Inside Asian Gaming

inside asian gaming September 2014 26 leading role in the MBS bidding process, utilizing his government- relations skills and local experience. When MBS Chief Executive Thomas Arasi left in January 2011, Mr Tanasijevich became CEO as well as LVS’ managing director of global development. Insiders praise Mr Tanasijevich’s team at MBS, led by Executive Vice President Andrew MacDonald. With second-quarter EBITDA of US$417.8 million, up 17.6% from a year ago, on a 51.9% margin, MBS is almost certainly the single most profitable casino resort on the planet. The hotel boasted 99.1% occupancy for its 2,561 rooms at an average daily rate of $409, and income from its attractive, hugely profitable 800,000-square-foot shopping mall rose 12.6% to $40.3 million. On the other hand, rolling chip volume fell 27.3% and mass- market table drop fell 4.9%. Casino revenue rose due to a rolling chip win rate of 3.45%, well above the 2.85% MBS uses as its benchmark, and also significantly better than the 2.53% achieved a year earlier. Normalized for luck, EBITDA for the quarter fell 4%. Those numbers illustrate the dilemma for MBS as it struggles with Singapore’s near-total ban on junket play. Gaming revenue shows extreme volatility since a handful of high rollers play a big part in determining the results. In the absence of junkets, MBS also has to absorb the credit risk. Receivables have hovered above $1 billion for the last seven quarters, and the property has made provisions for reserves totaling $420 million for potential non-payment. Along with volatility, there’s low growth amid Singapore’s ever- tightening gaming marketing restrictions, so MBS hopes to find growth in other segments of the business. LVS Chairman Sheldon Adelson announced earlier this year that the resort is seeking adjacent land to build additional hotel and convention space. But even with Mr Tanasijevich’s negotiating skills, Singapore authorities remain cool to the idea. Those skills are being further tested as Mr Tanasijevich spearheads LVS’ efforts to win a license for one of the IRs the Japanese government is expected to issue. “If they think Singapore is tough, just wait until they have to deal with Japan,” one industry executive cautions. As in Singapore, LVS has made a good choice by letting George do it. Tan Hee Teck President and COO, Genting Singapore Chief Executive Resorts World Sentosa too much. It restricted RWS’ and MBS’ local marketing efforts from the outset and has tightened the leash further. Global Betting and Gaming Consultants reports Singapore topped the world in per capita gaming spend last year at US$1,376, 43% higher than second-place Australia. Before the IRs opened in 2010, Singapore didn’t rank in the top five. Those numbers will likely tempt the city-state’s stringent Casino Regulatory Authority and likeminded government ministers to rein in the marketing even more. RWS parent, Singapore-listed Genting Singapore, of which Mr Tan serves as president and chief operating officer, reported strong numbers for the first half of the year. Gaming revenue grew 19% to 1.27 billion Singapore dollars (US$1.02 billion), adjusted EBITDA rose 27% to S$714 million, with net profit up 24% to S$389 million. However, the numbers were a tale of two quarters, illustrating the difficulties of finding steady growth in Singapore, a problem RWS shares with rival Marina Bay Sands. In the first quarter, gaming revenue rose 29%, adjusted property EBITDA was up 58% and the net grew 77%. In the second quarter, gaming revenue rose a healthy 9% but adjusted property EBITDA was up just 2% and net profit fell 22%. That volatility is a consequence of RWS relying on a relatively small pool of VIPs for the bulk of its Entrusted with the crown jewel of Genting Group’s global gaming portfolio, Tan Hee Teck enjoys the full confidence of Genting Executive Chairman Lim Kok Thay. That faith from the top also puts Mr Tan at the leading edge of Genting’s drive to expand into Japan. Resorts World Sentosa has been a stunning success, even though it has run second in Singapore to Marina Bay Sands in revenue and its growthprospects are limited. The problem is the Singapore government wants integrated resorts to draw tourists and give it a cooler image, but it doesn’t want junket promoters, especially the ones from Macau that can supply the most potentially lucrative players but tend to operate in a less transparent environment than the local regulatory regime is comfortable with. At the same time, the government really doesn’t want Singapore residents to gamble either, or certainly not to gamble