% in                                                                                                                 8%
                                                                                                150
November 2010) despite a more modest showing in VIP market share
                                                                                                                                                                                     6%
(12% in November 2010)—shows the inherent value of the mass if                                  100
significant volume can be built.                                                                                                                                                     4%
     “[Sands China] EBITDA margin improved gradually from 17.6% in                               50
                                                                                                                                                                                     2%
1Q09 to 23.6% in 3Q10. This is helped by rising mass win rate and
operating leverage. For example, its staff costs as a percentage of                               -                                                                                  0%
                                                                                                        2007          1H08         2H08         1H09          2H09          1H10
total revenue has decreased by 650 basis points since 2007,” says
                                                                                               Source: Company data, Morgan Stanley Research
Morgan Stanley.
                                                                                                                                               January 2011 | INSIDE ASIAN GAMING          23
                                                                                                10,000


                                                                                                 5,000
 Market Outlook
                                                                                                     -
                                                                                                           2005     2006       2007      2008       2009     2010E      2011E        2012E

                                                                                               Source: DSEC, DICJ, Morgan Stanley Rsearch; E= Morgan Stanley Estimates
                                                                                               Note: 2011-12 estimates presented in this chart are included in our Bull, but
                                                                                               not Base case
     The report writers suggest combined 25% year on year growth
 in gross gaming revenues across the mass and VIP markets may                                  Mass Revenue per Visitor reached record high at
 be possible. When sector growth rates are analysed individually,                              MOP$2,400 in October 2010
 the mass could expand by as much as 23% year on year, suggests                                2.5   (In mn)                   Total Visitor Arrival                     (In MOP$)     3,000
                                                                                                                               Mass Revenue per Visitor
 Morgan Stanley.
                                                                                                                                                                                       2,500
 Some projections                                                                              2.0

     “Under the following aggressive but reasonable assumptions, we                                                                                                                    2,000
 think Macau could achieve 25% YoY GGR growth,” say the authors.                               1.5
     “Mass Revenue to grow at 23% YoY: Visitor Arrival at Macau and
 Mass Revenue per Visitor could grow at 12% & 10%, respectively in                                                                                                                     1,500

 2011 considering they had grown at 12% & 14% CAGR from 2004 to                                1.0
 2010,” suggests the report.                                                                                                                                                           1,000
     “VIP Revenue to grow at 25% YoY: Market will see increase in
 number of VIP tables by 8% and VIP Win/Table/Day could potentially                            0.5
                                                                                                                                                                                       500
 reach to US$30k (level reached in 2005) from current level of US$25k
 in 3Q10.”
                                                                                               0.0                                                                                     0
     The authors also point out that market consensus typically starts                           Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
 conservative on Macau yearly revenue growth projections and then
                                                                                               Source: DSEC, DICJ, Morgan Stanley Research
 adjusts as the thing plays out.
     “Macau Gross Gaming Revenue (GGR) has shown growth of                                    given the opening of Galaxy Macau. If the credit environment remains
 57% YoY for 2010 up to November. Consensus is factoring in 16%                               easy, we think VIP Win/Table/Day will have to reach US$30K (similar
 in revenue growth for 2011. Over the past few years, consensus                               to the peak reached in 2005), up from the current level of US$25K.”
 estimates have typically started off at 10-15% at the beginning                                   A key take away from the Morgan Stanley report is that the market
 of the year, then adjusting upward/downward accordingly                                      has to love the VIP segment because of its sheer size. But the lower
 through the year.”                                                                           volatility in mass market volumes of play (because of the segment’s
     Morgan Stanley adds that supply-side limitations on the market                           lack of correlation with key economic indicators such as SHIBOR) and
 (with only one new property, Galaxy Macau, offering approximately                            its better margins makes for a more sustainable business.
 400 new live tables coming on-stream in the second quarter of 2011)                               “In the near term, we continue to like the VIP segment due to its
 could help boost table occupancy and thus profitability—provided                             size (72% of total revenue) and tremendous growth (69% YoY YTD).
 operators can up their operational efficiency and control costs at the                       Although VIP remains more volatile, risky and prone to any downturn,
 same time.                                                                                   we expect momentum to be sustained in the near term. The mass
     Other analysts have also suggested possible government caps to                           business, however, is more resilient, less volatile and generates a
 control aggressive competition on win-rate shares in the VIP sector                          higher margin for operators. Thus we think it is likely to be the better
 could also support operators’ profitability in 2011 and beyond.                              business in the longer term,” states the report.
     “Drivers of 25% growth in VIP revenue: We estimate that the
 average number of VIP tables could grow roughly 8% YoY in 2011

  Can Efficiency up by 16% given 8% up of supply?
   35,000   (In US$)       VIP Revenue / Table / Day                                 33,000

             30,083                                                 16%     30,000
   30,000                                                       Increase

                                                                   25,829
   25,000                        23,748

                       20,760
                                            19,910
   20,000                                              19,178


   15,000


   10,000


    5,000


        -
              2005     2006       2007       2008      2009         2010E   2011E    2012E

  Source: DSEC, DICJ, Morgan Stanley Rsearch; E= Morgan Stanley Estimates
  Note: 2011-12 estimates presented in this chart are included in our Bull, but
  not Base case

24 Mass Revenue| per Visitor reached record high at
   INSIDE ASIAN GAMING January 2011

  MOP$2,400 in October 2010
  Feature




                                                          Disposal
                                                          Option
                                                           Is Aruze cooler on its alliance
                                                                 with Wynn Resorts?



                                        D
                                                  oes Kazuo Okada know something the
                                                  rest of the market doesn’t?
                                                      The announcement on 15th
                                        December tucked away in a Wynn Resorts filing
                                        to the US Securities & Exchange Commission
                                        that Aruze—Mr Okada’s gaming equipment
                                        company—may be willing to dispose of up to
                                        one million Wynn shares has certainly caught
                                        the attention of analysts.
                                             It’s hardly likely that Mr Okada needs the
                                        money for his stalled casino project at Manila
                                        Bay in the Philippines. He’s had US$100 million
                                        in escrow parked in that scheme for the best Kazuo Okada
                                        part of two years without showing any signs of being anxious to get it back.
                                             What other reasons could Mr Okada have for reducing his holding in
                                        Wynn? One could be concern that the recent uncertainty about land rights
                                        on Cotai and government talk of a tendering process under the new Land
                                        Law will push back the opening date of Wynn Cotai beyond the hoped for
                                        launch in 2013.
                                             Another could be that even if Japan does pass enabling legislation for
                                        casino resorts, there is no guarantee that US-based operators such as Wynn
                                        and Las Vegas Sands Corp will be able to set up an operation there whereby
                                        they hold a majority stake.
                                             According to a source who is an investor in Asian Gaming markets: “The
                                        Japanese are not short of cash. There are plenty of conglomerates in Japan
                                        with cash.
                                             “They can only earn a quarter of a percent or so on their capital via the
                                        bank. Under those conditions, a project like an integrated gaming resort
                                        in Japan looks very attractive to Japanese investors. Why would they give
                                        a project like that to a foreign company? A foreign operator might be able
                                        to take a minority stake and possibly do a branding deal, but I don’t think
                                        they would ever own it. I can’t see Steve Wynn wanting to get involved in
                                        something in Japan unless he had control of it.
                                             “A person like Kazuo Okada won’t just be sitting there waiting to see how
                                        things work out for Steve Wynn in Japan. He will be talking to his Japanese
                                        business associates and seeing if there are any strategic alliances that can be
                                        made to form a domestic consortium.
                                             “The reason the Americans were able to write the cheques for multi-
                                        billion dollar resorts in Macau is that the incumbent SJM neither had the
                                        experience of running mixed use gaming resorts, nor probably had the risk
                                        appetite to sink that much money into a still-unproven market. SJM knows
                                        casino gaming, and so far has stuck to that, though that could change if
                                        their plans for an integrated resort come to fruition.”

