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Going Global

The future was on display at IAGA and G2E

Going Global

Call it an epiphany.

Like Saul on the road to Damascus, I was struck by the reality in the Mojave Desert amid the glitter of the Las Vegas Strip.

The world had changed.

For so very long, we have been saying that the gaming industry, once focused on Las Vegas with an occasional quaint outpost like Monaco, was globalizing.

And for nearly as long, we in the United States have been talking about some day when internet gaming would become a present and pressing reality.

Those are no longer future trends.

The gaming industry is global now. Internet gaming is a presence today.

This new reality was palpably evident at two recent conferences in Las Vegas—the International Association of Gaming Advisors (IAGA) and the gaming industry’s giant show, Global Gaming Expo, or G2E.

Panel after panel, exhibitor after exhibitor, speaker after speaker, product after product dealt not with the future of globalization or the internet, but with the now.

American gaming expansion, which excited investors with IPOs, then mergers and growing revenues, now seems as quaint as the paddle-wheeled boats once promised to Heartland legislators as encouragement to legalize casinos.

It was big news when Macau surpassed Las Vegas in gaming revenues.

Now it is almost taken in stride that Singapore is about to become the second-largest gaming market, and that others—Japan, Korea, India and elsewhere—will follow.

If mega-resorts rise in South Florida, it will be as much because Miami is the gateway to Latin America as because it is a tourist destination for snowbirds.

The evidence of globalization is in every day’s headlines as Genting, once exclusively a Malaysian company, spreads through the U.K., Europe, Singapore, the Philippines and the U.S.

And it was evident on the exhibition floor of G2E, where Aruze, Ainsworth, Interblock, Inspired and other international companies made their biggest splashes ever.

As recently as May, I attended a conference on internet gaming in Las Vegas. The split between American and European companies was clear. Americans talked about developing a strategy for the day when they would enter the internet space. The Europeans already were doing it.

Now look at some of the announcements during, and just after, G2E:

• Bally announced the creation of Bally Interactive.

• Shuffle Master likewise announced its interactive initiative.

• IGT and Shuffle Master each announced internet deals—IGT using its new Gibraltar gaming license to sell games to

i-gamer Betfred, and Shuffle Master extending its licensing agreement on some of its games to Amaya’s Chartwell Technologies.

These are companies acting now, not in some future when the U.S. legalizes internet gaming.

Or consider the International Association of Gaming Advisors. Among those elected to their board are the general counsels of and Betfair. That’s going mainstream.

The question, as always in the space, is what this means for investors.

For one, it means those wanting to invest in gaming have to look beyond the New York Stock Exchange and NASDAQ.

Financial markets have internationalized, too. The London Stock Exchange is home to many of the big internet gamers. Both American and Asian casino operators have raised money listing in Hong Kong. Tokyo is home to Konami, Sammy Sega, Universal Entertainment and JCM, among others. Companies developing significant projects internationally list in Malaysia, Singapore, even in the Philippines. Lending syndicates now comprise banks from several continents.

The internationalization was evident in a subtle way at the Gaming Investment Forum at G2E. Event sponsors were Deutsche Bank and UBS, companies headquartered in Germany and Switzerland, not New York.

Of course, the process of globalization has a way to go. Japan, Korea and India haven’t legalized casinos yet, no less other countries perhaps farther off in the future, such as Brazil and Thailand.

And the internet is still in its childhood—no U.S. yet, and European Union countries kicking and resisting, but fast falling into line in opening their markets to competition.

Gaming has grown tremendously in the two decades since riverboats first sailed the Mississippi River and casinos began to sprout up on the internet.

But the change is accelerating, and the scale is nothing like anything seen before.

Bellagio was once the highest-earning casino in the world with peak EBITDA of $480 million, a stunning number then.

In the coming year, one property, Marina Bay Sands in Singapore, will do $1.4 billion, and its rival, Genting’s Resorts World Sentosa, will be about the same. Combined, those two properties will out-produce the entire Las Vegas Strip.

So the economy might double dip, and the Euro zone crisis might spin out of control.

But looked at in the long term, the gaming industry is just beginning to emerge.


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