Inside Asian Gaming

47 International Briefs Atlantic City Revenue Falls Atlantic City recorded US$772.8 million in casino revenue for the first two months of this year, down 3.8% from the same period in 2006. The decline is attributed to the opening of new slot parlours in the adjacent Philadelphia area. Philadelphia Park Racetrack, in Bensa- lem Township, about 20 miles north of Philadelphia, opened a slots parlour on December 19 and Harrah’s Chester Casino and Racetrack opened on January 22. “It’s pretty clear that with the advent of 10,000 slot machines amassed at New Jersey’s border, it’s going to have a significant ef- fect,” said Joseph Weinert, senior vice president of Spectrum Gaming Group, a casino consulting firm.“I suspect we’re on the verge of see- ing a trend here with revenue declines.” Many industry observers say 2007 could be the first year that At- lantic City’s casino revenues decline. Revenues have increased every year since gambling was legalized in New Jersey in 1978. Trump May Sell Casinos Trump Entertainment Resorts, of which Donald Trump is chairman, announced it had retained Merrill Lynch to assist in identifying and evaluating capital structure, financing and other options, including a possible sale. Trump Entertainment is a gaming company that owns and oper- ates three properties:Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino, both on the Boardwalk in Atlantic City, and Trump Marina Hotel Casino, in Atlantic City’s Marina District. It is separate from Trump’s real estate and other holdings. The news that Trump had hired Merrill Lynch led to speculation that some or all the casinos would be put up for sale. Prudential Equity Group analyst Joel Simkins said in a client note on March 9 that Trump Entertainment could make a good fit for Am- eristar Casinos, Pinnacle Entertainment, Penn National Gaming or a private buyer.Mr Simkins sees Trump Entertainment having a difficult time in 2007 and 2008 due to new Pennsylvania slot parlours, Atlan- tic City smoking restrictions and a failed bid for a Philadelphia slot license. But Mr Simkins still views the company as an attractive target for a buyer interested in the Atlantic City market. Mobile Gambling to Soar The total value of bets placed worldwide on mobile phones will reach US$16 billion a year by 2011,according tomarket research analysts Ju- niper Research. Currently,US$1.35billiona year is spent globally atmo- bile casinos,mobile poker rooms,lotteries and sports betting services. The US crackdown on internet gambling had made 2006 a difficult year for the burgeoning industry, forcing many within the indus- try to readjust their focus and to consolidate in uncertain times. Juniper predicts that the biggest growth in mobile gambling will come from the sports betting and lotteries sectors, given the ease of use and simplicity of the products. Europe is the largest mobile gambling market in the world with US$665 million in bets placed in 2006, with the UK thought to be the location that could support the strongest growth in Europe. The Asia Pacific market is the region expected to show the most growth in mobile gambling revenue, from US$647 million in 2006 to US$6.7 billion by 2011. EU Court Opens Online Gaming in Italy The European Court of Justice ruled on March 6 that Italy could not bar gambling companies from other European Union nations from doing business with Italian citizens. The ruling could also force state- run monopolies in Germany and France to open up to competition. Italy had prosecuted three executives from Stanley Leisure under its criminal code for accepting bets without receiving authorization from Italian authorities.The three operated shops in Italy that allowed people to place bets with Stanley’s home office in Liverpool, UK. But the EU court ruled that Italy’s restrictions – which had been rescinded before the case was heard – violated the EU’s principles of freedom of establishment and the freedom to provide services. In the explanation behind its ruling the EU court did state, how- ever, that “moral, religious or cultural factors, as well as the morally and financially harmful consequences for the individual and for soci- ety associated with betting and gaming, may justify such restrictions (on gambling).” But if an EU country is going to restrict gambling competition on those grounds, they had better be prepared to make a solid case. “Those restrictions must nevertheless satisfy the conditions concern- ing their proportionality,” the court said. Italy had cited preventing criminal and fraudulent behaviour as the intent of the original law. European governments have said they want to maintain control over online gambling, but have stopped short of the approach in the US, where President Bush last year signed into law a prohibition on financial dealings with Internet gaming companies. 