  Encore at Wynn Macau

26 INSIDE ASIAN GAMING | January 2011
                                                                                                                                            In Focus




                                                Rich Brew
              Two new integrated casino resort projects with heavy-hitting development
                            partners have been announced in Vietnam




S
      easoned Vietnam watchers will tell              approved back in 2008. The latter is currently    liberalisation. Certainly, the experience in
      you that when it comes to major real            on schedule for a first phase opening of its      South Korea is that the barring of local players
      estate development projects, it’s more          first casino hotel—MGM Grand Ho Tram–in           in all but one of the country’s 17 casinos
important to focus on the trends than on the          Q1 2013.                                          has limited both the size of the market and
headline numbers quoted by government                      A key question is whether the timing         the amount of capital investment it can
officials for capital investment. By that             of this IR trend is significant, and whether      support. There are currently four casinos in
reckoning, the trend in the casino gaming             it’s an indication that Vietnam could soon        Vietnam open to foreigners-only, but they
segment is clear. Two major multi-billion             liberalise its casino market to allow locals to   are relatively small-scale operations, not
dollar casino resort projects with ‘serious’ (i.e.,   play. An assumption behind that thought is        integrated resorts.
internationally-recognised) partners have             that it would be hard, if not impossible, for         Vietnam had a population of 85.8 million
been announced within weeks of each other             three or more multi-billion dollar integrated     at the 2009 census. Although the average
in addition to the Ho Tram Strip originally           gaming resorts to exist without such market       income is just a shade over US$1,000 per
                                                                                                                     January 2011 | INSIDE ASIAN GAMING   27
  In Focus




                                             CHINA             Integrated casino resort projects announced for Vietnam
                  VIETNAM                                                          Ho Tram Strip             Hoi An           Cat Ba Amatina
                        Hanoi
                                Halong Bay
                                                           Announcement         May 2008              December 2010          December 2010
         LAOS                                              date
                                Gulf of
                                Tonkin         Hainan Is
                                                           Location             Southeast Vietnam     Central Vietnam        Northern Vietnam
                                                                                (South China Sea      (South China Sea       (island in Halong
                                                                                coast, Ba Ria-Vung    coast, Quang Nam       Bay, Quang Ninh
                                                                                Tau province)         province)              province)
       THAILAND                              Da Nang
                                                           Nearest city         Ho Chi Minh City      Danang (24km)          Hanoi (170km)
                                          Hoi An                                (130km)

                                                           Cost                 US$4.2 billion        US$4 billion           TBA
                CAMBODIA
                                                                                (phased)              (phased)
                                                           Opening              Q1 2013 (1st phase)   TBA                    2015 (est.)

                                      Ho Tramp Strip
                                                           Developers           Asian Coast           Genting VinaCapital    Vinaconex-ITC (a
                         Ho Chi Minh City                                       Development Ltd       (JV of Malaysia’s      joint stock company
                             (Saigon)
                                                                                                      Genting and            of Vinaconex,
                                                                                                      Vietnamese             a Vietnamese
                                                                                                      fund manager           construction,
  North and South—Vietnam’s casino resort projects                                                    VinaCapital. US$800    finance and import-
                                                                                                      million minimum        export business
  annum, the country also boasts one of                                                               direct investment
                                                                                                      from JV in four
  Asia’s fastest growths in new millionaires (in                                                      phases)
  percentage terms). But currently, none of
  those economically ambitious Vietnamese                  Financial partners   Harbinger Capital     Secondary investors    TBA
  are allowed to gamble in the country’s four              announced            Partners              TBA
  currently licensed casinos.                              Other partners       MGM Resorts           TBA                    Belt Collins
      As background to the current legal                                        International                                Hawaii (design
  position, Articles 248 and 249 of Vietnam’s                                   (casino and hotel                            consultancy)
  Penal Code criminalise gambling in Vietnam.                                   operations)
  Certain exemptions allow casinos and                                          Steelman Partners
                                                                                (design)
  electronic gaming that cater exclusively                                      Rider Levett
  to foreigners. For practical administrative                                   Bucknall (quantity
  purposes, ‘foreigners’ includes Vietnamese                                    surveying and
  who hold the passport of a foreign country.                                   co-project
                                                                                management 1st
  These are known as ‘Overseas Vietnamese’,                                     phase)
  many of whom or their parents left the
  country during or after the Vietnam War.                 Casino               10,000 sq. meters     Yes – details TBA      Yes – details TBA
  This diaspora amounts to approximately 3.7                                    with 90 live tables
  million people, of whom 1.6 million live in                                   and 500 electronic
                                                                                games (1st phase)
  the US or have the right of residency there,                                  Additional 500
  according to the US Census Bureau.                                            electronic games
      Vietnam had an estimated 4.5 million                                      (2nd phase)
  tourist arrivals in 2010, according to
                                                           Hotels               MGM Grand Ho          ‘5-star hotel’         ‘4-star to 5-star
  the Vietnam National Administration of                                        Tram (5-star)                                hotels’
  Tourism (VNAT). Macau clocked up 21.7                                         550 rooms (1st
  million visitors in 2009, according to Macau                                  phase)
  government statistics. Those Macau visitors                                   Additional 550
  currently support a market that has spent                                     rooms and 14 villas
                                                                                (2nd phase)
  an estimated US$10 billion on casino
  infrastructure since the first foreign-owned             Other facilities     Retail, luxury        Villas, 2,500 houses   Marina, commercial
  casino, Sands Macao, opened in 2004.                     and real estate      restaurants,                                 and service centres,
  (That capital spend from the private sector                                   conference centre,                           entertainment
                                                                                18-hole golf course                          parks, international
  excludes the yet-to-open Galaxy Macau                                         designed by Greg                             conference centre,
  at US$1.8 billion and Sands China’s Cotai 5                                   Norman                                       villas, sports centre
  and 6 project, weighing in at US$4.2 billion.)
28 INSIDE ASIAN GAMING | January 2011
                                                                                                                                           In Focus




Vietnam is proposing more than US$8 billion          only third worries about local players if and
in casino and hotel investment in a market           when they are allowed to play.
currently supported by only a fifth of the               But factors including government
tourists Macau receives.                             policies on player credit issuance, transport
    Asian Coast Development Ltd (ACDL), the          connectivity and tax competitiveness
developer of the Ho Tram Strip, will, however,       must also be considered when assessing
have noted Macau’s success in squeezing a            Vietnam’s potential appeal to high rollers.
huge amount of revenue out of a statistically        Junket operations can certainly currently
miniscule number of high roller customers.           be found in at least two of the four casinos
In Macau, 71.4% of all revenues for games            open to foreigners—the Royal International
of fortune (i.e. casino games) in 2010 were          Gaming Club in Halong Bay (not far from the
supplied by visiting VIP baccarat players,           proposed integrated resort on Cat Ba Island)    Stamp duty—many tourists still need a visa to enter
probably numbered in the few thousand.               and the Lao Cai International Hotel near the    Vietnam
Lloyd Nathan, the CEO of ACDL, is a former           border with Laos. The legal status of credit
President of Global Gaming Development for           issuance for gambling in Vietnam is not
MGM MIRAGE (as the company was known,                currently clear, though, and may need some
prior to the name change to MGM Resorts              regulation before international investors
International). He and his management                will feel comfortable with the level of
team will undoubtedly have spotted the               regulatory risk that could pose both to their
possibility that Ho Tram could also make a           future Vietnamese operations and to their
good living from its gaming operation if it          overseas ones. Online gambling marketed
focuses first on courting foreign high rollers,      to Vietnamese nationals takes place in
second on foreign mass market players, and           the country—some of it funded by credit,




                                                                                                     Nice to meet you—Ho Tram Strip investment
                                                                                                     certificate ceremony

                                                                                                     according to IAG’s sources—but it’s currently
                                                                                                     unlicensed and therefore illegal.
                                                                                                          Vietnam also currently imposes
                                                                                                     significant entry barriers on many overseas
                                                                                                     visitors—not the ideal posture for a
                                                                                                     country wishing to build its foreign tourism
                                                                                                     industry. According to an online circular
                                                                                                     issued by the Vietnamese Embassy in the
                                                                                                     US, travellers from Vietnam’s important
                                                                                                     regional feeder markets of China (including
Ho Tram Strip phase one—rendering of interior view                                                   Hong Kong and Macau), India, Japan, South
                                                                                                     Korea and Malaysia need a visa unless they
                                                                                                     are diplomats. Although visas on arrival are
                                                                                                     available to some of those nationalities,
                                                                                                     travel experts currently advise that hold
                                                                                                     ups can occur and advise would-be visitors
                                                                                                     to get their visa prior to arrival. Ordinary
                                                                                                     passport holders from Indonesia, Laos, the
                                                                                                     Philippines, Singapore and Thailand are
                                                                                                     allowed up to 30 days’ stay visa-free.
                                                                                                          The fact that the MGM Grand Ho Tram
                                                                                                     over at the Ho Tram Strip is proposing
                                                                                                     to offer 90 live tables and 500 electronic
                                                                                                     games in the first phase, due to open
                                                                                                     in the first quarter of 2013, followed by
                                                                                                     another 500 electronic games in the second
                                                                                                     phase, suggests the resort developers are
Ho Tram Strip phase one—rendering of interior view                                                   appealing to high rollers and the mass in

