A second-stage statute, passed in July, for legalisation of a Japanese industry for casino gambling was one of the biggest pieces of gaming-sector news during 2018, but it made little immediate difference to the industry landscape in the Asia-Pacific region.
An advisor to Japan’s government said during the conference segment of the MGS Entertainment Show, a casino trade event and conference in Macau in November, it was likely to be 2025 at the earliest before any of three initially-permitted resorts could open. At the same event a Japan-based consultant from business services firm EY, said it was more likely to be 2027.
Arguably of much greater impact – at least in the shorter term – was the departure from the industry early in the year of Steve Wynn, amid a slew of allegations – denied by him – of sexual misconduct. Unlike many business sectors, the casino industry globally still tends to be dominated by founder-owners.
The exit of Mr Wynn – for so long the essence of the Wynn Resorts brand he started – sent shockwaves through the industry. It also had implications for regulatory oversight of the group in Macau – where the firm operates two casino resorts via Wynn Macau Ltd – and in Nevada, as well as in Massachusetts, in the United States – where the group has other projects – and could yet have an impact on the brand’s aspirations for a Japan casino licence.
Mr Wynn’s enforced retirement was feathered by the fact he disposed of his stock in Wynn Resorts in March at US$175 per share. It was – in retrospect – at the top of the market. As he left, so Macau market rival Galaxy Entertainment Group Ltd entered, buying a circa 5-percent stake in Wynn Resorts.
Another casino owner with apparently mounting troubles in 2018 – and no such stock windfall for comfort – was Mr Wynn’s former business partner, Japanese entrepreneur Kazuo Okada.
Part of the long-standing fallout from the falling out between Messrs Wynn and Okada was how to settle payment for the cancelled stake in Wynn Resorts when Mr Okada was booted off the Wynn Resorts board in 2012.
As it turned out, the March settlement that saw Wynn Resorts agree to fork out US$2.4 billion, wasn’t any help to Mr Okada personally. The settlement was instead with Universal Entertainment Corp, the Japanese firm he founded but from which he became estranged, after it accused him of fraud. Mr Okada is currently in a legal fight to regain control of that business.
At the time of writing, Mr Okada was facing the possibility of fraud charges in the Philippines in relation to his term as chief executive of Tiger Resort, Leisure and Entertainment Inc, the promoter of the Okada Manila casino resort in that country.
Mr Okada told GGRAsia in an extensive interview in the summer that the publicity surrounding the Universal Entertainment saga was unlikely to help his chances of being involved in a casino licence in his native Japan, despite his detailed knowledge of the sector.
While sell-side analysts have largely been bullish about the revenue potential for a Japan casino industry, during 2018 there were also some expressions of concern that Japan’s democratic to-and-fro – and the cultural importance in that country of reaching consensus – might produce a local industry so bound up in red tape that it could have a negative impact on its potential for generating gross gaming revenue (GGR), and profits.
Some issues – such as level of tax on GGR and size of gaming facilities as a percentage of resort floor area – were clarified during 2018. It was also made clear during the year however that there would be a further layer of regulation allowed at local level, designed to minimise the negative impact – real or perceived – of casino gambling on consumers, especially Japanese citizens or residents.
In the Vietnam market it was reported locally in late November that the government was on the cusp of issuing a business licence to at least one resort allowing it to offer gambling to economically-qualified locals, under a long-flagged pilot scheme. There have been many false dawns on that topic over the past few years.
Meanwhile, neighbouring Cambodia remained a work in progress regarding a much-heralded gaming law that might make it easier for large international casino operators and global gaming equipment suppliers to have direct business dealings with that nation. Nonetheless, Cambodia remained during the year an attractive casino management and investment target for some with ties to the Macau market.
But the potential of high risk as well as high reward in emerging markets was illustrated during 2018, with the saga of Donaco International Ltd’s ongoing tussle with several Thai business people that sold the Australian company a Cambodian casino on the border with Thailand for US$360 million in 2015, and then some time later allegedly worked to compete against it and take its customers, in what Donaco says was a violation of previous agreements.
Hong Kong-listed NagaCorp Ltd ramped up business during 2018 at its Naga 2 resort – under the monopoly it enjoys in the Cambodian capital Phnom Penh – following the facility’s November 2017 launch.
In the Philippines, a more mature casino market than either Cambodia or Vietnam – and where locals are allowed to use the gaming facilities – the rough and tumble of that country’s democratic politics threw up the usual annual mix of criminal investigation, civil lawsuit and executive action by the presidential and regulatory authorities, as well as the commonplace competition in the country’s casino private sector.
The biggest news of 2018 was probably the on-off saga of whether Macau casino operator Galaxy Entertainment Group Ltd did or did not have permission to build – with a local partner – a casino on the Philippine holiday island of Boracay.
Casino resort investor Landing International Development Ltd was also involved in a political controversy in the Philippines. The Hong Kong-listed company is pursuing a casino resort project in Manila, but the authorities there have said that the land lease contract for the project would be “cancelled”, casting doubts over the project.
Landing International – which currently operates a casino resort complex on the South Korean island of Jeju – lost half of its market value this year, after it said in August that it was unable to contact its chairman, Yang Zhihui. The firm announced in late November that Mr Yang had “resumed his duties” after being out of reach for more than three months, reportedly to assist “a relevant department of the People’s Republic of China with an investigation”.
In the Macau market another year came and went with no news on how matters will be handled when the six current casino licences expire in either 2020 or 2022. The city’s Chief Executive, Fernando Chui Sai On, whose second and final five-year term ends in 2019, didn’t give any guidance on the matter in the local government’s policy address for 2019, issued in November. Some sell-side analysts think Mr Chui might kick that particular can down the road for the next chief executive to handle.
Lionel Leong Vai Tac, Macau’s Secretary for Economy and Finance, said in July the administration had received what he termed a preliminary proposal for amending the existing gaming law. That was understood to refer to a step for preparing for a rebid process regarding casino gaming rights in the city, but he didn’t go into details.
Oct 22, 2021Starting from the stroke of midnight on October 24 (Sunday), travellers arriving in China’s capital Beijing from Macau are no longer required to undergo a 14-day period of “centralised medical...
”Our own consensus is that any newcomers to this [junket] sector should be corporatised, and should be financially sound and able to commit a higher guarantee deposit”
Kwok Chi Chung
President of junket trade body, the Macau Association of Gaming and Entertainment Promoters