Casino gaming in the Indian state of Goa could be worth up to US$1 billion in terms of gross gaming revenue (GGR) as it develops from a riverboat-based market to one focused on bricks and mortar casinos, says brokerage Union Gaming Securities Asia Ltd. “We compare the Goa transition from riverboat to land-based, as like the Midwest [U.S.] riverboat transition story on steroids,” said analyst Grant Govertsen in a note on Friday.
According to the institution, it is the “already-government-telegraphed move” to land-based operations in Goa that will provide the highest levels of growth in coming years. “We expect the government’s formal announcement early this year,” it said.
Mr Govertsen stated: “We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion.”
“The introduction of the country’s first true integrated resorts should result in expansive growth in gaming revenue given significant pent-up demand for a high-quality gaming/entertainment experience,” he added.
Union Gaming suggested in its latest memo that traditional casino gaming in India is in its infancy and is experiencing strong growth trends “driven in part by economic factors, improving national infrastructure, and a greater acceptance of gaming”.
The brokerage started on Friday coverage of Delta Corp Ltd, India’s only listed gaming company. Delta Corp, controlled by businessman Jaydev Mody, currently operates casinos in the Indian states of Goa and Sikkim.
“Delta, with a 70 percent supply share of Goa today will be the leading land-based player,” said Union Gaming’s Mr Govertsen. “We expect the company to not only maintain this dominant market share, but to grow it as it leads the transition to land-based gaming in Goa,” he added.
The brokerage notes that Delta Corp is already moving forward with a land-based project in Goa, as it plans to acquire land located close to Goa’s under-construction new airport. The brokerage estimates a total capital expenditure of up to US$315 million to develop the land-based scheme.
According to Union Gaming, Delta Corp also owns a small-scale casino resort in the state of Daman that is waiting for government approval to begin gaming operations.
“Once it receives its gaming licence in Daman, Delta Corp will be the only company that has a presence in all three legal Indian gaming jurisdictions: Goa, Sikkim and Daman,” said the brokerage in Friday’s note.
Union Gaming forecasts Delta Corp’s revenues to expand by 34 percent this fiscal year, “followed by 20-percent+ growth over the subsequent two years”. The brokerage expects the casino operator’s earnings before interest, taxation, depreciation and amortisation (EBITDA) to grow at more than 64 percent, 37 percent and 29 percent, respectively, in the period between 2018 and 2020.
Delta Corp reported on Monday revenue for the October to December period of INR1.62 billion (US$25.4 million), up 56.7 percent from a year earlier. Net profit after taxes and minority interests was INR447.3 million, a fourfold increase from the prior-year period, the firm said in a filing to the Bombay Stock Exchange.
According to Delta Corp’s latest filing, the company’s income from gaming operations – excluding online gaming – for the three months to December increased 72.6 percent year-on-year to INR1.56 billion.
In October 2017, Delta Corp said it had signed a memorandum of understanding to operate a casino in Nepal’s capital Kathmandu. This would mark the firm’s first foray outside India’s gaming market.
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