                                                                                                                   January 2011 | INSIDE ASIAN GAMING   29
  In Focus




  equal measure. (The entire development has          second 14% of the 34%. This is also subject            want to compete regionally for VIP players.
  a licence for up to 180 table games and 2,000       to change without notice.                              Also, unlike Singapore, the Philippines and
  electronic games.) If the mass-market were              “Tax on [corporate] profit is about 30%            Australia, Vietnam’s gaming tax regime
  the principal target, then Vietnam still has a      of net revenue. This may have changed in               currently makes no distinction between VIP
  long way to go to catch up with the visitor         the last two weeks. No one can be sure what            and mass-market gaming.
  numbers available to Macau operators.               it will be next year.                                       Those familiar with Vietnam will be aware
       Figures released by VNAT show that                 “There are some investment tax credits             that what gets announced in real estate
  between January and July 2010, 2.9 million          for investment in undeveloped areas, but               circles and what actually gets built is not
  visitors came to Vietnam. That’s a 34.9%            whether you achieve any relief depends more            always the same thing. Interestingly, both
  growth year-on-year. In the first eleven            on your political power than on promulgated            the newcomer casino projects—like the
  months of 2010, 22.7 million people visited         rules or regulations,” adds the source.                more established Ho Tram—appear to have
  Macau, a year-on-year increase of 15.1%,                Vietnam’s tax on the gross may currently           serious partners both on the operational
  according to Macau’s Statistics and Census          be (slightly) lower than Macau’s, but when             and finance side. Vinaconex, the developer
  Service. Perhaps more encouragingly for             Vietnam’s higher rate of corporate tax is              of the proposed Cat Ba Amatina project
  Vietnam, arrivals from China were up 95.4%          taken into account, the burden on the                  in the north of the country, is a large and
  in the first seven months of 2010, though           industry is actually greater. Vietnam’s tax            politically very well-connected Vietnamese
  that is in part a function of starting from a       take is also very much greater than that               conglomerate with access to a lot of finance
  low base.                                           of Singapore (excluding the casino entry               and financial expertise. Genting, named as
       Vietnam currently offers a lot more air        fee imposed on Singaporeans), and that                 a participant in the Hoi An project, already
  transport connections than Macau, but not           could be significant if the new Vietnam IRs            has extensive experience of international
  nearly as many as Singapore. Changi Airport
  Group, the operator of Singapore’s main                         How Vietnam’s current gaming tax rates compare
  international air terminal, said in November                              with regional competitors
  it estimated 40 million passengers will have
  used its facilities during 2010.                                        Vietnam          Singapore Macau Malaysia Philippines                   Australia

  Taxing times                                         Mass
                                                       Gaming
                                                                     20 (known                                                                   19 to 27.5
      It would be fair to say there is currently                     as Special       15                   39*       25              25          (varies by
  some opacity regarding the Vietnam                   Tax %         Consumption Tax)                                                            state)
  government’s policy on gaming tax. An                VIP/
  inquiry made by IAG to the Ministry of               Junket                                                                                    10 to 12
                                                                     20 (ditto)            5               39*       25              15
  Finance indicated gaming tax is levied in            Gaming                                                                                    (ditto)
  Vietnam at 25% of the gross. Another source          Tax %
  familiar with the Vietnam industry suggests
                                                                                                                                                  10 (GST
  the effective total tax on gross revenue is
                                                                                                                                                  applied to
  currently 34%.
                                                                                                                                                  operator
      The source states: “A luxury tax accounts                                                                                                   margin for
  for the first 20% of the 34%. This applies                         14                    7 (known        N/A       N/A (but        2 (levied on
                                                                                                                                                  domestic
  directly to gross revenue. This is subject to                                            as Goods                  GST             gross for
                                                       Excise Tax                                                                                 sales.
  change without notice and without rational                                               & Services                possible        restoration
                                                       %                                                                                          Exempt
  analysis. A VAT [excise] tax applies in an                                               Tax)                      from July       of cultural
                                                                                                                                                  on sales
  uncertain manner. This accounts for the                                                                            2011)^          heritage)**
                                                                                                                                                  to players
                                                                                                                                                  from
                                                                                                                                                  overseas)
                                                                                                                                                  ^^
                                                                                                                                     30 (gaming
                                                                                                                                     operators
                                                                                                                                     exempt
                                                       Corporate                                                                     but pay
                                                                 30                        17              12        25                         30
                                                       Tax %                                                                         variable
                                                                                                                                     licensing
                                                                                                                                     fees to
                                                                                                                                     PAGCOR
                                                      * incl 3-4% mandatory social and welfare contributions
                                                      ^ Source: Ernst & Young report, ‘Indirect Tax in 2010’
                                                      ** Source: Bagong Nayong Pilipino Manila Bay Tourism City terms of reference
  Hoi An market—soon to be trading in casino chips?   ^^ Source: Australian Taxation Office

30 INSIDE ASIAN GAMING | January 2011
                                                                                                                                               In Focus




                                                                                                           betting—if allowed to continue—could
                                                                                                           have undermined the party’s remaining
                                                                                                           legitimacy and been dangerously socially
                                                                                                           divisive. Under the proposed regulation of
                                                                                                           the sports betting industry, not only will the
                                                                                                           government benefit from tax revenue, but
                                                                                                           minimum daily bets (10,000 dong, equal
                                                                                                           to 50 US Cents) and maximum daily bets
                                                                                                           (1 million dong, or US$50) will be imposed.
                                                                                                           A number of major Western suppliers of
                                                                                                           lottery services have reportedly indicated
                                                                                                           an interest in tendering for legalised sports
                                                                                                           betting services in the country.
Sophisticated—artist’s impression of Cat Ba Amatina integrated resort planned for northern Vietnam
                                                                                                               Vietnam committed to liberalising its
Image courtesy of Kiva Dang
                                                                                                           markets for many goods and services as
casino project management and operations              Island as a Biosphere Reserve of international       a condition of its joining the World Trade
in the Philippines (Resorts World Manila),            importance. Quite how that fits in with              Organization in 2006. It’s worth noting,
Singapore (Resorts World Sentosa) and the             marketing the place as a casino resort to more       however, that domestic and cross-border
United Kingdom (the Genting UK casinos).              than 300 million people in neighbouring              casino and gambling services are excluded
     Provincial government officials in               Yunnan province in southwest China hasn’t            from the free trade requirements. Any move
Vietnam do, however, have something of                yet been outlined by the developers.                 towards liberalisation is a purely domestic
a track record for inflating the total value               The Law on Investment (Article 37) and          political consideration.
and scope of development projects—                    related Decree No. 108 of September 2006                 Any such liberalisation will certainly
possibly because they are competing for               provide the legal framework for casinos in           benefit from international expertise in
the political favour of the country’s central         Vietnam, although provincial authorities can         management and marketing. To get some
government in the race to attract foreign             and do issue detailed regulations within this        idea of the relative immaturity currently of
investment and develop the country’s                  framework. This accounts for why new projects        the existing legal casino market in Vietnam,
infrastructure. An example of this is that            are announced by provincial officials rather         in a July 2009 report, the Asia/Pacific Group
although the Hoi An scheme has been                   than by the central government. Under Article        on Money Laundering—an international and
announced by regional officials as a US$4             37 of Decree 108, however, only Vietnam’s            inter-agency body promoting best financial
billion project, closer examination of the            prime minister can give ultimate approval            practice in financial industries and the gaming
deal suggests the joint venture partners              for a casino licence. Electronic gaming is           industry in the region—estimated that an
Genting and VinaCapital have themselves               governed by Prime Ministerial Decision 32            existing casino; Hai Phong Bay, had a turnover
only legally committed to a minimum of                on Regulations on Prize Winning Electronic           of only US$3 million a year with a maximum
US$800 million over four phases.*                     Games for Foreigners, though the Vietnam             payout per wager on roulette of only US$2,000.
     Added to the opacity over exactly how            government recently announced its intention          Expect casino operators with the marketing
much money has been committed in the                  to issue a law to regulate sports gambling for       expertise of MGM Resorts International and
Hoi An project is a degree of opacity over            local Vietnamese.                                    Genting to beat those numbers easily on entry
the future direction of the country’s policy               The website VietNamNet Bridge                   to the Vietnam market.
on the gaming industry. The five-year term            reported in October that during the FIFA
of office for current Prime Minister Nguyen           World Cup in South Africa in June and
Tan Dung expires in July this year. It is not         July last year, pawnshops in Vietnam were
clear at this stage whether he will seek a            flooded with assets including mobile
new term. A possible indicator is that his            phones, laptop computers and even
predecessor and political mentor was in               luxury cars. The report suggested this was
office for 11 years.                                  because Vietnamese people pawned their
     The budget for the Cat Ba Amatina                valuables to get cash for football betting.
project has not yet been announced. But               As they lost, they also lost the assets to the
indirectly added to the bill is a range of            pawnshops.
major infrastructure projects—including                    The website added that people in rural
Tien Lang International Airport, a major              areas even pawned land plots inherited
highway and a bridge. The latter two                  from parents or grandparents. Given
schemes are designed to reduce the road               that one of the founding principles of
journey time from Hanoi, 170 kilometers               communist Vietnam was land redistribution
away, to two and a half hours.                        to the poor, the trend of effectively                Back to the land—Vietnam’s government alarmed by
     In 2004, UNESCO recognised Cat Ba                mortgaging land for unregulated sport                asset sell-offs linked to unregulated gambling

* Source: statement by Do Xuan Dien, Vice Head of Chu Lai Open Economic Zone Management Authority, reported in Vietnam Business News.

