Inside Asian Gaming

July 2016 inside asian gaming 25 In Focus says. “Tax rates are onerous in many jurisdictions [reaching up to 80% on France’s staggered scale], so operators can’t spend money on marketing. Because you’re focusing on operations, you can’t get out positive messages.” Lobbying and public relations can change that image, Mr Gallaway says, but there’s a catch. “European operators don’t have the money for that; Asian and American operators do. But they have to be sensitive to the culture,” the US-based consultant cautions. “You have to be subtle and have a more European approach.” Noting how US operators went after UK casino licenses with “all guns blazing, proposing 4,000 machine casinos in residential areas,” Mr Gallaway thinks Asian companies will approach European markets with greater sensitivity. Another way to improve casino returns in Europe is through convergence between online gaming and land-based casinos. Again, Asian and American casino companies have the capital but US operators have shown reluctance to pursue online gaming, he notes, whether due to online gaming frequently operating in legal gray areas or the influence of Las Vegas Sands Chairman Sheldon Adelson, a vehement online gaming opponent. “Convergence will help bricks and mortar casinos,” Mr Gallaway says – and a test case is underway. Last year Genting Group moved its Genting Aldeney online gaming subsidiary, licensed in the British Channel Islands, under the Genting Berhad’s Genting UK umbrella. Aldeney operates betting sites using Genting and other group brand names. The parent company’s 2016 first quarter report, echoing previous announcements, states that “plans are currently underway for both the Group’s land-based casinos and the recently acquired online gaming operation to be streamlined as an integrated online, mobile and retail gaming business under the focus of a single management to provide a seamless multi-channel experience for its customers.” OLD BUT NEW “Europe is an old market, but it’s still virgin in some ways,” Mr Gallaway observes, highlighting the absence of any mass gaming and entertainment hub or world-class integrated resort. Monte Carlo is large for Europe, but it’s small by world standards, with €189 million in gaming revenue last year from four casinos, including the iconic Casino de Monte Carlo, which opened the doors of its present location in 1863. “A true IR would be a game-changer,” Macomber International President Dean Macomber says. “How big a game changer an IR might be, and what would be the driving characteristics of such an IR don’t move the needle for the largest international players.” Union Gaming expects the winning bidder to invest US$400 to US$500 million initially, “with potential for increased investment via future phases should demand warrant.” Disappointed first round bidder Goldenlady Consortium told Cyprus media that it proposed to invest €1.15 billion (US$1.28 billion) in its IR. It questioned the integrity of the evaluation process, claiming other bidders proposed to spend as little as €250 million, up to €425 million. For all his enthusiasm about Cyprus, GBGC’s Mr Bartlett says he’d pitch the project in the range of €100 to €120 million for a 200 room resort. “The final CAPEX will depend on what is provided other than rooms, such as the sports centers, theaters and cinemas that so many resorts now require.” “There’s money to be made there,” Mr Gallaway acknowledges. “But I wouldn’t want to invest hundreds of millions of dollars.” the billion(s) of dollars,” Mr Govertsen writes in a Union Gaming analysis. “While the ROI story based on several hundred millions of dollars of investment is likely to be good, the cash flows that would be associated with a several hundred million dollar investment just Cyprus