Inside Asian Gaming

INSIDE ASIAN GAMING | October 2011 20 Cover Story slot operator fees. Citi Equities said in an August report that NagaCorp had a fixed monthly tax of US$292k in 2010, growing by 12% per year through to 2013. Citi added this equated to an estimated effective tax rate of 5% for 2011. Another piece of positive news is that the number of international tourists to Cambodia is on the rise. In the first quarter of 2011, Cambodia’s Ministry of Tourism reported a 13.9% increase in international visitors year-on-year. Around 735,000 of the arrivals (94% of the total) were related to leisure travel. The appointment in August of Japan’s sixth prime minister in five years is unlikely to derail plans for legalisation of casinos in the country claims Tokyo-based consultancy Gaming Capital Management (GCM). Time will tell. On the plus side, Japan’s current economic difficulties—compounded by the natural andnuclear disasters in the northeast of the country in March—seem to have pumped up the normally flaccid political will of lawmakers. They and their advisors are now starting to put some administrative flesh on the bones of Japan’s draft Casino Bill. Among the details disclosed so far by a cross-party association of lawmakers and experts are: * at least one IR may be located in the Tohoku region—the northeast part of the main island of Honshu worst affected by the earthquake, tsunami and subsequent nuclear accident; * for the first fewyears of casino operations the government’s tax revenue from the industry will contribute to the earthquake recovery plan, although tax rates are still to be decided; * the costs of industry regulation will be borne by the casino operators; * an entry fee will be charged to pay for gambling dependence prevention; and for regional development measures. * casino entry will be controlled via a system of identity checks. Policy on how to prevent fraudulent entry of barred persons or the entry of criminals using aliases is still to be developed; * the necessary amendments to Japan’s Criminal Code required for legalisation of casinogamblingwill be the responsibility of the Ministry of Justice. Japanese spend around ¥20 trillion (US$260 billion) on pachinko each year. Whether that passion will translate into enthusiasm for casino slots and table games isn’t yet clear. But one indicator is that around 800,000 Japanese already visit casinos in South Korea every year, according to figures collated by CLSA Asia-Pacific Markets. It’s difficult to give a precise figure for the annual value in GGR of the Philippines market as it’s divided between private listed companies and the state-owned operator- cum-regulator the Philippine Amusement and Gaming Corporation. PwC, a specialist in professional business services said in its January report ‘Playing to win: The outlook for the global casino and online gaming market to 2014’, that it expected the country to generate approximately US$679 million in casino revenue in 2011—possibly nearly doubling that to US$1.2 billion by 2014 if all the infrastructure proposed for the Manila Bay entertainment zone is completed. In Genting Hong Kong’s 2010 annual report, the company said Resorts World Manila’s first full calendar year of operation following its soft opening in August 2009, achieved US$355.8 million in total revenue and US$102 million EBITDA (earnings before interest, taxation, depreciation and amortisation). PAGCOR’s total remittances to the country’s Bureau of the Treasury in 2010 were PHP10.343 billion (US$238.8 million). If existing IR infrastructure were the only measure used by international investors, then the Philippines would be out in front in the race for third place in the IR market behind Macau and Singapore. But it’s not the only measure used. Investors care about the security of their investment and about regulatory transparency. There the Philippines is arguably less competitive than some of its neighbours. It does however offer tax rates (25% on the ‘grind’ or mass- market and 15% on the VIP, plus 2% levied in both cases on restoration of cultural heritage) that are lower than Macau’s 39% across the board. The rates are still a little higher than Singapore’s applicable tax of 22% on the mass and 12% on the high roller segment (inclusive of gaming tax and goods & services tax). Resorts World Manila has benefited from having a local partner. That seems to have given it something of a buffer against the sharp swings that can occur in terms of regulatory approach and political mood in the Philippines. The country is a democracy, whichintheoryshouldassistincreatingsome transparency. But it is also one of the region’s most boisterous and fractious political landscapes. There’s constant bickering among lawmakers and claims and counter Two year deadline—Japan’s lawmakers urged to approve Casino Bill Proven performance—the Resorts World Manila integrated resort Japan Philippines