* Cash-rich Asian players have home advantage
* U.S. giants carry political, regulatory risk
* Asian players could move in on U.S. territory
* Philippines touted as next major casino venue
By Farah Master and Ronald Grover
MACAU/LAS VEGAS, April 17 (Reuters) – Billionaire Sheldon
Adelson, who became one of the world’s richest men by creating a
casino empire in Las Vegas and Macau, is doubling down on his
bets in Asia, the hottest gambling market on the planet where
his Singapore operation made $1 billion the first year it was
opened.
The 78-year chairman of Las Vegas Sands, the world’s
biggest gambling company by market capitalisation, looked
supremely confident when he opened his new $4.4 billion casino
last week in the former Portuguese colony of Macau, the world’s
largest gambling destination where bettors spent $33.5 billion
last year compared to Las Vegas, which took in $6 billion.
Speaking at the opening of his Sands Cotai Central on April
11, Adelson outlined plans to spend billions more developing
casinos in Vietnam, Korea and Japan, in addition to the $35
billion he plans to spend on a Spanish casino-resort complex.
Rivals Wynn Resorts and MGM Resorts are
also staking their own claims throughout Asia for growth.
It’s not all an American story however. Asian players like
Malaysia’s Genting , Hong Kong-listed Galaxy
Entertainment and Melco Crown , are
aggressively raising the ante as they expand on their home turf.
RISE OF THE ASIAN TITAN
The race to conquer the Asian casino world is already
heating up in the Philippines where Asian brokerage CLSA
forecasts gambling revenue to grow from US$1.3 billion in 2011
to US$3 billion in 2015 once three new resorts are completed.
Genting, controlled by Malaysian businessman Lim Kok Thay,
controls and is developing casinos in the Philippines through
its Genting Hong Kong unit, while parent Genting Group
is developing a casino in Vietnam with local asset management
group VinaCapital, according to Vietnamese media.
Galaxy and Melco, which both sit on prime real estate on
Macau’s coveted casino strip, are also interested in investing
in the Philippines, Cristino Naguiat, chairman of the
state-owned Philippine Amusement & Gaming Corp, told Reuters in
February.
The firms currently developing or operating casinos in the
Philippines include Belle Corp, Bloomberry Resorts,
Universal Entertainment and Travellers, a joint
venture between Genting and Alliance Global.
“Countries like Singapore have provided a very good template
for emerging jurisdictions looking to liberalize gaming
entertainment,” said Steven Tight, president of international
development for U.S. giant Caesars Entertainment, which owns
Caesars Palace in Las Vegas.
Caesars does not operate a casino in Macau, but is itself
expanding in Asia and is building a luxury resort in China’s
southern tourist destination, Hainan, where gambling is illegal.
Genting Singapore, armed with a hefty cash reserve of some
S$3.9 billion ($3.1 billion) as of March 2012, has in the past
two months raised around S$2.3 billion in debt, suggesting it is
likely to push ahead with expansion plans and global
acquisitions in the near term, analysts said.
LOSS OF FACE
The Asian expansion by U.S. operators has not been without
controversy. Government officials in several potential Asian
gambling jurisdictions considering which operators will be
awarded a license are growing weary of the negative headline
risk that Las Vegas operators bring with them, executives said.
Sands and Wynn are both embroiled in legal battles in the
United States and Macau. Sands is fighting lawsuits filed
against it by its former Macau chief executive and a former
Taiwanese business partner while Wynn is being investigated for
a HK$1 billion ($130 million) donation to the University of
Macau.
Alleged bribes for Philippine regulators became the
centerpiece of litigation in the United States between Wynn and
its largest shareholder, Kazuo Okada. The case is now before a
federal court in Nevada.
Okada, one of Japan’s richest men whose Universal
Entertainment manufactures pachinko machines, is building a
casino resort in the Philippines and is reported to be investing
in South Korea.
“Since entering Macau, all three Las Vegas-based operators
have had international headlines that have caused humiliation
and ‘loss of face’ for their Chinese partners and government
officials,” said Matthew Ossolinski, chairman of Ossolinski
Holdings, a global emerging markets fund that invests in casinos
and other gambling-related companies. “Some government officials
in Asia are now wondering: is it worth it?”
LEAVING LAS VEGAS?
Meanwhile, U.S. operators committed to a future in Asia
could make a bold move to leave Las Vegas by delisting and
selling their U.S. properties, which could free them from
various U.S. legal constraints.
“It would be creating a sort of international hybrid gaming
company: an established, world-class operator without the
American legal baggage,” said fund manager Ossolinski, who
predicts the next five years will determine who dominates Asian
gambling for the next 20 years.
U.S. operators are also on guard against Asian companies
muscling in on their territory in the United States. Genting has
been buying waterfront real estate in downtown Miami over the
past year, including buying the Miami Herald building, in the
hopes the state will legalise gambling.
As Asian firms look to dominate in Asia by relying on their
local networks and knowledge, they are also tapping the
intellectual resources of Las Vegas by hiring Las Vegas-based
lawyers, architects, live entertainment producers and
information technology companies.
“It won’t be long before Asian firms start acquiring and
developing properties in Las Vegas as a part of creating a
global footprint,” said Jonathan Galaviz, managing director and
chief economist at Galaviz and Company LLC, an economic research
and government strategies firm.
