Inside Asian Gaming

August 2014 inside asian gaming 25 included in the original enabling legislation, would appear to fly in the face of the economic benefits arguments that were advanced to justify casino expansion in the first place. “Our position is you can have one in Orange County and one in the Catskills, depending on how you design them,” said Caesars’ head of government relations, Jan Jones Blackhurst. Yet it’s an enviable position either way for Genting, triply unique, you might say, considered from the standpoint of its indirect control of Empire Resorts through Kien Huat. Empire’s Catskills casino bid, Montreign, it’s called, is part of a joint venture with EPR Properties, a Kansas City, Mo.-based REIT, and would be located within EPR’s $1 billion Adelaar, a mixed-use development with plans for 1,100 hotel rooms, a golf course, an indoor water park, shopping and other attractions. The bid is backed by a resolution of support from the town of Thompson and has secured almost all its local approvals. Empire is one of two bidders for a Catskills license. The other also is planned for a site at the old Concord. It’s a $675 million joint venture between the Mohegan Tribal Gaming Authority and New York developer Louis Cappelli. The Mohegans own one of Connecticut’s two Indian casinos and a commercial casino in the Pocono Mountains in northeastern Pennsylvania and they’re looking to expand elsewhere in the region. A Resort Gaming Facility Review Board appointed by the Gaming Commission is supposed to award the four licenses before the end of the year. Unemployment was down to 6.1% in June, its best showing since September 2008. But that’s difficult to gauge too. GDP grew 2.6% last year. But economists are more pessimistic now, and forecasts are that 2014 growth will fail to reach 2%. The question is whether the Strip can buck the trends. Private- equity giant Blackstone Group, for one, is a believer. They’re shelling out $1.73 billion for The Cosmopolitan, which has never made money in the casino since it opened in 2010. Based on last year’s room inventory, Las Vegas as a whole is around 875,000 visitors shy of pre-recession occupancy rates. Which is key because rooms account for a greater share of profits than gaming does (37% versus 30% in 2013). On the plus side, June EPR Properties’ $1 billion Adelaar in the Catskills, if it gets built, would include a $600 million casino by Empire Resorts that would be indirectly owned by Genting. “I think [Genting] have a particular expertise, given their Asian heritage, and increasingly it’s these Asian and Chinese players that are driving growth in a lot of the overseas markets.” Philip Tulk | Standard Chartered Cover Story was the best visitor month on record, up 3.1% year on year to 3.5 million. The town is on a pace to exceed 41 million arrivals in 2014. That’s even more than were coming before the recession. Convention attendance was up 4.5% in the first half. Hotel occupancy on the Strip is up to around 92%, driving a 2.1% increase in ADR in June, and RevPAR, up a corresponding 4.4%, is responding. “The growth we have been observing this year has been led by non- gaming segments,” brokerage Union Gaming Research said in a recent client note. “If we start to see some growth in the gaming segment, it would be an added catalyst to the Las Vegas Strip recovery.” Gaming revenue growth has been spotty. June was a good month, though. Table drop citywide, excluding baccarat, was up 6%, slot handle, 3%, resulting in an increase in “core mass-market revenue,” as defined by Union Gaming, of 4.5%. The Strip, on the other hand, enjoyed a 22.5% increase (and 14.4% in the second quarter) because baccarat has been off the charts. Volume was up 19.7% in April, 26.4% in May, 57.4% in June. June baccarat revenue was up 155% year on year. But Lim Kok Thay doesn’t need anyone to tell him the score. “Cannibalizing the existing Las Vegas market is not an option,” he has said. “We think we can drive new visitation.”