Genting, LVS in deep in Singapore with cost overruns

The developers of Singapore’s two casino megaresorts are reported to be facing more cost overruns on their multibillion-dollar projects.

Genting International said its Resorts World at Sentosa, scheduled to open early next year, will cost US$4.32 billion when all is said and done, 10 percent more than the previous estimate of $3.9 billion. The project originally was pegged at $3.4 billion.

Hardly good news for Genting, whose far-flung holdings have begun to feel the impact of the global recession. Malaysia-based Genting’s power operations in China and oil palm plantations in Malaysia and Indonesia are expected to slow down sharply too due to a weakening demand from factories to consumers. The company suffered a $32.9 million net loss in the fourth quarter, in part the result of an impairment loss on its cruise ship business. For the year, profits were down 71 percent compared with 2007 and shy of analysts’ estimates by 57 percent. In light of which, the company said opening costs for the Singapore integrated resort will have a “significant” impact on its earnings this year.

The other developer, Las Vegas Sands Corp, also has been hit by spiraling construction costs for its Marina Bay Sands resort in Singapore’s downtown financial district.

According to a report in The Straits Times, LVS has revised the cost of the development upward by about 68 percent, from an initial US$3.2 billion to $4.5 billion to $5.4 billion.

Las Vegas-based LVS has pledged that Marina Bay, or at least half of it, will be open for business by the end of this year.

The company recently bolstered its management team in Asia with the appointment of Leonard DeAngelo as senior president of Asia operations and Nigel Roberts as president of Marina Bay Sands. Bradley H. Stone, who has long served as corporate executive vice president, has been named to the newly created position of president of global operations and construction.

Visitor arrivals to Singapore fell almost 13 percent in January to 771,000 from 885,000 a year ago. The bustling city-state’s economic output is forecast to shrink by 2 to 5 percent in 2009.

Aristocrat takes hit in profits as sales dip in key markets

Global slot giant Aristocrat Leisure recorded a 75 percent drop in second-half profit as Australian earnings slumped and the company took a charge to settle a lawsuit.

Net income fell to A$30.8 million in the six months ended December 31, from $121.3 million a year earlier. Full-year profit stood at $101.2 million. Earnings before items for the year were $140.3 million, matching the company’s forecast.

The company took an A$57.4 million pre-tax charge against earnings to settle a class-action lawsuit. The company also wrote down its stake in PokerTek by $19.9 million while booking $21 million of gains from property sales. Shareholders will receive a second-half dividend of 10 cents, down from 25 cents a year earlier.

Second-half EBITDA from Australia fell 61 percent to $26.8 million as pubs and clubs responded to a smoking ban by investing in outdoor smoking areas rather than buying new slot machines.

North American profit rose 19 percent to A$108.9 million as the slump in the Australian dollar boosted the value of sales. However, after adjusting for exchange-rate movements, sales fell 5.6 percent and profit dropped 11 percent.

Japanese earnings surged ninefold to A$25.7 million as the company boosted sales of so-called Regulation 5 games that comply with new rules curbing payouts on pachislot machines. Aristocrat sold 57,473 machines in Japan during the year, almost double the amount in 2007.

Taiwan college contracts for dealer training

A tourism college in eastern Taiwan has signed an agreement with a U.S.-based institute to train Taiwanese hoping to work in the gambling industry.

Lee Ming-hui, principal of Taiwan Hospitality and Tourism College in Hualien, signed the agreement with James Kong, a representative of Galaxy Training Institute.

Under the agreement, a three-stage training program will be offered with basic courses on the gambling industry taught in Taipei in the first phase, courses on professional dealing in the second, and in the final phase, training modules on casino dealing and management will be offered in Singapore.

Kong identified the main assets of potential croupiers as “English and math ability and physical fitness”.

The Chinese government will not be lending a hand, however. Beijing has issued an order forbidding its citizens from visiting Taiwan’s casinos when they eventually open.

“It is Taiwan’s own business to legalize gaming,” said Shao Qiwei, director of China’s National Tourism Administration. “The mainland’s law makes it very clear that gambling is not permitted.”

The island of Kinmen, along with other outlying islands in the Taiwan Strait have become potential sites for Taiwan’s first legal casinos following the passage by the Legislative Yuan in January of an amendment that permits them on the islands.

Although Taiwan opened its doors to more Chinese tourists beginning last July and expanded the daily quota of arrivals to 3,000, Taiwan received only 300 Chinese tourists per day on average during the six months through December. The average number has doubled to 600 people per day during the first two months of this year, but it still remains far behind the target.

In a bid to help increase the number of Chinese visitors to Taiwan, tourism groups in Jiangsu and Shandong provinces have launched a campaign to promote tours to Taiwan, with the goal of seeing 10,000 residents from each of the provinces traveling to Taiwan in the first half of this year.

Cambodia closes slot halls, betting shops

Cambodia’s police crackdown on gray-market casinos disguised as “hotels” has been widened to include slot clubs in the capital of Phnom Penh.

Following an order from Prime Minister Hun Sen the Ministry of Economy and Finance issued a directive stating that licenses to operate betting machines were now invalid. An official at the ministry said the directive led to the closure of 60 gambling clubs within a week.

Many of the clubs are now operating as restaurants or coffee shops. Thousands of jobs have been lost.

The order also targeted Cambo Six, the country’s sole licensed bookmaker, which must close all 20 of its outlets but is permitted to remain open only to pay off winners. The government has signed a license termination agreement with Cambo stipulating that the operator would not receive any compensation. Its current license was due to expire in 2011.