46 Amid the US crackdown, executives of several online gambling companies and related businesses have been arrested during stop- overs in the US. Most recently, the two founders of Neteller, an online payment system, Stephen Lawrence and John Lefebvre, were arrested and charged with money laundering. Meanwhile, France’s recent moves to restrict or ban certain forms of Internet gambling received confirmation with the news that that country’s authorities have summoned former 888 Holdings CEO John Anderson to an ‘interview’ connected to online gambling in France. 888 is the parent company of Pacific Poker,and while specifics regard- ing France’s interest in Anderson have not been released, the request continues France’s protectionist push, which mirrors efforts in the US. France’s move follows two similar events of recent months, including the September 2006 arrest of two Austrian Bwin executives, and the forced cancellation of the EPT Deauville poker event, which was to be held in February. Monaco seeks China’s Super-Rich Monaco’s Société des Bain de Mer, operator of the famed Casino de Monte Carlo, is reaching out to China’s high rollers with an aggressive global marketing campaign of complimentaries and free transporta- tion. Monaco has been sending representatives to the Far East to lure a select group of big spenders — those who may be expected to bet €1 million or more — who are based in Shanghai, Hong Kong, Canton and Beijing. The strategy was launched in response to disappointing volumes at Monaco’s tables, which reached only €123 million in recent months, and it appears to be paying off. Figures released by the principality’s Tourist Office reveal a growing presence of Chinese players, about 1,400 in 2006, an 11% increase over the previous year. India is another target market, said SBM, which also plans to send marketing reps to New Delhi, Mumbai and Bangalore, a centre of the subcontinent’s booming high-tech industry. The Monaco casino relies totally on foreign play. Citizens of the principality have been prohibited fromgambling there since the 19th century. Seminole Tribe Seals Hard Rock Deal The Seminole Tribe of Florida completed its US$965 million purchase of the Hard Rock cafes, hotels, casinos and music memorabilia from The Rank Group PLC on March 5 through a combination of a bond offering and an equity contribution from the tribe. It marks the tribe’s entry in the worldwide hospitality industry and gives the tribe’s gam- ing operations a foothold in states where gambling is legal. The pur- chase was first announced in December and approved by Rank Group shareholders in January. The Hard Rock business includes 124 Hard Rock Cafes, five Hard Rock Hotels, two Hard Rock Casino Hotels, two Hard Rock Live! concert venues and stakes in three unbranded hotels. It also fea- tures a collection of rock ‘n’ roll memorabilia that includes 70,000 pieces, including guitars owned by Jimi Hendrix and Eric Clapton. The Seminoles were the first Native American tribe to get into the gambling business, and it says the deal is an American tribe’s first pur- chase of a major international corporation. The tribe has about 3,300 members and owns and operates seven casinos in Florida, including Hard Rock Hotel and Casinos in Tampa and Hollywood. Before it entered the cigarette and gambling business, the tribe was mired in poverty. Today, more than 90% of the tribe’s budget is made up of gaming revenue, which stands at about US$500 million, according to court records cited by the South Florida Sun-Sentinel. Each tribal member receives a monthly dividend from operations. Revenue generated by the tribe’s businesses goes into education, health care and other services. The tribe already has plans to expand the business, with the num- ber of Hard Rock hotels to grow to 15 in the next three to four years. This year, Hard Rock plans to finish reconstruction of a hotel and ca- sino in Biloxi, Mississippi, that was damaged by Hurricane Katrina. It also plans to open a hotel in San Diego, begin development of a hotel and casino in Macau and start building condo-hotel properties at the Copper Mountain Resort in Colorado and in Palm Springs, California. Station Bid May Hold While a private equity group involving the founding family has in- creased its offer to take Station Casinos private,industry analysts say a follow-up bid that might drive the price higher is unlikely to come. The current bid is being made by a private equity partnership in- volving Los Angeles-based Colony Capital and Station Casinos Chair- man and Chief Executive Officer Frank Fertitta III, brother Lorenzo, the company president, and their sister, Delise Sartini, and her husband, Blake. Blake Sartini was the chief operating officer at Station Casinos be- fore leaving to form Golden Gaming. Colony Capital now owns the Las Vegas Hilton and other gaming properties around the country. Affiliates of Deutsche Bank and JPM- organ Chase are financing debt for the transaction. Station Casinos operates 16 properties in Southern Nevada with additional four undeveloped parcels covering 199 acres. It also has three parcels covering 192 acres in Reno.

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