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Issues  |  MARCH 11, 2014 1:00PM

The regional casinos

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Genting Gaming In story banner 01In the second of the KiniBiz series on Genting and the regional casino competition we take a look at the regional casinos – their size and the potential competition to the Genting casinos.

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Genting’s own casino on the hill on the border between Selangor and Pahang is among the largest in South East Asia with a total of 10,000 rooms, over 426 table games and 3,140 machines. It is of course the only casino in Malaysia and sets to remain that way for some time to come. This is 49% owned by Genting Bhd through associate company Genting Malaysia.

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Probably the biggest competition in South East Asia to the Malaysian casino is from Singapore’s two casinos in Singapore, but one of the casinos there is itself owned by Genting Bhd’s 52%-owned Singapore subsidiary Genting Singapore, Resorts World Sentosa.

Genting’s competitor in Singapore is Marina Bay Sands. The waterfront recreational hub is operated by Las Vegas Sands, a US-based company that is responsible for the operation of 7 casinos worldwide. Three of these casinos are located in Macau, and three others are located in Las Vegas, with the remaining facility in Singapore. Marina Bay Sands has 2500 machines, as well as 700 table games, while Resorts World Sentosa, a subsidiary of Genting Singapore, has 2400 machines and 500 table games.

Laos has four casinos in its borders, with the first being the Dansavanh Nam Ngum Resort, which is 25% owned by the Laotian military and 75% by the Syuen Corporation, a local private property developer. The two entities had set up a joint-venture coined Lao-Syuen Development to manage the casino and resort. The slot machines are by Silver Heritage Limited, one of the growing casino groups in the Asia Pacific, and the casino has 150 machines and 60 table games. They are rather small compared  to the Singapore casinos.

 Savan Vegas Hotel and Casino

Also in Laos is the Savan Vegas Hotel and Casino, managed by Macau-based Sanum Investment Limited, which is also involved in development projects in Laos and Macau. THis facility has about 500 machines, as well as a variety of table games. One other Chinese-operated casino, the Kings Romans Casino, run by the King Romans (Dok Ngiew Kham) Group, has established in an area termed a “special economic zone”.

However, this special economic zone has met with opposition, as local farmers are fighting the land seizure. The land that was signed over to the Kings Romans Group for 99 years by the Lao government and would deny the farmers farmland that they have worked for generations.

The special economic zone casino earns its keep from players coming in droves from China, where gambling is illegal, except in Macau. The special economic zone, which will also boast an airport and industrial zone, is said to be a change in image to the Golden Triangle region, made famous by its past of a heroin and drug-running haven, by the Kings Romans Group to improve the lot of Laotian citizens, increasing their standards of living.

Asean neighbour Cambodia has a total of 14 casinos in its borders, with its attractiveness coming from the low value of the national currency, the Cambodian riel, which currently trades to the US dollar at 3965 riel. Most of the casinos in Cambodia are in Poipet, along a strip that is in between Thai and Cambodian immigration counters. The area thrives off Thai nationals who go there to gamble, as gambling is illegal in Thailand. This eases their travel to Poipet, as there would be no need to cross immigration.

Holiday Palace Hotel and ResortIn the Poipet area, most of the casinos are in a place known as Aranyapathet. The Holiday Palace Hotel and Resort is the largest there, with 70 tables and 300 machines. The same group also operates one other casino in the country, also under the Holiday Palace brand, for a total of 80 tables and 340 machines in the country. Aranyapathet is estimated to have a total of almost 1100 machines, and 540 table games spread out amongst its casinos.

Also of note is NagaWorld, a casino developed and operated by Hong Kong-listed, but Malaysian-founded NagaCorp, and is one of the most successful casinos in the country, with 1700 machines and 170 table games. This casino holds a monopoly on the Phnom Penh region. There are also plans for Malaysian Chen Lip Keong, the founder of NagaCorp, to introduce another casino to Cambodia, coined Naga2. Naga2 is slated to join NagaWorld between late 2015 to early 2016, and will add up to 300 table games and 500 machines.

