Inside Asian Gaming

INSIDE ASIAN GAMING | August 2012 10 O n 7th July, residents of the offshore Taiwan island chain of Matsu took part in a historic referendum, assenting in principal to the construction of Taiwan’s first casino on the archipelago. Although a milestone, the victory was far from compelling. In fact, of the near 10,000-strong population, only 1,795 people voted in favour whilst 1,341 voted against the motion. A swing of 228 people would have made the difference. Despite the slim margin, the result has paved the way for a casino on Matsu—possibly two—with the government of Taiwan now considering a draft bill that would formally legalize gaming. The problem for interested developers, however, is that Matsu’s location on the doorstep of China comes with high political risk and its infrastructure is wholly inadequate. Infrastructure and Administrative Bottlenecks Thearea’s two feeder airports, Beiganand Nangan, are tiny—amounting to 166,000 seats to Taipei annually, while the lack of basic resources is apparent. It costs NT$80 (US$2.66) per tonne to supply fresh water to Matsu compared with the national average of NT$11 per tonne, and the same dynamic applies to electricity. Local residents receive a government subsidy on these resources, but a casino would probably have to pay full price. Supplying a major resort’s needs would also require a significant investment in boosting the supply chain. Add to that a tiny land mass (covering 25 square km) and population—not to mention the need to minimize the social and environmental impact of development on a sleepy community—and Matsu’s only real asset for a would-be integrated resort operator is arguably its new legal status. Fortunately, the pro-gaming lobby should be able to rely on government support. The administration has been intent on legalizing gaming ever since it passed the Offshore Islands Development Act in 2009, allowing casinos to be built on Taiwan’s outlying islands pending local referenda. It’s therefore highly likely that Taiwan will introduce gaming in one location or another in the next decade, and that plays into Matsu’s hands as the first mover. In fact, Grant Govertsen, partner and analyst at Union Gaming Research Macau, thinks The Making of Matsu As in Macau, casino success in Matsu ultimately depends on Beijing Market Outlook