Inside Asian Gaming

August 2014 inside asian gaming 45 in mind, we would expect SCL to continually adjust its gaming and non-gaming mixes to suit its customer base.” VIP volume was down 16% as a result, versus a market-wide decline of 6%. But mass table revenue growth outstripped the market (34% versus 32%), as did slots (+19% versus +4%). The difference was apparent in a 27% jump in net income to $620.2 million. Operating income company-wide rose 23.2% to $961.5 million, due mostly to the stronger Macau results. Total net income was up 26.7%. Earnings per share increased 29.7% to 83 cents, missing a consensus of analysts polled by Thomson Reuters by 7 cents a share on forecasted revenue of $3.8 billion. Marina Bay Sands in Singapore reported revenue of US$804.7 million, an increase of 8.8%. The company’s two Las Vegas Strip resorts, The Venetian and Palazzo, combined for revenue of $353.1 million, an increase of 2.1%. Sands Bethlehem continued to dominate Pennsylvania’s table games market with revenue of $177 million, a 7.2% increase year on year and far ahead of the $123 million taken in by second-place Parx Casino in the Philadelphia suburb of Bensalem. Best Sunshine Wins Saipan License Saipan’s Lottery Commission has voted unanimously to award the island’s controversial casino license to Best Sunshine International, one of only two bidders for the US$2 billion resort authorized by the legislature earlier this year. A report in the Saipan Tribune says the commission followed the recommendation of US-based consultants The Innovation Group and B2G Global Strategies in rendering its decision, which the newspaper describes as “conditional” and subject to Best Sunshine and the commission reaching a “casino development agreement”. The law requires a minimum of 2,000 hotel rooms as part of the $2 billion mandate. The license also entails a payment of $15 million a year in lieu of gaming tax. The negotiations are expected to begin shortly. Casinos have been a divisive issue on Saipan and were rejected several times over the years both by the legislature and by the voters. Supporters see casinos as a way to revive Saipan’s ailing economy by boosting foreign tourism. But the bill that finally succeeded this year was prompted more by a government fiscal crisis, and it’s reported that the $30 million Best Sunshine was required to deposit in escrow will be used immediately to restore cuts to pension benefits. The casino will be the second in the US Pacific territory. The losing bidder, Marianas Stars, purchased the failing Tinian Dynasty Hotel & Casino on the neighboring island of the same name last year and is renovating and expanding it. Marianas Stars had proposed two licenses for Saipan, and when the government rejected the idea, the company sued to halt the award, claiming the process was seriously flawed, biased in Best Sunshine’s favor and possibly corrupt. Responding to the news of the award a spokesman told the Tribune the company is “obviously disappointed with the outcome, but now we move on and make sure that Tinian Dynasty stays economically viable in light of an exclusive casino license on Saipan.” Best Sunshine and Marianas Stars are both based in Hong Kong. Macau Drives Strong Q2 for Sands Las Vegas Sands (NYSE: LVS) posted a strong second quarter on the strength of its expansive Macau resort portfolio, delivering net income of US$671.4 million on $3.62 billion in revenue, both double-digit increases over the same period last year. More than 65% of the revenue, $2.38 billion, was generated in Macau, a 15% percent increase year on year, which was achieved despite some choppiness in the VIP segment, which was reflected in a 3.7% decline in gaming revenue in June, the first monthly drop in more than five years. Sands’ Macau operations “delivered strong growth in the mass and non-gaming segments of our business” in the quarter, Chairman Sheldon Adelson said in a statement. “During the quarter, we again outpaced the market in terms of gaming revenue growth. Our gross gaming revenue was up 12%, versus a market that was up 5%.” The company’s Hong Kong-listed Sands China subsidiary (1928. HK) generated adjusted EBITDA of US$800.6 million, missing a Bloomberg consensus of six analysts by about $56 million, but up 22% over Q2 2013. A “significant drop in VIP revenue” was the reason, noted JP Morgan Chase analyst Cusson Leung. It’s a market-wide phenomenon currently that’s being attributed to a combination of macro-economic uncertainties in mainland China and the central government’s aggressive anti-corruption stance. It’s expected to continue as operators respond by shifting more table games into the more profitable cash sector and in particular to lucrative high- limit “premium mass” areas. Union Gaming ResearchMacau estimates that Sands China was operating 148 fewer VIP tables in the second quarter compared with a year ago and 144 more mass-market tables, including 49 more premiummass tables, a 20% increase. The company’s current table mix stands at 377 VIP, 290 premium mass and 857 non-premium mass, the brokerage wrote in a client note. “We continue to believe that all of the major infrastructure already put into place (and continuing to be put into place) in mainland China is driving a much-higher-quality customer to Macau, and driving them more frequently,” the firm said. “With this The Venetian Macao INTERNATIONAL BRIEFS