Inside Asian Gaming

INSIDE ASIAN GAMING | September 2012 34 cutting into the company’s win per unit. Net revenue in the second quarter totaled US$35.1 million, up 8% from $32.4 million in the same period last year. But that’s on 500 additional machines over the 1,600 in operation in 2Q 2011, which translated to a diluted win per unit per day in 2Q12 of $181 versus last year’s $226. However, the company’s installed base will come down when its Marina Plaza location closes in line with a new government policy aimed at curtailing gaming in predominantly residential areas. Once that venue shuts, taking more than 300 machines offline, some of those customers will naturally head to other Mocha outlets, pushing up overall win per unit across what will be a smaller total installed base. Interestingly, Mocha appears intent on branching out from its locals focus and is seeking further opportunities to work as a third-party slot operations manager within existing casinos, a business model launched in January at Casino Golden Dragon, one of SJM’s third-party-owned “satellite” casinos. Mocha also seems to be going after more tourists. Mocha Macau Tower, which opened at the waterfront tourist landmark in September last year, features several games chosen specifically for their potential appeal to out-of-towners. Given the constraints of the regulatory environment, as well as Macau’s limited land area and population, initiatives such as these will be important to Mocha’s growth going forward, and under Ms Hsu’s steady leadership, very likely to succeed. Asian Gaming 50 – 2012 32 Philip Chun Chairman and CEO Paradise Group Kangwon Land opened to Korean nationals in 2000.) It lost that lead, however, following the government’s decision in 2005 to set up its own casino operating company, Grand Korea Leisure, under the auspices of the Korea National Tourism Organisation, with a remit to boost tourism and generate income to fund tourism infrastructure and other government projects. GKL opened three casinos—two in Seoul and one in the port city of Busan—under its Seven Luck brand in 2006, and by 2010 had grabbed an estimated 54% of a foreigners-only market worth just over KRW1 trillion (US$885 million). As the market expanded to 17 casinos in all, Paradise’s share contracted to around 30%. Philip Chun, chairman of Paradise Group since 2004, has led a remarkable turnaround 31 Constance Hsu President Mocha Clubs Before Mocha Clubs opened its first venue in 2003, slot machines in Macau were viewed as merely decorations at the table- dominated casinos. Worse, they were seen as a bad gamble, “hungry tigers,” as they were called in the local Cantonese dialect. Mocha has worked hard to shake off that perception, showing Chinese players that slots are not only fair but also offer strong entertainment value. As Constance Hsu explained recently to Inside Asian Gaming : “There are several cultural explanations for the erstwhile aversion to slots in Macau, such as the supposed preference of Chinese to engage in intense face-to-face battles against the house and their belief that they can influence outcomes at tables by spotting patterns and picking lucky cards or numbers, whereas when they play slots they leave their destinies to unfeeling computers. However, from our point of view, the main reason for the previous non-performance of slots in Macauwas a lackof qualityproduct offerings, service and comfortable ambience.” Mocha Clubs, owned by Macau casino operator Melco Crown Entertainment, has helped to redress that, creating a chain of locals-focused venues offering cozy, coffee- shop style surroundings, a slick player rewards scheme and one of the best returns to player on its machines in the whole of the city. The company’s keen attention to service and local game preferences has allowed it to compete in the face of fierce competition from the slot floors of Macau’s glitzy resort casinos. As president of Mocha since 2008, Ms Hsu has overseen the company’s expansion to 2,100 machines across 10 venues. The latest financial results appear to suggest the expansion may have been a bit too rapid, The South Korean government legalized foreigners-only casinos in 1967, and for most of the ensuing four decades, Paradise Group dominated the market. In 1968, the company opened what is still the country’s best-known casino at the Sheraton Walker Hill Hotel in the capital of Seoul. Paradise now operates five foreigners-only venues, led by flagship Walker Hill containing 79 table games and 160 slot machines, and as recently as 2005 controlled an estimated 90% share of revenue in the sector. (The state-owned