Inside Asian Gaming

INSIDE ASIAN GAMING | October 2008 42 Briefs Regional Briefs Busan Market Thrives Casinos in Busan, South Korea are thriving as greater numbers of foreign visitors are coming to the country’s largest port city. The Seven Luck Casino at Busan Lotte Hotel and the Casino Busan at the Paradise Hotel reported combined revenue of about 60.1 billion won (about US$49.1 million) in the first nine months of 2008, representing an 18% increase from the 51 billion won revenue generated during the same period last year. It is also 45% higher than the the 41.3 billion won revenue reported in the first nine months of 2006. South Korea has 17 casinos, but the Kangwon Land Casino is the only one which permits locals. All the others are restricted to serving foreigners. Before Seven Luck opened in Busan in June 2006, Casino Busan was the only casino in the city. Both casinos draw visitors primarily from mainland China and Japan. This year, Seven Luck overtook Casino Busan in terms of revenue for the first time since opening. In the first nine months of 2008, Seven Luck generated 31.1 billion won revenue, compared to Casino Busan’s 28.9 billion won. Seven Luck hosted 93,750 visitors in the period, more than double Casino Busan’s 42,550. Total visitors to Busan’s two casinos in the first nine months of around 136,000 is up nearly 55% from the 88,000 recorded in the same period of 2006. Casino visitors tend to stay longer and spend more money in Busan than the average visitor. Amax Cuts on Dividend Amax Entertainment Holdings Limited, which facilitates VIP play at Crown Macau and has a 49.9% equity stake in the operating company of the nearby Greek Mythology casino, says shareholders have agreed to forgo a share dividend owed to them. The cash will instead be used to support the trading position of the company, which in common with all Macau gaming operators is facing pressure on its revenues and margins. This has been exacerbated recently by the announcement by the Macau government of plans to cap VIP rolling chip commission at 1.25%. Amax’s business model focused on attracting many VIP agents to Crown Macau with industry leading commission rates.The agents were then consolidated under an umbrella operation operated by an Amax subsidiary. Amax was able to do this after negotiating a headline grabbing 1.35%commission deal on a daily settlement basis with Crown Macau late last year. This was double the commission rate available in VIP rooms before the ending of Stanley Ho’s casino monopoly in 2002. The rates enabled Crown Macau to grab a 20% share of the local VIP market within weeks. They also sparked a VIP chip commission trade war between operators that eased off this summer with a government announcement of plans for a (so far) voluntary cap on commissions. Since the announcement of the commission cap plan, Crown Macau’s VIP revenue has dipped. VIP rolling chip sales were down 17.5% in August compared to July, though the property’s operator Melco Crown Entertainment attributed the dip to a fall off in visitors from China following visa restrictions instituted by the mainland authorities. Macau Success Delayed Macau Success, a 44% partner in Ponte 16, the hotel and casino complex at Macau’s inner harbour, close to the territory’s historic old town, has issued a profits warning for the financial year ending 30 September 2008. The company said it expected to record a loss for the period, linked to depreciation costs and operating expenses at Ponte 16, a joint venture with SJM. Macau Success added that high oil costs and other increased overheads would also reduce contributions from its cruise leasing and management businesses. Global’s Reach Extended Hong Kong-based Global Entertainment Group, a media and entertainment conglomerate, says it has acquired Global Gaming Leisure Plc (GGL), a vehicle for investment in the Asian gaming industry. As of April this year,GGL had an interest in one of the VIP rooms at Wynn Macau, and had plans to acquire further interests in Macau. The parent said GGL would be integrated into GEG’s existing gaming activities, including a statistical risk management business focused on the gaming and entertainment industries. A statement from the parent company’s chairman Dr Johnny Hon said: “The board considers that these [GGL’s] activities complement our statistical risk management business and further develops the company’s position in the rapidly expanding gaming industry in Macau.” The parent company made an operating loss of £510,304 for the financial year ended 30 June, according to figures released to the financial media. Healthy Future for Singapore Net profit from Singapore’s new casino resorts could be nearly 40%, suggested speakers at the 13th Annual Asian Casinos Executive Summit 2008. While some contributors may have wanted to create a feel Ponte 16