Inside Asian Gaming

INSIDE ASIAN GAMING | January 2011 10 end it will be growing the market as a whole, because, Crown, who have done a much better long-term job of that, have been the only one pulling all the effort [having invested A$1 billion in updating and expanding its facilities over the past four years, and planning to invest a further A$800 million].We hope with our efforts, the pie will get bigger.” The Macau effect It appears the explosion of gambling capacity in Macau has actually benefited the Australian high roller market by expanding the pool of VIPs—particularly from mainland China—in the region. Mr Mullin agrees “Macau has helped grow the market here for internationals.” Although there were early signs that the arrival of Singapore’s two casino resorts in the first half of 2010 was negatively impacting Australia’s VIP gaming turnover, this could be a short-lived phenomenon, andTabcorp’s CasinosDivisionbelieves that ultimately, Australia’s international VIP play will not be cannibalised by either Macau or Singapore. Mr Mullin acknowledges that the glitzy new properties emerging in Macau and Singapore have been a wake-up call for the Australian casino market, but he says he welcomes the competition. “What I like about having competition is it forces you to improve everything you’re doing. And we’re going through a big recheck here. I think part of the issue with this [the Australian] market is it had gotten complacent, more from a product standpoint in the VIP business or the type of business you see up in Asia. We haven’t been competitive with the product we offer to those customers. So even though we’re in a great location here in a city such as Sydney, we just haven’t had the offerings to complement that visit. What’s happened in Singapore and Macau and that part of the world is they’ve significantly put new product in over the last five years. “So now we are going to make sure we offer the international customer the best suite experience in the city, and also give them a VIP experience with the gaming area. We needed to improve all that so we can compete with places like Macau and Singapore, offering the same type of product or better, but sitting here in Sydney, in one of the best resort cities in the world” Pros and cons Australia’s casinos clearly face a more favourable tax regime on international VIP play than their Macau counterparts—and hence have the flexibility to offer more attractive rebate programmes to international VIPs. In New SouthWales, the gaming gross on overseas VIPs checking in aminimumof A$75,000 at the state’s casinos is taxed at just 10% (inclusive of GST). The equivalent tax rate in Queensland is also 10%, though the minimum check in to qualify is lower, at A$50,000. By contrast, all VIP play in Macau is taxed at just under 40% of the gross. VIP play in Singapore is taxed at just a shade more than in NSW and Queensland at 12% (split between a 5% tax on the VIP gross and a 7% goods and services tax). Mr Mullin recognises the importance of casino operators raising product and service standards. “One of the great advantages we have here is we’re in a great climate with a beautiful city and other attractions, but that only goes so far. At the end of the day, a customer has the ability to go to many different places. From our research, the first thing they’re looking for is quality product. But Mr Mullin acknowledges that the glitzy new properties emerging in Macau and Singapore have been a wake-up call for the Australian casino market, but he says he welcomes the competition. Cover Story