                                                                                                                        January 2011 | INSIDE ASIAN GAMING   31
  TransAct




                                    Centre Stage
               TransAct’s Epicentral coupon and promotion system keeps players playing
                                        and casino hosts hosting




  T
        ransAct Technologies launched its        take their existing Epic 950 printers and      be to move an uncarded player to being
        groundbreaking Epicentral™ Print         turn them into networked printers that         a carded player. It could be for entering
        System at the Global Gaming Expo in      print promotional coupons, marketing           people into slot tournaments or keeping
  Las Vegas.                                     messages and to communicate with the           your players playing longer.”
      Epicentral’s suite of software and         players directly at the game while the
  hardware enables casino operators to           player is playing,” explains Tracey Chernay,   Breakthrough
  create promotional coupons and marketing       Executive Vice President, Sales & Marketing        ‘Groundbreaking’ is a word that gets
  messages and to print them in real-time        for TransAct.                                  used a lot in stories about casino technology
  at the slot machine. Moreover, the system          “Any number of incentives can be           but in this case it appears justified.
  works with and enhances a casino operator’s    provided. It could be to extend a marketing        “What casinos have been doing up until
  existing player database, rather than trying   campaign, where say the operator is already    now is running a member of staff out to the
  to build a new database from scratch           doing billboard and radio commercials and      player on the floor just to give them their
      “Epicentral is a way for casinos to        can add a coupon at the game. It might         comps,” states Ms Chernay.




32 INSIDE ASIAN GAMING | January 2011
                                                                                                                                      TransAct




                                                  coupon and create and embed common              take their existing printer out.”
                                                  barcode types, allowing casinos to track who
                                                  is using their coupons and the effectiveness    Big score
                                                  of these new marketing programmes.                  Foxwoods Resort Casino in Connecticut
                                                       “What we found is that casinos don’t       has already agreed to equip 300 of its slot
    “Epicentral Mobile Host™ is a way for         generally have a way of laying out coupon       machines with the Epicentral Promotional
your casino host, as he’s walking around the      design. They don’t necessarily know how         Print System, and may extend that trial on a
floor, either with a smartphone or an iPad,       to actually make the coupons,” says Tracey      permanent basis to the other slot machines
to choose from his library of coupons and         Chernay.                                        at the property that also use TransAct’s Epic
reward the player, on the spot, with the type          “Coupon Layout Generator is an easy        950 printer.
of coupon the player’s interested in.             software tool to allow them to make a               “We believe it’s a slam dunk,” Kevin
    “By talking to the customer the casino        library of coupons. That’s sent to Epicentral   O’Sullivan, Foxwoods’ Senior Vice President
host can adjust the coupon offer issued. If       Server Manager where a library of coupons       of Gaming said on the eve of G2E. An
the host thinks coupons for a complimentary       is stored and can be managed, distributed       important element in persuading Foxwoods
dinner would be appropriate but finds             and provided with security features, so that    and in likelihood other properties to adopt
during conversation with the player that          for example the right customer has access to    Epicentral is its competitive pricing.
he or she has just eaten, then they can offer     the right level of couponing. The system also       “We’ve said to the industry, ‘We know
show tickets instead. The host uses the hand      keeps track of those coupons.”                  times are tough for casinos in the States’,
held computer to print the coupon from the                                                        explains Ms Chernay.
slot machine there and then. Or you might                                                             “Everyone is trying to leverage their
want the player to play a little bit longer, so                                                   investment. We want to give them a tool
you enter them for a slot tournament,” adds          “Epicentral keeps the                        to have their players play longer, but we
Ms Chernay.                                           host with the player,                       also want to do it in a really cost-effective
    “Epicentral keeps the host with the            communicating with them,                       manner. So we’ve gone on a daily fee model,
player, communicating with them, versus                                                           so there’s little capital expenditure up front.
running back of house to get a comp or to
                                                      versus running back                         We’ll use that model in Asia Pacific also,
pick up a pre-printed coupon that might not         of house to get a comp                        including Macau.
be relevant.                                              or to pick up                               “Even if an operator has old, legacy,
    “The casino host can even be talking                                                          printers from our competition, we will be
to one player in one location, and send
                                                   a pre-printed coupon that                      happy to take those out and put the Epic 950
an instruction wirelessly and remotely to           might not be relevant.”                       in on a daily fee model.”
a machine used by another player across
the floor, to print a coupon for that other
player. All the host has to do is select the           A crucial feature of the Epicentral
asset number of the device you wish to print      coupon system is that it works with
from,” she explains.                              TransAct’s existing and widely used Epic
                                                  950® printer. All it needs to communicate
                                                  with the printer is ServerPort™. The
                                                  ServerPort device is easily added and
                                                  eliminates any new programming or
                                                  resetting of the Internet Protocol address
                                                  if the printer is removed or changed.
    The ‘back of house’ parts of Epicentral       ServerPort allows casinos to tie the IP
that allow the casino host to stay front of       address to the slot machine.
house on the floor–making the connection               “We’re simply asking customers to
with the players and giving players               leverage the investment they have
appropriate incentives to play consistently       already made with their existing
and for longer–is the Epicentral Coupon           TransAct Epic 950 printers,” states
Layout Generator and the Epicentral Server        Tracey Chernay.
Manager.                                               “We’ve said all along that the
                                                  950 is dual port and will support
Coupon design                                     coupon printing. So customers
    Epicentral Coupon Layout Generator            like Wynn, Harrah’s etc that made
allows the casino’s marketing team easily         the investment in the Epic 950,
to design and save on a computer desktop          now, with a simple upgrade–
any number of coupons or promotions to            ServerPort–can upgrade
be used later on the slot floor. The user can     their existing printer.
import logos or other graphics onto the           They don’t have to
                                                                                                               January 2011 | INSIDE ASIAN GAMING   33
  TransAct




      The desktop interface on Epicentral
  Server Manager allows casino staff to set
  the parameters for rewards and coupon
  issuance.
      “If I’m back of house and looking at my
  casino management system, I may see I’ve
  got a hot player and want to comp him,”
  explains Tracey Chernay.
      “I can set a date for those promotions
  to be activated; I can add a barcode that’s
  linked back to my restaurant and point
  of sale system. There’s any number of
  selections I can make, whether it’s in Las
  Vegas for a show such as Blue Man Group,
  or for a show or event in Macau. I as the
  casino management choose the appropriate
  coupon for the appropriate player.”

  Leveraging casino infrastructure                 TransAct’s Andrew Hanley and Tracey Chernay at the Epicentral product display during G2E 2010.
       Epicentral can be applied to uncarded
  as well as carded players, by setting triggers   in their casino marketing system, in their                   “Some other suppliers involved in
  for rewards via the Server Manager interface.    restaurants, in their point of sale system, and         coupon generation systems are actually
  But TransAct points out that Epicentral’s        in show ticketing. So we’re saying ‘We’re not           building a separate database to reward
  ability to use a casino’s existing database      going to duplicate that system’.                        players. We’re saying ‘Just link into your
  ensures operators aren’t being asked to pay           “We’re simply going to provide an open             existing system’. What TransAct does is
  twice for infrastructure.                        applications programming interface (API)                provide the final mile on the journey
       “We’re simply asking casinos to leverage    for those systems to interact with Epicentral.          to connect the player with the coupon
  the infrastructure that they’ve already made     It’s similar to an iPhone environment where             incentive. It’s an innovative approach and
  investments in,” states Tracey Chernay.          applications can be written to the server.              the casinos are responding very positively to
       “They have already made a big investment    That’s the connectivity part.                           it, and we’re excited about its prospects.”




                                               A Sure Bet




                        Log onto www.asgam.com for the latest industry intelligence and a subscription
34 INSIDE ASIAN GAMING | January 2011    to our digital edition—all absolutely free
  ATRONIC




      HOT Offers, WiLD Times
               ATRONIC’s new multi-game and linked gaming products are due to launch
                                     in Asian casinos very soon




  A
          TRONIC’s new multi-game offer
          diversity™ launched in Macau at the
          turn of the year. It will be followed
  by the regional launch on a trial basis of
  the company’s new linked gaming concept
  CASH FEVER™ HOT & WiLD.
      “We will have the diversity multi-game
  in Macau by the end of 2010. And by early
  2011 we will trial our linked gaming concept
  HOT & WiLD throughout Asia,” Sylvia Dietz,
  Managing Director and Executive Director
  Marketing for ATRONIC International told
  Inside Asian Gaming at the recent G2E show
  in Las Vegas.
      HOT & WiLD and diversity will be
  delivered via ATRONIC’s new OXYGEN™
  cabinets in either upright or slant version.
  There are also new core games for the
  OXYGEN cabinet, including Sheherazade.
  On that game the player can actually choose
  the win volatility level using a virtual slider
  control on the cabinet screen.




                                                    packaged in themed suites, allowing                  “There are ‘Line Action’ which are multi-
                                                    players to select their preferred game           line entertainment games with a lot of bonus
                                                    type and with it the volatility from a single    features but not necessarily very volatile. We
                                                    gaming machine.                                  also have ‘Thriller Jackpots’. That’s unique.
                                                        With 22-inch dual screens, diversity’s       We’re the only manufacturer offering a
                                                    reel strips are larger and easier to see         multi-level progressive on a multi-game. We
                                                    than ever. A new simplified button panel         also have `Classic Slots´. These are low-line
                                                    also maximises player comfort and                rather high stake games. Furthermore, we
                                                    convenience. Featuring suites of up to           have something called ‘No Limits’ for high
                                                    ten games with top performing games              gamblers, featuring the game `Triple Way Hi-
                                                    including     standalone        progressives,    Lo.`” No Limits doesn’t use reels, but is instead
                                                    diversity provides variety in space-limited      a next number ‘higher or lower’ game.
                                                    venues, extends play and profit-per-                 “It’s an out of the box concept and
                                                    customer and attracts new players.               something completely new,” explains
                                                                                                     Sylvia Dietz.
  Sylvia Dietz, Managing Director and Executive     Diverse offer                                        As well as player-selectable language
  Director Marketing, ATRONIC International              “Diversity has ten different games          options, diversity offers players a speed
                                                    structured in four different categories so the   button to increase reel spinning speed, plus
     The diversity collection features brand-       player can easily find the type of games they    a flexible gamble feature, allowing players
  new and top-ranking ATRONIC games                 like,” explains Sylvia Dietz.                    to wager only a portion of each win, and
36 INSIDE ASIAN GAMING | January 2011
                                                                                                                                           ATRONIC




setting a wager amount for future wins with
the auto gamble feature.




