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A New Day

Public offerings and corporate involvement in gaming cross international boundaries

A New Day

A new era doesn’t announce itself with a press conference, fireworks and a party.

Often, it isn’t certain a new era has begun until it’s been around a while.

Today, it seems, we are in a new era-the merger of Asian and American gaming enterprises and investment opportunities.

If we have to put a date on when this era began, we’ll pick 2002, the year Stanley Ho lost his Macau casino monopoly.

Soon afterward, three American companies-Las Vegas Sands, Wynn and MGM Mirage-won the rights to build casinos in Macau. And one Hong Kong-listed company, Melco Crown, began trading shares in the United States on Nasdaq.

The pace of the trend for Americans and Asians to invest with each other has picked up this year, no doubt helped along by low stock prices and the freezing of the credit markets that has been slowly thawing in recent months.

Now, however, it is Asians putting money into American companies rather than the other way around. Consider these recent developments:
    

  • Wynn and Las Vegas Sands intend to go public-on the Hong Kong Stock Exchange with minority stakes in their Macau operations.

    

  • Lim Kok Thay, head of the family that controls the various Genting companies, is buying about half of Empire Resorts, putting his financial might behind Empire’s efforts to build a casino with the St. Regis Mohawks in the Catskill Mountains north of New York City.

    

  • After a long, slow buildup, Konami has arrived as a major North American slot machine company, and has even begun selling casino management systems, a business nearly 100 percent occupied by Bally, IGT and Aristocrat.

    

  • Aruze, which already owns a big chunk of Wynn, has ambitions to become a significant American slot machine company.

 

Of course, the trend still runs the other way, with Scientific Games and IGT having investments in the Chinese lottery industry, and Melco Crown recently selling more shares in the U.S.

And if we throw Australia into the mix, there is even more interaction, from Aristocrat and Ainsworth slots in North America to American suppliers in Australasia.

Then there are partnerships and cross ownership of companies-Aristocrat and PokerTek, the JCM and TransAct alliance, as examples.

Of course, this is part of a broader globalization of gaming, as illustrated by the American financing of British internet companies, Lottomatica’s purchase of Gtech, Scientific Games’ British gaming machine business, and Intralot’s fast advance in the U.S.

But what interests us is the Asian-American theme.

Two companies we find interesting are giant Genting and little Elixir Gaming Technologies.

Genting is a multibillion-dollar Malaysian conglomerate.

Its gaming business has grown from its giant Genting Highlands to ownership of the former Stanley Leisure in Britain and Europe to the Sentosa mega-resort opening in Singapore to the just-opened $700 million Resorts World in the Philippines.

Several Genting entities are publicly traded. The parent company, Genting BHD, and Genting Malaysia, are traded in Malaysia. Genting Singapore trades in Singapore. Star Cruises, the partner in Resorts World Manila, trades in Hong Kong.

Genting has global gaming ambitions, and its track record and resources suggest it can fulfill them.

Genting bought some MGM Mirage bonds early this year, sparking speculation about its intentions with MGM both in the U.S. and Macau.

The purchase of Empire Resorts is being done through Kien Huat Realty III Ltd., the privately held company of Lim Kok Thay’s family.

For $55 million, he is buying what could be the base of an American casino group, and at the least is a relatively inexpensive entry into the U.S. if the Mohawk casino is approved.

Elixir is a different story. It is a small slot machine company that has lost money in markets like the Philippines, Vietnam and Cambodia, and has been driven down to penny stock status.

Yet it lists on the American Stock Exchange and its top executives have been making the rounds of investor conferences in the U.S.

One thing that makes EGT interesting is its pedigree.

It is part of Elixir International, which, in turn, is part of Melco, the Hong Kong-listed company headed by Lawrence Ho and chief partner with Crown Gaming in Melco Crown.

Whether that translates into EGT growing beyond Asian slot parlors and some RFID-embedded playing chips remains to be seen.

No doubt, as time goes on, there will be more Asian and American combinations and alliances, and more Asians investing in U.S. companies.

And as those enterprises prosper, many Asian investors will be able to say their profits were made in the USA.


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