The major player in the border market of Cambodia, according to Macau-based Inside Asian Gaming, is Entertainment Gaming Asia, a distributor and lessor of machine games around Cambodia and the Philippines, including 670 of NagaWorld’s machines. The company is a wholly-owned subsidiary of Melco International Development, which is listed on Hong Kong’s bourse. Entertainment Gaming Asia is the company behind Dreamworld Pailin, with 26 tables and 58 machines, as well as Dreamworld Poipet, a slots-only gaming hall with about 300 machines.

However, there is news that Entertainment Gaming Asia is considering stepping away from Dreamworld Pailin, due to crippling revenue and poor gamer numbers, as the venture struggles to lure gamers from across the Thai border, its target audience.

“EGA recorded a decrease of more than US$475,000 between the second quarter and third quarter of 2013 at Dreamworld Pailin.” noted Eddie Morton of the Phnom Penh Post. The venture itself had cost the gaming company US$2.5 million as the initial investment.

cambodia casino genericThere are also rumblings that Australia’s largest outlawed motorcycle club is looking to gain entry into the casino scene in Cambodia. According to the Herald Sun, the 1200-member strong Rebels have established a chapter in Cambodia, and are negotiating to buy a casino licence. The news portal had also noted that members of another major club, the Comancheros, were also showing interest in acquiring a casino licence there.

Myanmar also boasts its own casinos, split evenly between Tachilek and Thahtay Kyun Island. The largest of these is Treasure Island, located on Thahtay Kyun Island, with a small 22 table games and 130 machines. The other casino on Thahtay Kyun Island is the Andaman Club and Casino, with 25 table games of its own. In Tachilek is the Regina Entertainment Resort, with 30 machines and 12 table games, as well as the Allure Resort, with 133 machines and 16 table games.

Vietnam has seven casinos within its borders, with five of these operating in a small scale with a limit of 15 tables and 80 machines at each casino, one each in Hai Phong, Lao Cai, Da nang, and two in Quang Ninh, and two larger operations in Quang Nam and Ba Ria-Vung Tau provinces.

Ho Tram Strip The grandBa Ria-Vung Tau province’s casino is Ho Tram Strip, developed by Asian Coast Development Limited, a Canadian-based company, and operated by Asian Coast Development’s wholly-owned subsidiary Ho Tram Project Company Ltd. The casino is operated by Pinnacle Entertainment Incorporated, based in Nevada. Ho Tram Strip features 90 game tables, as well as 600 machines, with construction already begun for a second phase that will bring in another 90 tables to the nation’s limit of 180 tables, and another 2000 machines.

Quang Nam’s casino had initially hit a snag, when Genting had washed its hands of a proposed US$4 billion project in 2012, ostensibly due to the nation’s unwillingness to relax the laws currently banning local residents to enter any of the country’s gambling establishments. However, VinaCapital, the largest fund manager in Vietnam, notes that it has secured another partner for the project, but has not disclosed any names or identities.

Vietnam’s Politburo, however, has agreed to consider allowing Vietnamese to gamble, but only at the Van Don Specific Economic Zone, and only as a pilot basis. This casino is yet to be built, and the plan has attracted the interest of quite a few investors, such as Las Vegas Sands, NagaCorp, Penn National Gambling, and Genting Berhad. If the Vietnamese Politburo does accede to allowing local residents into casinos, Vietnam will likely be a country investors in the gaming sector will look out for.

PAGCORThe Philippines has casinos scattered across the archipelago, with the state-owned corporation Philippine Amusement and Gaming Corporation (PAGCOR) running a majority of the casinos under its own brand name, for a total of 13 casinos in the country, with upwards of 4500 machines, as well as more than 550 gaming tables. There are PAGCOR-run casinos in Manila, Makati, Angeles City, Pampanga, Olongapo, Tagaytay, Laoag, Cebu, Bacolod, and Davao. Manila has three facilities and Cebu has two, while the other locations have just the one PAGCOR-operated facility each.