HOT & WiLD
     Based on the popular CASH FEVER
progressive link, HOT & WiLD is ATRONIC’s
latest four-level progressive link with new
features and even more bonus action. By
activating the bonus bet, players can double
their chances of entering the CASH FEVER
Bonus during each and every wager.
     “The new linked gaming concept on
the new OXYGEN cabinet is a four-level
progressive available in two versions—either
as a single game on one cabinet, or in a multi-
game format where you have four different
titles and the player can choose. The player
can easily get the pay table information for
the respective game. All the games have the
HOT & WiLD bonus, which is linked,” explains
Sylvia Dietz.



                                                  DOGGIE CASH—an addition to ATRONIC’s multi-level progressive link catalogue


                                                       “You need three symbols for the bonus.          based on our sister company SPIELO’s
                                                  If you have two then the fourth reel will have       prodiGi Vu™ cabinet,” explains Sylvia Dietz.
                                                  a free respin as an additional chance to get             “It really saved us a lot of development
                                                  into the bonus. In the bonus you get a certain       costs because we didn’t have to start
                                                  number of bonus games. During those                  from scratch and were able to start from a
                                                  special bonus games you earn ‘temperature            cabinet design and then modify it. Our new
                                                  points’ where a thermometer on the screen            generation of sensys EP™ platform is also
                                                  rises. At the end of the bonus you win               based on SPIELO’s platform, modified for the
                                                  all progressive levels you unlocked with             casino market. It helped us tremendously
                                                  earned temperature points.” [The ‘hotter’ the        and pushed us forward in our product roll
                                                  thermometer the more progressive levels              out and product portfolio.”
                                                  are unlocked.]

                                                  OXYGEN™                                              DOGGIE CASH™
                                                      The OXYGEN cabinet hardware is                       DOGGIE CASH has been installed on a
                                                  compatible with the Gaming Standards                 number of cruise ships in Asia. It had been
                                                  Association’s G2S protocols, meaning it              in operation for three months at the time
                                                  supports all major casino management                 IAG went to press, with what the company
                                                  systems and player tracking systems.                 describes as “very positive performance and
                                                  OXYGEN also has dual 22-inch TFT [thin-              feedback. Offered on the popular e²™ cabinet,
                                                  film transistor] screens for excellent image         DOGGIE CASH is an addition to ATRONIC‘s
                                                  quality, as well as advanced ergonomics for          multi-level progessive links, and features
                                                  player comfort. ATRONIC benefited from the           the cute dogs from the internationally
                                                  scale and scope of research and development          recognised brand, the Artlist Collection’s
                                                  available across the Lottomatica Group when          “THE DOG”. On top of the four supporting
Upright version of ATRONIC’S new OXYGEN cabinet   developing OXYGEN.                                   game titles, this multi-level progressive
                                                      “The OXYGEN cabinet family is designed           features two bonus rounds: the Mystery Dog
                                                                                                                    January 2011 | INSIDE ASIAN GAMING   37
  ATRONIC




  Bonus and the DOGGIE CASH Bonus.                  base game or free games with any 5 of a
                                                    kind win combination, provided players
  Mystery dog bonus                                 make a maximum bet on each line. The high
      The Mystery Dog Bonus can be triggered        number of progressive jackpot levels, easy-
  randomly after every base game or every           to-understand rules, and high progressive
  single free game and therefore can be             hit frequency should appeal especially to
  triggered multiple times during one free          players in Asian markets.
  game session. The player may either win                Two new supporting titles have been
  a mystery credit prize or a DOGGIE CASH           created for this link, all based on proven
  Bonus trigger.                                    maths systems: Magic 5‘s Big City and Magic
      The DOGGIE CASH Bonus can be                  5‘s Fortune. Although the look of the symbols
  triggered during the base game or the free        is different in both games, the game rules
  games by either the Mystery Dog Bonus or          are exactly the same.
  the appearance of the letters “D“, “O“, and “G“
  on reels two, three and four. On the bottom       Special wild functionality
  screen players will be asked to choose one            Heart symbols substitute for diamond
  of six dogs. The chosen dog will then move        symbols and the diamond symbols substitute
  to the upper screen and will be placed next       for heart symbols, leading to mixed ‘red’
  to one of the four progressive jackpot levels.    wins. Club symbols substitute for spade
  Once a jackpot level has any three dogs, the      symbols and spade symbols substitute for
  player wins that jackpot level.                   club symbols, leading to mixed ‘black’ wins.

  Magic 5‘s™                                        Free game bonus
      Magic 5‘s is another addition to                  Three, four, or five bell symbols
  ATRONIC‘s multi-level progessive links on         trigger the free game bonus, awarding           STARGATE SG-1 multi-bonus progressive link
  the e²™ cabinet, featuring eight progressive      15, 25, or 50 free games, respectively. The
  levels. Each level can be won during the          bonus can be re-triggered during the free       games. Up to 300 free games can be won
                                                                                                    during one session.

                                                                                                    Progressive trigger
                                                                                                        Each natural five-of-a-kind win triggers
                                                                                                    one of the progressive jackpot levels, where
                                                                                                    the lowest symbol (K) triggers the lowest
                                                                                                    jackpot, and the highest symbol (Jackpot)
                                                                                                    triggers the jackpot with the highest value.
                                                                                                    The jackpot values appear on the top screen
                                                                                                    and are visible at any time.

                                                                                                    STARGATE SG-1™
                                                                                                        ATRONIC´s multi-bonus progressive link
                                                                                                    STARGATE SG-1™, themed on the popular
                                                                                                    television series, has been celebrating
                                                                                                    a strong debut at several casinos across
                                                                                                    Europe, Africa and Latin America and has also
                                                                                                    had success in Malaysia and the Philippines.
                                                                                                    STARGATE SG-1 is available on the premium
                                                                                                    double screen e²™ cabinet, and features an
                                                                                                    eye-catching merchandising package to
                                                                                                    draw players in.
                                                                                                        “We have experienced success with
                                                                                                    STARGATE SG-1 in Malaysia and the
                                                                                                    Philippines. With themed games it’s all about
                                                                                                    the game concept and mathematics,” states
                                                                                                    Sylvia Dietz.
                                                                                                        “There’s no use in purchasing a strong
                                                                                                    brand and then putting a weak game
                                                                                                    underneath it because that simply doesn’t
  Magic 5‘s multi-level progressive link                                                            work.”
38 INSIDE ASIAN GAMING | January 2011
  Wide Area Networks




                                        Life Changer
               Wide area networks are set to spread across Asia, predicts Weike Gaming
                                  Technology CEO David Kinsman



  W
             hat sum would constitute a truly      (IGT). The largest ever Megabucks jackpot
             ‘life changing’ jackpot in Macau?     was US$39.7 million, awarded in 2003 at a
                   On 20th November, the winner    machine in The Excalibur Hotel and Casino.
  of Macau’s biggest ever 20¢ Hyperlink                In Nevada, Megabucks and Aristocrat’s
  progressive jackpot walked away with over        Millioni$er slot machines offer jackpots that
  HK$7 million (US$897,436 million) in cash.       accrue over hundreds of machines located
  Considering property prices in southern          across multiple properties. The machines are
  China and Hong Kong—the prevailing               also owned and operated on a participation
  source markets for Macau casino patrons—         basis by their respective manufacturers.
  that sum may be regarded more as mortgage        In Macau, there are no wide area jackpots
  relief than life changing.                       operating between any of the 33 casinos or
       Indisputably life changing is the minimum   the handful of small but popular slot clubs,
  US$10 million wide area progressive jackpot      and the slot manufacturers have thus far not
  paid out by any one of the hundreds of           been able to operate their machines on a
  Megabucks slot machines operated across          participation basis in the city.
  Nevada by International Game Technology              Although Macau’s six casino operators
40 INSIDE ASIAN GAMING | January 2011
                                                                                                                      Wide Area Networks




