The increasing volume of business done by the floating casinos run by Delta Corp Ltd in the Indian state of Goa “continues to make the case” for the transition from a riverboat-based market to one focused on running casinos on dry land, said Union Gaming Securities Asia Ltd.
On Monday, Delta Corp reported an unaudited net profit from operations of INR416.6 million (US$6.05 million) on revenue of INR1.96 billion for its financial second quarter ended June 30, having made a net profit from operations of INR216.4 million on revenue of INR1.32 billion a year earlier.
“Upside to our expectations derived from all major reporting segments: casino gaming operations, online gaming and hospitality, with the biggest delta in absolute dollar terms coming from casino operations upside,” said Union Gaming in a Tuesday memo.
Delta Corp’s casino gross gaming revenue (GGR) grew by 52.7 percent year-on-year to INR1.77 billion in the three months to June 30. The company, India’s only listed gaming firm, currently operates casinos in the Indian states of Goa and Sikkim.
“Much of the difference stems from a notable amount of player displacement from the nearby small-scale hotel-based casinos [in Goa] that have either closed or downsized … due to the recent licence fee hike,” suggested Union Gaming’s analyst Grant Govertsen.
The surge in players comes after a government-led crackdown on Indian nationals playing at Goa’s casinos, either offshore or within five-star resorts, that began last year.
In the research note, Union Gaming’s Mr Govertsen says the biggest impediment to Delta Corp’s continued growth will be the lack of space to accommodate players on its riverboats, which are already above 50 percent occupancy.
“Simply put, demand for the company’s riverboats in Goa remains very robust and continues to make the case for the transformational land-based move,” stated the brokerage.
Union Gaming now expects the government of Goa to announce within the current session of the state legislature its policy on casinos on land, which may bring nearer the prospect of Delta Corp moving ashore.
The brokerage has a bullish view on the future of gaming in Goa and recently suggested the size of the industry could top US$1 billion in GGR within a few years. In a January note, Union Gaming suggested a formal announcement of a gaming policy for land-based casinos would happen early this year.
While that has not yet taken place, the Law Commission of India has recommended that gambling and sports betting should become regulated industries in a move to help stamp out a flourishing black market that has led to cricket matched being fixed. The government’s top advisory body for law reform matters has also called for “online gambling” to be made legal across the country.
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”We have maintained stringent cost controls, conservative financial policies, and have the resources to weather a lengthy adverse situation if necessary”
Executive director of Hong Kong-listed Summit Ascent, promoter of the Tigre de Cristal casino resort in Russia