ASIA E
by Daniel Macadam,
GamblingCompliance.com
very time a new casino resort opens up in South East Asia, gaming executives proclaim that it will be the next premier gaming and leisure destination in the region. In other words - the new Macau. Macau set off a domino effect across Asia in the last decade as other jurisdictions set out to emulate its successes. Led by Singapore, other Asian governments have eyed liberalisation of casino
policy as a revenue engine for tourist development. After seven years of revenue growth in Macau at a rate of 30 percent a year it is easy to
see why. Macau had the highest turnover of any global gaming market last year, including Las Vegas. Changes by Chinese authorities to visa rules and labour quotas have historically affected operators’ margins, although Goldman Sachs recently noted there is little fear that “the Chinese government is looking to cool it off.” The economic climate in China is another factor, including falling property prices. Analysts agree, though, that there is often a lag before economic changes on the Chinese mainland reach Macau. Deutsche Bank’s Karen Tang also sees possible cannibalisation of gaming revenues by Singapore’s two new integrated resorts (IRs). Genting’s Resort World Sentosa and Las Vegas Sands’ Marina Bay Sands both opened in Singapore in 2010. They pay lower taxes than the casinos in Macau but are under a more stringent regulatory structure. In Macau junkets control a vast majority of casino play, while in Singapore junket operators must undergo background checks and submit the personal details of high rolling players. There has been evidence, however, that the junkets are already finding ways to circumnavigate the restrictions. Another stipulation was that the casino operators build resorts that appeal to all types
of tourists. Goldman Sachs noted in June 2010 that “one negative” about Macau is that it is “a purely gambling market and shops, restaurants and entertainment continue to be viewed as secondary”. Ben Lee, management partner at IGamiX Management and Consulting, dismissed this analysis and drew a distinction between the Asian and American markets. He added: “If the same non gaming, convention business does not take off in Singapore, no doubt they will blame the market for not being ‘sophisticated’ enough”. Vietnam has also committed to allowing integrated resort projects after announcing
plans to legalise gambling in 2006. So far the Vietnamese government has only accepted casino developments with investment capital of over US$4bn, such as MGM Resort International’s US$4.5bn development on the Ho Tram Strip. It is likely that the
authorities set this multi-billion dollar threshold to encourage the construction of resorts of similar scale to those in Singapore or Macau’s Cotai Strip. Plans for a casino complex are afoot in the Philippines too. In 2008 state-owned Pagcor announced a US$15bn integrated resort project in Manila Bay, to compete with the Singaporean IRs. Pagcor currently has a dual role as operator and regulator in the Philippines, but the new government recently indicated that Pagcor would be privatised to address corruption concerns and increase revenue. For decades South Korea has used casinos to increase tourism, although some analysts
suggest that competition from the new Singaporean IRs could lead to a new wave of casino licences. There is currently only one casino, Kangwon Land, at which Korean citizens are allowed to gamble. In comparison there are 16 casinos open for foreigners in places such as Seoul, Incheon and Jeju Island. These are aimed specifically at gamblers in Japan and China, where there are currently bans on casinos. Most forms of gambling in Japan are either illegal or rigidly controlled. However, a
cross-party body in the Japanese Parliament (Diet) is currently working on proposals that would introduce a limited number of casinos across Japan. The working group is reportedly putting together a draft casino bill, which they aim to have completed by the autumn of 2010, although further delays are likely. As investors continue to search across South East Asia for the next Macau, interest in Japan remains high. Analysts are split, though, on the prospects for liberalisation there.
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