Inside Asian Gaming

INSIDE ASIAN GAMING | November 2008 42 In Focus residential, and entertainment areas in all of Melbourne, with capital investments in excess of A$10 billion within two kilometres of the Crown site. Some casino operators such as MGM Mirage have created master planned precincts such as their CityCenter development on the Las Vegas Strip. In a similar manner, Las Vegas Sands and its majority owner Sheldon Adelson—and some other companies—are developing the Cotai Strip in Macau as a massive series of Integrated Resorts, with aggregate capital investments in the range of US$12 billion in the form of branded hotels, entertainment offerings, and, of course, casinos. Other situations have developed over time to bring about Integrated Resorts in less planned ways. The massive organic growth of Genting Highlands, outside Kuala Lumpur in Malaysia, which now boast over 10,000 hotel rooms (the largest concentration under single ownership in theworld) has resulted in an entertainment complex with indoor and outdoor theme parks, convention and conference facilities, as well as over two hundred retail, food and beverage outlets.While less structured in its evolution than other IRs, it is nonetheless important to appreciate from Genting Highlands what can be developed off the back of casino led expansions. The positive annual impact from Integrated Resort developments can indeed be substantial. Estimating the economic potential of these IRs will depend on the unique situations established within each locale and legal situation. However, it is often the case that such developments can become the most significant that any locale will have seen from a single activity, and can have impacts in excess of the holding of the Olympic Games or sponsoring a World’s Fair or some other spectacular event of worldwide significance. It becomes easier for affected parties and stakeholders to understand the changes that the development of an Integrated Resort can bring to a government and community once the quantitative and qualitative impacts are released and understood. These multi-billion dollar developments can generate thousands of jobs, regenerate regions, and stimulate much broader economic activity, as well as bring about substantial returns from gaming taxes, fees and initial license costs. One need only look at the fiscal and economic impacts that have accrued in Macau in several short years to understand these fundamentals, or to analyse what Singapore is achieving and will likely experience in the next few years with the Genting International development at Sentosa Island and the Las Vegas Sands development at Marina Bay. Conclusions Because of their relative economic and social benefits and costs, the attractiveness to countries and jurisdictions of the strategy of authorizing substantial Integrated Resorts, in comparison to legalizing other forms of gambling, such as gambling-centric casinos that do not require other amenities, or convenience gambling outlets such as arcades filled with slot machines, will likely become a popular option in the future. Such efforts will have to be accompanied by specific limitations on the number of licenses issued, as well as other protections against regional competition, which will create an environment conducive to the substantial capital investment levels desired. This will obviously not work well for every jurisdiction that would like to go forward with this kind of strategy, but it can work if the underlying economic, political, and social circumstances permit it. The major conclusion for national governments, or for states and provinces empowered to authorize casino-style gambling, is to reach the understanding that their policy alternatives are NOT a question of Integrated Resorts versus no gambling whatsoever. Rather, they have a choice between permitting alternative structures, styles and types of gambling industries that have markedly different economic and social impacts. By virtually any measure, the concept of Integrated Resort best harnesses the benefits associated with their alternatives, while (potentially) reasonably constraining the unintended negative impacts. Carefully developed legislation and implementation, which seems to be the case for Singapore, will prove far more benevolent in the long run than the haphazard and opportunistic approaches that have been undertaken by many countries, states and provinces over the past few decades. Such alternatives, such as permitting the proliferation of electronic gaming devices in arcades or bars and taverns (so-called “convenience gambling”), limits the economic and catalytic power that might be associated with Integrated Resorts. Furthermore, the ability to control for excessive or problematic gambling through exclusionary strategies is far more difficult for convenience gambling than it can be for highly regulated and cooperative Integrated Resorts. It will be interesting to see which countries will be next to accept and act upon these scientific observations, by harnessing the economic potential that Integrated Resorts promise with thoughtful and effective legislation and implementation. Among the candidates to watch in the immediate future will be Mexico, Japan, Taiwan, Thailand, and Vietnam, and even perhaps (but with lower probabilities) Dubai, Abu Dhabi, India, or somewhere in China other than Macau. The high potential of success of IRs in Singapore will no doubt be an important example to other governments and may indeed set the stage for the next major direction in the spread of legal commercial gambling. Andrew MacDonald is founder of urbino.net and is also Executive Vice President of Genting Berhad. He can be reached at andrew.macdonald@genting.com Bill Eadington is a professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. He is an internationally recognized authority on the legalization and regulation of commercial gambling, and has written extensively on issues relating to the economic and social impacts of commercial gaming. Eadington can be reached at eadington@prodigy.net The Atlantis on Paradise Island in the Bahamas