This week's installment of Inside Gaming focuses on Macau where another huge hotel-casino opened this week while a junket operator is pulling its VIP rooms, earning some animosity from at least one Macau casino operator.
LV Sands' Parisian Opens in Macau
Amid questions over whether or not Macau's more than two-year slide in gaming revenue might finally be coming to an end — and continued governmental pressure to find other non-gaming avenues for growth — another casino has opened in the Special Administrative Region.
On Tuesday the Parisian Macao Hotel opened its doors to the public, a sprawling, 3,000-room resort adorned with a half-scale Eiffel Tower located on the Cotai Strip. It marks the fifth Macau property for the Las Vegas Sands Corp. and Chairman and CEO Sheldon Adelson, who appeared to field questions from hundreds of reporters prior to the evening's opening ceremonies.
After 26 consecutive months of declining gaming revenue — with decreases in the 30-40 percent range (and higher) many of those months — Macau's Gaming Inspection and Coordination Bureau finally reported a positive month in August as casinos collectively showed a 1.1 percent increase in gaming revenue. Many analysts nonetheless remain skeptical over whether a turnaround is near, with some expressing doubts regarding the opening of new casinos and whether there remains enough demand to support them.
When asked about the future of gambling growth in Macau, Adelson opined "I think we have essentially hit the bottom," reports Reuters. He added that a return to growth "will be gradual," adding he believes "Macau still has very good days to come."
"I can't predict what the percentage of growth will be, but I am optimistic about the future," said Adelson.
Adelson and the Las Vegas Sands were the first to build on the Cotai Strip with the world's largest casino, the massive Venetian Macao that opened in 2007.
With an approximate cost of $3 billion, the Parisian Macao opens less than a month after the opening of the $4.2 billion Wynn Palace Cotai in late August, a 1,700-room hotel with 1,145 slot machines and 100 gaming tables to begin thanks to governmental restrictions. The Parisian reportedly has 1,600 slots and just over 400 gaming tables in operation, having been permitted to move some of its tables from other properties.
"Even if Macau never again reaches the stellar growth of its boom years, casino bosses say they can wear the slowdown" explains Reuters. "After all, total monthly takings of about $2 billion, while less than half 2014 levels, are still a third of what Las Vegas earns annually."
Indeed, it has been a decade since Macau passed Las Vegas in gambling revenue, a milestone achieved in 2006. At its peak just prior to the decline, Macau's gambling industry was said to be seven times the size of Las Vegas, having earned over $45 billion in 2013 alone.
Various factors helped the downward turn, however, including measures introduced by China's President Xi Jinping to reduce corruption, graft, and other types of extravagence, stop money laundering, and decrease governmental bureaucracy. Such efforts directly impacted what had been a burgeoning junket industry whose operators facilitated "VIP" high-rollers activities, including moving funds, settling debts, and managing loans.
Thus have many hotel-casinos been redirecting their efforts toward building both non-VIP clientele and non-gaming attractions. As we shared here in July, Paulo Martins Chan, Director of the Macau Gaming Inspection and Coordination Bureau, advised operators to consider a "structural readjustment of the gaming industry if Macau is to diversify its economy and achieve sustainable development."
Some of the many amenities of the Parisian Macao may attract non-gamblers. "Instead of flocking to the baccarat tables as they used to in Macau's heyday, the crowds at the Palace mainly cluster in front of huge flower installations for selfie opportunities," suggests Reuters.
When asked when he believed the Parisian would finally recover its exorbitant costs, Adelson continued to express cautious optimism. "We hope it is one year but might be disappointed if it is over four years," he said when asked when he thought the property would break even. "I just hope it is sooner rather than later."
Meanwhile, poker continues to boom across Asia, with several positive indicators of a bright future for that game amid the uncertainties surrounding the industry, generally speaking.
Read more about the big opening as well as further speculation about Macau's near future at Reuters.
Macau Junket Operator Closes VIP Rooms; Galaxy Responds With Legal Threat
Staying in Macau, the VIP junket operator Iao Kun Group Holding Company Limited announced a week ago it was closing two of its Macau-based rooms, one at the StarWorld Casino and Hotel Resort and another at the Galaxy Macau Casino. The news came a week after the same group closed its VIP room at the Las Vegas Sands' Sands Cotai Central a week before.
Then soon after the announcement, Galaxy Entertainment Group Limited issued a statement declaring it had been the one to terminate the its agreement with the junket operator, and that it further intended to pursue legal action against the Iao Kun Group for "breach of its undertakings and agreements."
According to GGRAsia, the junket group's stated its intention on Tuesday to close the two VIP rooms as part of a "comprehensive strategic review" of its Macau operations. That followed a statement earlier this month from the group that a review was needed "due to the ongoing challenging VIP gaming environment" in Macau alluded to above.
However two days later, Galaxy Entertainment issued its statement in order to "put the record straight."
Buddy Lam Chi Seng, Assistant Senior VP of Public Relations for Galaxy Entertainment, clarified they had been the ones to drop the group "as a result of Iao Kun's breach of the agreements made with us," and that legal action would be pursued both against the company "and its relevant directors and/or officers."
Meanwhile Iao Kun Group Holding Company Limited continues to service City of Dreams Macau (a Melco Crown Entertainment property) and Casino Le Royal Arc (of SJM Holdings Ltd.). It also services VIP rooms in other locations including at casinos operated by Crown Resorts Limited in Australia.
For more on the casino operator's conflict with the junket operator, see GGRAsia.
Image: Parisian Macao.
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