Inside Asian Gaming

INSIDE ASIAN GAMING | September 2012 46 Asian Gaming 50 – 2012 43 Lee Choong Yan President and COO Genting Malaysia Bhd While the announcement of a Singaporean casino duopoly—with Genting being awarded one of the coveted slots—was always going to be a boon for the Malaysian company, the competition with Casino de Genting at the company’s flagship Genting Highlands resort complex north of Kuala Lumpur was also a serious threat. But Casino de Genting has weathered the successful opening of its neighbor fairly well, so much so that it continues to expand. Gaming in Malaysia has traditionally beenmass market-focused, but the company is now setting its sights on growing the VIP business. According to RHB Research, casino by a bit, added about 10% to the cross-gaming floor area, they’ve done a lot of marketing…and havemanaged to keep and maintain the younger gamblers’ interest.” And while Genting’s sights look firmly set on expanding their global operations, it will need to rely on steady management from domestic executives like Mr Lee to make sure the home market remains rock solid. Genting is aiming for its VIP business to contribute 40% of gaming revenue within the next three to five years, up from its current 36%. And this will incorporate overall top-line growth of 5% to 7%. One way Genting is doing this—and also addressing its currently high hotel occupancy—is by building a new 700-room hotel situated next to its existing First World Hotel. Construction is set to commence next year, and the new digs will be targeted toward the higher-end of the market. According to analysts and market observers, much of the casino’s growth and success is attributable to Lee Choong Yan. “I think he’s done a pretty good job given the competition from Singapore. The Malaysian revenues have held up quite well despite the competition,” says one Malaysia- based gaming analyst. “They expanded their 44 Lam Man Pou Chairman Asia Entertainment & Resources Ltd As founder and chairman of Asia Entertainment & Resources Ltd, Lam Man Pou is the archetype of a new breed of Macau junket investor, heading up a Nasdaq-listed holding company whose VIP room subsidiaries and related promotional entities saw net income more than double last year to US$77.3 million and figure to be even more profitable in 2012 once the company completes a shift of its remuneration model from fixed commissions on rolling chip turnover to sharing revenues with its casino clients. Under Mr Lam’s seasoned guidance—he started as a junket agent for Stanley Ho’s Sociedade de Turismo e Diversoes de Macau back in 1990 and was sole proprietor of his own VIP rooms for a time in the post- monopoly era—AERL has grown from US$45 million in cage capital at its inception two years ago with the acquisition of VIP promoters Asia Gaming & Resort Ltd to more than $260 million, with 29 tables in rooms in Galaxy Macau and The Venetian Macao in the Cotai resort district and Galaxy’s StarWorld downtown. The company recently added to its portfolio with the acquisition of a junket with five tables in City of Dreams. It’s the solidity of the company’s financial footing that has Mr Lam confident AERL can weather the volatility implied by a revenue split—which commits the promoter to an agreed percentage of a room’s win but requires it also bear the same percentage of possible losses—to become an even stronger and more diversified concern. AERL believes it can generate the equivalent of commissions on rolling chip turnover considerably higher than the established 1.25% cap, which figures to be a lot of money for a company that grew turnover 91% last year to almost $20 billion. It will also have the ability to negotiate with its casino partners on additional allowances and incentives. Moreover, alignment with the prevailing business model in the sector opens up the potential for expansion into rooms in MGM Macau, Wynn Macau and the casinos of SJM Holdings (which do not operate on fixed commissions). Overseeing this transition, probably the most significant in AERL’s young life, Mr Lam remains as ever the guiding force behind strategy, development and marketing. 45 Choi Hung-jib President and CEO Kangwon Land Inc Choi Hung-jib, 61, is a former governor of South Korea’s Gangwon Province—the economically depressed former coal mining region where the majority state-owned Kangwon Land casino is located. He is the seventh person to head the resort since it was founded in 2003 as, in effect, a regional sovereign wealth fund designed to plough its profits back into the regional economy and community. He replaced Choi Yung, who resigned amid an investigation into allegations of corruption. Kangwon Land is the only one of South Korea’s 17 casinos where Koreans are allowed to play, and owing to that exclusive position, generates a great deal of money. On weekends, eager city dwellers pay local grannies the equivalent of hundreds of US dollars just for reserving seats for them at the tables. The property generates gross revenues in excess of US$1 billion per year. It’s perhaps not surprising, therefore,