Inside Asian Gaming

INSIDE ASIAN GAMING | September 2010 20 Asian Gaming 50 – 2010 Seoul bourse in November last year. The challenge now is to maintain profitability as the business matures and develops its product range. GKL’s three properties are only open to foreigners or Koreans holding foreign passports. Developing the business principally means finding new ways to encourage existing and new Japanese and Chinese players to visit and spend their money. The task is a tough one. GKL’s operating profit for the second quarter of 2010, announced in August, was KRW8 billion (US$6.8 million) a 62.2% fall from the KRW21.6 billion reported a year earlier. The result was 57.5% below some analysts’ forecasts, according to a report by Hyundai Securities. The dip was attributed by analysts to a number of factors, including a rise in overheads linked to an increase in the number of Chinese high rollers. The number of Chinese visitors at GKL’s venues increased by 72.9% quarter on quarter. Received wisdom in the industry is that South Korea is not directly competing with Macau, but serving a distinct market made up mainly of Japanese and northern Chinese. Macau is serving mainly southern Chinese customers. But as more and ever smarter casino properties open in Macau and Singapore, there is pressure on regional gaming centres such as South Korea to keep pace in terms of the style and quality of facilities. Looming (if somewhat distantly) on the horizon is also a major competitive challenge from Japan should that country ever get around to legalising casino gaming. GKL has been spending a considerable amount on refreshing its product offer, although its casinos are no more than four years old. Seven Luck Millennium Seoul Hilton underwent a five-month, KRW6 billion won (US$5 million) renovation between May and the end of August. Six new gaming tables and 51 seats were added to the existing 59 tables in an effort to attract and retain VIP patrons. In addition, the overall space of the casino was increased by 1,442 square feet, and 25 LCD flat screen monitors were installed along with crystal chandeliers. In early October last year, GKL opened a dramatically revamped third floor VIP area at its Seven Luck property at Gangnam in the capital Seoul. The company said it spent KRW8.3 billion (US$7.1 million) on the refitting. The new zone has five VIP rooms plus 19 gaming tables in an open hall area, taking the property’s total inventory at that time to 74 tables and 112 slot machines. GKL also brought in 71 new dealers to the property—all trained at its Seven Luck Casino Academy. If South Korea is to face the long term competitive challenge from neighbouring casino jurisdictions, then opening the industry to locals rather than simply revamping foreigners-only venues is probably the answer. The 64-year-old Mr Kwon is well placed to act as a public relations face for the industry in any lobbying campaign. He has impeccable contacts within South Korea’s government from his days at the Korea Trade Investment Promotion Agency (KOTRA). He held a variety of positions there, including heading the agency’s North American office. 10 (11) Pansy Ho Chui-king Managing Director, M GM Grand Paradise Managing Director, Shun Tak Holdings At a recent social event in Macau, Pansy Ho was treated rather like royalty. This could be simply the usual politeness of local people toward the great and the good. A cynic might think it was locals hedging their bets in case Ms Ho is soon to inherit her father Dr Stanley Ho’s business interests. Ms Ho might as well enjoy the red carpet treatment at home, because she’s unlikely to see much of it abroad. Her Macau joint venture partners MGM Resorts gave up their interest in an Atlantic City casino earlier this year on her and Macau’s account. That was after the New Jersey Division of Gaming Enforcement’s (NJDGE) famously peevish report last year describing Ms Ho as an unsuitable partner for the US casino operator. The main charges were that she is StanleyHo’s daughter and that Dr Hohas ties to organised crime groups; ergo, through her father, she is connected to organised crime. If that sounds more like the logic of the Salem Witch Trials than modern legal process, MGM wasn’t dismayed. MGM’s decision to stick by Ms Ho and ditch New Jersey wasn’t difficult, given that Atlantic City’s revenues had been going into reverse while Macau’s had been growing 40% or more year on year. With that particular distraction behind her, Ms Ho has been able to concentrate more on building up MGMMacau’s business. A milestone in that process was passed in December last year when One Central, the luxury residential and retail development by Hongkong Land and Ms Ho’s own conglomerate Shun Tak, opened its doors. One Central is connected directly to MGM Macau, and has some of the smartest shops ever seen in Macau, including a multi-floor Louis Vuitton store that ranks among the world’s largest. It’s just the kind of amenity that MGMMacau needs if it is to kick on from its respectable if unspectacular start and become a second home for Chinese high roller players and their families. Ms Ho may dispute the findings of New Jersey’s gaming enforcement people that she is too closely tied to her father. But the Ho family name can’t have done too much harm, and may even have done some good when it came to drumming up more high roller business for MGM Macau. Ms Ho’s influence can be detected in the recent move to ramp up the involvement of traditional Macau junkets at the property. That local market ‘in’, combined with MGM’s acknowledged sophistication in player tracking and player rewards, could prove a winning combination over the course of the next 12 months.