Inside Asian Gaming

INSIDE ASIAN GAMING | August 2009 4 Editorial Publisher Kareem Jalal Director João Costeira Varela Editor Michael Grimes Operations Manager José Abecasis Contributors Desmond Lam, Steve Karoul I. Nelson Rose, Richard Marcus Shenée Tuck, James J. Hodl Andrew MacDonald William R. Eadington Graphic Designer Brenda Chao Photography Ike Inside Asian Gaming is published by Must Read Publications Ltd Suite 1907, AIA Tower, 215A-301 Av. Comercial de Macau - Macau Tel: (853) 6646 0795 For subscription enquiries, please email subs@asgam.com For advertising enquiries, please email ads@asgam.com or call: (853) 6646 0795 www.asgam.com Printed by Unique Network Printing Factory Ltd. Tel: (853) 2828 2832 Fax: (853) 2828 2830 E-mail: unique@macau.ctm.net Michael Grimes We crave your feedback. Please email your comments tomichael@asgam.com Wind of Change The gaming industry, perhaps more than many other industries, relies on big personalities and a supportive political framework. Events of the last few weeks have shown how quickly things can change. First there was the signalling of a change of personnel at the top in Macau politics. Fernando Chui Sai On was confirmed as the Chief Executive-elect and will take over from the incumbent Edmund Ho in December—the tenth anniversary of Macau’s return to Chinese administration. Second there was the hospitalisation of 87-year old Dr Stanley Ho, the founder of the modern Macau gaming industry. He underwent surgery for a blood clot on his brain—an operation necessitated reportedly after a fall at home. As far as Mr Chui’s appointment is concerned, many commentators on Macau are predicting more of the same. That means a largely hands-off, arms-length approach to the industry—in terms of giving it as much freedom as possible to generate wealth for the local community, within the framework of international standard regulation. There are, however, a number of domestic economic issues that were either shelved or only partially addressed by the outgoing government. Two important ones are what should be the level of gaming tax levied and how to restructure the economy from being a low skill, low wages society importing all its required talent, to a high skill, highwages community creatingnewwealthorganically through innovation and excellence in its tourism and gaming sectors. It is hard to see how—with a global recession and the imminent arrival of fresh competition in the Asian casino gaming market from a low-tax, well educated community, namely Singapore—decisive action on these issues can be postponed indefinitely. RegardingDr Ho’s recent illness, InsideAsianGamingwishes hima speedy recovery. He commands the respect of everyone in the local industry. As a person with a mixed cultural heritage—Chinese andWestern—he is able to span the sometimes seemingly unbridgeable gap between the viewpoint and expectations of the overseas operators, and the expectations of the host community and local consumers. Dr Ho also has the pragmatism and force of personality to bring normally sparring factions together for the common good. His prolonged absence from the helm at a time of challenge and change for the Asian gaming sector would not be to anyone’s benefit. Not Just a Game National governments are often accused of being slow to understand and respond to technological developments and how they affect the way we all do business. China’s recent crackdown on so-called ‘virtual cash’ earned via computer games suggests that Beijing is responsive to how a cyber economy can affect what happens in the ‘real’ world. This virtual cash can be generated in a number of ways. Those ways include earning credits for achieving goals in role-playing games. Those credits can then be sold to others for hard cash, in what is sometimes termed ‘gold farming’. Another method is to earn virtual winnings from casino-style or table-style games played for example on a subscription basis that can then be converted to prizes or cash. In both cases, the net result is the same for the service providers. They tap in to the psychology of winning and the feel good effect that has on the player, and get the player to spend real money up front in order to generate their virtual winnings. An underlying point about virtual cash is that it’s widely been seen by the online gaming industry as a good way to engage players’ interest without falling foul of China’s prohibition on domestic casino gaming. The fact Beijing has decided to intervene in this market appears to be a sign of its concern about the social implications of excessive gambling-type behaviour among the population—especially among the young. In an economy not yet fully plugged in to international financial markets, excessive speculation in the digital world could also lead to negative implications for the real economy. This is not an empty threat. Exact figures for virtual currency exchange in China are hard to come by— official estimates from the Ministry of Commerce recently put the figure in China at “several billion yuan”. At current exchange rates RMB1 billion is equivalent to more than US$146 million. One of themost popular virtual currencies in China is“QQcoins”issued by Chinese Internet service provider Tencent. The QQ coins can be used to pay for in-game items or elements that subscribers can add to their blog. Some stores and websites had even started accepting QQ coins in payment for low-value items. The possibility of a parallel currency emerging among the nation’s youth just as China is starting to play a bigger role in international financial affairs, is unlikely to be greeting with rejoicing in Beijing. Whether an accommodation can be found between the commercial needs of the online industry and the strategic needs of the country’s leadership, remains to be seen.