Inside Asian Gaming

INSIDE ASIAN GAMING | September 2008 Jefferies and Co. gaming analyst Larry Klatzkin told investors Dubai World will raise its stake. “It’s when, not if,” Klatzkin said. “The stock is cheap.”MGM Mirage has lost 58% of its stock market value in the past 12 months. Playtech Amasses War Chest According to the Financial Times , Playtech, the world’s leading provider of online gaming software, says it has built up a war chest of more than US$300 million to spend on acquisitions as it announced a 45% rise in half-year pre-tax profit. The company, whose clients include PartyGaming and Paddy Power, said it expected new markets to open up in Europe as gambling regulations eased. It was lining up acquisitions that would allow the company to take advantage of those opportunities. For the six months to the end of June, revenue rose more than 85% to $81m, after it sold more online games and won new licensing agreements. Playtech sells a number of different gaming software products, including online casino, poker and bingo, to companies such as Party Gaming, and takes a typical cut on every transaction of 15- 20% from operators. LVS Strip Condos to Carry St. Regis Brand According to a Las Vegas Gaming Wire report, Las Vegas Sands Corp (LVS) will attach the high-end St. Regis brand to its US$600 million condominium project on the Las Vegas Strip, deepening the worldwide connection between LVS and Starwood Hotels & Resorts. In a joint statement, the companies announced the development would be called The St. Regis Residences at the Venetian Palazzo, Las Vegas. The planned 632-foot tower, which fronts the Strip between The Venetian and Palazzo, will have 398 residences. It is expected to open in 2010. Combined,The Venetian and Palazzo have more than 7,000 hotel rooms. LVS will build the development and Starwood, through St. Regis, will operate it. LVS spokesman Ron Reese said a sales and marketing group will be hired to operate the sales center for the St. Regis Residences. Neither company released financial details about the arrangement. It was unclear if LVS and Starwood would split the profits on the residential sales. The deal is also the first time LVS has brought in a management company to run one of its Strip properties. Starwood operates several hotel brands in addition to St. Regis. The White Plains, a New York-based company, is in a partnership with LVS on Macau’s Cotai Strip. The companies are building a 4,100-room Sheraton and 439-room St. Regis on a Cotai Strip parcel across from The Venetian Macao. Starwood will operate the hotels while LVS will operate the casino attached to the hotels. St. Regis operates high-end hotel brands around the world, 44 Briefs International Briefs MGM MIRAGE Secures More Funds MGM MIRAGE President Jim Murren announced at the end of August that the company has secured US$2.3 billion of the remaining financing for its CityCenter project, leaving $700 million still to be funded. However, Murren told Reuters News Service he was confident the final portions of the $9.2 billion CityCenter financing would be completed by the end of September. In early August, MGM MIRAGE said it had secured $1.65 billion of the $3 billion needed. Credit markets dried up and Wall Street had expressed concern over the challenges MGM MIRAGE has faced in obtaining the remaining financing. During MGMMIRAGE’s second-quarter earnings conference call on August 5, Murren said he thought the financial community’s worries were “overblown.” He said there were no delays in completing CityCenter, which is expected to open late next year. CityCenter has been called the most expensive private commercial development in US history and includes six high-rise towers, a 4,000-room hotel-casino, residential condominiums, boutique hotels and a 500,000-square- foot retail, dining and entertainment complex. Dubai World, the investment arm of the Persian Gulf state, is MGM Mirage’s 50-50 joint venture partner in CityCenter. Dubai World is also MGM MIRAGE’s second-biggest shareholder, with a 9.4% stake, while Las Vegas billionaire Kirk Kerkorian holds the majority stake, almost 54%. Last month Dubai World received permission from New Jersey gaming regulators to acquire as much as 20% of the Las Vegas Strip’s largest casino operator— MGM MIRAGE operates 10 casinos on Strip, as well as casinos in Northern Nevada, Detroit and Mississippi. Dubai World bought its initial stake in MGM Mirage last year and increased its ownership in February. The investment group paid $80 a share, roughly $2 billion, and invested nearly $3 billion to acquire 50% ownership of CityCenter. Nevada gaming regulators don’t require prior approval, but an investor must file a licensing application with the state once the 10% threshold is crossed. Dubai World applied for a gaming license with Nevada last year because of the investment arm’s 50% ownership of CityCenter. MGM Mirage Chief Financial Officer Dan D’Arrigo said it has been Dubai World’s intention from the initial agreement to acquire 20% of the company, although no timetable has ever been set. In April, Michigan gaming regulators gave Dubai World permission to raise its stake in MGM Mirage to 14.75 percent and will need to grant an additional approval. MGM MIRAGE’s CityCenter