Of note as well is the Solaire Resort and Casino was opened in March 2013 by shipping magnate Enrique Razon, the first of four planned for a Las Vegas-style complex called Entertainment City along a 120-hectare strip in Bay City. Razon joined the gaming fraternity as a 71% stakeholder of Bloomberry Resorts, which also functions as the casino operator.

Also there is Resorts World Manila, a joint venture between Philippine-based Alliance Global, and Genting Hong Kong. The casino of the resort runs a total of 1500 machines, as well as 300 table games, spread across three floors of the complex. The integrated facility had experienced a dip in 4Q13, likely due to the weakening peso. However, CIMB Investment Bank remains positive on the growth of the Philippines market, believing more market depth can be realised, while the opening of more integrated resorts should broaden the business.

One such example would be Melco Crown (Philippines) Resorts Corporation’s City of Dreams, Manila project, developed by the company and with its casino operated by Melco Crown Entertainment Leisure (Philippines) Corporation. CIMB expects this to be a catalyst for the casino sector in the country.

The Philippines gaming sector also missed its mark for the quarter, due to relations souring with China and Hong Kong, as families of eight Hong Kong tourists, who were killed during a bus hostage rescue in Manila in 2010, demanded an apology and compensation from the Philippine government, which has ruled out an apology, leading to tensions with Hong Kong and China.

This led to a sharp decline in gamers headed there, worsening an already shrinking pool in two ways: that tourists from China were headed to Macau instead, and that tourists from other countries headed to Macau as well, in fear of the same thing happening to them.

Macau-Galaxy-CasinoWhich leads to the Asian crown jewel of gaming, Macau, which boasts almost 40 casinos, spread across three areas, Cotai, Macau, and Taipa. Macau only allowed foreign gaming companies to establish facilities in its borders in 2002, but has had sanctioned casinos way back in 1962.

It was in that year that the government granted the Sociedade de Turismo e Diversoes de Macau, or the Society of Travelling and Entertainment of Macau Limited, the sole licence to operate casinos on the islands. The company’s subsidiary Sociedade de Jogos de Macau then proceeded to run over 20 casinos over those 40 years, allowing the owner of the company, Stanley Ho, a monopoly on the casino scene on Macau.

It was only after Macau was returned to China in 2001, and declared a Special Administration Zone, similar to Hong Kong, that policy was changed and foreign operators were allowed in, with Las Vegas Sands leading the way with the Sands Macau, which opened its doors in 2004, and broke even within its first year of operations.

Currently, the Sociedade de Jogos de Macau, through its holding company SJM Holdings, is managing 17 casinos in Macau, while other notable casino operators in the area include Las Vegas Sands, Galaxy Entertainment Group, MGM, and Wynn Resorts. All in, the entirety of Macau’s casino sector boasts upwards of 17 000 electronic gaming machines, as well as almost 6 000 gaming tables.

Macau is currently the world’s casino capital, as the sector’s FY13 results showed a 19% boost in revenue, to the tune of US$45 billion, compared to the Las Vegas Strip’s US$6.4 billion in FY13, up only 3%. According to the Wall Street Journal, analysts remain bullish on casino stocks in Asia, not to mention an analyst estimates that 20 new casinos will open in Asia over the next five years, as compared to the Las Vegas Strip, which is still struggling to recover from the financial crisis.

According to an analyst from a local research house, Macau has a hold on the lion’s share of the sector, and the analyst also described most of the markets in the region as fringe markets, with the exception of Singapore and the Philippines, which were labelled as up-and-coming markets.

While growth through the opening up of more casinos is clearly a plan moving forward for Genting, the competition is still going to be stiff. Size and location will play a big part in terms of determining the success of a new casino.

Yesterday: Genting feels the pressure

Tomorrow: Techy gamblers or gambling techies?



 
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