Inside Asian Gaming

May 2014 inside asian gaming 31 country accross the border from China’s Yunnan province. Their new Lao Cai International Hotel is scheduled to open the 18th of May with 428 hotel rooms, up from 34, and a casino that will go from eight very profitable table games to as many as 50 very profitable table games. There are 45 million people in Yunnan. They’re the ballast under the ASX-listed stock of the Lims’ investment vehicle, Donaco International (ASE: DNA), which is valued currently at about $521 million on a share price that has risen more than 200% over the last year. Those Yunnanese are the reason the Lao Cai International was able to book US$40 million in gaming revenue in 2013, 80% of it VIP play delivered via relationships with some 20 junket operators. That’s roughly $11,000 per table per day, and what it implies for 2014- 15 in terms of the bigger casino that opens this month is a capacity to generate well more than $100 million a year—not counting the hotel side—and that’s equivalent to about one-third of the entire Vietnamese market as it exists today. On the strength of it Donaco was able to raise A$100 million from two private placements in Sydney in the last year to pursue what it terms a “strong pipeline of opportunities” in which Vietnam is likely to figure as prominently in the future as it does today. It’s been a nice revenue stream as well for the provincial government, which owns 5% of Lao Cai. And two new highways are coming to the region that will only bolster the resort’s positioning: one from Hanoi designed to tie the province more closely to the larger economy of the north, one from China that will cut the drive from Yunnan’s capital of Kunming in half to about four hours. About 160 kilometers east of Hanoi, the casino in the northern port city of Haiphong derives 70% of its business from Chinese players. Another casino on picturesque Halong Bay in Quang Ninh province next door similarly benefits from proximity to the giant neighbor to the north. A UNESCO World Heritage Site, Halong has long been a popular destination for domestic and foreign vacationers, and the government of Quang Ninh is looking to leverage that with a much larger casino as part of a planned megaresort called Marina City designated for a 300-hectare island in Halong Bay called Tuan Chau, which lies within a special economic zone much favored by the central government and known as Van Don. Marina City is the brainchild of a Vietnamese entrepreneur named Dao Hong Tuyen, a 60-year-old veteran of the Cambodian war that overthrew Pol Pot and reputedly a US dollar billionaire twice over, with holdings in agricultural fertilizers, food and beverage, banking, construction, imports and exports and leisure and tourism. The locus of his fame is Tuan Chau—tiny, sparsely populated, so beautiful that Anthony Bourdain shot one of his travel episodes there for American television. Beauty was all Tuan Chau had when Mr Dao arrived around the turn of the century. Electricity didn’t exist as late as the 1990s, there were no modern roads, not even a reliable source of potable water. He poured in millions to remake the place as a destination. There are now beachfront villas and guesthouses, a golf course, a marina, sports facilities, a water park with dolphins and sea lions and a two-kilometer road to the mainland. They call him the “Island King”. His partner in Marina City is a private development company out of Australia called ISC Corp. Mr Dao is supplying the land and the political connections, ISC the money. Their plans call for a phased development of luxury hotels and private residences, an even larger marina for berthing super-yachts, more golf courses and more outdoor attractions, the whole priced at US$7 billion. Backers include no less than Citibank and Credit Suisse. Penn National Gaming, one of the largest operators in the United States (Nasdaq: PENN), has signed on to run the casino. “Everything is ready for the project,” said Nguyen Van Doc, who chairs the Quang Ninh Provincial People’s Committee. “We have found a suitable place for it. The casino would have connections with the Van Don airport, which is also a key investment project in the province.” It’s not just Quang Ninh that’s hot for this. Marina City is reported to have the endorsement of the Communist Party’s all-powerful Politburo, and the buzz surrounding it was enough last year to move some members of the National Assembly to raise the possibility of allowing the country’s population of 90 million to gamble in casinos, The border between Vietnam’s Lao Cai province and China’s Yunnan, where 45 million people live. Rendering of the proposed Marina City in Halong Bay. In Focus