Inside Asian Gaming

inside asian gaming September 2014 58 support, and construction has yet to start. Mr Rajapaksa is expected to seek a third term in elections that could be held as soon as January, and it’s not likely that Crown Colombo, as it’s called, will break ground before then. The 36-story, 400-room complex is slated to be built on a lakeside plot in the capital’s tourist core, and as owner of two of the country’s five officially recognized casinos (none are actually licensed), Mr Wijeratne is its key. The target market is “rich Indians,” as he puts it, big spenders who might otherwise go to Macau or Singapore to gamble. “We plan to divert them to Colombo, which is nearer to their homes,” he says. The potential is huge and still untapped. By his estimation, most of Sri Lanka’s foreign players come from China and Singapore, with India’s contribution “barely 2%”. He is keen to point out also that it was he who brought James Packer to Sri Lanka. “The government is not responsible in any manner for James Packer’s involvement in the project,” he said in a recent interview. “My board of directors discussed what international company should undertake the management of the hotel. I visited several countries and met the business community. I realized that there was no match for James Packer. It was I who selected him and not the government.” Mr Wijeratne, one of Sri Lanka’s pre-eminent entrepreneurs, returned to the island in 1992 after completing his education in the UK. He’s built up a diversified portfolio of businesses under his flagship, Rank Holdings, but the civil war that raged in the north of the country until 2010 forced him to put on hold his ambition to expand it with world-class hospitality offerings. Now that peace reigns, he is aggressively pushing ahead. The government sees foreign tourism as a key element in Sri Lanka’s post-war economic future and has approved two other major resort casino projects for Colombo—the US$350 million Queensbury proposed by Sri Lanka’s Vallibel One conglomerate and an $850 million complex spearheaded by regional hospitality giant John Keells Holdings, the country’s largest publicly traded company. Japan’s massive pachinko industry is in decline. According to investment bank Morgan Stanley, gross revenue from the country’s primary speculative pastime—a form of quasi-gambling played on pinball-style machines—has shrunk to 19 trillion yen (US$185.8 billion) from 31 trillion yen two decades ago, while the number of players halved between 2002 and 2012. Major factors driving the decline include the country’s shrinking population and pachinko’s failure to attract younger players, who prefer games on their mobile phones. Most of Japan’s 12,300 pachinko parlors are managed by small, family-run outfits, with Maruhan Group and Dynam Holdings the giants among the 4,000-plus operators. Maruhan is the biggest earner, generating the equivalent of $20.1 billion in sales across 299 venues in the 12 months ended 31st March. Although the entire industry is hurting, Maruhan and Dynam are doing better than the smaller companies, with Maruhan’s sales down just 1.2% over the previous year. Maruhan and Dynam are also working to reverse the decline with improved venues and a greater emphasis on customer service. The estimated$2.7billion fortuneofMaruhan’s self-made founder, Korean-born Han Chang-woo, landed him in 12th place this year on Forbes ’ “Japan’s 50 Richest” list, emblematic of an industry which owing to its disrepute among Japan’s commercial elite is dominated by ethnic Koreans, especially on the operations side. Maruhan was set up in 1953 and incorporated in 1957. As Japan prospered in the post- Han Chang-woo Chairman and CEO Maruhan Group World War II era, pachinko also thrived, and Mr Han did well enough in the ’60s to diversify into bowling alleys, driving ranges for golfers, amusement facilities, cinemas and other leisure-related businesses. In the 1970s, he returned his focus to pachinko and rode the wave of the country’s ’80s economic boom, which left him well-positioned to take advantage of the long slide that followed, when he continued to build the company by exploiting the decline in asset prices to increase Maruhan’s market share. Mr Han, now 83, has expanded his reach into more centralized locations. He’s built multi-story emporiums that lure customers with innovations that include non-smoking sections, free parking and improved odds. The cash flow from these large, successful outlets has helped transform Maruhan into the conglomerate it is today. The company’s Maruhan Japan Bank subsidiary has been expanding in Cambodia, Myanmar and Laos. And as pachinko sales slow, Mr Han is focusing more on new developments, including a four-story building in Osaka to open this year that will consist of shops and restaurants selling goods from South Korea, as well as a concert hall for Korean performers. According to Forbes , the Osaka development is part of his efforts to solidify relations between Korea and Japan.