Inside Asian Gaming

47 June 2013 | INSIDE ASIAN GAMING REGIONAL BRIEFS stronger anti-money laundering measures. Congress passed amendments earlier this year bolstering the country’s anti-money laundering law, including one that expands the list of covered institutions, but casinos were excluded on the belief of several influential lawmakers that it would hamper the industry’s growth. “We will study how the other countries are doing it and we’ll see how we can incorporate it here,” Mr Guingona told reporters. “There are more industry players now, therefore we can start the hearings and see what their views are.” Okada’s Manila Joint Venture Collapses Universal Entertainment and Philippine property giant Robinsons Land will no longer jointly pursue development of a US$2 billion resort casino at Manila’s bayside Entertainment City complex. The companies issued separate statements last month saying they decided by mutual agreement not to pursue the relationship further. Universal, the machine gaming manufacturer controlled by Japanese billionaire Kazuo Okada, may seek a new partner or pursue the development itself, a spokesman told Reuters . The company had been in negotiations with Robinsons Land since late last year over what would be the Philippines’ largest gaming resort. The talks were extended after they failed to close a deal by an initial January deadline, according to Reuters , which said Robinsons was looking to acquire a majority stake in Eagle I Landholdings, the Universal unit listed as owner of the 40-hectare Entertainment City site. The deal also would have allowed Universal to resolve a dispute with the government over the ownership structure of Eagle I. An agency of the country’s Justice Department says Eagle I’s structure violates the 40% cap on foreign ownership of Philippine companies. “As long as there is an apparent breach of the constitutional limitation on land ownership, we cannot allow the casino to open,” an executive of gaming regulator PAGCOR told Reuters . Universal contends that it acquired the land based on legal advice obtained in the Philippines. “So this should not be an obstacle,” the company said in a statement. The US Federal Bureau of Investigation and the Philippine National Bureau of Investigation have launched separate probes into Universal’s activities in the country following reports published by Reuters late last year tying the company to some US$40 million in alleged bribes paid to a politically connected businessman. Universal has denied any wrongdoing and is suing Reuters in Tokyo for defamation. Macau Government Clears Way for Four Seasons Apartments Sale The Macau government, in its Official Gazette published 5th June, granted Sands China Ltd permission to transfer its Four Seasons Macao residential units to a separate company, which appears to pave the way for the company to monetize the assets. As Union Gaming Research Macau’s Grant Govertsen explains, “Effectively, the gazette allows SCL to transfer the asset to a separate company (“Cotai Strip Lote 2 Apartment Hotel”). We believe it is this company that will ultimately be able to sell shares that allow for co-op ownership of the units (as opposed to traditional strata-title condominium ownership in Macau). We believe that other various government approvals will be necessary to make this a reality and today’s gazette indicates that things are moving forward towards completion.” Mr Govertsen estimates Four Seasons Macao contains up to 300 residential units, covering approximately 750,000 square feet, and that Sands China could pocket around HK$6 billion (US$775 million) by selling them. That equates to proceeds of HK$0.75 per share in the Hong Kong-listed entity. Bullish Galaxy Raises Ante on Cotai Macau casino giant Galaxy Entertainment Group says it expects meaningful improvement in its VIP business this year and is bumping up the budget for the second phase of its Cotai expansion by HK$3.6 billion (US$464 million). Fresh off a month of May in which the market enjoyed its second- best gaming revenue performances ever, Galaxy CFO Robert Drake said he sees new momentum in the high-end sector at both Galaxy Macau, the company’s Cotai flagship, and its StarWorld Hotel and Casino on the Macau peninisula. “We are very pleased with how the market has done so far this year, we are sticking to our guns and say that it’s a high single-digit growth,” he told Forbes . Galaxy grew total revenues 15% year on year in the first quarter to HK$15.2 billion (US$2 billion), but its VIP business only grew 0.3% . “We’re not surprised to see that given the flow of macroeconomic conditions things were kind of flat,” said Mr Drake. “People just tend to be more cautious in periods of uncertain times like these.” Gaming revenue market-wide in May rose 13.5% year on year to MOP29.6 billion (US$3.7 billion), bolstered by an improving economy on mainland China, a slightly more favorable calendar and an easy comparison with a particularly weak May 2012, when gaming revenue rose only 7.3%. Year to date, gaming revenue is up 14.2% over the first five months of 2012. The second phase of Galaxy Macau, slated for completion in mid- 2015, is now pegged at HK$19.6 billion, up from $16 billion, as Hong Kong-listed GEG continues to refine its plans for the burgeoning Cotai resort district, where all six Macau casino concessionaires have unveiled major expansion plans. Galaxy plans to invest another HK$50 billion-$60 billion (US$6.4 billion-$7.7 billion) in two subsequent expansions at Galaxy Macau. Model of second phase of Galaxy Macau, displayed in the property’s lobby.