Inside Asian Gaming

41 40 Regional Briefs Sub-Concession Sale Yields Wynn Profit Wynn Macau recorded an overall profit of 6 billion patacas (US$750 million) in 2006 on revenue of 2.1 billion patacas. The company had actually incurred an operating loss of 410 million patacas during its almost four months of operation since opening on September 6, but its earnings were pushed into the black by a one-off gain of 7.2 billion patacas from the sale of a Macau casino sub-concession to Melco-PBL Entertainment for US$900 million (7.2 billion patacas). Taiwan Online Casino Busted Taiwan’s China Post reported in April that prosecutors and police had uncovered Taiwan’s biggest-ever online gambling website – which allegedly recorded total “revenues” of over NT$1.5 billion (US$45 mil- lion) within half a year – and found police officers were involved in the operation. Macau “Golden Week” Visitors Surge Nearly 590,000 visitor descended upon Macau during the Labor Day “Golden Week” holidays, which lasted from May 1 to 7. Visitor num- bers to Macau during the week-long mainland Chinese holiday were up 29% year-on-year. Some 60% of visitors to Macau during “Golden Week”hailed from mainland China. More Misappropriation for Macau Gambling Hu Jianping, the president of the Shanghai branch of state-owned China National Light Industry (Group) Corp, went on trial on charges of embezzling company funds to pay off gambling debts incurred in Macau, effectively bankrupting his company and forcing it to close. Mr Hu allegedly misappropriated Rmb25 million (US$3.25 mil- lion), of which Rmb167.4 million was used to pay off debts owed to operators inside the Lisboa casino. The rest of the money remains missing. Shanghai prosecutors began investigating Mr Hu in March last year after receiving a tip-off that he was misusing company funds. Mr Hu was appointed head of the Shanghai subsidiary in 2001 and was found by prosecutors to have made more than 30 visits to Macau in the three years between 2004 and 2006.Mr Hu was said to place mini- mum bets of half a million renminbi (US$65,000). Like most Chinese gamblers in Macau, his favorite game was baccarat. He told a Lisboa VIP room operator that he ran his own steel ma- terials company and often paid off debts by issuing company checks to mainland businesses affiliated with the room operators – a means to bypass Chinese restrictions against debt collection by Macau casi- nos on the mainland. Last December, a Communist Party official from prosperous Ji- angsu province next to Shanghai was sentenced to life for gambling away Rmb170 million (US$22 million) in public funds at overseas gaming tables. Foreign Online Casinos Targeting Koreans The Korea Internet Safety Commission announced on May 10 that it had asked the country’s Internet service providers to block access to 549 foreign-based Korean-language gambling websites in March. The sites target Koreans but operate overseas due to the country’s ban on online gambling. Such sites have been proliferating – there were only 96 in December 2004, but the number doubled to 170 by December 2005 and 342 by December 2006.This year, there were 395 in January and 493 in February. By contrast, the number of pornographic Internet sites servicing Korean’s has fallen over the past few years. The Korea Internet Safe- ty Commission required Internet firms to cut access to 440 foreign websites that provide obscene content in Korean in December 2003. However, the figure has headed south ever since, reaching 310 in De- cember 2004, 237 in December 2005 and 209 last December. LVS Profit Down on Building Costs Las Vegas Sands Corp (LVS), announced its first quarter 2007 profit fell 25% year-on-year as it spent more on developing new hotels in Macau and Las Vegas. First-quarter net income decreased to US$90.9 million,or 26 cents a share, from US$121.8 million, or 34 cents, a year earlier. Revenue climbed 18% to US$628.2 million. LVS borrowed money to open the first phase of a 20,000-room project on Macau’s Cotai Strip and a new addition in Las Vegas. LVS’ total debt as of March 31 was US$4.42 billion, more than double the US$1.7 billion a year earlier. Pre-opening expenses in the first quarter rose 10-fold to US$22.5 million from US$2.2 million a year earlier. In- terest expense climbed 62% to US$34.6 million. The Sands Macau, which opened in 2004 – becoming the first for- eign-operated casino to open in the city – accounted for 57% of LVS’ revenue last year. LVS spent US$12 million in marketing to help stave off increased competition in Macau, President William Weidner said on a conference call. Wynn Resorts opened the US$1.2 billion Wynn Macau in September 2006. MGM Mirage is also building a new resort in the city. LVS will unveil the US$2.4 billion Venetian Macao resort in July, as part of its Cotai Strip developments which the company recently reported could cost up to US$14 billion. LVS also plans to spend US$2 billion over the next five years to develop