Inside Asian Gaming

In thewakeofmainlandChina’s gambling crackdown,two casinos frequented by mainlanders in the Russian port of Vladivostok have closed down,and the Chinese state media reports that between 68 and 84 casinos have closed in Myanmar, Laos and Vietnam since Yunnan provincial police launched a campaign against border gambling establishments. Vietnam and Cambodia While the Chinese gambling crackdown has not helped,Vietnam, Cambodia , Myanmar and Laos were hardly on the way to becoming major gaming destinations. Their largely unregulated gaming industries are hardly appealing to foreign investors. “Vietnamese casinos are small, they’re restricted to hotels and they’re only for visitors. They’re not destination resorts at all,” says Mr. Green. In any case, gaming does not appear high on Vietnam’s agenda, and for historical reasons, Vietnam does not attract many Chinese visitors—the lifeblood of casinos in the region. One of Vietnam’s two casinos, Do Son, is owned by Macau gambling tycoon Stanley Ho. Taking a leaf from the Koreas, in October 2005, a lawmaker in Vietnam’s commercial hub, Ho Chi Minh, proposed that the city should build a casino dedicated to serving foreigners. In Cambodia, Naga Casino, located in the capital, Phnom Penh, “has pretensions of being a destination,”reveals Mr.Green.“That apart,the border casinos are just gambling palaces. A couple of them are tied in with hotels.” A few years ago, the Cambodian government issued a law stating all the casinos in Phnom Penh had to be relocated to sites at least 200 kilometres away from the capital—it is rumoured this was because the Japanese, concerned about the proliferation of gambling in a poor country, refused to continue their aid programme to Cambodia unless this was done. An exception was made, however, for the Naga Casino. The owners, it has been alleged, are very well connected in government and military circles, but the operation has not escaped the attention of international drug enforcement agencies,which in internal reports have mentioned the casino as a centre for the laundering of drug money. At least 13 other casinos operate away from the capital,mainly along the Thai border,and cater mainly to Thai clientele.The casinos stand out in contrast to the squalor of their countryside surroundings. In September 2005, Macau casino operator Greek Mythology Entertainment Group scrapped its plan to build a Cambodian casino resort in Poipet on the Thai border on fears that Thailand’s imminent plan to legalize casino gaming would drain the project of Thai customers. Taiwan Taiwan has been considering developing offshore casinos on its Penghu islands for a while. The casinos would naturally target mainland Chinese gamblers, though mainlanders would have to come via either Hong Kong or Macau due to the ban on direct air links between Taiwan and China. The Taiwan press periodically reports on the resumption of deliberations on bringing casinos to Penghu, and each subsequent report receives less attention. Yet a source we are not at liberty to divulge leads Inside Asian Gaming to believe that Penghu could sprout casinos in the not too distant future. Japan Inside Asian Gaming ventured to Japan to report on the country’s biggest industry and quasi-national pastime, pachinko, which is basically gambling, but because it isn’t recognised as gambling by law,is dominated by organised crime and corrupt police. A full report on the moves towards legalizing casino gaming in Japan begins on page 22. Legalization would permit proper regulation, which can help eliminate the influence of organised crime. “The Atlantic City model is probably the clearest example of that, where they regulate everybody, from suppliers to employees to operators,” says Mr. Green. Organised Crime had previously been infiltrating Atlantic City’s casinos through supply, “charging excessive prices for supplying casinos with fish, for example, and that sort of stuff.” Mr. Green adds:“In Atlantic City, to get a casino license, you need to go through a higher standard of security clearance than you need to work for the US government in a security-cleared position.” Malaysia Genting in Malaysia“just keeps growing.It would be very close to the biggest integrated casino resort facility there is, though the casino itself is not as big as Foxwood’s in Massachusetts,”says Mr. Green. Macau’s 16.7 million total visitors in 2004 pales in comparison to Genting’s 23 million visitors a year, though that figure includes people day-tripping out of Kuala Lumpur. Still, Genting has been around since before gaming in Macau started taking off,and as such,poses no threat to Macau.Genting is not trying to attract the junket market, but rather, a tourist/local market. Genting International is currently bidding for a license to build an integrated resort in Singapore, and is the only casino that is likely to be allowed to operate in Malaysia“while current government is in power. It’s been in power since the 60s.” The Philippines The Philippines has ambitious plans to develop the country’s gaming industry, including a vision of a theme park built on a reclaimed 250-hectare site along Manila Bay, which is hoped will attract US$15 billion worth of investment within ten years. Thus far, no one has put up the US$1 billion investment needed to jump-start the project. Mr. Green gives a possible explanation: “To get investors who have got the clout to do it,you’re really talking about American,Australian,maybe a couple of other places. If they’re faced with a choice between unstable political environments riddled with corruption and stable governments, where do you reckon they’ll go?” Mr.Green continues:“It was recognised that major groups which had licenses in the US will only come into an environment which has a reasonably strong regulatory framework. They can’t afford not to, because if they conduct themselves in a manner that’s objectionable to the Nevada regulators, they’d be under pressure [and could possibly lose their licenses back home].” Gaming in the Philippines is monopolised by the state-owned Philippine Amusement and Gaming Corporation (Pagcor).The trouble is that “Pagcor is really its own regulator, so the regulatory framework as such is almost non- existent.” The last issue of Inside Asian Gaming discussed how rather than rushing into the Philippines, foreign investors seem more likely to exit a country beset with corruption and lack of transparency. Pagcor responded to the article, writing us a letter which appears on page 6. Indonesia While there is probably a substantial illegal casino business in Indonesia, the only official casinos are on the Bataan island,though their revenues are pretty much inconsequential.“As a Muslim country,” Mr. Green feels the industry in Indonesia is“unlikely to go further.” India A Portugese colony until 1961, Goa is the only state in India which currently has casinos, with a total of six, including the casino cruise ship Caravela. Casinos and gambling remain largely frowned upon in India, though the tide could be turning, and other states are considering introducing legal casinos. An ethnic-Indian businessman from South Africa is building a 1 billion rupee (US$22.6 million) casino in the north-eastern state of Sikkim along with his partner, cricket legend Kapil Dev.The 25 hectare property, scheduled to open soon, will include a 400-room, five-star hotel and casino, golf course, theme park and museum. Featuring vistas of snow-capped mountains, Sikkim lies on the border with China, and is the first state after Goa to issue a casino license. Mr. Green points out that India is“no threat to Macau, but by the same token, it’s an economy that’s performing pretty well.Youwonder whether it wouldn’t have a big home grown market.” Nepal At the moment, many Indians get their gaming kicks in Nepal. The country has six casinos, all based in five-star hotels in the capital, Kathmandu. Nepal’s first casino opened in 1968, and the country has now prepared a draft bill to regulate the industry. Clear regulation could bring in foreign investment,though Nepal’s casinos would suffer if more Indian states legalize gaming. A former Australian gaming regulator, David Green heads the gaming practice of PricewaterhouseCoopers in Macau, having originally come to the city in 2001 to conduct the feasibility study on the liberalisation of the local gaming industry. He also consults for both the Macau and Singapore governments on gaming regulation. 13 12