                                                                                                    sprawling integrated resorts, Resorts World
                                                                                                    Sentosa and Marina Bay Sands. Mr Kinsman
                                                                                                    argues wide area systems offer the clubs a
                                                   Indisputably life changing is                    way “to be more competitive against the
                                                     the minimum US$10 million                      casinos.” He points out that “since the IRs
                                                          wide area progressive                     opened, the clubs using Weike systems have
                                                                                                    fared much better than the industry average.
                                                       jackpot paid out by any
                                                                                                    In other words, they haven’t dropped as
                                                         one of the hundreds of                     much business as the other clubs.”
                                                     Megabucks slot machines
                                                      operated across Nevada                        Asia going wide
                                                                                                         Asia has the opportunity to be a pioneer
                                                         by International Game                      in the adoption of wide area systems.
                                                               Technology (IGT).                    Notably, although Megabucks offers a
                                                                                                    wide area jackpot across Nevada, none of
                                                                                                    the properties in Las Vegas utilise full wide
                                                                                                    area systems, “even though companies like
are unlikely to cooperate to offer a joint          than offer life-changing jackpots. “They        MGM and Harrah’s operate multiple sites,
wide area jackpot, some of the operators            cover everything from player tracking,          and it would be a perfect opportunity for
could offer significantly more life changing        monitoring, accounting, player rewards,         them,” says Mr Kinsman. “The US is not an
jackpots simply by linking up their own             TITO, etc,” explains Mr Kinsman. “So they run   early adopter when it comes to available
properties; notably, SJM, which provides the        everything on a wide area basis. The benefit    technology in the gaming industry.”
licenses for twenty of the casinos, Melco-          of that is, take someone like SJM in Macau,          Last month, Weike installed a wide area
Crown Entertainment, which operates not             or Pagcor [the Philippine Amusement and         system across four Singapore clubs run by
only three casinos but also half a dozen            Gaming Corporation] in the Philippines—it       the Home Team Group. It is also set to supply
Mocha Clubs slot venues, and Sands China,           means one card can be utilised across their     the first wide area system in Malaysia in the
which runs three casinos, including the             entire network.”                                first quarter of 2011.
mass-market gaming meccas of Sands and                   Weike has not only developed a                  Although each of Malaysia’s 228
Venetian Macao.                                     complete wide area system, but also has had     slot clubs is limited to a maximum of 15
     Linking multiple sites requires no             it running live without a glitch in Singapore   machines (which generate a rumoured
additional infrastructure, and can be               since 1st December 2009, linking the five       US$3,000 on average per day), there are
done reliably via the standard telecoms             sites run by NTUC, the city-state’s largest     large groups in the market that run up
infrastructure available in all Asian countries.    slot club operating group. Singapore’s slot     to 40 of the clubs, and they could derive
“Any country that has ATMs is a country where       clubs, which are limited to a maximum 40        significant advantages by linking their
you can run wide area networks without              machines per venue, have seen revenues          various sites. Mr Kinsman points out: “At
any problem,” explains David Kinsman,               plunge following the recent opening of the      the moment, Malaysian clubs are most
CEO of Singapore-based gaming machine
and systems provider, Weike Gaming
Technology. Although a wide area jackpot
can be “extremely motivating,” according to
Mr Kinsman, it must be “properly marketed
and well strategised.”
     Megabucks created a sensation following
its launch in 1986, owing largely to IGT’s
supporting PR efforts. The game’s popularity
has waned in recent years, however, as
players realise it offers a significantly lower
RTP (return to player) than most other
machines. Part of the reason for that is
the Megabucks machines are operated
on a participation basis, necessitating a
significant portion of the proceeds to go to
IGT. Mr Kinsman points out that if a casino or
slot venue operator runs its own wide area
jackpot, it can return more to players.

Wider benefits
    Wide Area Systems can do much more              Wide area potential—Mocha Clubs

                                                                                                                January 2011 | INSIDE ASIAN GAMING   41
  Wide Area Networks




                                                                                                           by looking at wide area capacity.”
                                                                                                                Meanwhile, in the Philippines, slots at
                                                                                                           Pagcor run sites have fared poorly compared
                                                                                                           to those at venues run by private VIP club
                                                                                                           operators and casino licensees—including
                                                                                                           the recently opened Resorts World Manila.
                                                                                                           Mr Kinsman believes Pagcor can improve its
                                                                                                           relative performance by linking up the 5,000
                                                                                                           plus machines it operates in various venues
                                                                                                           across the country.
                                                                                                                “The reality is Pagcor is missing out on
                                                                                                           revenue because their machines are not
                                                                                                           doing the figures per day that compete with
                                                                                                           say locations like Resorts World Manila. The
                                                                                                           reasons for that are they are not running
                                                                                                           TITO [it’s still coin-in in most places], they’re
                                                                                                           not running player tracking. What they’ve
                                                                                                           got to do is be able to offer substantial
                                                                                                           comparative, or better, promotions and
  David Kinsman                                                                                            marketing to players, which a wide area
                                                                                                           network would enable them to do. That
  probably the most aggressive promoters                “Another group that has potential to               ability to take one card and walk from one
  in all of Asia—extremely aggressive.              do this [in Macau] is Mocha. A multiple site           site to another anywhere across a territory is
  They’re constantly chasing each other with        operation where they’ve got the ability to             very attractive to a player. It is the ultimate
  high level promotions and really working          start to push their business to the next level         opportunity to lock in loyalty.”
  hard on it. One of the benefits wide area
  networks bring is the larger groups will be
  able to run promotions on a larger basis
  so you can give away more, and the prizes
  become bigger and much more substantial.
  It takes the pressure off single sites. You can
  still have activities running at single sites,
  which is linked to the system, but it takes
  a lot of that pressure away and gives you a
  focus on large marketing incentives which
  you can run over wide area networks, which
  become much more attractive for players.”
       Mr Kinsman also anticipates the roll
  out of wide area networks in Macau and
  the Philippines. In Macau, “SJM is a perfect
  example of a good potential wide area
  operator because they’re in control of their
  own sites and SJM clubs, like the Canidrome
  the Jockey Club, etc. They’ve most probably
  got a couple of thousand machines. They’re
  in a position where they can run substantial
  wide area activity, which can make your           Slots at the recently opened Resorts World Manila have been outperforming machines at Pagcor-run sites by
  business very attractive for players.             a wide margin




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42 INSIDE ASIAN GAMING | January 2011
  Briefs




  Regional Briefs                                                           Sands China says it is ‘nearing approval’ on sale of Cotai
                                                                            apartment co-op shares
                                                                                Sands China Ltd announced it has received a letter from the Macau
                                                                            Land, Public Works and Transport Bureau which its Macau counsel
  LVS claims former Sands China CEO discussed Cotai deal                    advises should clear the way for the company to start preparing for
  with Harrah’s                                                             the sale of shares in co-op fashion to prospective buyers interested
       Former Sands China chief CEO                                         in having a Four Seasons-branded apartment at the Cotai Strip in
  Steve Jacobs negotiated a deal                                            Macau. The letter states that “the process is at its final proceeding”
  with rival US gaming operator                                             and that after its approval the government will provide the company
  Harrah’s Entertainment on Cotai                                           a draft contract finalizing the approval process. The draft contract is
  development sites. The revelation                                         also expected to be issued shortly.
  comes from the termination letter                                             “We truly appreciate the government’s diligence in addressing this
  sent to Jacobs, which was included                                        matter and we are optimistic that a resolution could be forthcoming
  as evidence in a wrongful dismissal                                       very quickly,” said Sands China Chairman Sheldon Adelson. “The
  lawsuit filed by the executive.                                           company has been inquiring of prospective buyers over many
       In October, Jacobs filed a lawsuit                                   months and has accelerated the inquiries to ascertain the viability of
  against Las Vegas Sands Corp (LVS),                                       a concentrated sales effort starting after the first of the year.”
  the parent company of Sands China,                                            “The reaction from prospective buyers is very positive and
  claiming he was terminated in July Steve Jacobs                           company management is optimistic that our anticipated pricing will
  after disputes with Sheldon Adelson,                                      be well-received,” he concluded.
  chairman of both LVS and Sands China. The former CEO also accuses
  Mr Adelson of trying to pressure Macau Government officials.
       Last month, LVS responded by asking for the lawsuit to be            New Thai-Cambodian spat could hurt border casinos
  dropped. According to the company’s motion, quoted by newspaper                Fresh diplomatic tension
  Las Vegas Sun, Mr Jacobs was fired for working on unauthorised            between Cambodia and Thailand
  deals and repeatedly violating company policy.                            could create problems for the
       One of the accusations is that Jacobs negotiated an                  casinos in the Cambodian border
  unspecified deal with Harrah’s for certain Cotai development              town of Poipet.
  plots, which could be site 3 or sites 7 and 8. The Government                  During a previous row
  recently rejected Sands China’s application for the concession            between the two countries in
  of plots 7 and 8. Harrah’s is the only major US gaming operator           November, cross-border trade
                                                                                                                 The Poipet border crossing
  with no presence in Macau and has repeatedly shown interest in            was disrupted and the number of
  entering the local market.                                                gamblers travelling from Thailand into Poipet fell sharply, according
       The former CEO is also accused of signing an agreement with          to a report at the time in the Bangkok Post.
  Playboy before being authorised to do so. The Playboy Club Macao               In the latest incident last month, Cambodia said it had arrested
  opened its doors at Sands Macao in November, while a 30,000 square-       a Thai ruling party politician and six others whom it accused of
  feet Playboy Mansion is slated for 2012 on Cotai plots 5 and 6.           trespassing in a disputed border area. A Cambodian government
       According to the termination letter, Jacobs entered negotiations     spokesman said the seven would be charged with illegally entering
  and signed deals with hotel operator Four Seasons as well without         Cambodian territory.
  prior authorisation. LVS’ second Cotai resort, opened in 2008, includes        Thai Democrat Party lawmaker Panich Vikitsreth was detained
  a Four Seasons hotel and branded serviced-apartments.                     along with a group of journalists and members of the royalist ‘Yellow
       The company also only knew about negotiations with                   Shirt’ movement while inspecting contested territory from Thailand’s
  entertainment giant Cirque du Soleil midway through the process,          eastern Sa Kaeo province. Poipet is just over the border in Cambodia.
  the motion says. Cirque du Soleil’s permanent show ZAIA opened at         The town principally caters to Thai gamblers who cannot legally
  the Venetian resort in July 2008 in a custom-built theatre—a MOP 1.2      engage in casino gambling in their own country.
  billion (US$150 million) investment.                                           Relations between the two countries have been strained
       Other reasons mentioned are: disagreeing in public with              following a series of deadly border clashes in July 2008 over land
  Mr Adelson’s position on the growth prospects for Sands China;            surrounding the 11th century Preah Vihear temple after it was
  negotiating “arrangements” for Cotai plots 5 and 6 without approval;      granted UN World Heritage status. Thailand was outraged when
  and commissioning a brand study for those sites without informing         Cambodia hired ousted former Thai premier Thaksin Shinawatra—a
  the board.                                                                hero to many of Thailand’s opposition ‘Red Shirts’—as an economic
       Attorneys for LVS also claimed Mr Jacobs’ employer was               adviser in November 2009.
  Venetian Macao, so any dispute should be resolved within
  Macau. The executive’s suit “is a strategic and calculated effort
  to mislead this court,” LVS said. “There is the potential that if         Stanley Ho steps aside to let wife take SJM reins
  Venetian Macao is not joined in this proceeding, it would be the             Macau casino tycoon Stanley Ho has relinquished his role as
  target of future, duplicative litigation.”                                head of Macau casino operator Sociedade de Jogos de Macau (SJM)

