Inside Asian Gaming

February 2008 | INSIDE ASIAN GAMING 15 Market Outlook trips to Washington D.C. Like the Chinese, the Indian authorities have slowly been back tracking on their Marxistpast,butbothcountriesseeminclined to cherry pick those bits of globalisation they like (such as the outsourcing of the West’s software development and customer service to developing countries) and put aside the bits they don’t like. Ask any foreign investor who has tried putting money into India’s real estate and equity markets.The rationale for this protectionism—giving the country and the economy a soft landing after years of isolationism and preventing financial overheating—does though have its merits. Town versus country Of other touted casino jurisdictions, the cities of Mumbai and Bangalore have been mentioned, though information on the proposals is sketchy.Madhya Pradesh, where a more concrete proposal has been made, is officially classified as a low-income state, according to India’s Ministry of Planning. It is ranked seventh in terms of population but only 18th in state GDP, according to the 2004-05 data from the CSO. It also receives greater subsidies from central government than most other states, paying only around 39% of its spending costs out of its own income. The state capital, Bhopal, is best known in recent years for the leak of chemicals from a Union Carbide factory in 1984 that killed thousands and injured thousands more. The case for a casino resort in the state is likely to be based on an economic regeneration rationale of the sort seen recently in the proposal for a super casino in Manchester, an industrialised city in northern England. Failing any immediate moves toward casino legalisation,investors would probably like to know about the prospects for a timetable toward such a move. Timetable The timetable concept is currently very fashionable in political and lobbying circles around the world—probably because it is a great way of suggesting change without the troublesome business of actually effecting it. Political timetables are nowquoted regularly in the Middle East. In Hong Kong they are also often invoked regarding the movement to a fully democratic society. Evidence of the danger of toogreat anemotional attachment to timetables can be seen in Asian gaming circles. Politicians in Japan and Taiwan made public commitments to legalise casinos five years ago or more, and not a single piece of concrete has been poured. What could ultimately change India’s attitude to gaming are the social changes within the country. India’s middle class will expand tenfold to 583 million people by 2025, estimates McKinsey. They are also travelling abroad a lot more. The Ministry of Tourism says outbound visits by Indian nationals more than doubled between 1996 and 2006,from 3.46 million visits to 8.34 million. This writer was particularly struck, on a recent visit to Phuket in Thailand, by the numbers, the affluence and the self assurance of English- speaking Indian middle class families mingling with the Western guests at five star beach side resorts. Big brother As India’s middle class grows larger and more self confident, they may be less and less inclined to receive lectures from their politicians—however well intended— as to how they should spend their money. It’s hard for governments to tell people what to do and make it stick, if those citizens can simply vote with their feet and travel somewhere else to gamble. This has already happened to Japan, where the locals simply jump on plane to Korea or Macau if they want a casino experience. It may soon happen to India. When Singapore’s integrated gaming resorts open in 2009 and 2010 respectively, Indian nationals are likely to be among the eager customers. The operators Las Vegas Sands Corp and Genting International have publicly stated they expect them. If that happens, then the pressure on the Indian central government to get a piece of the tax action by legalising domestic casino gaming in some form is likely to grow. “After trialing gaming with 13 state-run lotteries, several horse racing tracks and small ‘casinos’ in Goa, the ‘slippery slope’ theory seems to be taking hold,” is how Deutsche Bank succinctly puts it. When Singapore’s integrated gaming resorts open in 2009 and 2010 respectively, Indian nationals are likely to be among the eager customers.