Inside Asian Gaming

INSIDE ASIAN GAMING MAY 2018 24 Japan’s casino market will be worth around US$15 billion annually … of which Tokyo would comprise around 40% of GGR and 50% of foreign spend assuming it hosts one of the three licenses on offer. “With mainland China as the most contributing feeder market, there has been an increasing sense of ‘patriotism’ from China as to ‘why let the US companies reap so much profit from the Chinese wallet in China’s SAR?’. “The US operators have contributed tremendously to Macau’s success in terms of industry expertise, operating know-how and so on, however the fully-fledged local companies have become competitive enough in these fields and even proven that they can be better in certain areas. “Macau does not need to rely on the US giants anymore and there is no convincing reason why Macau has to maintain the current three local/three US concessionaire split. Macau is on its free will to choose what to do next, given Beijing would apparently have a lot to say on this process.” One company that has been touted as a leading contender in this regard is Macau’s number one junket operator, Suncity. Already responsible for around 50% of Macau’s annual VIP gaming revenue, Suncity is also in the process of branching out into the world of casino operations via a 34% stake in Vietnam integrated resort Hoiana, due to launch in 2019. In a recent note outlining a potential Suncity bid, Govertsen observed just how irresistible the company’s dual involvement in Asia as both a junket operator and casino operator could prove to be should it bid for a Macau license. “In regards to the license rebid process in Macau, Hoiana will put them in a better position to win a license (in the event a seventh license is issued) not only because Suncity will be a bonafide IR operator with local roots, but that licensing Suncity would also repatriate VIP dollars to Macau where it provides a benefit to the local community,” Govertsen said, estimating up to US$15 billion in quarterly roll at its Vietnam IR. “The reality is that Suncity will be in a position to redirect a real amount of VIP volume to Vietnam beginning next year. The scenario COVER STORY we provide herein is the equivalent of 7% of total VIP volume in Macau in 2019E. “While it is virtually impossible to isolate the impact to Macau due to the growth in VIP in other regional markets, we think that Suncity’s transition to becoming a casino principal brings with it risks to Macau and a positive new angle for Suncity as it relates to the potential for obtaining a Macau license.” Among the other potential bidders is, of course, Caesars Entertainment Corp – which famously chose not to apply for a Macau gaming license in 2001, then knocked back a second opportunity to buy Wynn’s sub-concession five years later. Touted as one of the biggest mistakes in corporate history, the oversight later prompted then-CEO Gary Loveman to quip, “We are the biggest gaming company in the world but we are not in the most important gaming market, because when that opportunity came, we missed it.” Govertsen also raises the possibility of any of Macau’s current