Inside Asian Gaming

August 2014 inside asian gaming 15 Cover Story down 12%. Total visitation to Clark County, which includes the city and the outlying towns, has been flat (though it has been picking up). Gaming revenue countywide the last six years is down 11%. The biggest Strip operators have fared a little better in this area. Their cumulative decline has been 4.4% over the same period. It would’ve been a lot worse, though, if table games hadn’t held their own at +9%; and for that they can thank baccarat, which is booming: it has soared 76% in revenue terms the last six years, and for the big casinos it’s now generating around almost half of total table win. “Baccarat contributed roughly 25% of all Las Vegas Strip revenue and 46% of total table revenue in the 12 months ending June 2014,” notes Praveen Choudhary, Hong Kong-based gaming analyst with Morgan Stanley, ”and most of the baccarat players are Asians and Chinese high-end gamblers. Genting would have a lot of means to leverage that to develop something that some of the incumbents don’t have access to.” So it’s not just Genting’s deep pockets the town needs, it’s the knowledge it’s amassed as a leading operator of casinos in Asia going back more than 40 years. And Genting, the largest Asian operator without a presence in Macau, needs Las Vegas. There’s not a lot about the company on a same-store basis to excite investors. It hasn’t had a really compelling story to tell since Singapore and Resorts World Sentosa. “Their strategy is become a major national and international operator of casino resorts,” says Andrew Klebanow of Las Vegas- based industry consultants Global Market Advisors. “In the United States and around the world. Their goal is to get into as many lucrative markets as possible. That’s what they’re doing.” And they’re doing it big, despite Vegas’ post-recession hangover and the over-supply weighing down most regional markets. “I also think the US is a lot about prestige,” says Mr Choudhary. “You want to be a global gaming company you have to have a casino in Las Vegas.” A CASE FOR AN IPO Under the broad umbrella of Genting Malaysia (GENM), which trades in Kuala Lumpur, the company has more than $6 billion in proposed gaming investments on the table in Miami and New York state. Resorts World Bimini, which opened in the Bahamas last summer as part of a joint venture, operates a small casino (10,000 square feet) about 50 miles from Miami that is being expanded with a hotel and docking facilities for cruise ships. GENM’s wholly owned Genting Casinos UK is Britain’s largest operator with 41 casinos and a 42nd under development in Birmingham that will be the country’s largest. Genting’s presence in the US actually goes back decades to private investments in tribal gaming by founder Lim Goh Tong, who died in 2007, and by his son and current Chairman and CEO Lim Kok “They’re willing to wait. They’re not beholden to shareholders for the next quarter’s performance of their stock. They’re patient. They wait for their opportunities. No US gaming company has that luxury.” Andrew Klebanow Global Market Advisors TOTAL VISITORS, GAMING REVENUE, AND WIN PER VISITOR (CLARK COUNTY, NEVADA) Year Total Visitors % Change Total Gaming Revenue % Change Gaming Revenue % Change (Win) per Visitor 2007 39,196,761 0.7 $10,868,029,000 2.2 $277 1.5 2008 37,481,552 (4.4) 9,796,970,000 (9.9) 261 (5.7) 2009 36,351,469 (3.0) 8,833,902,000 (9.8) 243 (7.0) 2010 37,335,436 2.7 8,908,698,000 0.8 239 (1.8) 2011 38,928,708 4.3 9,222,906,000 3.5 237 (0.7) 2012 39,727,022 2.1 9,399,882,000 1.9 237 (0.1) 2013 39,668,221 (0.1) 9,676,458,000 2.9 244 3.1 Average Annual Compounded % 2.0 % 2.8 % 0.7 % Change - 2010 to 2013: Year-to-date April: 2013 13,037,268 --- $3,281,193,000 --- $252 --- 2014 13,664,661 4.8 % 3,191,098,000 (2.7) % 234 (7.2) % Source: Nevada Gaming Control Board, Las Vegas Convention & Visitors Authority, HVS Consulting and Valuation