Inside Asian Gaming

January 2008 | INSIDE ASIAN GAMING 43 Briefs to S$5.44 billion (US$3.8 billion) for the development of the Marina Bay Sands in Singapore. LVS President William Weidner stated, “We are pleased to have completed this important financing for our Marina Bay Sands de- velopment. The completion of this Singapore Dollar-denominated facility, which is the largest private Singapore Dollar-denominated financing in Singapore’s history, was accomplished on very favorable terms in a challenging global credit environment. “The vote of confidence we have received from the international financial community, including leading Singapore-based financial institutions, is a testament both to our track record of successful In- tegrated Resort development worldwide and to the significant eco- nomic benefits the Marina Bay Sands, South Asia’s first Integrated Re- sort,will deliver to the economy and people of Singapore,”continued Weidner.“Our Marina Bay Sands development remains on track for a late 2009 opening,and we look forward to continuing to work closely with the Singapore authorities as we complete the final design com- ponents of this iconic development in the coming months.” Hong Kong Jockey Club Faces Macau Threat According to an Associated Press report , the 124-year-old Hong Kong Jockey Club is facing a mounting threat from new casino de- velopment in Macau. The new competitors are draining away at least HK$20 billion (US$2.4 billion) a year in betting revenue, or 20% of its annual take, estimates Chief Executive Officer Winfried Engelbrecht-Bresges. “Our customers are definitely their prime targets,” Engelbrecht- Bresges said in an interview with The Associated Press. He said that Hong Kong gamblers account for about 40% of gaming revenue in Macau, just an hour away by high-speed hydrofoil ferry. The Jockey Club holds the monop- oly on legal gambling in Hong Kong. Horse racing has been part of Hong Kong almost since it was colonized by the British in 1841. The original Happy Valley Racecourse was built on malarial marshland five years later, and the Royal Hong Kong Jockey Club started taking bets in 1884.The “Roy- al” was dropped from the name after Britain returned Hong Kong to China in 1997. The club, which gives all its profits to charities and community projects, holds horse races on two tracks, takes bets on international soccer matches and overseas horse races and runs a lottery. It pays a heavy tax on betting profits—72.5% for horse racing and 50% for soccer. Last year, the club paid HK$12.6 billion (US$1.6 billion) in betting taxes and donated HK$1.1 billion (US$134.6) to its various causes. Local regulations limit horse racing to 78 days a year and off-track betting to 10 overseas races annually. Engelbrecht-Bresges is lobby- ing the government to loosen those rules, especially in response to increasing competition from Macau. Macau is not the only competitor for the racetrack’s 1.3 million gamblers. Illegal bookmakers siphon off business, offering higher odds because they don’t pay taxes or incur the cost of running horse races, said Rob Hart, an analyst with Morgan Stanley. The Jockey Club estimates the underground market for horse betting is between HK$50 billion to HK$60 billion (US$6.4 billion to US$7.7 billion) a year. That’s more than half the Jockey Club’s total revenues of HK$100 billion (US$12 billion) in 2007. Last year,the clubmanaged to reverse a slide in gaming revenues after the government allowed it to offer 10% rebates to gamblers los- ing on bets of HK$10,000 (US$1,280) or more, just as the illegal book- makers were doing. “We have hit the illegal market in a really hard way,”Engelbrecht- Bresges said,adding that there had been a significant increase in bets in the over HK$10,000 segment. Analysts agreed that the rise of Macau’s mega-casinos poses a new challenge,particularly in the battle for new customers.“It’s much harder to get people interested in horse racing, which is a specialized skill, than in playing baccarat, which is really based on a lot of luck,” said Grant Chum, an analyst at investment bank UBS. AsianLogic Launches on AIM Hong Kong-based online casino developer AsianLogic, founded by former Playtech executive Thomas Hall, made its initial public of- fering (IPO) to the London Stock Exchange in December, becoming the first major online gaming company to do so since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in America over a year ago. The Telegraph newspaper stated that the company floated with a market capitalization of US$245 million after raising US$81.17 mil- lion to fund its expansion plans, which include capitalizing on the massive popularity of betting in Asia and the growing penetration of the Internet. The company generates three quarters of its revenues from on- line casino games but also owns a small chain of sportsbetting shops in the Philippines.The majority of its customers are based in Malaysia and Singapore, where broadband Internet access is relatively wide- spread and gambling laws are more liberal. “I’ve been involved in a couple of listings and,in what was a pretty tough market, we got support from a wide range of institutions,”said Hall, Executive Vice Chairman for AsianLogic.“Asia is growing rapidly as a gaming environment both on land and online, and we are one of the first major online gaming groups in Asia.”