Inside Asian Gaming

May 2014 inside asian gaming 91 in the premises of different five-star hotels in the country as some didn’t apply for renewal within the given time-frame and applications of others were filed without fulfilling due process,” a spokesman for the Ministry of Culture, Tourism and Civil Aviation said. The decision was taken after several deadlines to pay up were extended. It affects eight foreigners-only casinos in Kathmandu and two in Pokhara, all operating in tourist hotels. About 4,000 jobs could be affected, according to news reports. The casinos owe the government a total of 1.07 billion Nepalese rupees (US$11 million) dating back to 2005-2006, according to the ministry, which also complains the casinos do not obey regulations prohibiting Nepalese nationals from entering the venues. The government recently approved new rules reinforcing the ban and introducing mandatory licensing. The new measure also raises the annual royalty fee to 40 million rupees, which the casinos have said they cannot afford to pay and remain profitable. Three closed last year. Mass Drives Q1 Gains for MGM China MGM China Holdings posted a 33% increase in operating profit in the first quarter as revenue from the Macau resort’s high-margin cash tables grew a hefty 45%. Earnings before interest, taxes, depreciation and amortization, the industry’s principal indicator of profitability, rose to US$257 million from $193 million in the 2013 quarter on net gaming revenue that was up 26% to $941 million. Despite the increases, the EBITDA total missed the median estimate of $258.5 million from six analysts polled by Bloomberg News , and that has raised some concern among investors. “With limited room inventory and premium mass success in the bag, the company might be running short of new ideas to keep its market share stable,” Morgan Stanley’s Praveen Choudhary wrote in a client note earlier this month. VIP revenue rose 12% in the quarter, in line with the market, which saw revenue growth from the rolling chip slot taper off for the first time in five months to +12.5%, a factor observers attribute to a general slowing of the mainland China economy. Total gambling revenue in Macau, the only place in the country where casinos are legal, is up 20% through the first three months of the year. MGM China is 51% owned by Las Vegas-based MGM Resorts International. Pansy Ho, a daughter of Macau casino tycoon Stanley Ho and Hong Kong’s richest woman, owns 27%. Sands China Q1: Mass Story Shines On Sands China’s operating profit soared 50% in the first quarter as the company outperformed the rest of Macau in the high-margin mass and slots segments to generate net revenues of US$2.72 billion. The revenue represents a 35% increase year on year as the Hong Kong-listed subsidiary of Las Vegas Sands (HKSE: 1928) was able to leverage its outsized supply of gaming positions, hotel rooms and retail to continue shifting its strategic emphasis toward cash customers and away from the market’s historical dependence on VIP rolling chip play. It showed in the 50% jump in EBITDA, which hit $938 million for the 12 weeks ended 31st March and handily beat the consensus of $880 million. The company played lucky with a VIP win rate of 3.2%, and that helped, too, adding $75 million to the earnings line in Union Gaming Research Macau’s estimation. “We continue to believe that all of the major infrastructure already put into place (and continuing to be put into place) in mainland China is driving a much higher-quality customer to Macau, and driving them more frequently,” the firm said in a note to investors. “With this in mind, we would expect SCL to continually adjust its gaming and non-gaming mixes to suit its customer base. We think the addition of Parisian and St. Regis, along with a potential redevelopment of Sands Macao in the out years, will keep the SCL growth story intact through the end of the decade.” The company finished the quarter with 107 fewer VIP tables and 180 more cash tables compared to the same period in 2013. This included 33 tables dedicated to the bigger bettors constituting the lucrative premium-mass segment as part of what UGRM identifies as a “broader ongoing trend”. “SCL, while operating fewer VIP tables, is increasing the value of each VIP table by working with a lower number of (higher quality) junkets. As such, we would look for VIP yield/table to continue to increase.” VIP volume was up 10% company-wide despite the lower number of tables, led by the resort complex at Sands Cotai Central, which for the fourth consecutive quarter generated more rolling chip volume than the rest of the SCL portfolio. Characteristically, company-wide mass table and slot revenues outperformed the market, up 54% and 24%, respectively, versus +39% and +10% for Macau as a whole. MGM Macau Rendering of The Parisian on Macau’s Cotai Strip REGIONAL BRIEFS