Inside Asian Gaming

DECEMBER 2018 INSIDE ASIAN GAMING 45 Maruhan’s group revenue of ¥1.55 trillion (US$13.7 billion) in its 2018 fiscal year leads Japan’s pachinko industry. Korean immigrant Han Chang-woo began the business with a cafe outside Kyoto in 1957, and a year later he took over a pachinko parlor from his brother-in-law. Today, it operates more than 300 parlors across Japan, as well as restaurants, entertainment centers – it rode Japan’s bowling boom and bust of the late 1960s to early 1970s – cinemas, golf and banks in the Mekong region. Despite the efforts at diversification, pachinko still generates the vast majority of Maruhan’s revenue and profits. But the industry’s contraction continues unabated, a victim of broadening leisure options, video games and government regulation aimed at reducing the gambling element that’s an undeniable part of pachinko’s appeal. Maruhan has been unable to buck that larger trend. The next major challenge facing pachinko will come from Japan’s integrated resorts. For those who view pachinko and Japan’s legal gambling options such as parimutuel racing as substitutes for casino gambling, then the advent of the real thing gives ample cause for worry. However, IRs will have a ¥6,000 entry tax for Japanese citizens and residents, limits of three visits a week and 10 visits per month and won’t open until 2024 at the earliest. Perhaps most important, there will only be three IRs in the country for at least the next decade. A study by Amusement Japan Editor in Chief Tsuyoshi Tanaka, a marketing professional before turning to journalism, finds that IRs would have no impact on pachinko players living more than two hours away. Global Market Advisors Senior Partner Andrew Klebanow suggests the relationship between pachinko parlors and IRs will resemble that of neighborhood bars and ultra lounges or dance clubs. The local bar is all about convenience and relationships – and that points the way forward for pachinko. How do you say “where everybody knows your name” in Japanese? David Sisk PROPERTY PRESIDENT City of Dreams Macau POWER SCORE: 1,214 POSITION LAST YEAR: – CLAIMS TO FAME Brought in from Studio City to oversee Melco’s flagship property Industry veteran, having worked in senior roles at Sands China, Resorts World Sentosa, Wynn Las Vegas and Caesars 20 Former Studio City President David Sisk found himself in charge of Melco Resorts & Entertainment’s flagship Macau property City of Dreams in January as part of a major reshuffle that saw predecessor Gabe Hunterton out the door, Geoff Andres moved from CoD Manila to Studio City and Kevin Benning handed the keys to Melco’s Manila operation. Sisk’s task is simple: rejuvenate the IR’s under-performing premium mass segment – one easier said than done while City of Dreams continues to undergo substantial upgrades to its gaming space including ongoing construction of new VIP rooms in the space formerly occupied by PokerStars LIVE Macau. Nevertheless, Sisk has at least been handed a much needed leg up with the launch of luxury hotel tower Morpheus in June, described by Chairman and CEO Lawrence Ho as “an architectural masterpiece” that “will become a tourist attraction in Macau – an icon for quality, taste and vision.” While ramp of CoD under Sisk remains slow, the longer-term outlook ismorepositivewithBernstein’sVitalyUmansky commenting, “City of Dreams Macau is a turnaround story after a weak 2017 – set to show strong growth with the opening of Morpheus and operational and marketing enhancements.” 3Q18 results were also promising, with both VIP rolling chip and mass table drop at City of Dreams up for the quarter even if luck wasn’t on Melco’s side. ASIAN GAMING POWER 50 2 0 1 8