44 INSIDE ASIAN GAMING | January 2011
                                                                                                                                          Briefs




in favour of his fourth wife, Angela                                        relationship with Genting Group,” said John Gomes, managing
Leong, who took up the position                                             director of IGT Asia. “With this mix of the latest IGT games and our
of managing director of the                                                 cutting-edge sbX™ Experience Management System, Genting Group
company.                                                                    are able to offer the latest gaming experiences to their customers
     Ms Leong, who was also                                                 and differentiate themselves from their competition.”
appointed recently as managing                                                  The new IGT games were installed at Genting Starworld and
director of Hong Kong-listed SJM                                            Casino de Genting—the two casinos at Resorts World Genting (RWG)
Holdings, said this was “normal                                             in Malaysia. The new games include many well known standalone
procedure” due to 89-year-old                                               video slot games, such as 100 Wolves®, Crown of Egypt™, Desert
Stanley Ho’s continuing recovery                                            Spirit®, Diamond Queen™, Eastern Sun™, Lil Lady®, Mayan Riches®
from brain surgery after an                                                 and Unicorn Magic™, to name a few. Complementing these stand-
accident at home in the middle                                              alone video slot games are the renowned Wheel of Fortune® Super
of 2009 led to a lengthy hospital                                           Spin™ Video Slots as well as Star Wars™: The Empire Strikes Back™
stay. “It’s inconvenient for him to                                         Video Slots on the Trimline AVP® model.
frequently travel to Macau and                                                  The award-winning sbX™ Floor Manager was also installed at
handle company matters,” Ms Stanley Ho                                      RWG. The product is GSA compliant and provides RWG with unlimited
Leong was quoted by The Macau                                               access to IGT’s expansive game library. sbX™ Floor Manager allows
Post Daily as saying. “That is why I was appointed.”                        the casino to change themes quickly, offer the newest game content
     In December, Dr Ho transferred his entire direct 7% stake in SJM       and reduce downtime often associated with replacing games on the
Holdings—worth nearly HK$5 billion—to Ms Leong. The listed firm             casino floor.
is still 56% owned by unlisted Sociedade de Turismo e Diversoes de
Macau (STDM), in which Dr Ho retains a controlling 33.7% stake.
     According to a report in the South China Morning Post, Ms              AERL aims to double its Macau rooms
Leong is a director of SJM, SJM Holdings and STDM. In her private               VIP gaming promoter Asia
capacity, she announced plans in November to develop a 10.4                 Entertainment & Resources
billion pataca (US$1.3 billion) non-gaming resort and theme park            Ltd. (AERL) is aiming to
on Macau’s Cotai strip that may co-operate with SJM Holdings,               double the number of rooms
which is seeking to develop a casino on an adjacent plot. She is            it operates in Macau, the
also a Macau legislator. New World Development chairman Cheng               company’s chairman Man
Yu-tung, whose family controls a 10% stake in STDM, remains                 Pou Lam said in an interview
chairman of SJM and STDM.                                                   published in Forbes China
     Weeks before handing the SJM Holdings shares to Ms Leong, Dr           magazine.
Ho transferred an 11.55% stake in property and shipping firm Shun               AERL currently runs three
Tak Holdings—worth over HK$1 billion—to Hanika Realty Co.                   VIP rooms in local casinos,
     Hanika is controlled by Dr Ho’s second wife, Lucina Laam               mainly focused on high-stakes
King-ying, and five of their children (Pansy, Daisy, Maisy, Josie and       baccarat: one at The Venetian
Lawrence). The transfer made Hanika Shun Tak’s biggest single               Macao, one at MGM Macau
shareholder with an 18.4% stake.                                            and another at StarWorld.
     “Stanley Ho is dividing up his various listed companies among              AERL reported a two-
family members,” Deutsche Bank gaming analyst Karen Tang wrote              fold growth of its rolling
last month in a research note.                                              chip turnover last year, in       MGM Macau
     “We think this should lower uncertainties related to his succession    comparison with 2009.
plan,” she wrote.

                                                                            Macau gaming revenue up 58% in 2010
IGT installs 200 games and sbX™ Floor Manager at                                Gross gaming revenue in Macau soared 58% year on year in
Genting’s Malaysian casinos                                                 2010 to a record 188.34 billion patacas (US$23.51 billion), bolstered
    International      Game                                                 by a flood of gamblers from mainland China on continued strength
Technology (IGT), a leading                                                 in the Chinese economy.
supplier of slot machines and                                                   December gambling revenue jumped 66.4% to a record monthly
network systems, announced                                                  high of 18.883 billion patacas, the Macau Gaming Inspection and
it has installed an extensive                                               Coordination Bureau said on its website.
mix of 200 gaming machines                                                      According to a Reuters report, the stellar growth in revenue in
and sbX™ Floor Manager                                                      2010 contrasts with the 10% growth seen in 2009—even without
at the Genting Group’s                                                      the relaxation of visa restrictions on mainland Chinese visitors and
Malaysian-based casinos.                                                    a recent reminder from China’s premier Wen Jiabao for improved
    “We are excited to                                                      regulation and diversification of Macau’s economy away from
continue      our   successful Malaysia’s Genting – City of Entertainment   gambling.
                                                                                                                January 2011 | INSIDE ASIAN GAMING   45
  Briefs