hotels and condominiums on nearby Hengqin Island, where it awaits final Chinese government approval for its plans. Last year, LVS was also awarded the right to build Singapore’s first integrated casino resort last, scheduled to open in 2009 at a cost of US$3.6 billion. In the US, LVS is set to add the Palazzo Resort Hotel Casino to the Venetian, giving the company more than 7,000 hotel rooms on the Las Vegas Strip The growth of LVS has helped make Sheldon Adelson, 73, who owns about 70% of the company, the sixth-richest man in the world, according to Forbes magazine. His net worth of US$26.5 billion as of the end of last year ranks him behind Bill Gates andWarren Buffett. Man U to Play Venetian Cup Las Vegas Sands Corp, parent company of The Venetian Macao Re- sort Hotel, announced that The Venetian Macao will serve as the title sponsor of The Venetian Macao Cup – a football match pitting English Premier League powerhouse Manchester United against the Chinese Super League’s Shenzhen Football Club. The battle for The Venetian Macao Cup will take place on July 23 at Macao Stadium. It will mark Manchester United’s first ever ap- pearance in Macau and their only appearance in China as part of the team’s Asia Tour 2007. Labour Strains in Macau Despite Macau’s recent stunning economic growth and apparent political stability, there are clearly strains under the surface. During the Labour Day march on May 1 - with protesters numbering 2,400 according to police, and 10,000 by the organizers’ count - police shot five warning shots at the crowd of low-income construction workers and civil servants, who had taken to the street to voice anger over a raft of social problems in the city. One person was hit by a bullet and clashes between protesters and police continued late into the evening. Among the protesters’ grievances was a widening wealth gap, widespread corruption, housing problems due to high real estate prices and an influx of foreign laborers, as well as complaints over government policy on civil servants’ compensation for early retire- ment and rights of abode for divided families. The protest occurred at a time when Macau appears to have achieved unprecedented prosperity. It has overtaken the Las Vegas Strip as the highest grossing gambling destination in the world, and its full-year per capita GDP in 2006 was higher for the first time than Hong Kong’s - US$28,439 vs. Hong Kong’s US$27,526. Meanwhile, the unemployment rate has stayed at a historic low of 3.2%. But wealth distribution in Macau is uneven, and towering con- struction cranes and occasional shining new casinos sit alongside narrow streets and old, decrepit housing estates. Public resentment over corruption has been rising due to the re- cent revelation that a former transport and public works official led a ring of nearly 30 people who skimmed as much as 800 million pata- cas (US$100 million) from public construction projects between 2002 and 2006. Only one in 400 packages of land sold by the Government since Macau reverted to Chinese sovereignty in December 1999 has been subject to public tender. Macau responded last month to a public outcry against rising housing prices by ending a popular immigration program that gave away Macau residency to foreign investors, many of whom came from China, when they made real estate purchases of more than 1 million patacas (US$125,000). The government also pledged to stem the inflow of foreign workers — mainly skilled construction workers from Hong Kong who are perceived to be taking jobs from aging and less technically sophisticated local laborers, and to build more public housing units. However, the day after the Labour Day march, the Macau gov- ernment indicated its intolerance to public demonstrations, stating it would pursue all who broke its laws and plotted against the city’s development and stability. Singapore Gives Genting All Clear On April 16, Genting International broke ground on its US$3.4 Singa- pore integrated casino resort project, called Resorts World Sentosa. The Singapore government gave Genting the go-ahead to build the resort following extended probity checks after the group announced links with Macau tycoon Stanley Ho. Genting International and sister company Star Cruises Ltd, which are both controlled by Genting Bhd, won the bid for the Sentosa re- sort – Singapore’s second integrated casino resort – in December, but the group upset Singapore authorities when it unveiled a tie-up with Stanley Ho a month later. Genting International later withdrew from the Macau partnership with Stanley Ho and bought out Star Cruises’ stake in the Sentosa project to allay concerns of Singapore authorities – Star Cruises re- mained in the Macau deal.“There is no issue now.We are only looking at our jurisdiction – who the partners and shareholders participating in ResortsWorld Sentosa are,”said Minister for Trade and Industry Lim Hng Kiang.

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