Inside Asian Gaming

September 2014 inside asian gaming 61 In Focus official to face a corruption probe since the Chinese Communist Party came to power in 1949. Hong Kong, like Macau a Chinese special administrative region, is also suffering the effects of the clampdown, with its retail sales down five straight months through June, the longest losing streak since the global financial crisis in 2009. Citigroup analyst Anil Daswani highlighted “the panic” created by the anti-corruption campaign as the cause of a 13% year-on-year drop in July Macau VIP revenue. Mr Adelson pointed out, however, that “It [the campaign] doesn’t affect people coming to Singapore, and we’ve seen an increase in Chinese customers.” Still, even though there was a 9.5% increase in gaming revenue at Mr Adelson’s Marina Bay Sands, and the number of VIP players was up, rolling chip volume there plunged 27% year on year. Elsewhere in Asia, the high-roller segment has charted a different path. NagaCorp, operator of Cambodia’s biggest gaming operation, NagaWorld, reported a 20.1% increase in its rolling chip turnover in the first half of this year. NagaWorld’s VIP operations are targeted at high rollers from China and North Asia. In South Korea, Paradise, which runs five foreigners-only casinos, said its table drop from Chinese VIPs surged 24.9% year on year to 1.15 trillion won (US$1.11 billion) in the second quarter, accounting for 66.1% of its total drop. “It is the anti-corruption crackdown that is causing Macau VIP to be soft. In all other markets—Korea, Singapore, Cambodia, Philippines, Las Vegas, etc.—the Chinese VIP market is growing,” says Grant Govertsen of Union Gaming Research Macau. “Ultimately, we have a situation where wealthy VIP gamblers are laying low as it relates to Macau. Clearly, they do not have a problem going elsewhere (outside of the purview of the PRC) to gamble. However, when we compare Macau to any of these other markets, we’re talking apples and oranges. The typical VIP customer outside of Macau in all likelihood is a lower-value customer than a typical VIP customer in Macau.” The Macau VIP slowdown comes amid a warning by Pansy Ho, co-chair of Macau casino operator MGM China, that the city faces intensifying competition from rivals in the region. The daughter of local casino mogul Stanley Ho, Ms Ho told Bloomberg News recently that Macau is gradually losing its appeal for mainland Chinese, who are increasingly opting to travel more frequently and farther afield. Still, more than 10.2 million mainlanders visited Macau in the first half of this year, 14.7% more than the year-ago period. The current lack of new resorts ahead of the opening of the second wave of Cotai megaresorts starting in 2015 is also limiting revenue growth in the short-run, suggests Erika Cain, analyst at Canada- based Scotiabank, while “industry investment continues to shift to emerging markets in Asia”. Ms Cain says, “International tourist arrivals and gaming revenue in Macau and Singapore are expected to be tempered over the coming years by gaming liberalization and new casino developments across Asia.” THE LEADING CONTENDER Of the existing Asian gaming markets beyond Macau, South Korea in particular is tipped to rise on growing visitation from China, with the progressive easing of visa requirements on mainlanders visiting the country as well as warming bilateral ties, with Xi Jinping having met his South Korean counterpart, Park Geun-hye, five times over the past year. The rise in Chinese customers has driven the annual growth of casino revenue in South Korea by 7.5% in the five years through 2013, and the growth will be quickened to 11% a year in the 2014-16 period, according to analysts at Macquarie Equities. Since last September, Beijing and Shanghai residents buying into time share properties in Soth Korea can apply for three-year multi-entry visas rather than single-entry visas each time they visit. In March, Seoul unveiled its “Korea Priority Card” scheme for tourists, granting them five-year visas as long as they have spent more than US$30,000 in the country in the past five years and deposited at least 50 million won (US$46,700) in banks there, according to The Korea Times . Eased visa requirements, coupled with the popularity of Korean Las Vegas Sands Chairman Sheldon Adelson, commenting recently on China’s anti-corruption drive, said, “As in the past as I have experienced, that type of crackdown creates uncertainty, and that uncertainty temporarily slows the VIP market in Macau. Let me emphasize—it’s temporary and it’s cyclical.”