Inside Asian Gaming

INSIDE ASIAN GAMING | September 2011 46 Asian Gaming 50 – 2011 The company is also in talks with Wynn Macau, SJM Holdings and MGM China Holdings about additional large-scale orders for its slot machines and other products. Bally’s systems business in particular has expanded under Ms Burns’ watch. The company has installed its systems products across Macau, in some cases displacing other suppliers. One of its biggest single systems customers recently has been SJM, with directly managed properties such as Grand Lisboa and satellite properties such as L’Arc opting for Bally products. The company has also had sales success with systems installations at Galaxy Entertainment Group’s StarWorld Hotel & Casino and more recently the new Galaxy Macau on Cotai. Bally Technologies’ regional expansion is also on track Down Under. The company won a contract to supply SkyCity with systems for the latter’s flagship property in Auckland, New Zealand—Bally’s first systems sale in the Australia-New Zealand market. “On the games side, after two years of planning, we have completed our re-entry into the Australian market with the opening of our Sydney sales office and game-development studio,” Ms Burns told IAG. A key attribute of successful people is that they are always looking forward to their next goal, rather than looking back at their past ones. By that token, Bally can look forward to further good news in Asia Pacific and beyond in 2012 with Cath Burns at the helm. “At the end of the day, we’re here for the customers and the shareholders,” she says. 31 (15) Philip Chun Chairman and CEO Paradise Group Paradise Group has around 40% of the market by revenue for foreigners-only casino play in South Korea. South Korea’s total market is annually worth about US$2 billion, but US$1 billion of that is spent at Kangwon Land—the only one of the country’s 17 casinos catering for domestic players. Philip Chun, chairman of Paradise Group since 2004, presided over an 11% increase in sales for this private sector South Korean casino operator during 2010. That was actually a year-on-year fall in the rate of sales growth. In 2009, the group—which runs five foreigners-only casinos in Korea mainly catering for junket players from China and Japan, plus a boutique property in Nairobi, Kenya—managed a 21.3% increase in sales compared to 2008. It’s worth pointing out, however, that fromthe beginningof financial year 2011, Paradise changed the way it calculates sales, introducing tighter controls on free chips and agent commissions. As a result of these changes and an improvement of the operator’s overall hold rate from 13% to 14.3%, CLSA Asia-Pacific Markets in May issued a generally positive report about Paradise. It said first quarter 2011 earnings growth of 27% year-on-year had beaten its own forecasts and those of other analysts. CLSA added that although around 15% of Paradise customers are from Japan, there was no noticeable fall off in visitor numbers and sales at the end of that quarter, despite the devastating earthquake and tsunami in Japan on 11th March. The company’s flagship property is Paradise Walkerhill Casino, founded in 1968 in the South Korean capital, Seoul. The group also has a spa and hotel in Dogo, Chungnam. Paradise Casino, located at Haeundae Beach at the port city of Busan, opened in 1981 and offers live games including blackjack, baccarat and roulette, along with 40 slot machines. Paradise Grand Casino, located in the Grand Hotel, Jeju Island, is five minutes from the local airport, and offers various table games and 50 slot machines. Lotte Casino, also on Jeju, offers customers 87 Las Vegas-style gaming machines in two private VIP rooms. Paradise Casino Incheon was the first South Korean casino opened to foreigners in 1968. It was renamed Golden Gate Casino when it moved to the Hotel Hyatt Regency Incheon near the city’s airport in August 2005. In August, Daishin Securities said second quarter results producing revenue of KRW80.4 billion (US$75.5 million)—a year-on-year growth of 23.7%—had been driven mainly by visitors from China. Daishin described Paradise as “an undervalued China play”. There are a number of opportunities and challenges awaiting Paradise in the next few years. On the opportunities side, the South Korean casino market is likely to undergo some liberalisation by 2015, with the probable ending of Kangwon Land’s monopoly on serving domestic customers. At least one more domestic casino concession and/or licence is likely to be issued. In addition, up to five international-standard casino resorts with integrated entertainment facilities will also be allowed in South Korea. If Paradise successfully pitches for one or more of these opportunities, it could dramatically improve the commercial performance of the group in the medium- to long-term. Set against that, the risk is that the South Korean government will opt to introduce into the market foreign casino companies with proven track records in running integrated resorts—in the way Macau did. Another downside risk is that if Japan ever does organise itself sufficiently to legalise casino gaming, it could cause some cannibalisation of South Korea’s market in Japanese gambler tourism. Around 800,000 Japanese visited South Korean casinos in 2010, according to data collated by CLSA.