Inside Asian Gaming

INSIDE ASIAN GAMING | February 2014 22 COVER STORY T aiwan is seeing more than its share of political wrangling related to the proposed development of a gaming industry. Millions of mainland Chinese are only a short trip away, and the potential windfall this could bring is the main driver of the island nation’s strategy. However, exactly where casinos could be located has been the subject of both domestic politicking and potentially ominous words from the mainland government. Gaming was authorized by the Offshore Islands Development Act, which was passed in 2009 to allow residents of the Matsu, Kinmen and Penghu archipelagos in the Taiwan Strait to vote on legalizing casinos with a view to attracting tourism and generating growth. Matsu voted in favor of them in 2012, the only archipelago to date to do so. Last May, Taiwan’s cabinet approved a draft bill for regulating the industry on the islands that approve them. So far, only one developer has stepped forward with a specific plan: Weidner Resorts, a company founded by former Las Vegas Sands President WilliamWeidner. Weidner envisions a veritable resort city for Matsu to open in phases with gaming as the anchor for a cluster of hotels, residences and leisure attractions designed to bring 5 million to 7 million visitors to Matsu a year. The current price tag is $2.5 billion, a good portion of which is earmarked to bring the islands’ primitive electrical, water treatment and transport infrastructure into the 21st century.Therewould also be a university to train staff, and locals would be paid a monthly stipend. The first phase calls for 2,000 hotel rooms and an array of entertainment and leisure attractions. Mr Weidner predicts 1 million visitors in his first year of operation and 4.5 million after five years, 70% of them from mainland China. Currently, Matsu hosts about 100,000 visitors a year, only about 7,500 of them from China. Given the transportation and infrastructure needs, it’s estimated that 2019 would be the earliest the resort could open. The company has reached across the Taiwan Strait to sell officials of China’s neighboring province of Fujian with its 37 million inhabitants on the wisdom of joining forces, and a preliminary agreement has been reached with Hong Kong ferry operator Chu Kong Passenger Transport for a service between Fujian’s capital of Fuzhou and Matsu. Mr Weidner has reportedly also gained Fuzhou officials’ support for the development of a supporting tourist hotel near the city, whose 4.4 million residents, together with the 5 million or so living around Xiamen to the south, are considered key to Matsu gaming’s success. However, late in 2013, themainland government invoked a clause in the 2008 Cross-Strait Agreement between the two governments that forbids travel agents and tour groups from organizing gambling trips from themainland or involving its citizens in gambling activities. The National Tourism Administration holds to a similar position, and this was affirmed last year when the question of Matsu was broached with a spokeswoman for the State Council’s Taiwan Affairs Office. This threw developments into confusion. Taiwan’s pro-casino Minister of Transportation Yeh Kuang Shih has since suggested that it would make more sense to allow gaming on the main island to take advantage of the large population in and around the capital of Taipei, andsome legislatorshaveproposed foreigners- only casinos for a number of special economic zones, the main one being the Taoyuan Aerotropolis complex at Taoyuan International Airport. Terry Gou, head of Foxconn Technology Group and one of Taiwan’s wealthiest citizens, suggested earlier in 2013 that a special casino enclave be developed near the capital, but Premier Jiang Yi Huah described the proposal at the time as “problematic”. Officials on Matsu are concerned they’ll lose out and strongly oppose casinos on the main island, an idea that also has encountered significant public and political opposition. At the end of last year, a committee of the Legislative Yuan struck out 83 of the 114 articles contained in the draft regulatory bill and reaffirmed their support for restricting casino development to the outlying islands. A final bill is expected to be approved this year. What it will end up containing isn’t known. It’s believed the casino tax regime will not be unfriendly: an effective 14% initially, composed of a 7%“franchise fee” that gradually increases after 15 years and a local government tax capped at 7%. There had been talk of a 20% tax on winnings, which wisely was scrapped. Some Singapore-style restrictions are expected to be imposed on gambling by Taiwanese. The rules are expected to come in somewhere between Macau and Singapore in their receptivity to junkets. Pro-casino forces, meanwhile, are marshaling their resources for another try at Penghu, where an Isle of Man-based company called Claremont Partners owns 27 acres on which it wants to develop a gaming resort. Some better-known industry names, SJM Holdings, Caesars Entertainment and Jimei Group among them, have scouted sites on Penghu and Kinmen and have met with local officials. TAIWAN Ambition and Uncertainty WilliamWeidner’s Weidner Resorts is the only company to have advanced a concrete plan for Matsu. Photo: Christopher Adams/flickr Matsu boasts natural beauty but lacks infrastructure.