Inside Asian Gaming

September 2008 | INSIDE ASIAN GAMING Neptune Group Hong Kong-listed Neptune Group, known until July 2007 as Massive Resources International Corp, has been ramping up its high growth gaming interests for more than a year. The company grabbed the headlines this summer with news of its profit share agreement at Galaxy StarWorld’s ‘jumbo’VIP area on the third floor. The facility will have up to 100 tables. The initial 30 were due to be opened to customers shortly after Inside Asian Gaming went to press. As a first in Macau, the VIP facility will also feature slot machines.The machines, supplied by Aristocrat, include Cash Express, a popular game on casino main floors in Macau and known to many visitors as ‘The Train Game’. Before the deal the company was probably best known to the general public as the operator of the casino cruise ship Neptune. The company acquired a 70% stake in the vessel in June 2005 for HK$68 million. The company then spent a further HK$94 million on refurbishment of the existing entertainment facilities, plant and machinery.The vessel sails out of Hong Kong to international waters. The Group hopes eventually to use its cruise client list as a marketing tool to feed customers to the VIP facility at StarWorld. The technicalities of the StarWorld VIP deal, done indirectly to comply with Hong Kong regulatory requirements, are that Rich Pearl, a wholly-owned subsidiary of Neptune Group, acquired 100% of the equity in an investment company called Best Max for HK$4.32 billion (US$554 million). Using the aggregator model now familiar in Macau VIP operations, Lucky Star, a gaming promoter, will indirectly be loaned up to HK$6 billion by Neptune Group via a third party company to provide the liquidity to pursue VIP promotion. In return, Lucky Star will pay Best Max 100% of the commission derived from monthly rolling turnover (up to HK$20 billion) at 0.45% commission. If monthly rolling turnover rises above HK$20 billion to a maximum of HK$45 billion, then the 0.45% commission will be split 10:90 between the gaming promoter and the intermediary loan company. Should monthly rolling turnover top HK$45 million, then the 0.45% commission will be split 45:55 between the promoter and the loan company. Nicholas J. Niglio, Executive Director and Chief Operating Officer of Neptune Group, said he was confident the quality of service and atmosphere on offer in the new VIP facility meant they would fill tables without having to push to the limit of the 1.25% rolling chip commission cap recently agreed between operators, agents and the Macau government. 29 Las Vegas From Home Las Vegas From Home (LVFH) is a Canadian publicly traded software company specialising in multi-player games for the Asian market. We think 2008 could be a breakthrough year for LVFH in Asia following its deal to supply gaming software to Hong Kong-listed CY Foundation for use in the People’s Republic of China. CY Foundation operates online player-to-player (P2P) game tournaments for prizes mainly via Internet cafes across China.The country had an estimated 45 million P2P players in 2006. LVFH opted for the relatively conservative route of charging a licence fee for its software rather than asking for a share of revenue. Nonetheless, working with a strong Asian partner such as CY Foundation can only help LVFH’s profile in Asia. CY Foundation Chairman Theodore“Teddy”Cheng Chee Tock is well-connected in government circles in China and has acted as an advisor to major foreign firms operating in the country including AT&T and Hewlett Packard. CY Foundation says it plans to get games into 20,000 Internet cafes in the next three years. LVFH announced in August it planned to launch its own host site called Asian Games Network.The site will use the company’s proprietary Asian Multi-Player Software and include popular games such as Fight the Landlord, Big 2, Chinese Poker and Si Ki Pi. Eight to Watch