But the clampdown has not affected all gambling outlets. Senator Phu Kok An, the owner of Golden Crown Casinos, said the directive does not affect slot machines in legal casinos along the borders with Thailand and Vietnam. And a casino near Siem Reap, the Angkor Park Resort, was recently approved by the central and regional governments, according to a report by Inside Asian Gaming.               

Phu said the closure order also does not affect NagaWorld, the only casino permitted in Phnom Penh and located on the same block as parliament.

“As long as we can ban Khmer people from gambling, slot machines in casinos will not be affected,” he said.

Cambodian nationals are banned from entering licensed casinos to gamble. 

South Australia weighs proposal to require ID cards for players

 A system using swipe cards to enter casinos is being considered in Australia in an effort to curb problem gambling.

The Independent Gambling Authority wants to ensure problem gamblers in South Australia are adequately protected and may ask SkyCity Casino to start using swipe cards to prevent barred gamblers from entering surreptitiously.

Advocates of the plan say the cost to the casino of constructing a physical entrance where cards would be checked would be minimal. But casino officials say the cost in lost business would be far greater. Their fear is that identification cards drive away many more customers who value their privacy while only protecting a few.

A card system was tried in the U.S. state of Missouri, but customers fled the state in droves to visit casinos in neighboring states. Missouri removed the checking stations and also canceled a longstanding statutory limit on losses.

SkyCity has asked the state to consider reworking laws protecting problem gamblers, which hold the casino accountable if even one banned gambler sneaks in.

Melco gearing up for City of Dreams off strong ’08 results

Melco Crown Entertainment reported a US$2.5 million net loss for 2008, but it was a massive improvement over the $178.2 million lost the year before.

Driving the improved results was a substantial increase in revenue, from $358.5 million in 2007 to $1.41 billion, which the company attributed to improved operating performance and a full year of operations at is Crown Macau, which opened in May 2007.

“As some of our competitors have suspended the development of their integrated resort projects in Cotai, the supply growth outlook in Macau has shifted in our favour,” said co-Chairman and CEO Lawrence Ho. “We expect City of Dreams to be the only new property to open in Cotai in 2009. We believe that high-quality new supply drives incremental visitation demand, and we are fortunate to be the sole beneficiary of this phenomenon for the foreseeable future. Additionally, more staggered supply growth will give Macau’s expanding transportation infrastructure time to catch up with the expected future increases in visitation.”

Melco Crown had approximately $825 million in cash, excluding cage cash, at the end of the fourth quarter and undrawn credit of $320 million. Ho said the company will spend about $620 million to cover construction and preopening expanses at City of Dreams. Another $50 million remains of a $250 million revolving facility. Debt maturities are still three to five years away, he said.

“In these challenging economic times, we are proud to have managed our company in a prudent manner that allows us to protect the jobs and benefits of our existing team members and to create thousands of new job opportunities and careers for the people of Macau,” Ho said.

Fourth-quarter net revenue was $253.5 million, up from $179.7 million for the same period in 2007, driven by improved operating performance at Crown Macau, which generated adjusted EBITDA of $25.7 million, compared with $4.2 million in the fourth quarter of 2007.

The company halved its net loss for the fourth quarter from $36.5 million in 4Q07 to $18.9 million.

Rolling chip volume at Crown Macau totaled $10.28 billion for the quarter, up from $8.53 billion VIP table hold percentage improved from 2.4 percent to 2.89 percent.

Drop at the mass-market tables totaled $73.0 million, down from $87.3 million in the fourth quarter of 2007 when 69 tables were in service on average, compared with 34 in 4Q08.

Non-gaming revenue at Crown Macau improved from $7.6 million to $9 million. Hotel occupancy was 92 percent at an average daily rate of $238 per occupied room, both improvements over 4Q07.

Mocha Clubs generated $6.7 million of adjusted EBITDA on net operating revenue of $22.4 million, up from $21.7 million in 4Q07. The number of gaming machines in operation averaged approximately 1,091. Average win per machine per day increased to $223 from $215 in the same period in 2007.

IN OTHER NEWS …

—AIM-listed AsianLogic said it expected pre-tax profits for 2008 of approximately US$7 million, a drop of 11 percent compared to 2007. The company said the fall was due to a “challenging economic environment where sustaining growth required continuing innovation in services provision and product development”. The company also warned that pre-tax profits in 2009 were unlikely to reach the same levels achieved in 2008 as capital expenditures would be significantly higher than in previous years.

—San Diego-based Mahjong Time has signed a software licensing deal for its mahjong software and turnkey solutions with Chinese real-time sports news Web site SportsCN.com.

—Sky City Entertainment Group, New Zealand’s largest casino operator, said first-half operating profit fell 6.4 percent as margins narrowed at its home venues. Earnings before interest, tax and depreciation fell to NZ$148.5 million in the six months ended December 31, from $158.7 million a year earlier. Sky City gets more than 70 percent of its pre-tax profit from its casino, conference center and tower in Auckland, where earnings fell 5.2 percent as spending slowed amid New Zealand’s first recession in a decade. Earnings from Australia increased 7.6 percent, boosted by an improvement at Adelaide and a weaker New Zealand dollar.

—Australia’s Centrebet has been selected to manage the fixed odds betting services of ACT TAB, Racing & Wagering Australia and Tote Tasmania, beginning in late May. The agreement covers all fixed odds racing and sports betting products offered by the TABs today as well as an expanded offering to be provided by Centrebet.

—Astro Corp., a Taiwan-based operator and manufacturer of gaming PCBs and video slot machines, has joined the Association of Gaming Equipment Manufacturers.