Inside Asian Gaming

JUly 2015 inside asian gaming 27 Cover Story remains a minority partner in what Vietnamese officials call the country’s most profitable casino, posting a $9 million net profit in its fiscal 2014. “Our traditional client base is in Yunnan, and there are not many gaming options for them,” Donaco Executive Director Ben Reichel says. “They can go to Macau, but they need a visa for that.” Alternatively, the province’s 46 million residents can cross into Lao Cai for 48 hours with just their ID cards through a border open 16 hours daily. China accounts for more than 90% of Aristo’s players, the overwhelming majority from Yunnan. Mr Reichel says the upgraded property reaches deeper into Yunnan—the largest city, Kunming, is a four-hour drive away via a new expressway—and beyond. Aristo players bet in renminbi at three categories of tables. Main hall minimum bets range from RMB50 ($8) to 400, premium table minimums RMB600 to 2,000 and VIP minimums RMB4,000 with a RMB200,000 maximum. A mezzanine above the circular main gaming floor has eight private gaming suites, each with one table, generally reserved for VIPs. Throughout the casino, table designations can be easily adapted to suit demand. Some hotel suites have also been designed to accommodate gaming tables. RICH TREATED RICHER VIP play provides 90% of gaming turnover, with 90% of revenue from VIP and premium. “Our focus has been on the premium- mass market and treating them like VIPs,” Mr Reichel says. “That’s the sweet spot we’ve identified, treating the medium rich like super rich.” For the six months ended 31st December, mainly covering the soft opening period, Donaco reported gaming table turnover increased 18%, slot machine turnover grew 746%, and non-gaming revenue rose 822%, despite “headwinds.” Anti-Chinese riots in Vietnam broke out the week Aristo opened, prompting a second-level travel warning by China that prevented tour groups from getting travel insurance. World Cup football in June and July plus the Yunnan earthquake in August further cut gaming patronage. Mr Reichel notes Aristo didn’t begin full scale marketing efforts until its completion and five- star certification in November, and that the travel warning wasn’t downgraded until January. Revenue suffered from a July quarter VIP win rate of 1.29% and 2.09% for the full first half. Expensing A$1.2 million ($1.07 million) in stock options, a non-cash cost, and opening expenses at Aristo also hit the bottom line, resulting in first-half negative EBITDA of A$765,112 and a net loss of A$844,743. Aristo results, separated from the group’s gaming technology business disposed during the half, show normalized EBITDA of A$7.4 million, up 52% from the previous year, and net profit of A$4.3 million, up 29%. Most “headwinds” died down in the new year, Mr Reichel says. Casino visits rose 45% in December and 82% in January. “In the past months, the anti-corruption campaign in China has started filtering down to our level of players,” he adds. “It’s had a bit of a chilling effect. People are laying low.” Before Aristo opened, Donaco worked with 24 junkets, all from Yunnan. That number has risen to 33 since the property upgrade, Aristo players bet in renminbi at three categories of tables. Main hall minimum bets range from RMB50 ($8) to 400, premium table minimums RMB600 to 2,000 and VIP minimums RMB4,000 with a RMB200,000 maximum. Before Aristo opened, Donaco worked with 24 junkets, all from Yunnan. That number has risen to 33 since the property upgrade, including junkets from Singapore and Malaysia that usually take players to Macau.