Inside Asian Gaming

INSIDE ASIAN GAMING | April 2011 34 there are over 6,000 eligible voters in Lieyu. Taiwan’s Offshore Island Gambling Law does not stipulate a required minimum turnout for the referendum results to be valid, but potential casino developers are still waiting for Kinmen to hold a county- wide referendum—which would cover 72,500 eligible voters—before pursuing their plans. With a greater number of eligible voters, the outcome becomes less certain. Of Penghu’s 70,000 eligible voters, only 29,000 turned out for the 2009 referendum, with 17,359 voting against the casino plan and 13,397 in favour. It’s quite possible the anti-casino residents were the ones most keen to have their say during Penghu’s referendum, with a large portion of the no-shows undecided because they were not provided sufficient details about the casino proposal. With the MOTC setting out to ensure the residents of Kinmen, Matsu and Penghu are fully appraised of the measures to mitigate the potential social ills, future referenda could see much better turnouts and, importantly, ‘yes’ votes. Locals driven According to a report released by Union Gaming Research Macau, casinos in Taiwan will not have a significant impact on Macau over the medium- or long-term for the following reasons: “1) Any expansion of gaming is likely several years away (5+ in a quickest-case scenario) when accounting for the legislative /referendum process, the RFP (Request for Proposal) process and typical construction timelines. 2) While more mainland PRC residents are travelling to Taiwan these days under a more relaxed visitation scheme, Beijing is incentivized to direct gaming visitation to Macau rather than Taiwan. 3) Taiwanese visitation to Macau only accounted for 5% of total visitation in 2010 (down from 15% in 2000) and likely accounted for only a low-single- digit percentage of gross gaming revenue last year.” With the MOTC setting out to ensure the residents of Kinmen, Matsu and Penghu are fully appraised of the measures to mitigate the potential social ills, future referenda could see much better turnouts and, importantly, ‘yes’ votes. Despite the Taiwan draft casino bill’s Singapore-style measures to dissuade locals from playing at the proposed casinos, the reality is that just as has happened in Singapore, the bulk of Taiwan’s casino revenue is likely to be generated by its own citizens. Taiwan currently has around 3,000 electronic game arcades offering quasi- gaming, in a similar fashion to Japan’s pachinko industry. While pachinko itself remains popular in Taiwan—a legacy of the Japanese occupation in the early 1900s—the country’s restricted rate arcades have come to be dominated by slots and multi-player machines offering baccarat, sic bo and roulette. Bingo also still enjoys a strong following in Taiwan, particularly among the older generation. The legal grey-area under which the restricted rate arcade market operates has probably not helped the public perception of gaming in Taiwan. Despite their less- than-ideal operating environment, the restricted rate arcades are estimated to generate over US$5 billion annually. That suggests plenty of pent-up local demand for legal gaming to support an ambitious casino venture, even if, as many fear, mainland China blocks its citizens from playing at Taiwan’s proposed casinos. Mainland China already has an officially- sanctioned outlet for its citizens’ pent-up casino gambling demand in Macau. Taiwan’s casino properties could also hardly hope to compete with those in Macau, where billions of dollars have been invested since the liberalisation of the industry in 2002 to create a string of dazzling resorts. Even if Taiwan eventually builds its own casinos, Taiwan’s highest-rollers may still continue traveling to Macau to get their gambling fix. Realistic goal The Singapore government’s stated intention in legalising casinos in the city state was to boost the local tourism industry. Union Gaming Research Macau believes the Taiwan government’s goal of “jump-starting the economies of the subject areas has some merit (mainly driven by the sheer depth of the potential gaming customer base in Asia).” Union continues: “The physical location and somewhat inconvenient access to the outlying areas could naturally dissuade patronage fromTaiwanese citizens. However, there is some infrastructure already in place, like Kinmen airport, that if repositioned to accept international flights could act as a gateway for foreign customers. We believe the stated goals of rebuilding the economies of the outlying islands and generating funds for public-use projects are probably achievable.” Back to the drawing board—Taiwan gets more serious about winning public support for casinos Mainland China Matsu Taiwan Penghu Taiwan Strait Wuciou Kinmen Way offshore—Matsu and Kinmen are much closer to mainland China than to Taiwan’s main island Market Outlook