Inside Asian Gaming

INSIDE ASIAN GAMING | September 2008 46 Feature T he long-awaited prospect of casinos in Taiwan is approaching a crossroads in the wake of an announcement by the government last month that it will formally state its position on legalization in the form of a report scheduled for release by the end of this year. Thereportwillofferanofficialassessment of the possibilities, including whether casino development is advisable and if so whether priority should be given to outlying islands, namely Penghu, the territory that is seen as the likely center of a Taiwanese industry. Chen Tain-jy, chairman of the government’s Council for Economic Planning and Development, acknowledged as much in recent news reports, stating that plans to boost Penghu’s economy would take into account the expectation on the part of officials there that gambling be legalized and that local authorities be permitted to develop it. The northern regions of Miaoli and Taipei are also actively seeking permission to operate casinos, Chen said. Local governments have been pressing their case for legalization since May when President Ma Ying-jeou took office. Ma is seen as sympathetic to the industry as an economic development tool and made the issue part of his election platform. Speaking during a recent fact-finding tour of casino operations in Melbourne, Australia, where he attended a meeting of Asia-Pacific Economic Cooperation, Chen said the report will include an assessment of potential social and economic impacts and will also cover regulations, licensing issues, casino operation management and various methods of allocating income. He said that if the report concludes that legalization is viable, and after all the relevant regulations have been formulated, local governments will be allowed to file applications for casino development, with priority to Penghu and the islands of Kinmen and Matsu. Local governments will be required to show that they have the approval of their residents, they must stipulate the potential economic benefits, and they’ll have to show they can attract legitimate international investment. With an export-driven economy that is one of the most dynamic in Asia, Taiwan is also one of the region’s wealthiest nations. Gross domestic product grew 5.7% last year, topping US$695 billion. Per capita GDP exceeds $30,000. And with a gambling age population in excess of 16 million, its proximity to China, and the prospect of direct air travel to the mainland—which will put the country within three hours of South Korea and the Philippines and within five hours of Southeast Asia, Indonesia and the Indian subcontinent—the opportunities for a casino industry of destination resort proportions are generally seen as favorable. Japan also presents sizable potential as a feeder market. Taiwan hosted 3.7 million foreign visitors last year, according to official statistics.They spent in excess of US$5 billion in the country. Forty-six percent of those visitors were from Japan. A 2007 report by the World Economic Forum ranked Taiwan the fourth most competitive country in the Asia-Pacific region for travel and tourismbasedoncriteria such as human resources and natural and cultural attractions, tourism infrastructure, information and communication technology infrastructure and price competitiveness. Andrew MacDonald, executive vice president for gaming for Malaysian resort giant Genting, assesses the market potential in terms of what he calls the “Macau effect”—and, more recently, the “Singapore effect”—the latter an example of a“laudable, transparent process,” he said, and one “representing a complete turnaround for government.” “It begs the question of why [other countries] may not follow,” he stated in a presentation at this summer’s G2E Asia 2008 in Macau. “Governments are looking at tourism as a regenerative economic tool. Tourism is the key to all thesemarkets.People are now taking a new view on the potential for these developments with increasing cultural sympathy and public acceptance.” Taiwan already is home to a sizable gambling industry. A Public Welfare Lottery, instituted in 2001, generates net revenues of more than US$1 billion a year. A new Sports Lottery (launched in May) is estimated to be Is Next? The long wait for casinos may finally be nearing an end Ma Ying-jeou Chen Tain-jy