Macau: Billion and Counting
It was a very good year for Macau gaming operators. The 2007 combined results for casino gaming, horse and dog racing and lotteries show gross gaming revenue at 83.847 billion patacas, which converts roughly to US$10.5 billion.
That is only about $1.5 billion behind what Nevada is expected to show for 2007. Full-year results for the state will not be out until February, but total Nevada revenue through November was $11.75 billion from gamblers.
For comparison, Nevada produced $12.62 billion in 2006, while Macau’s 24 casinos then in operation did $6.95 billion. At the end of December 2007 Macau had 28 casinos.
According to Xinhua News Agency, 67 percent of Macau’s gaming revenue came from casino VIP rooms last year. Before the market opened to competition in 2002, that figure was over 70 percent.
The boom in business has created some problems for the territory. Primarily, a surge in visitors has led to a mini population explosion, with all the attendant problems.
“It’s been crazy,” Paulo Azevedo, publisher of Macau Business magazine, told the Chicago Tribune. “We used to have this sort of Mediterranean, laid-back quality of life.”
The prelude to the influx, according to the Tribune, was a change in policy that permitted China’s citizens to visit Macau as individuals whereas previously they had only been allowed with organized tours. The result helped visits to Macau quadruple in the last 10 years, to 27 million in 2007. More than half of those visitors came from the mainland.
Another problem that has come to light with the participation of the new operators, whose public nature demands transparency in such matters, is the situation inside the VIP gaming rooms within the casinos. According to the South China Morning Post, independently run betting operations inside VIP rooms are detouring as much as 50 percent of the casinos’ gaming revenues.
Macau’s 29th Opens
Ponte 16, Macau’s newest casino opened its doors on Friday, February 1, at 10 p.m. By the end of the weekend, over 60,000 people had entered the property, 20,000 of them on opening night.
The five-star integrated resort was developed by Stanley Ho’s SJM and Macao Success Limited. It has 105 gaming tables, 300 slots and a hotel run by the French chain Sofitel. For now, only the mass-market gaming floor is open. Four or five VIP rooms will begin operating in March. Future plans include the opening of retail shops.
In a move to diversify its customer base, Ponte 16 is looking to introduce pachinko. The new game is expected to attract more players from Japan.
With the opening of the Ponte 16, SJM now owns 19 of Macau’s 29 casinos.
Packer pulling VIPs
James Packer’s previously shaky Crown Macau Casino is reportedly doing much better since the start of 2008. A relationship with junket operator AMA International has resulted in VIP action of about $7.1 billion in the past month.
Investment bank UBS estimates that the efforts of AMA have more than doubled Crown Macau’s market share since December, raising it from 7 percent to 16 percent, according to a report in Australia’s Daily Telegraph.
The report quotes UBS analyst Sam Theodore, who visited the casino in the fourth week of January, saying, “The casino was busy, with the atmosphere of a busy mass casino, except that the bets being wagered were
significantly greater.”
Genting’s Golden Triangle
Bintan Treasure Bay Pte. Ltd. has signed a zoning agreement with government authorities that will allow gaming operations at its Treasure Bay project on the Indonesian island of Bintan.
The island is situated just south of Singapore and is about an hour away by catamaran ferry.
The zoning agreement also allows the operation of entertainment, medical tourism and the hosting of multimedia and information technology.
The permission comes in the form of the designation “Exclusive Integrated Tourism Zone,” or EITZ. PT Wisata Hiburia, or PTWH, an Indonesian company with which BTB is partnering in the integrated resort project, has been granted the power to designate land for EITZ use.
Within the proposed development, certain plots have been identified for development as “integrated resorts.” For its part, PTWH will receive 10 percent of the net profit resulting from the sale of the proposed integrated resort development.
The entire project will cover a total of about 1.3 square miles, roughly 338 hectares. Treasure Bay is designed as a “water resort city” situated within the Lagoi area on the island of Bintan, adjacent to the Bintan Bandar Telani Ferry Terminal, the main gateway to Bintan from Singapore. The project is a creation of islands, landscaped land parcels, waterways and canals. The larger plots are meant for high-end leisure facilities, while smaller plots are for medium and high-density residences.
BTB is a 74 percent, indirectly owned subsidiary of Landmarks Bhd., which in turn is 30.31 percent owned by Genting Bhd. via that parent company’s wholly-owned Phoenix Spectrum Sdn. Bhd. This will be Landmarks’ first experience with gaming.
The zoning development means that Genting will have a share in three gaming licenses in the region, in Malaysia, Singapore and Indonesia.
In a report in The Edge Financial Daily, a source at OSK Investment Bank said, “It is a good thing for Genting as it can diversify geographically and have a bigger captive market to cross-sell its products.”
“This cements Genting’s position as the leading gaming player within the region,” the report quoted a note from CIMB Research.
