Inside Asian Gaming

INSIDE ASIAN GAMING | November 2009 4 Editorial Publisher Kareem Jalal Director João Costeira Varela Editor Michael Grimes Financial Controller Christina Tan Operations Manager Hilary Lao 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 What Revolution? Macau is an exception, not yet the rule, regarding gaming liberalisation in Asia Received wisdom has it that Asian people are passionate gamblers and that the continent is some kind of Far Eastern ‘El Dorado’ where Western operators and game content providers can make their fortune. It’s true that Asians are passionate gamblers. The latest figures for gross gaming revenue in Macau speak for themselves. But Asian governments are not always as enthusiastic as their peoples about spreading the gaming revolution. Macau remains the exception rather than the rule in Asia when it comes to whole-hearted liberalisation of land-based casinos. South Korea allows only one of its 17 casinos to serve local players. Singapore has slapped hefty entry fees for locals on its two integrated gaming resorts due to open early next year. Vietnam and (in theory) Cambodia ban locals from using their facilities. Taiwan’s attempt at creating a legal casino or two limps on frommonth tomonth and year to year like a wounded stag—too strong to lie down and die, but not quite strong enough to reach safe ground. Yet experts tell us that Taiwan is awash with quasi-casinos in the form of slot halls. Ostensibly, these establishments offer amusement games with prizes, but in reality they operate somewhat like Japan’s pachinko halls in that the prizes can be turned into significant cash sums at some booth manned by shady gentlemen around the corner. The public policy signals regarding the Asian online market are equally mixed. Only the Philippines has so far been willing to grasp the realities of the Internet age and deigned to create a licensing system for online gaming service and content providers. Japan—one of the most wired up and wireless-capable nations in the world—veers between looking the other way, pretending the World Wide Web hasn’t yet been invented and attempting to block its nationals from using their credit cards to pay for Internet gambling services. The latter strategy is risible, given that card payment service companies can simply re-route the transactions to third party companies using payment codes that give no hint that the cash is for online gambling. Unlike the United States, Japan seems to lack the political will to chase after the banks if they fail to prevent such payments being made. Macau’s online gaming law was drafted two years ago, but has been gathering dust ever since. It is a victim most likely of lobbying from vested interests in the land-based gaming market at home; by pressure from Hong Kong politicians wishing to protect the revenues of the neighbouring Hong Kong Jockey Club, and perhaps most of all by a distinct lack of enthusiasm among the central leadership in Beijing. The latter probably regard any ‘normalisation’ of online gambling via local licensing out of Macau as not only a competitive threat to Macau’s casinos, but also to China’s two state lotteries, and to ‘social harmony’. No tipping point has yet been reached among governments in the rest of Asia regarding the social benefits of regulating land-based and online gaming and taxing them. In Europe, that tipping point has largely been passed. Perhaps one of the reasons for the resistance at public policy level in Asia is that local demographics are working against the gaming industry. By that we mean Asian governments aren’t as desperate to plug public spending gaps and fill their tax coffers with gaming duty as Western ones. Most Asian countries have a lot of young, economically ambitious people, rapidly expanding GDP and low levels of social welfare spending relative to the developed world. What we have at present, therefore, is a bizarre game of jet fuelled chess using Asia as the board, whereby Japan sends plane loads of its gamblers to Korea, Korea ships its gamblers to Macau or the Philippines, and Mainland Chinese ship themselves across the border to Macau (when they can get a visa). This is certainly a travel agents’ jamboree, but not much of a way to run a 21st century service industry. The two Asian countries with demographic profiles and public spending policies most similar to Western countries—Japan and Korea—have so far baulked at opening up their domestic markets to casino gambling. They may not be able to do so for very much longer, given their ageing populations, shrinking tax base and aversion to mass immigration to plug the funding gap.