Inside Asian Gaming

INSIDE ASIAN GAMING | February 2013 14 Tech Talk savings—and suddenly it’s eminently profitable for operators to afford the smallest bettors a genuine baccarat or sic bo or roulette experience at stakes they can handle. Typically these are HK$100 at stadium installations with a live dealer. At stand-alones linked to automated games they can run as low as $10. “Anywhere we’ve seen [ETGs] in Asia they’ve tended to do quite well,” says Mr Govertsen, “so it’s no surprise that we’re seeing more and more of them, or even that more exclusive, premium-mass, VIP-centric properties like MGM and Wynn are getting on the ETG bandwagon. It’s affirmation that ETGs are part of the Macau gaming fabric.” This is also interesting. Because as popular as they are in places like Australia and the Philippines and in emerging markets like Singapore and Cambodia, until recently it was rare to see them in Macau outside the neighborhood slot parlors run by Mocha Clubs, which introduced them to the market about a decade ago. They didn’t come to the attention of the industry until Hong Kong- listed Paradise Entertainment opened Kam Pek Paradise Casino in 2007 with a floor devoted to an innovative technology that restored the human element Chinese gamblers prefer. Developed by Paradise subsidiary LT Game, it was baccarat with outcomes determined at physical tables manned by croupiers and streamed to individual play stations in real time, the forerunner of today’s hugely popular Live Table Multi- Game Systemmanufactured by LT. Oddly enough, the experiment was less than successful at the time, partly due to shortcomings in the design of the terminals, partly because operators were looking to them as a cross-play for slot bettors, which they weren’t, and partly because the industry had been doubling up on live tables just when Beijing figured it was a good time to cool Macau down by restricting visas for outbound travel from the mainland, then the global financial crisis hit, and suddenly you could find HK$50 baccarat tables (and lower) anywhere in town. Today’s boomtown is a very different place, needless to say. HK$500 minimums are the norm at the public tables. And a literal reading of the cap says the market gets only 165 new tables this year, and so over the next five years call for something like 4,300 new tables, way more than the cap allows. Currently, there are more than 4,000 ETGs spread across the 35 casinos either in LT Game’s stadium-style live-dealer configurations, single- and multi-game, or in banks of five to 10 seats linked to automated games. The latter the government treats as slots, each betting terminal counted as a single device. Mr Govertsen, for one, believes the market will grow to 5,500 over the next five years. “With fewer and fewer tables being released by the government,” he says, “we’ll continue to see these e-tables flourish.” This would appear to provide plenty of elbow room for competition, and so there is, but in the automated space only. Interblock, Aruze and SHFL Entertainment all participate there. In the lucrative live-dealer segment, LT Game holds a monopoly by virtue of a patent on the technology that is recognized only in Macau. These “theater” or “stadium”-style installationsaresimilarlypopularwithplayers in Singapore. But roulette, not baccarat, is the game of choice, accounting for 64% of seats. Multi-games (roulette and sic bo) are somewhat less popular, accounting for only about 10%, according to Union Gaming’s research. Velocity equals profitability—LT Game’s Slant Top New Casinos’ Opening Timeline Soiurce: Company data, J.P.Morgan estimates. Casino Operator Completion Total tables yoy Hotel rooms yoy time increase increase Galaxy Macau Galaxy 2Q11 450 2,200 Other movement (76) 65 End-2011 5,193 8% 22,356 11% Sands Cotai Central Phase 1 Sands China 2Q12 393 1,800 Sands Cotai Central Phase 2 Sands China 3Q12 - 2,000 Other movement (88) - End-2012 5,498 6% 26,156 17% Sands Cotai Central Phase 3 Sands China 1Q13 200 2,000 End-2013 5,698 4% 28,156 8% Sands SL Regis Tower Sands China 3Q15 - 600 Galaxy Macau Phase 2 Galaxy 3Q15 400 1,350 Macau Studio City Melco Crown 3Q15 600 1,600 End-2015 6,698 16% 31,706 13% MGM Cotai MGM China 2Q16 500 1,600 Wynn Cotai 450 2,000 End-2016 7,548 14% 35,306 17% Parisan Sands China 1Q17 600 3,000 Wynn Cotai 700 2,000 End-2017 9,198 22% 40,306 14% on, incrementally at 3%, at least through the end of the decade—only there are eight new resorts planned for Cotai whose plans