Inside Asian Gaming

REGIONAL BRIEFS Macau’s $4.8B February a New Record Macau gaming revenue soared 40% to a new monthly record in February on the strength of a flood of mainland Chinese visitors to the world’s largest gambling hub during Chinese New Year. Revenue hit MOP38 billion (US$4.8 billion), beating the MOP36 billion median forecast by seven analysts polled by Bloomberg News . The previous record was MOP36.5 billion set last October. It’s estimated that more than 1 million people visited the city, the only legal casino market in China, over the New Year holiday, which ran from 31st January to 6th February. More than 770,000 came from mainland China, an increase of 23% over a year earlier, according to the Macau Government Tourist Office. “Clearly, it’s evidence that there’s still pent-up demand to play from mainland customers,” said Standard Chartered investment analyst Philip Tulk, based in Hong Kong. “Macau’s becoming a more accessible and realistic spot for visitation.” Revenue is up 24% through the first two months of the year to MOP66.7 billion ($8.33 billion), but the pace could begin to slow on tougher year-on-year comps. “Growth in March will slow due to the higher base,” said Aaron Fischer, a Hong Kong-based analyst at CLSA. “The full-year outlook remains very positive, especially for the higher-margin mass-market segment.” The city’s six casino operators took in US$45.2 billion last year, about seven times that of the Las Vegas Strip. Peter Kup-Ferroth Joins Weike as VP, Product Marketing Singapore-based electronic gaming machine manufacturer Weike Gaming Technology announced last month that it has appointed Peter Kup-Ferroth as Vice President, Product Marketing. In his new role, Mr Kup- Ferroth will oversee Weike’s product marketing department from Singapore. “With my appointment, I hope I can bring forthmy experience to strengthen our great product pipeline for our customers and generate future business opportunities for Weike Gaming,” commented Mr Kup-Ferroth. Mr Kup-Ferroth has worked in the gaming industry for 16 years holding product management roles worldwide. His previous appointments include serving as a global product manager for Aristocrat Technologies, and as a product marketing manager for Australia/Asia Pacific at IGT Australia. “We are very excited to welcome Peter Kup-Ferroth as a pivotal member of Weike Gaming Technology. His familiarity with design trends and providing key information to customers will strengthen business opportunities into the future. As Weike moves to new levels, Peter’s valuable knowledge of global gaming markets and product management will create more success stories for us,” said Andrew Masen, Vice President, Design Development at Weike. PAGCOR Franchisees No Longer Tax-Exempt In a move that draws the ongoing issue of Philippine gaming taxation further toward a close, the country’s Court of Tax Appeals has ruled that Thunderbird Pilipinas Hotels and Resorts Inc. must pay tax deficiencies of Php17.92 million (US$400,000) dating back to 2006. According to reports, Thunderbird first argued that the 30% income tax exemption given to the Philippine Amusement and Gaming Corp. covered corporations that acted as its licensees. When this was rejected by the court, the company argued that even if it were liable for taxes, these should only apply after the 2011 decision by the country’s Supreme Court overturning Pagcor’s tax exemption, as it had signed up to a Pagcor charter which had now been reinterpreted. This was a question for which market watchers had also wanted a resolution, and it was also rejected by the court; the judgment was based on the Expanded Value Added Tax Law passed in 2005, which the CTA argued abolished Pagcor’s tax- exempt status and had already been ruled on by the Supreme Court. For its part, Pagcor announced its willingness to help shoulder additional taxes in 2013, but the extent to which it is willing and able to do this remains unclear. Philippine casinos currently pay a 15% levy on VIP gaming revenue, 25% on mass-market and a 5% “franchise fee”. Melco Crown To Start Paying Dividends With earnings that beat analysts’ forecasts, a US$2 billion Macau resort going up on time and on budget, and a plan to pay dividends for the first time, Melco Crown Entertainment offered shareholders a lot to like in the announcement of its latest quarterly results. It was largely a mass-market story for Melco Crown (Nasdaq: MPEL) over the final 12 weeks of 2013, with adjusted EBITDA up year on year by 46% to $394.4 million—six analysts polled by Bloomberg had expected $373 million—on a 27% increase in net revenue to $1.39 billion. VIP volumes at Altira and City of Dreams combined were up only 2% (+9% at CoD and -11% at Altira), but mass table drop company- wide grewby 29%and beat themarket’s revenue growth rate of 40% with a 55% increase. Slot revenue, which includes the company’s INSIDE ASIAN GAMING | December 2013 42 Peter Kup-Ferroth Thunderbird’s Fiesta Casino in the Philippines’ Rizal province