3 Editor and Publisher Kareem Jalal Director João Costeira Varela Business Development Manager Ricardo Carvalho Operations Manager Artur Sousa Contributors Octo Chang, Ben Lee, Karen Tang, Leanda Lee Photo Treatment Karen Yiu Graphic Designer Ricardo Borges Editorial Inside Asian Gaming is published by Must Read Publications Ltd Rua de S. Domingos, nr 16-i, Ed.“Hin Lei”7A - Macau Tel: (853) 6646 0795 For subscription enquiries, please email
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[email protected] or call Ricardo Carvalho on (853) 6682 8475 www.asgam.com Monopolies are ended with a view to bringing competition, along with new ideas and approaches to markets. Stanley Ho decried the “cutthroat competition” that has arisen in the wake of the ending of his 40-year casino monopoly in Macau. Yet competition has clearly enriched the local industry overall, and brought new approaches including the fostering of the long-ne- glected mass market and development of mega resorts featuring extensive non-gaming draws. The Paradise Group dominated South Korea’s casino industry for 38 years until, inspired by Macau, the government created a new state- run casino operator, which opened three venues under the Seven Luck brand last year. As in Macau, the arrival of competition eroded the hitherto industry leader’s market share in South Korea, with Paradise posting a 72% drop in operating profit in 2006. Meanwhile, Seven Luck has brought several new ideas and approaches to a market that faces major threats to its future prosperity. Inside Asian Gaming visited South Korea last month with two of those threats in mind. The first is South Korean casinos’ heavy reli- ance on Japanese gamblers, given Japan is expected to legalise casinos over the next 12-18 months. The second is the billions of dollars worth of investments currently being pursued around Asia – especially in Macau and Singapore – by major international casino resort developers. South Korea’s casinos are of relatively modest size and scope, and we wondered how they would be able to compete with the slew of glitzy new mega resorts which will soon appear across the region. Seven Luck CEO Jung-Sam Park offered the answer by pointing out the company’s intention to provide “a cultural experience,” rather than “just a place to gamble.”As Mr Park explains in Betting on Cul- ture on page 4,“So far, the casino industry in Asia has been focused on recreating the Las Vegas strip.” Seven Luck, on the other hand, “incorporates Asian culture into everything from door knobs to our customer-service spirit.” The new Seven Luck approach is a way for local casino operators across Asia to retain a niche despite the relentless advance of the likes of Las Vegas Sands Corp (LVS) in the region.“So far, the casino industry in Asia has been focused on recreating the Las Vegas strip,” observes Mr Park.The mega resorts will no doubt have mass ap- peal, but riding Venetian gondolas in Southern China will not be to everyone’s taste.Those seeking a more authentic cultural experience may opt for a boutique local property, provided the quality of facili- The Seoul Attraction ties and service are up to par. Mr Park contends Seven Luck’s focus on service could in fact put it ahead of major international operators. The international operators will adapt to local realities, however, particularly if they take on powerful Asian partners, as MGM MIRAGE has done in Macau. Inside Asian Gaming recently spoke to Terry Lanni, Chairman & CEO of MGM MIRAGE, at the opening ceremony of MGM GRAND Macau’s Recruitment Center, detailed on page 14.The experi- ence of its local partner, Pansy Ho, as well as the benefit of “having seen what works and what doesn’t” at preceding properties from LVS andWynn Resorts has led MGM MIRAGE to adopt a different approach in Macau from what it would at home.The MGM GRAND Macau resort is set to open in the fourth quarter of this year, but un- like MGM properties in Vegas,“we won’t have a significant entertain- ment component in the first phase of this operation,” revealed Mr Lanni.The resort will provide space for future addition of entertain- ment facilities because “I really do think it’s going to come. I just can’t predict when,”he added. MGM GRAND Macau will enter a fiercely competitive VIP gaming market, with junket commission rates having been pushed steadily higher by LVS andWynn Resorts.The US-based operators are now of- fering junket commission rates that barely offer room to cover their overheads, and with their superior facilities, are drawing customers in droves from smaller local operators.The “cutthroat” competition could see some locals resort to grey market tactics such as The Mul- tiplier, explained on page 12, in order to offer otherwise unfeasibly high commission rates. Mr Lanni argues that “cutting out the middle man”would end the junket commission rate wars, and says this could be achieved if the Chinese currency were to become freely convertible. Currently, the most important function of junkets to Macau is arranging credit for mainland Chinese customers, who are restricted from taking curren- cy out of their country.“I think you’re going to be dealing much more with individuals when people are allowed to take money legally out of China,” says Mr Lanni. While junkets have shown they will switch allegiances to the casino that offers them the highest commission, individuals are likely to be more concerned with the facilities and“soul” of where they choose to gamble. Kareem Jalal We crave your feedback. Please send your comments to
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