Inside Asian Gaming

inside asian gaming October 2015 24 chasing after a smaller pie, when you divide it up among places like the Philippines, Australia, Singapore, South Korea, so on a combined basis this is keeping the competitive pressure on.” As Brent Pirosch, who heads the Global Gaming Group of brokerage CB Richard Ellis, puts it, “It’s not just Las Vegas or Macau. We’re seeing a worldwide phenomenon.” The crash in stock prices in the summer and the devaluation of the yuan in August haven’t helped. June’s 57% decline in baccarat revenue capped a second quarter that saw the Strip’s take from the game fall 33.7% compared with the same period in 2014. July was down 20.8%, August was down 24%. More than $1 billion in volume was shed over those three months. Play was down 14% through August on a trailing 12-month basis, according to CBRE’s research. Hold was off almost 1.4%. “So those two things combine for pretty significant revenue declines,” says Mr Pirosch. Of course, a lot can change, no doubt a lot will, between now and the scheduled opening of Resorts World Las Vegas’ first phase in 2018. There will be 1,000 hotel rooms, the initial installment of a planned 3,000-3,500, a 4,000-seat theater, retail shopping, restaurants and nightlife venues, an aquarium, an observation deck and a 100,000-square-foot casino. There has been mention of a water park, a multiplex cinema, expansive MICE facilities and other attractions in subsequent phases. Media reports early on described a wonderland of Disney proportions replete with a Great Wall, a panda habitat and replicas of the famed life-sized clay warriors unearthed near the tomb of China’s first emperor. Genting has been vague on details, which is not uncommon at the early stages of a major resort project, and this one is pegged at $4 billion at full build-out. A release accompanying the groundbreaking gushed about “rich cultural attractions, varied cuisine, and jaw-dropping entertainment from China’s many diverse regions and ethnic groups” as well as “an infinite variation of entertainment themes from the longest continuous civilization in the world”. This would not be unfamiliar territory for Genting, which hosts a Universal Studios theme park at Resorts World Sentosa in Singapore and is bringing a 20th Century Fox themed attraction to its Genting Highlands resort in Malaysia. Spokesman Michael Levoff told the news Web site VEGAS Inc. , “Genting has a loyal customer base from China, the United Kingdom and countless other countries. … Thanks to these existing a partner in Global Market Advisors, a consultancy specializing in gaming, was quoted last year as saying 85% of EB-5 investors are Chinese. He said they put $100 million into the completion of the city’s Downtown Grand Hotel & Casino and were part of $150 million of Asian money staking the SLS Las Vegas, which opened last August at the site of the old Sahara. “They’re a group with deep experience in Chinese VIP play, and I suspect they’ll be successful,” says Mr Klebanow’s partner Steve Gallaway. Lucky Dragon completed the exterior of its hotel in September. In May, more than two years after Resorts World Las Vegas was announced, Genting broke ground with Nevada Gov. Brian Sandoval hefting one of the golden shovels alongside Mr Lim in a ceremony accompanied by a traditional Chinese lion dance. Elsewhere on the Strip, baccarat players were pulling in their horns. LAS VEGAS STILL Macau peaked in 2013 at $45.2 billion in gaming revenue, 60% of it VIP. It was the high water mark for baccarat on the Strip. Revenue totaled $1.58 billion that year, a 16.6% increase over 2012. It would fall 6.4% in 2014. When the cracks first appeared in the Macau VIP edifice last May, it looked as if Vegas might benefit much as it had in 2009. It was a strong month for table games across the board, especially for baccarat, which accounted for almost 50% of the total take on an 88.7% increase year on year, boosted by abnormally high hold. Hold normalized to 12.3% in June (11.98% is the historical average statewide as tracked by the Center for Gaming Research at the University of Nevada, Las Vegas), and revenue was up a whopping 155%, and Macau’s loss was showing itself to be very much a win for the Strip. July was up 16%, but that was the last month of gains in 2014, for baccarat and for tables, the latter falling behind slots on a percentage basis for the first time since 2008. “It’s the general economic malaise and the crackdown on corruption and softness in the economy. [Players] are not as comfortable spending as they have in the past,” says Union Gaming’s Chris Jones. “The visitation is there but not the spending.” He adds, “The most important thing to realize is that we saw some pretty spectacular growth, like Macau, double- and triple-digits. It’s foolish to think that would continue. And you have more and more people A release accompanying Resorts World’s groundbreaking gushed about “rich cultural attractions, varied cuisine, and jaw-dropping entertainment from China’s many diverse regions and ethnic groups” as well as “an infinite variation of entertainment themes from the longest continuous civilization in the world”. Cover Story