Inside Asian Gaming

inside asian gaming March 2015 44 Caesars CEO Gary Loveman to Step Down Gary Loveman, the longtime chief executive of Caesars Entertainment, the troubled casino operator whose largest unit recently filed for Chapter 11 bankruptcy, plans to step down from that role, the company said last month. He will be succeeded by Mark Frissora, the former chief executive of Hertz, who left the rental car company last year after pressure from activist investors. Mr Frissora will join the board of Caesars immediately and will be guided by Mr Loveman before taking the reins of the company on 1st July. Mr Loveman, who became chief executive in 2003, will continue to serve as chairman of Caesars and of the unit now in bankruptcy, Caesars Entertainment Operating Company. Caesars is currently locked in a bitter fight over the bankrupt subsidiary with certain creditors, who have loudly complained that they would be shortchanged in the restructuring plan. Caesars, which was acquired for about US$30 billion in 2008 by two private equity firms, Apollo Global Management and TPG, has been losing money for years due to the recession and other issues. The private equity firms put the operating subsidiary into bankruptcy in Chicago in January, in an effort to shed debt and salvage value from their investment. Hertz, which went public soon after Mr Frissora joined, came under scrutiny last year by the billionaire investor Carl C. Icahn, who said he lacked “confidence in management.” Mr Frissora stepped down in September, citing personal reasons. The departure of Mr Loveman closes a long chapter for Caesars. A former professor at Harvard Business School, Mr Loveman was recruited in 1998 to join Harrah’s, the regional gambling company that would become Caesars. Among Mr Loveman’s early moves as the chief executive of the company, which was then known as Harrah’s, was to buy Caesars Entertainment for more than $5 billion, creating the biggest gambling company in the world. He also acquired Planet Hollywood and the World Series of Poker. Russia to Close Azov Casinos Three Russian casinos are now scheduled to close by April, as the Russian government hopes to bolster casinos in Sochi by shutting down other facilities and shifting focus to the former Olympic host city, reports gaming news Website casino.org . Sochi is a new entrant in Russia’s casino gambling industry, as it was only added to Russia’s four approved gambling zones last July. The three casinos that will be closing come from the Krasnodar Krai region, in the gambling zone known as Azov-City, in the town of Azov in the far west of Russia. The three casinos—Oracul, Shambala and Nirvana—had seen tremendous growth in the last few years, attracting about six times as much traffic in 2013 as they did in 2010, when they first opened. It’s unclear just how much warning operators were given of the closure plans. When Sochi was first authorized as a gambling zone last summer, the Royal Time Group (which operates Oracul) said that they did not see the new regulations “as a direct indication to the elimination of the existing Azov-City gambling zone.” Sochi is also located in Krasnodar Krai, however, which would have put it in direct competition with Azov-City had both been allowed to host casinos. Given that the casinos will have to close abruptly by 1st April, the Russian Ministry of Finance has said it will make efforts to compensate the operators for closing their casinos. The owners of the casinos will reportedly receive payments of at least 10 billion rubles (about US$160 million at the currently depressed exchange rate) in compensation for their losses. That could help offset some investments by Royal Time, which recently built a five-star hotel at the Oracul and was in the process of completing a concert and entertainment complex that was scheduled to open later this year. The law passed last summer was designed to help Sochi find ways to make sure the massive investment into the city for the 2014 Winter Olympics did not go to waste. However, despite the legislation, there had yet to be any firm proposals to build a casino in Sochi. This may have prompted the closure of the Azov-City casinos: the hope may be that by eliminating any competition in the region, developers will be more likely to invest in a Sochi casino project. The law allowing gambling in Sochi, signed by Russian President Vladimir Putin last July, also established a gambling zone in Crimea, the Ukrainian region that Russia annexed earlier in the year. Russia said that setting up a gambling area there would help boost visitation to what was a popular tourism region before the Ukrainian crisis. Gambling in Russia is strictly controlled, and casinos are only allowed in four small sections of the nation. Those zones were established in 2009, after which gambling halls became illegal in all other parts of the country. So far, only the three casinos in Azov-City and one facility in Altai, the Siberian Coin, have been opened. However, there are plans by some firms to build in Primorsky, the Far Eastern province that borders northeastern China. Lawrence Ho, co-chairman of Macau-based operator Melco Crown Entertainment, is in the process of launching a casino near Vladivostok that is expected to open in May, while both Royal Time and NagaCorp have plans to open casinos in the region in the future. INTERNATIONAL BRIEFS Gary Loveman The Oracul casino in Azov