Inside Asian Gaming

inside asian gaming July 2014 44 Aristocrat Pulls Off Second Big US Buy Aristocrat Leisure has made another strategic acquisition in the US, buying Paltronics, a leading provider of game systems whose jackpot technologies are deployed in Aristocrat’s popular Hyperlink and Xtreme Mystery progressives. The deal further shores up a growing US business for the Australian slots and systems giant (ASX: ALL) in the wake of its purchase of Video Gaming Technologies, a major supplier in the Class II tribal markets. Aristocrat is spending US$1.3 billion to acquire Tennessee-based VGT, which has about 20,000 machines in more than 145 locations in the United States and Mexico, most of them leased games distributed under revenue-sharing agreements. No sale price was reported for Paltronics—“a compelling acquisition that will deliver significant value across key strategic segments, particularly our leading US casino systems business and in the fast-growing linked progressive and jackpot markets,” said CEO Jamie Odell. The huge but struggling US slots market is in the throes of a wave of consolidation following on Bally Technologies’ purchase of SHFL entertainment and Scientific Games’ purchase of WMS Industries. New and replacement sales have been sagging nationwide, the consequence of jurisdictional saturation, flat same-store casino revenue growth post-recession and the aging of the traditional slots customer base. International Game Technology, the dominant US manufacturer, recently announced it was entertaining suitors and is reported to be in talks with lottery giant GTECH, private equity’s Carlyle Group and Apollo Global Management, which co-owns Caesars Entertainment, and an investment firmheaded by SciGames Chairman Ron Perelman. Paltronics provides a range of applications for in-game media windows and bonusing and jackpots for EGMs, video poker machines and table games and is seen as a fresh source of ideas for strengthening Aristocrat’s OASIS 360 casino management system. Aristocrat said the purchase will “secure access to key technology … while protecting existing multi-site progressive technology infrastructure and opening up further innovation opportunities in the jackpot segment.” The purchase covers all material assets of Paltronics, including IP, Aristocrat said. Chinese Money Backs $2B Caribbean Resort Plan A Beijing-based investment group plans to spend US$2 billion to develop a destination resort with a casino in the Caribbean island nation of Antigua and Barbuda. Yida International Investment, whose holdings include mining, real estate and health care, has signed a memorandum of agreement with the islands’ government with the aim of constructing a mixed- use leisure complex larger than Baha Mar in the Bahamas, which is also backed with Chinese money and is slated to open in December with William Weidner’s Global Gaming Asset Management in charge of operations. The Yida plan calls for five hotels, 1,300 private residences, a golf course, a conference center, a marina and other attractions spread across 1,500 acres on Antigua’s Guiana Island, two smaller islands and a neighboring peninsula. The deal was signed on the same day that Antigua, known principally as a tourist destination and online gambling hub, swore in a new Labor government led by Prime Minister Gaston Browne, who has “promised the people that my administration would bring the type of investments” that would transform Antigua into “an economic powerhouse,” according to news reports. In line with this the agreement calls for Yida to invest more than $200 million annually in the local economy over the next 10 years and open doors in China for Antigua in hopes of attracting additional investments. The agreement certainly signals a robust interest in the Caribbean on the part of Chinese companies. The Import-Export Bank of China is providing the bulk of the financing for the US$3.5 billion Baha Mar, which will feature 1,000 hotel rooms and a 100,000-square-foot casino among its first-phase attractions. China State Construction Engineering Corp., the country’s largest builder, is the general contractor and a limited investor and is employing thousands of workers from China at the site. The Bahamas has since expanded its international airport to meet the hoped-for demand and has negotiated 30-day visa free access to the island nation for Chinese travelers. Baha Mar parent Baha Mar Resorts Ltd has opened a business development office in Hong Kong and plans to reach out to wealthy Asians in North and South America and Europe. Malaysia-based resort conglomerate Genting also is expanding in the region through its Resorts World Bimini complex in the west of the Bahamas about 50 miles from Miami. Russia OKs Casinos in Crimea, Sochi The Russian State Duma has approved a bill to legalize casinos in Crimea and Sochi in a bid to boost tourism and attract investment. The Crimea is a special concern as Moscow’s annexation of the Black Sea peninsula from Ukraine earlier this year has saddled it with an ailing economy and a cash-strapped government dependent on federal subsidies. “The creation of a gambling zone in Crimea will attract additional investment to the region, create jobs and improve the tax base,” said high-ranking Duma member Anatoly Karpov. The zone, most likely in Yalta, will add the equivalent of US$720 million to the economy, according to analysts cited by news agency ITAR-TASS , which reports that “many potential investors” have expressed interest. INTERNATIONAL BRIEFS Antigua