Inside Asian Gaming

FEBRUARY 2016 inside asian gaming 45 and is still off its 2007 peak of $6.83 billion. Entry into the world’s most competitive casino market might seem risky for an Asian company in such a climate. Yet Genting Group is perhaps the best qualified to go up against American heavyweights on their home turf. In addition to casinos in Malaysia, Genting Americas’ parent runs highly succesful resorts in the Philippines and Singapore, is the largest casino operator in the UK, and since 2011 has been operating the first and only legal casino in metropolitan New York, although all gaming in the property is electronically based. Crucially, Genting also has a deep capability in marketing to Chinese gamblers, who now make up one of the most important segments of the global market. iGaming mega-mergers Ireland’s Competition and Consumer Protection Commission has approved the merger of Irish bookmaker Paddy Power and the world’s largest online betting exchange, the UK-based Betfair. Headquartered in Dublin with its main listing on the London Stock Exchange, the newly created Paddy Power Betfair will have a market capitalization of about €9.4 billion and annual revenue of about €2 billion. It will own and operate online betting businesses in Europe, the US and Australia, serving over four million customers from more than 100 countries. Also in February, UK bookmakers Ladbrokes and Gala Coral are expected to complete their planned merger, creating a new company in possession of nearly 4,000 betting shops, or about 45% of the British total. With only around 600 land-based betting INTERNATIONAL BRIEFS shops of its own, Paddy Power Betfair will have a much smaller bricks-and-mortar operation, and lower revenues to boot. Yet while both Ladbrokes and Gala Coral have struggled with the internet, around 80% of the new Paddy Power Betfair’s revenue will be from online business. Higher margins online and internet gambling’s greater potential for growth mean the Paddy Power Betfair deal is valued at over three times the total €2.83 billion Euros the markets are giving the Ladbrokes Coral merger. MGM raises controversy with Vegas parking fees In a move seen as signaling a fundamental transformation of the Las Vegas economy, MGM Resorts International has announced it will start charging for parking in the city, the first major casino operator to do so. MGM Resorts has 35,310 hotel rooms and 37,000 parking spots around the city’s main drag, known as “the Strip”, which are in high demand during major events. The charges, which the operator says will be up to US$10 for overnight self-parking, will be introduced at most of its casinos and attached hotels, although some parking at one MGM hotel and casino, and two of its shopping centers will remain free. Customers in MGM’s loyalty program will also be able to earn free parking rewards. Parking fees would not make headlines elsewhere. But in Las Vegas they are important for marking the city’s shift away from reliance on gambling and towards non-gaming income from attractions such as conventions and performances. In 1990, for example, 61% of revenues came from gambling, which subsidized many other goods and services supplied to visitors; from $20 hotel rooms to free drinks on the casino floor. The cost of supplying them at a loss was more than offset by the benefits of making it easier for the visitors to gamble. These days, however, many tourists visit Las Vegas without gambling. Non-gaming revenues overtook money earned from gaming in 1999 and stand at 64% of the total today. That makes it harder to justify the subsidies. 70% of MGM’s revenue in Las Vegas now comes from non- gaming attractions such as high-end shops, celebrity restaurants, shows and nightclubs. The reaction to the move to charge for parking has been vocal, with some customers responding to the new charges by vowing on social media to take their business elsewhere. Analysts, however, are predicting that other operators will eventually follow MGM, and introduce parking fees themselves.