  International Briefs
                                                                            of its regional casinos.
                                                                                 Speculation has surrounded the future of Ameristar since late
                                                                            2006, following the death of company founder Craig Neilsen.
                                                                                 Ameristar said the transaction committee of its board of directors
                                                                            is no longer considering a possible sale of the company.
  Cosmopolitan opens on the Las Vegas Strip                                      In the statement, the company didn’t shut the door on a
       The Cosmopolitan Las                                                 potential sale.
  Vegas was unveiled on 15th                                                     “The transaction committee will continue to explore other
  December, with a third of its                                             avenues to enhance stockholder value,” the company said.
  3,000 rooms opened, The rest
  are to follow this year.
       The US$3.9 billion dual-tower
  resort sits on the west side of the
  Las Vegas Strip between MGM
  Resorts’ Bellagio and CityCenter
  properties.
       According to a Reuters
  article, it has rooms with open air
  terraces that offer excellent views
  of Vegas landmarks like the faux
  Eiffel tower across the street in
  front of Caesars Entertainment’s
                                       The Cosmopolitan, Las Vegas
  Paris resort, or Bellagio’s famous
  dancing fountains next door.
       “People talk about the Strip and the views, but most of the
  buildings around here are so sealed off,” said Tammy Ayre, a visitor
  from Fort Myers, Florida. “This looks really open—you can actually
  get outside.”
       John Unwin, the former general manager of nearby Caesars             The Ameristar Casino Resort Spa Black Hawk, located in Black Hawk, Colorado
  Palace who is now chief executive at The Cosmopolitan, is betting
  that those terraces, and other novel touches, will draw customers he          JP Morgan gaming analyst Joe Greff told investors there are few
  dubs “the curious class.”                                                 buyers in the market for a casino company. “We interpret this to
       “We are bringing back a bit of personality to Las Vegas,” he         mean that there was little interest from third parties in buying the
  remarked at the ribbon-cutting ceremony.                                  entire company by either casino operators or private equity at prices
       The new resort—owned by Deutsche Bank after a 2008                   much higher than the US$18 (more or less) share price range,” Greff
  foreclosure—has a hip, modern style similar to the neighbouring           said in a research note.
  CityCenter, which has towers designed by “starchitects” like                  Ameristar operates eight casinos in seven regional markets,
  Cesar Pelli.                                                              including two small casinos in northern Nevada.
       Las Vegas has seen a string of high-profile casino openings over
  the past few years—CityCenter and its flagship Aria in 2009, Wynn
  Resorts Ltd’s Encore the year before and Las Vegas Sands Corp’s           Sports wagering has record month in Nevada
  Palazzo four years ago.                                                       Nevada casinos saw gaming revenues jump 11% year on year in
       All of them, along with the Wynn and Venetian resorts, Bellagio      October while casinos on the Strip reported a 16% increase.
  and now The Cosmopolitan, compete for the same high-net worth                 Sports book operators statewide collected gaming revenues of
  individuals and corporate customers.                                      US$35.7 million during the month, a jump of 113.2% compared with
       Such free-spending guests have, of course, become harder to find     October 2009.
  in the wake of the global financial crisis that brought some casino           The amount wagered on sports betting increased 9.4% to $352.9
  operators to the brink of bankruptcy, including The Cosmopolitan’s        million, the largest handle ever in the month of October.
  original developer.                                                           Gaming Control Board research analyst Mike Lawton had several
                                                                            reasons for the increases, according to a report in the Las Vegas
                                                                                                                 Review-Journal.
  Ameristar Casinos cancels sales plans                                                                              First, the hold percentage by
       The management of Las Vegas-based regional casino operator                                                sports book operators was slightly
  Ameristar Casinos cancelled plans to sell the company, saying in a                                             above 10%, when the average is
  brief statement “a sale is not in the best interests of the company and                                        usually 6.5%. Also, mass-market
  its stockholders at this time.”                                                                                customers seemed to be a little
       The company hired an investment bank and legal adviser in                                                 freer with their spending habits
  August to consider sales opportunities for the company or some                                                 during the month, especially on
46 INSIDE ASIAN GAMING | January 2011
                                                                                                                                         Briefs




college and professional football.                                        a final bill has been passed and signed into law,” said Boyd Gaming
    And, the wagering offerings, including the various in-game            spokesman David Strow. Las Vegas-based Boyd Gaming operates
betting options offered by different sports books, seemed to be           two resorts in New Jersey.
picking up interest.                                                           Penn National Gaming Inc operates Freehold Raceway in New
                                                                          Jersey and recently purchased the debt backed by the M Resort in
                                                                          Henderson for US$250 million. Joe Jaffoni, a spokesman with Penn
New Jersey sees progress on Internet gambling                             National, said it was a little too early in the process to comment, but
     Efforts to approve online gaming in New Jersey are moving            added that if it were legalised, “we would consider it.”
forward, reported the Las Vegas Review-Journal. The state Assembly             New Jersey lawmakers also approved a resolution that will
Regulatory Oversight and Gaming Committee has passed a dozen              ask voters next year to decide whether sports betting ought to be
different bills related to the state’s gambling and horse racing          legalised in New Jersey.
industries, including a bill that would legalise online gambling for           “Sports gaming is a bit of a harder sell. Poker is probably a good
residents of the state.                                                   place to start,” Mr Schwartz said. He cited the Professional and
     The online gambling bill, authored by Democratic state Senator       Amateur Sports Protection Act passed by Congress in 1992 as an
Raymond Lesniak, was expected to be voted on shortly. On 22nd             obstacle to legalising sports betting in New Jersey. The bill basically
November, the state Senate passed Sen. Lesniak’s Internet gambling        outlawed sports betting nationwide, except for sports lotteries in
bill by an overwhelming 29-5 margin.                                      Oregon, Delaware and Montana, as well as licensed sports books
     The New Jersey online gambling bill would not change the             in Nevada.
legality of online gaming for most of the United States. The bill would
set a tax rate of 15% on Internet gambling revenue in New Jersey.
     Sen. Lesniak said if legalised, online gambling would generate       LVS promotes Rob Goldstein to president of global
US$210 million to $250 million in annual gross revenues for the state.    gaming operations
He said the measure would also create 547 well-paying jobs, along             Las Vegas Sands Corp announced
with an additional 1,039 jobs in positions that supply products and       ob Goldstein has been promoted
services to online gaming companies.                                      to President of Global Gaming
     Gaming industry analysts and company executives believe New          Operations and will have overall
Jersey’s efforts could have an impact on the national debate over         responsibility for the company’s
online gambling.                                                          gaming operations in the US, Macau
     “If this passes it could be a tipping point for online gambling,”    and Singapore. Mr Goldstein joined
said David G. Schwartz, director for gaming research with the             the company in 1995 and is currently
University of Nevada Las Vegas.                                           its executive vice president and
     The bill continues to make its way through the Legislature           president of The Venetian and Palazzo
despite opposition from Caesars Entertainment Corp, formerly              resorts in Las Vegas.
Harrah’s Entertainment Inc., which has four casinos in New Jersey.            “Rob is one of the gaming
Caesars has come out in support of a federal measure, which is            industry’s most knowledgeable
stalled in Congress.                                                      executives and we have been
     “We are monitoring the progress of the legislation closely.          privileged to have him with us for so Rob Goldstein
However, it is premature for us to comment on potential plans before      many years. This new role will allow
                                                                          him to focus solely on this important segment of our business and,
                                                                          in turn, make our industry-leading gaming operations even more
                                                                          formidable,” said Las Vegas Sands Chairman and CEO Sheldon
                                                                          Adelson.
                                                                              “With our significant presence in Asia and as Las Vegas
                                                                          continues to rebound, this company has opportunities in front
                                                                          of it that are unprecedented in the industry. The company’s
                                                                          geographic advantages, especially our positioning in Asia,
                                                                          combined with the quality of our assets gives Las Vegas Sands
                                                                          the chance to do something very special over the next couple of
                                                                          years,” said Mr Goldstein.
                                                                              “As we are doing in other key areas of the company, Rob will
                                                                          be in a position to retain and attract other talented individuals
                                                                          and build an organization which will further enhance our current
                                                                          operations and ensure future growth,” said Michael Leven, the
                                                                          company’s President and Chief Operating Officer.
                                                                              Mr Goldstein’s new position is effective January 1, 2011 and he
                                                                          will report to Mr Leven. Company executives currently in charge of
                                                                          operations at The Venetian and Palazzo will report to Mr Leven while
                                                                          the company seeks Mr Goldstein’s successor.
                                                                                                               January 2011 | INSIDE ASIAN GAMING   47
  Events Calendar




  Events Calendar
  A more comprehensive events listing is available on our website, www.asgam.com.



          24 - 25 January, 2011                                                              1 - 3 March, 2011
          5th Annual Legal Gaming in Europe                                                  iGaming Asia Congress
          Conference                                                                         Grand Hyatt, Macau
          Millennium Gloucester Hotel in Kensington,                                         The region’s leading event for the interactive gaming community
                                                                                             will return to Macau for another year of learning, networking
          London                                                                             and entertainment. iGaming Asia Congress 2011 provides
          Focusing on the future strategy and new market penetration                         an opportunity to bring together Western technology and
          for gaming businesses all across Europe, the conference brings                     experience with the in-the-trenches knowledge of those doing
          together the European Commission, leading lawyers and leading                      business in Asia.
          lobbying operators.                                                                Website: http://www.beaconevents.com/2011/
          Website: http://www.bulletbusiness.com/gambling-                                              igamingasiacongress2011/
                    conference/


          25 - 27 January, 2011                                                              3 - 5 March, 2011
                                                                                             CIAE 2011
          ICE 2011
                                                                                             Pazhou Complex, Guangzhou
          Earls Court, London                                                                The 7th China International Game & Amusement Exhibition,
          ICE covers the entire spectrum of gaming in all its many forms. It                 featuring major suppliers from mainland China, as well as Japan,
          provides manufacturers and creators with the finest marketplace                    Korea and Taiwan.
          for their products and services, and attendees with a unique                       Website: http://www.chinaamusement.com/
          forum to discuss and exchange views and opinions about the
          global market
          Website: http://www.icetotallygaming.com/                                          13 - 14 April, 2011
                                                                                             FADJA 2011
          21 - 23 February, 2011                                                             Bogotá, Colombia
          6th World Game Protection Conference                                               The Andean Gaming Trade Show
                                                                                             Website: http://www.fadja.com
          M Resort, Las Vegas
          The premier industry event for casino game protection
          professionals.
          Website: http://www.worldgameprotection.com/




                           denotes events where Inside Asian Gaming will be available. To list your event here and on our website, email dom@asgam.com.

48 INSIDE ASIAN GAMING | January 2011
May 2010 | INSIDE ASIAN GAMING   49

				
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