Inside Asian Gaming

inside asian gaming November 2014 32 will come from non-gaming sources, local news site Rappler reports. That would be better than the 65% non-gaming revenue that Las Vegas Strip resorts book and on a percentage basis more than double that of Marina Bay Sands, regarded as Asia’s top non-gaming performer. “Our master plan is over a billion [US] dollars of investment,” Mr Tight says, adding that a precise budget will be contingent on the final location, whatever terms might be attached to the government’s approval, and on how the plan eventually unfolds. PREMATURE EVALUATION Caesars’ billion-dollar figure equates to the minimum investment required of the four Entertainment City licensees, but PAGCOR Chairman Cristino Naguiat has said his agency is considering raising the minimum for future projects to $1.5 billion. At the same time, Mr Hernando says it is “premature” to think about the details of a Caesars license. Because even if the “long and tedious” licensing process (his words) were to proceed, “PAGCOR would likely look at crafting terms that are more advantageous to the government than the existing licenses.” Earlier this year, the agency cut its gaming license fees, effectively the gaming tax, for current licensees by 10 percentage points to 5% on VIP revenue and 17% on mass-market revenue and scrapped its 5% franchise fee to offset the impact of a court decision making PAGCOR and the private operators subject to the nation’s 30% corporate income tax. The court ruling could have dealt a serious blow to the government’s plans for Entertainment City, the special resort zone carved out of 120 hectares of reclaimed land along Manila Bay for the purpose of attracting investment and providing badly needed jobs. Four resorts are licensed for the district. Solaire Resort & Casino was the first to open. Controlled by Philippine ports magnate Enrique Razon, it debuted last March. Melco Crown Entertainment’s City of Dreams Manila is expected to open in the coming weeks in partnership with the Philippines’ richest man, Henry Sy. Japanese pachinko mogul Kazuo Okada’s Manila Bay Resorts is expected to open in 2016. Bayshore City Resorts World, scheduled to open in 2018, is being developed by Travellers International Hotel Group, the partnership between Genting Hong Kong and Philippine property billionaire Andrew Tan’s Alliance Global that also operates Resorts World Manila. Opened in 2009 and continually expanding, RWM lies across the road from Terminal 3 of Ninoy Aquino but is not directly accessible to it. There would be obvious competitive ramifications from Caesars’ entry into the market, but according to one source, PAGCOR has not Feature In Focus That partner is a supplier to the hospitality industry, Mr Tight reveals, and Caesars might bring in another local partner as well. For its resort in Incheon, South Korea, Caesars has two partners: Indonesian conglomerate Lippo Group and OUE, a Singapore-listed property developer controlled by Lippo. A source told Inside Asian Gaming the partners were surprised at how much cash they were expected to provide for the project. In Manila, it appears Caesars wants to replicate the formula. “As a minority partner, we think there is little, if any financial risk [to Caesars] for such a project,” said a gaming investment analyst who requested anonymity. Mr Tight says it is “premature to speculate” on how much equity Caesars would hold in a Manila IR. “But we want to make sure that we’re investing enough that we can create something that truly meets our brand standards and complements the existing offerings in Manila today. Caesars as a brand has equity, and we want to make sure it’s consistent and reinforces our overall brand as well as expands our presence in Asia.” Francis Hernando, vice president for Licensing and Development for state-run regulator PAGCOR, says there are no fixed rules in the Philippines governing ownership thresholds. “But naturally we want our licensed operators to hold significant equity interest in their respective projects. This is a good measure of their commitment to their projects.” Looking at the Caesars proposal, he says, “It is too early to do any kind of evaluation, but we believe it is critical for our licensees in general to have the financial wherewithal to complete their projects.” Muhammad Cohen “There is a sector that believes Caesars is a brand name that kind of tells the world that … in a sense, we have arrived”. President Benigno Aquino