Nearly 3,100 electronic table game (ETG) seats are likely to be added to casino inventory across key Asia Pacific markets in the next three years – from a base of approximately 12,000 seats – says a report from brokerage Union Gaming Securities Asia Ltd.
It said that represented a business opportunity for equipment suppliers amounting to around US$62 million.
“We forecast nearly 3,100 new ETG seats over the next three years, driven by placements in Macau, Manila, Saipan, [South] Korea (Incheon and Jeju), Cambodia, and Vladivostok [in Russia],” wrote analyst Grant Govertsen, in Union Gaming’s fifth annual review of the segment.
“We forecast another potential 2,500 ETG seats in the out years [post-2018],” added the brokerage.
Union Gaming estimates at least one-third of sales revenue in the 2016 to 2018 period could be captured by Hong Kong-listed Paradise Entertainment Ltd, which markets a live dealer, multi-game product under the LT Game brand.
“For Paradise Entertainment’s LT Game product, their 37 percent share of Asian ETGs could translate to a US$23 million revenue opportunity,” wrote Mr Govertsen.
“Scientific Games [Corp] could see [a] US$7 million revenue opportunity in ETGs, which would not represent a meaningful contribution to the company’s nearly US$3-billion top line,” he added.
The growth in ETG inventory region-wide would be “on the heels of significant greenfield development across multiple jurisdictions, with approximately 1,800 of these seats in Macau alone,” said the paper from Union Gaming.
“New projects in [South] Korea (Jeju and Incheon) and the Philippines (Manila) account for most of the rest,” Mr Govertsen wrote.
Union Gaming stated that the five Asia Pacific jurisdictions it surveyed had a base of 10,400 ETG seats, and that market share leader LT Game was “followed by Aruze [Gaming Inc] and Alfastreet at 14 percent and 13 percent each, and Scientific Games (via the Shuffle Master brand) at 11 percent”.
But the financial institution added: “Interestingly, each of the five markets we’ve surveyed has a different number one player [share leader for ETG seats]: Cambodia, Alfastreet with a 48 percent share; Macau, LT Game with a 60 percent share; Malaysia, Novomatic [AG] with a 47 percent share; the Philippines, Interblock [DD] with a 68 percent share; and Singapore, Scientific Games with a 53 percent share.”
Standalones’ market share
Despite the lead of LT Game – a firm noted for its strength in selling stadium-type layouts for ETGs – in the Macau market and Asia Pacific generally, Union Gaming’s report indicated that in the past 12 months ETGs in eight-seat formats in Macau have “taken market share” – in terms of installed units – from stadium-style ETG layouts.
“Standalone ETGs – typically configured as eight-seat installations – have taken market share away from stadium-style machines even as the absolute number of stadium-style seats has grown,” said the paper from Mr Govertsen.
“The largest beneficiaries of this market share shift in Macau have been three privately-held companies: Aruze, Jumbo [Technology Co Ltd] (Taiwan), and Spintec [Gaming Technology] (Slovenia). These three companies collectively picked up nearly 600 basis points of market share on a base of more than 6,300 seats over the last 12 months,” he added.
The brokerage mentioned that stadium-style games – especially the live dealer ETG product offered by Paradise Entertainment – had been popular among Macau players priced out of traditional table games when minimum bets rose sharply during the boom years.
Now, with the shrinking of casino gross gaming revenue in Macau and the decline in many mass table minimum bets to pre-boom levels – i.e., to HKD300 (US$37) or HKD200 – some of those stadium players seem to have migrated back to traditional live tables, stated Union Gaming.
One of the effects of this possible shift in the structure of the market for ETGs in Macau was to reduce industry estimates on the number of ETG seats that are being installed in Cotai’s new casinos.
“The reality is that the current demand story has slackened enough so that the need to populate the new casinos on Cotai with massive amounts of ETG seats simply has not been necessary as there are more traditional live tables available for mass market customers than ever before,” wrote Mr Govertsen.
“We now expect the more premium-focused casinos, like Wynn Palace, MGM Cotai, and Lisboa Palace to install 250 to 300 [ETG] seats, and the base mass focused Parisian to install up to 550 seats. On a combined basis, this results in 250 fewer ETG seats at these three casinos relative to our initial expectations,” he added.
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