Inside Asian Gaming

47 uanxi – a Chinese term defined roughly as“relationships”– is regarded as vital to doing business in China. Analysts had predicted it would take many years for new US-based gambling licensees arriving in Macau to penetrate the market of mainland Chinese high-rollers served by the well-established networks of local (Macau and Hong Kong) junket and casino operators. It appears, however, that in the gaming world at least,guanxi can be fickle,with Las Vegas Sands Corp (LVS) having made strong inroads into the high-roller market with its first property in the city, Sands Macau. Of all the local operators, Galaxy Entertainment Group appears to have suffered most from LVS’ cultivation of high-roller guanxi. Gal- axy’s first property in Macau, the Waldo Casino, opened in July 2004 with a mere 38 tables. Sands Macau had opened two months earlier with 277 tables. In 2004, the modestly-appointed Waldo outgrossed the spacious Vegas-style Sands thanks to its focus on VIP gaming. Sands began courting high-rollers from the beginning of 2005, Less Than Stellar Galaxy Entertainment Group made a strong debut in Macau with its high-roller focused Waldo casino in July 2004, but the company has since seen its gaming revenue and market share plunge. Still, analysts remain bullish on Galaxy’s stock price, pinning hopes on an imminent sale of a stake in Galaxy to US-based casino operating giant Harrah’s Entertainment Inc and thwarted analysts’ expectations by raising its share of that mar- ket from 2% at the start of 2005 to 9.8% by the end of the year.Waldo’s revenue concurrently plunged. Even though Galaxy’s sole Macau ca- sino had only operated for less than six months in 2004, revenue for that year reached HK$1.299 billion. Revenue for twelve full months of operation in 2005 was HK$1.292,suggesting a more than 50% decline in average monthly revenue. Galaxy clearly feels the need to diversify from its focus on high- rollers. It made a modest first effort to court low-rollers by opening the 90-table Rio Casino in February and the 75-table President Casino in April, both of which are located in independently-operated hotels, as is Waldo Casino. In May, Galaxy unveiled Macau’s twenty-first ca- sino, the Grand Waldo, which is the first casino to open on the Cotai Strip – a dubious honour since the rest of the Strip is still a big con- struction site with building work carried on late into the night. GrandWaldo features 16 VIP gaming rooms, 166 tables and 350 G The Landmark ( 澳門置地廣場 ) , Macau Tel: (853) 785008 Mandarin Oriental Hotel ( 文華東方酒店) , Macau Tel: (853) 701551 www.zegna.com More neon at Grand Waldo