Inside Asian Gaming

September 2013 | INSIDE ASIAN GAMING 51 either. Casino Royale, the state’s second- largest gambling vessel, features 480 gaming positions on four decks, with separate VIP areas, its own helipad and a crèche and playroom for children. Casino Caravela contains 190 gaming positions on two decks, one of them private. The Horseshoe, a catamaran 87 meters long and containing 80 slot machines and about 100 gambling tables, was purchased from Caesars Entertainment for US$3 million to replace a much smaller boat. Delta not only is India’s largest gaming operator, it is the only one in the country that is publicly traded, with a current market cap in US dollars of about $255 million and revenue from operations in the latest financial year of $77.6 million, $30 million of it from gaming. Not surprisingly, Mr Mody likes the profit-making potential of casinos and believes there is plenty of appetite in South Asia for more of them. In Daman, where the company holds a substantial equity interest in Advani Hotels & Resorts (India), owner and operator of the Ramada Caravela Beach Resort, plans are in the works to add a casino with up to 1,500 gambling positions to the company’s own Thunderbird resort complex. Mr Mody also is busily wooing officials for approval to open a second casino in Daman. He sees the state as the gaming hub for Mumbai with an immense opportunity to broaden its overall appeal as a domestic vacation destination. In Sri Lanka, Delta intends to be an even bigger player, and its ambitions appear to dovetail with the government’s desire to leverage resort-scale gaming as an economic development tool. The company owns a sizable plot of land in Colombo and is looking for a partner or partners to join it in building something there of destination proportions. The Asian Gaming 50 – 2013 With the M.V. Horseshoe approved last month to start taking bets in Goa, there are now five casino cruises plying the lucrative waters off the western Indian state, and hotel and leisure giant Delta Corp. owns three of them. Mumbai-based and -traded Delta has no intention of stopping there. The holdings the company has amassed under its charismatic 58-year-old chairman Jaydev Mody include residential and commercial real estate both at home and abroad, including several Mumbai landmarks, the city’s famed Crossroads mega-shopping mall among them. In the resort space, it owns the state of Daman’s largest tourist and convention hotel, three non-gaming tourist hotels in Goa, one of them an extravagant all-suite waterborne affair, and foreigners-only casinos in two tourist hotels in the Sri Lankan capital of Colombo. The Goa casinos aren’t modest affairs Lam Man Pou is leading Asia Entertainment & Resources down a path of managed expansion, adding two promoters to its junket network earlier this year and establishing a presence with casino giant Sociedade de Jogos de Macau for the first time through the acquisition of six VIP tables at SJM satellite Le Royal Arc Casino. He plans to cap these achievements with a dual listing on the Hong Kong Stock Exchange. Amid the general slowdown in VIP volumes last year, AERL was tardy in joining its competitors in the switch from commission-based partnerships with the casinos to the revenue-sharing model the casinos prefer. Mr Lam’s focus ever since has been to minimize the company’s exposure to the risks that can impede growth over the long haul. He’s reined in credit and cut complimentaries to his agents for hotel 43 Jaydev Mody Chairman Delta Corp. 44 Lam Man Pou Founder and Chairman Asia Entertainment & Resources Ltd rooms and other perks. To soften the blow he’s taken the novel approach of offering cash-only agents a piece of the win he shares with his casinos. It’s gutsy, and it hasn’t come without a price. Rolling chip turnover through the first half of this year was down 15%, and the acquisitions took a significant bite of net income, which was down 89% to US$4 million ($24.4 million on a non-GAAP basis). But revenue-sharing has begun to pay off, and the company made money in the second quarter on hotel and other services charged to its agents. The momentum is expected to continue into the second half, with rolling chip turnover forecast to grow to $19 billion for the year, and that’s not counting the L’ Arc tables. The Hong Kong listing should be finalized before then. Mainland Chinese and Hong Kong investors have been calling for it, according to reports, and Mr Lam has high hopes for it. AERL, for all the challenges it’s faced, has enjoyed robust free-cash-flow yields that aren’t being fairly valued, as far as he’s concerned. Moreover, he believes locals understand better than American investors the swings in fortune that can characterize the high-roller trade. To signal his confidence he’s joined his management and a core of AERL shareholders in purchasing $60 million of the stock for the listing.